Document:

Exhibit 10.7

                                                                  Execution Copy
                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT  AGREEMENT  (this  "Agreement") is entered as of April 19,
2007 (the  "Effective  Date"),  by and between Bauble Holdings Corp., a Delaware
corporation ("Holdings"), and Eugene S. Kahn (the "Executive").

      WHEREAS, upon the closing (the "Closing") of the transactions contemplated
by that  certain  Agreement  and Plan of Merger  dated as of March 20, 2007 (the
"Merger  Agreement"),  by and among Holdings,  Bauble  Acquisition  Sub, Inc., a
Florida  corporation  ("Merger  Sub")  and  Claire's  Stores,  Inc.,  a  Florida
corporation  ("Claire's"),  Merger Sub will merge  with and into  Claire's,  and
Claire's shall become a wholly-owned subsidiary of Holdings (the "Acquisition");

      WHEREAS, Holdings desires to employ the Executive on the terms and subject
to the  conditions  set  forth  herein  and the  Executive  has  agreed to be so
employed.

      NOW,   THEREFORE,   in  consideration   of  the  mutual   representations,
warranties,  covenants and agreements  set forth herein,  and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  the  parties  hereto,  intending  to be legally  bound,  agree as
follows:

1.    Employment of Executive; Duties.

      1.1   Title.  During  the  Employment  Period  (as  defined  in  Section 2
hereof), the Executive shall serve as Chief Executive Officer of Holdings.

      1.2   Duties.

            (a) During the Employment  Period,  the Executive shall have overall
responsibility  for  the  business  affairs  and  activities  of  Holdings,  its
subsidiaries and Affiliates (as defined in Section 5.4(a) hereof),  and shall do
and perform all services  and acts  necessary or advisable to fulfill the duties
and  responsibilities of the Executive's position and shall render such services
on the terms set forth herein. In addition,  the Executive shall have such other
executive and managerial  powers and duties as may reasonably be assigned to the
Executive by the Board of Directors of Holdings (the "Board"), commensurate with
the  Executive  serving  as Chief  Executive  Officer.  Except  for sick  leave,
reasonable  vacations  and  excused  leaves of  absence,  the  Executive  shall,
throughout the Employment  Period,  devote  substantially all of the Executive's
working time, attention, knowledge and skills faithfully, and to the best of the
Executive's  ability,  to the duties  and  responsibilities  of the  Executive's
positions in furtherance of the business  affairs and activities of Holdings and
its subsidiaries and Affiliates.

            (b) During the Employment Period, the Executive's principal place of
employment  shall be at  Holdings'  office in  Hoffman  Estates,  Illinois.  The
Executive is  encouraged,  but shall not be required to,  relocate his principal
residence to the greater Chicago metropolitan area.

            (c) The  Executive  shall at all times be subject to,  comply  with,
observe and carry out (i) Holdings'  rules,  regulations,  policies and codes of
ethics and/or conduct applicable

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to its employees  generally and in effect from time to time and (ii) such rules,
regulations,   policies,   codes  of  ethics  and/or  conduct,   directions  and
restrictions as the Board may from time to time reasonably  establish or approve
generally for senior executive officers of Holdings.

      1.3   Duties prior to the Closing Date.  From the Effective Date until the
date of the Closing (the "Closing  Date"),  the Executive agrees to be listed as
Chief  Executive  Officer  of  Holdings  or  any  of  its  subsidiaries  in  all
documentation in connection with the Acquisition, shall participate in the "road
show" relating to the financing of the Acquisition, and shall perform such other
services as reasonably requested by the Board in order to facilitate  completion
of the Acquisition.

2.    Term  of  Employment.  This  Agreement  shall  govern  the  terms  and
conditions  of the  Executive's  employment  by  Holdings,  and the  termination
thereof,  from the Effective  Date through the third  anniversary of the Closing
Date (the "Term"), provided that on each annual anniversary of the Closing Date,
the Term shall be extended for one  additional  year,  unless  during the thirty
(30) day period ending on any such anniversary  date,  Holdings or the Executive
notifies the other in writing not to have the Term so  extended.  The portion of
the Term  following  the Closing  Date during  which the  Executive  is actually
employed  by Holdings  under this  Agreement  is referred to as the  "Employment
Period".  Should the Merger  Agreement be terminated  prior to completion of the
Acquisition,  this  Agreement  shall  expire and  neither  party  shall have any
further obligations or rights hereunder, except that the Executive shall receive
a lump sum payment equal to $1,000,000  multiplied by a fraction,  the numerator
of which is the number of days from and  including  the  Effective  Date, to and
including the date of expiration, and the denominator of which is 365.

3.    Compensation and General Benefits.

      3.1   Base Salary.

            (a)  During the  Employment  Period,  Holdings  agrees to pay to the
Executive  an annual base  salary in an amount  equal to  $1,000,000  (such base
salary,  as may be adjusted  from time to time  pursuant to Section  3.1(b),  is
referred to herein as the "Base  Salary").  The  Executive's  Base Salary,  less
amounts  required to be withheld under applicable law, shall be payable in equal
installments  in  accordance  with  Holdings'   normal  payroll   practices  and
procedures  in effect  from time to time for the payment of salaries to officers
of Holdings, but in no event less frequently than monthly.

            (b) The Board or the Compensation Committee established by the Board
(the  "Compensation  Committee") shall review the Executive's  performance on an
annual  basis and,  based on such  review,  may change the Base  Salary,  as it,
acting in its sole discretion, shall determine to be reasonable and appropriate.

            (c)  Upon or as soon as  practicable  following  the  Closing  Date,
subject to the Executive's  satisfactory performance of his duties under Section
1.3,  the  Executive  shall  receive  a lump sum  payment  equal  to  $1,000,000
multiplied by a fraction,  the numerator of which is the number of days from and
including  the  Effective  Date  to and  including  the  Closing  Date,  and the
denominator of which is 365.

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      3.2   Bonus. With respect to each fiscal year of Holdings that ends during
the Employment  Period, the Executive shall be eligible to receive from Holdings
an annual performance bonus (the "Annual Bonus") based upon Holdings' attainment
of annual goals  established by the Board or the Compensation  Committee,  which
may include Holdings' comparable store sales,  earnings before interest,  taxes,
depreciation  and  amortization  ("EBITDA")  and/or cash generation  goals.  The
Executive's  target  Annual  Bonus  shall be one hundred  percent  (100%) of the
Executive's  Base Salary if Holdings meets targeted  levels of performance to be
determined by the Board or the  Compensation  Committee for the applicable year;
provided  that for the first fiscal year that ends  following  the Closing Date,
the  Annual  Bonus  shall be no less  than one  hundred  percent  (100%)  of the
Executive's  Base Salary paid from the Closing Date to such fiscal year end. The
Board or the  Compensation  Committee will also establish  threshold and stretch
performance  levels which, if achieved,  will entitle the Executive to an Annual
Bonus equal to such percentage of Executive's  Base Salary as established by the
Board or the Compensation Committee. Any Annual Bonus earned shall be payable in
full as soon as reasonably  practicable following the determination thereof, but
in no event later than April 15 of the following  year (unless  administratively
impracticable to do so because the Company's results for the applicable year had
not  yet  been  finalized)  and in  accordance  with  Holdings'  normal  payroll
practices and procedures.  Except as otherwise  expressly  provided in Section 4
hereof,  any Annual Bonus (or portion  thereof)  payable  under this Section 3.2
shall not be earned and payable  unless the Executive is employed by Holdings on
the last day of the period to which such Annual Bonus relates.

      3.3   Expenses.

            (a) In  addition  to any  amounts  to  which  the  Executive  may be
entitled pursuant to the other provisions of this Section 3 or elsewhere herein,
the Executive shall be entitled to receive  reimbursement  from Holdings for all
reasonable and necessary  expenses  incurred by the Executive during the Term in
performing the Executive's  duties hereunder on behalf of Holdings,  subject to,
and consistent with,  Holdings'  policies for expense payment and reimbursement,
in effect from time to time.

            (b) Until the date the Executive  relocates his principal  residence
to the greater Chicago  metropolitan  area, the Executive shall also be entitled
to  reimbursement  for lodging and  transportation  expenses between the Chicago
area and the Executive's  principal  residence in the St. Louis,  Missouri area.
If, after six months following the Closing Date, the Executive has not relocated
to the greater  Chicago  metropolitan  area,  Holdings  will making  available a
corporate  apartment or reimburse the Executive for the reasonable costs to rent
an  apartment,  including  utilities,  such  as  gas,  electricity,   telephone,
cable/satellite  and  internet  services.  In  addition,  upon  or  as  soon  as
practicable after the Closing Date, Holdings shall pay the professional expenses
incurred by Executive in connection with the negotiation  and  documentation  of
this  Agreement  (including all Exhibits  thereto),  up to a maximum of $27,500.
Expense  reimbursement  amounts  described in this Section 3.3(b) and in Section
3.4 for  relocation  costs  shall be  grossed-up  to the  extent  includible  in
Executive's income.

      3.4 Benefits.  During the Employment Period, in addition to any amounts to
which the  Executive  may be entitled  pursuant to the other  provisions of this
Section 3 or elsewhere  herein,  the Executive  shall be entitled to participate
in, and to receive benefits under, any benefit plans,

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arrangements  or policies  made  available  by Holdings to its senior  executive
officers  generally,  subject  to and on a  basis  consistent  with  the  terms,
conditions and overall  administration of each such plan, arrangement or policy.
The  Executive  shall be entitled to  relocation  benefits  in  accordance  with
Holding's executive relocation policy.

      3.5   Employee Stock Options and Restricted Stock.

            (a) On or  shortly  after the  Closing  Date,  Holdings  shall  have
adopted a stock  option  plan,  in the form  attached  hereto  as  Exhibit A and
incorporated herein by reference (the "Plan"), for the grant of stock options to
employees or directors of Holdings or of any  subsidiary of Holdings to purchase
shares of Common Stock of Holdings (the "Common Stock").

            (b) On or shortly after the Closing Date,  pursuant to the Plan, the
Executive shall be granted nonqualified options to purchase a total of number of
shares of Common Stock  representing  2.1% of the  outstanding  shares of Common
Stock immediately  following the Closing at a price per share equal to the price
per share paid by Apollo (as defined in Exhibit D) for its shares  (the  "Apollo
Price") on the terms set forth in the Option  Grant  Letter  attached  hereto as
Exhibit B and incorporated herein by reference (the "Option Letter").

            (c) On or shortly  after the Closing Date,  the  Executive  shall be
awarded such number of shares of Common  Stock equal to $750,000  divided by the
Apollo  Price on the  terms set forth in the  Stock  Purchase  and Grant  Letter
attached  hereto as Exhibit C and  incorporated  herein by reference (the "Stock
Letter").

      3.6   Stock Investment.

            (a) On the  Closing  Date,  Holdings  agrees  to  offer  and sell to
Executive, and the Executive agrees to purchase from Holdings,  shares of Common
Stock for aggregate cash  consideration of $1,000,000 at a price per share equal
to the Apollo Price (the "Stock  Purchase").  The Stock Purchase shall otherwise
be on the terms set forth in the Stock Letter.

            (b) Upon  completion of the Stock  Purchase,  the Executive shall be
granted an  additional  fully  vested  nonqualified  stock option to purchase an
equal  number of shares of Common Stock at a price per share equal to the Apollo
Price on the terms set forth in the Option Letter.

4.    Termination.

      4.1   General.   The  employment  of  the  Executive  hereunder  (and  the
Employment  Period)  shall  terminate  as provided  in Section 2 hereof,  unless
earlier terminated in accordance with the provisions of this Section 4.

      4.2   Death or Disability of the Executive.

            (a) The  employment of the Executive  hereunder  (and the Employment
Period)  shall  terminate  upon (i) the death of the  Executive  and (ii) at the
option of Holdings,  upon not less than fifteen (15) days' prior written  notice
to the Executive or the Executive's personal  representative or guardian, if the
Executive suffers a "Total Disability" (as defined in

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Section 4.2(b) hereof). Upon termination for death or Total Disability, Holdings
shall pay to the Executive, guardian or personal representative, as the case may
be, a prorated  share of the Annual Bonus  pursuant to Section 3.2 hereof (based
on the period of actual  employment) that the Executive would have been entitled
to had the Executive worked the full year during which the termination occurred,
which bonus  shall be based on actual  performance  of Holdings  for the year of
such termination.  Any bonus shall be payable as soon as reasonably  practicable
following the determination  thereof, but in no event later than April 15 of the
following  year  (unless  administratively  impracticable  to do so because  the
Company's  results for the applicable year had not yet been  finalized),  and in
accordance with Holdings' normal payroll practices and procedures.

            (b) For purposes of this Agreement,  "Total  Disability"  shall mean
(i) if the Executive is subject to a legal decree of  incompetency  (the date of
such decree being deemed the date on which such disability  occurred),  (ii) the
written  determination  by a physician  selected by Holdings and  acceptable  to
Executive (which acceptance shall not be unreasonably withheld),  (which expense
shall be paid by Holdings) that,  because of a medically  determinable  disease,
injury  or  other  physical  or  mental  disability,  the  Executive  is  unable
substantially to perform, with or without reasonable accommodation, the material
duties of the Executive required hereby, and that such disability has lasted for
ninety (90)  consecutive  days or any one hundred  twenty  (120) days during the
immediately  preceding  twelve  (12)-month  period  or  is,  as of the  date  of
determination,  reasonably  expected to last six (6) months or longer  after the
date of  determination,  in each case based upon  medically  available  reliable
information  or  (iii)  Executive's  qualifying  for  benefits  under  Holdings'
long-term  disability  coverage,  if any. In conjunction with determining mental
and/or physical disability for purposes of this Agreement,  the Executive hereby
consents to (x) any examinations  that the Board or the  Compensation  Committee
reasonably  determines are relevant to a determination  of whether the Executive
is mentally and/or  physically  disabled or are required by Holdings  physician,
(y) furnish such medical  information  as may be  reasonably  requested  and (z)
waive any applicable  physician patient privilege that may arise because of such
examination.  All expenses incurred by the Executive under this subsection shall
be paid by Holdings.

      4.3   Termination  by  Holdings   Without  Cause  or  Resignation  by  the
Executive For Good Reason, or in the event of a Change of Control.

            (a)  Holdings  may  terminate  the  Executive's  employment  without
"Cause" (as defined in Section  4.3(g)),  and thereby  terminate the Executive's
employment (and the Employment  Period) under this Agreement at any time with no
requirement for notice to the Executive.

            (b) The Executive may resign,  and thereby terminate the Executive's
employment  (and the  Employment  Period),  at any time for  "Good  Reason"  (as
defined in Section  4.3(f)  hereof),  upon not less than thirty (30) days' prior
written notice to Holdings specifying in reasonable detail the reason therefore;
provided, however, that Holdings shall have a reasonable opportunity to cure any
such Good  Reason (to the extent  possible)  within  such thirty (30) day notice
period after  Holdings'  receipt of such notice;  and provided  further that, if
Holdings is not seeking to cure,  Holdings  shall not be  obligated to allow the
Executive  to  continue  working  during  such  period  and  may,  in  its  sole
discretion, accelerate such termination

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of  employment  (and the  Employment  Period) to any date  during  such  period.
Executive  may not  terminate  employment  under this  Agreement for Good Reason
regarding  any of  Holdings'  acts or omissions  of which  Executive  had actual
notice  for sixty (60) days or more prior to giving  notice of  termination  for
Good Reason.

            (c) In the event the Executive's  employment is terminated  pursuant
to this Section 4.3,  then,  subject to Section  4.3(d)  hereof,  the  following
provisions shall apply:

                  (i)  Holdings  shall  continue to pay the  Executive  the Base
            Salary to which the Executive  would have been entitled  pursuant to
            Section  3.1  hereof  (at the Base  Salary  rate  during the year of
            termination)  had the  Executive  remained in the employ of Holdings
            until the expiration of the Term in effect  immediately prior to the
            date of  termination,  with all such amounts  payable in  accordance
            with Holdings'  normal payroll  practices and procedures in the same
            manner  and at the  same  time  as  though  the  Executive  remained
            employed by Holdings.

                  (ii) If such  termination  occurs upon or within eighteen (18)
            months  following  a Change of  Control  (as  defined  in  Exhibit D
            attached  hereto),  Holdings shall continue to pay the Executive the
            Base Salary to which the Executive would have been entitled pursuant
            to Section  3.1 hereof (at the Base  Salary  rate during the year of
            termination)  for the greater of (A) the period set forth in Section
            4.3(c)(i) hereof or (B) a two (2)-year period following such date of
            termination,  with all  such  amounts  payable  in  accordance  with
            Holdings' normal payroll practices and procedures in the same manner
            and at the same time as though the  Executive  remained  employed by
            Holdings.

                  (iii) In the event the  Executive's  employment  is terminated
            pursuant  to this  Section 4.3 without  Cause,  and if Holdings  has
            previously  effected  reductions in the Executive's  Base Salary and
            the  base  salary  of  all  senior  executives  of  Holdings,  which
            reductions were substantially similar, then the Base Salary rate for
            purposes  of  Section  4.3(c)(i)  or (ii)  hereof  shall be the Base
            Salary rate in effect immediately prior to such reductions.

                  (iv) Holdings  shall pay to the Executive a prorated  share of
            the Annual Bonus pursuant to Section 3.2 hereof (based on the period
            of actual employment) that the Executive would have been entitled to
            had the Executive  worked the full year during which the termination
            occurred,  based on actual  performance  of Holdings for the year of
            such  termination.  The bonus shall be payable as soon as reasonably
            practicable  following the  determination  thereof,  but in no event
            later than April 15 of the following  year (unless  administratively
            impracticable  to  do so  because  the  Company's  results  for  the
            applicable year had not yet been finalized),  and in accordance with
            Holdings' normal payroll practices and procedures.

                  (v)  If  the  Executive  elects  continuation  coverage  (with
            respect to the Executive's  coverage  and/or any eligible  dependent
            coverage) under the Consolidated  Omnibus Budget  Reconciliation Act
            of 1986 ("COBRA  Continuation  Coverage")  with respect to Holdings'
            group health insurance plan,

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                  the Executive  shall be responsible for payment of the monthly
                  cost of COBRA Continuation Coverage. Unless prohibited by law,
                  Holdings shall  reimburse the Executive for any portion of the
                  monthly cost of COBRA  Continuation  Coverage that exceeds the
                  amount of the monthly health  insurance  premium (with respect
                  to the  Executive's  coverage  and/or any  eligible  dependent
                  coverage)  payable by the Executive  immediately  prior to the
                  date  of  Executive's  termination,   such  reimbursements  to
                  continue  (A)  through  the  expiration  of the Term in effect
                  immediately  prior  to the date of  termination  or (B) in the
                  event that  Executive's  Base Salary is being paid pursuant to
                  Section 4.3(c)(ii), for the period set forth therein. Holdings
                  shall pay the  reimbursements on a monthly basis in accordance
                  with Holdings' normal payroll practices and procedures.

                  (d) As a  condition  precedent  to the  Executive's  right  to
receive the benefits set forth in Section 4.3(c) hereof, the Executive agrees to
execute  a  release  of  Holdings  and  its  respective  Affiliates,   officers,
directors,  stockholders,   employees,  agents,  insurers,  representatives  and
successors  from and  against  any and all claims  that the  Executive  may have
against any such Person (as defined in Section  5.4(f)  hereof)  relating to the
Executive's  employment  by Holdings and the  termination  thereof,  in the form
attached  hereto as Exhibit E, as such form may be amended  from time to time to
comply with changes in law.

                  (e) For purposes of this  Agreement,  the  Executive  would be
entitled to terminate the  Executive's  employment  for "Good Reason" if without
the Executive's prior written consent:

                        (i)   Holdings   fails  to  comply  with  any   material
                  obligation imposed by this Agreement;

                        (ii) Holdings changes the Executive's position from that
                  of Chief Executive Officer;

                        (iii)  Holdings  effects a reduction in the  Executive's
                  Base Salary,  unless all senior executives of Holdings receive
                  a substantially similar reduction in base salary; or

                        (iv)  Holdings   requires  the  Executive  to  be  based
                  (excluding regular travel  responsibilities)  at any office or
                  location  more  than 75  miles  outside  of  Hoffman  Estates,
                  Illinois, provided that the Executive had previously relocated
                  his principal  residence to the greater  Chicago  metropolitan
                  area.

                  (f)  For  purposes  of  this  Agreement,   "Cause"  means  the
occurrence of any one or more of the following events:

                        (i) an act of  fraud,  embezzlement,  theft or any other
                  material  violation of law that occurs during or in the course
                  of Executive's employment with Holdings;

                        (ii) intentional damage to Holdings' assets;

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                        (iii) intentional  disclosure of Holdings'  confidential
                  information contrary to Holdings' policies;

                        (iv) material  breach of Executive's  obligations  under
                  this Agreement;

                        (v)  intentional  engagement in any activity which would
                  constitute a breach of Executive's  duty of loyalty or of your
                  obligations under this Agreement;

                        (vi) material breach of any of material Holdings' policy
                  that has been communicated to the Executive in writing;

                        (vii) the willful and continued failure to substantially
                  perform  Executive's  duties  for  Holdings  (other  than as a
                  result of incapacity due to physical or mental illness); or

                        (viii) willful conduct by Executive that is demonstrably
                  and materially injurious to Holdings, monetarily or otherwise.

                  For purposes of this Section  4.3(f),  an act, or a failure to
            act,  shall not be deemed  "willful" or  "intentional"  unless it is
            done,  or omitted to be done, by Executive in bad faith or without a
            reasonable  belief that  Executive's  action or omission  was in the
            best interest of Holdings.  Failure to meet performance standards or
            objectives, by itself, does not constitute "Cause".

      4.4   Termination  For Cause,  Voluntary  Resignation  Other Than For Good
Reason or Election Not to Extend the Term.

            (a) (i)  Holdings  may,  upon  action of the  Board,  terminate  the
employment of the Executive (and the Employment Period) at any time for "Cause,"
(ii) the Executive may voluntarily resign other than for Good Reason and thereby
terminate the  Executive's  employment  (and the  Employment  Period) under this
Agreement at any time upon not less than thirty  (30)-days' prior written notice
or (iii)  either  Holdings or the  Executive  may elect not to extend or further
extend the Term pursuant to Section 2 hereof.

            (b) Upon  termination by Holdings for Cause, by the Executive as the
result of  resignation  for other than for Good  Reason,  or by  Holdings or the
Executive  at the end of the Term as the result of an election  not to extend or
further extend the Term, the Executive  shall be entitled to receive all amounts
of earned but unpaid Base  Salary and  benefits  accrued and vested  through the
date of such termination.

            (c) Before  Holdings may terminate the Executive for Cause  pursuant
to Section  4.4(a)(i),  the Directors  other than Executive (the  "Disinterested
Directors")  shall deliver to the Executive a written notice of Holdings' intent
to terminate the Executive for Cause,  and the Executive shall have been given a
reasonable opportunity to cure any such acts or omissions (which are susceptible
of cure as reasonably determined by the Disinterested Directors by majority vote
thereof) within thirty (30) days after the Executive's receipt of such notice.

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      4.5   Resignation  from Officer  Positions.  Upon the  termination  of the
Executive's  employment  for any reason (unless  otherwise  agreed in writing by
Holdings and the  Executive),  the  Executive  will be deemed to have  resigned,
without any further action by the Executive,  from any and all officer, director
and/or  director  positions  that  the  Executive,  immediately  prior  to  such
termination,  (a) held with Holdings or any of its  Affiliates and (b) held with
any other  entities  at the  direction  of,  or as a result  of the  Executive's
affiliation  with,  Holdings  or any of its  Affiliates.  If for any reason this
Section 4.5 is deemed to be insufficient to effectuate such  resignations,  then
Executive  will,  upon Holdings'  request,  execute any documents or instruments
that Holdings may deem necessary or desirable to effectuate  such  resignations.
In addition,  the  Executive  hereby  designates  the Secretary or any Assistant
Secretary  of Holdings  and of any  Affiliate  to execute any such  documents or
instruments as the Executive's  attorney-in-fact to effectuate such resignations
if  execution  by the  Secretary  or any  Assistant  Secretary  of  Holdings  or
Affiliate is deemed by Holdings or the Affiliate to be a more expedient means to
effectuate such resignation or resignations.

      4.6   Section 409A of the Code.  Notwithstanding  anything to the contrary
in this Agreement, the parties mutually desire to avoid adverse tax consequences
associated  with the  application  of Section 409A of the Code to this Agreement
and  agree to  cooperate  fully and take  appropriate  reasonable  actions  that
preserve to the Executive,  to the maximum extent  practical,  the full economic
benefit of this  Agreement  while avoiding any such  consequences  under Section
409A of the Code,  including  delaying  payments and  reforming  the form of the
Agreement if such action would reduce or eliminate taxes and/or interest payable
as a  result  of  Section  409A of the  Code.  In this  regard,  notwithstanding
anything to the  contrary in this  Section 4, to the extent  necessary to comply
with Section 409A of the Code,  any payment  required under this Section 4 shall
be deferred  for a period of six (6)  months,  regardless  of the  circumstances
giving rise to or the basis for such payment.

      5.    Confidentiality,    Work    Product    and    Non-Competition    and
Non-Solicitation.

      5.1   Confidentiality.

            (a) In connection  with the  Executive's  employment  with Holdings,
Holdings  promises  to  provide  the  Executive  with  access  to  "Confidential
Information" (as defined in Section 5.4(d) hereof) in support of the Executive's
employment  duties.  The Executive  recognizes that Holdings' business interests
require a confidential  relationship  between Holdings and the Executive and the
fullest  practical  protection and  confidential  treatment of all  Confidential
Information.  At all times,  both during and after the  Employment  Period,  the
Executive shall not directly or indirectly:  (i) appropriate,  download,  print,
copy, remove, use, disclose, divulge,  communicate or otherwise "Misappropriate"
(as defined in Section 5.4(e) hereof), any Confidential Information,  including,
without limitation,  originals or copies of any Confidential Information, in any
media or format, except for (A) Holdings' benefit within the course and scope of
the  Executive's  employment or with the prior written  consent of a majority of
the  Disinterested  Directors,  (B) that  which the  Executive  is  required  to
disclose by applicable  law,  regulations  or legal process  (provided  that the
Executive  provides  Holdings  with prior  notice  according  to Section  5.1(d)
hereof) or (C) that which the  Executive  discloses to his spouse,  personal tax
and financial advisors,  and/or attorney as reasonably  necessary or appropriate
to advance the Executive's tax, financial and other personal  planning;  or (ii)
take or

                                       9
<PAGE>

encourage any action that would circumvent, interfere with or otherwise diminish
the value or benefit of the Confidential  Information to any of Holdings Parties
(as defined in Section 5.4(b) hereof).

            (b) All  Confidential  Information,  and all other  information  and
property affecting or relating to the business of the Company Parties within the
Executive's possession,  custody or control, regardless of form or format, shall
remain,  at all times,  the  property of the  respective  Company  Parties,  the
appropriation, use and/or disclosure of which is governed and restricted by this
Agreement.

            (c) The Executive acknowledges and agrees that:

                  (i) the Executive  occupies a unique position within Holdings,
            and  the  Executive  is  and  will  be  intimately  involved  in the
            development and/or implementation of Confidential Information;

                  (ii) in the event the Executive breaches this Section 5.1 with
            respect to any Confidential Information, such breach shall be deemed
            to be a Misappropriation of such Confidential Information; and

                  (iii) any  Misappropriation  of Confidential  Information will
            result in immediate and irreparable harm to Holdings.

            (d) Upon receipt of any formal or informal request, by legal process
or  otherwise,   seeking  the  Executive's  direct  or  indirect  disclosure  or
production of any  Confidential  Information to any Person,  the Executive shall
promptly  and  timely  notify  Holdings  and  provide  a  description   and,  if
applicable,  hand  deliver a copy of such  request to  Holdings.  The  Executive
irrevocably  nominates and appoints  Holdings as the Executive's true and lawful
attorney-in-fact  to act in the Executive's name, place and stead to perform any
act that  the  Executive  might  perform  to  defend  and  protect  against  any
disclosure of Confidential Information.

            (e) At any time Holdings may request, during or after the Employment
Period,  the  Executive  shall  deliver to Holdings all  originals and copies of
Confidential  Information and all other  information  and property  affecting or
relating  to  the  business  of  the  Company  Parties  within  the  Executive's
possession, custody or control, regardless of form or format, including, without
limitation any Confidential  Information produced by the Executive.  Both during
and after the  Employment  Period,  Holdings  shall have the right of reasonable
access to review,  inspect, copy and/or confiscate any Confidential  Information
within the Executive's possession, custody or control.

            (f) Upon termination or expiration of this Agreement,  the Executive
shall immediately return to Holdings all Confidential Information, and all other
information  and  property  affecting or relating to the business of the Company
Parties,  within the Executive's possession,  custody or control,  regardless of
form or format, without the necessity of a prior Company request.

            (g) During the  Employment  Period,  the  Executive  represents  and
agrees  that  the  Executive  will  not  use or  disclose  any  confidential  or
proprietary information or trade secrets

                                       10
<PAGE>

of others, including but not limited to former employers, and that the Executive
will not bring onto the  premises of Holdings  or access  such  confidential  or
proprietary  information or trade secrets of such others, unless consented to in
writing by said others,  and then only with the prior written  authorization  of
Holdings.

      5.2   Work Product/Intellectual Property.

            (a) Assignment.  The Executive hereby assigns to Holdings all right,
title and interest to all "Work  Product" (as defined in Section  5.4(h) hereof)
that (i) relates to any of the Company Parties' actual or anticipated  business,
research and development or existing or future products or services,  or (ii) is
conceived, reduced to practice, developed or made using any equipment, supplies,
facilities,  assets,  information  or  resources  of any of the Company  Parties
(including, without limitation, any intellectual property rights).

            (b) Disclosure.  The Executive shall promptly  disclose Work Product
to the Disinterested  Directors and perform all actions reasonably  requested by
Holdings  (whether  during or after the  Employment  Period)  to  establish  and
confirm the ownership and proprietary  interest of any of the Company Parties in
any Work Product (including,  without limitation,  the execution of assignments,
consents, powers of attorney, applications and other instruments). The Executive
shall not file any patent or copyright  applications related to any Work Product
except with the written consent of a majority of the Disinterested Directors.

      5.3   Non-Competition and Non-Solicitation.

            (a) In consideration of the Confidential  Information being provided
to the  Executive  as stated in Section 5.1 hereof,  and other good and valuable
new consideration as stated in this Agreement,  including,  without  limitation,
employment  and/or  continued   employment  with  Holdings,   and  the  business
relationships, Company goodwill, work experience, client, customer and/or vendor
relationships  and other fruits of employment  that the Executive  will have the
opportunity  to obtain,  use and develop  under this  Agreement,  the  Executive
agrees to the restrictive covenants stated in this Section 5.3.

            (b) From the Closing Date until the end of the Restricted Period (as
defined in Section 5.4(g) hereof),  the Executive agrees that the Executive will
not,  directly or indirectly,  on the Executive's own behalf or on the behalf of
any other Person, within the United States of America or in any other country or
territory in which the businesses of Holdings are conducted:

                  (i)  engage in a  Competing  Business  (as  defined in Section
            5.4(c) hereof), including,  without limitation, by owning, managing,
            operating,  controlling,  being employed by, providing services as a
            consultant  or  independent  contractor to or  participating  in the
            ownership,   management,  operation  or  control  of  any  Competing
            Business;

                  (ii)  induce  or  attempt  to  induce  any  customer,  vendor,
            supplier,  licensor or other Person in a business  relationship with
            any Company  Party,  for or with which the  Executive  or  employees
            working under the Executive's supervision had any direct or indirect
            responsibility  or contact during the Employment  Period,  (A) to do
            business with a Competing Business or (B) to

                                       11
<PAGE>

            cease,  restrict,   terminate  or  otherwise  reduce  business  with
            Holdings  for the benefit of a  Competing  Business,  regardless  of
            whether the Executive initiates contact; or

                  (iii) (A) solicit, recruit, persuade,  influence or induce, or
            attempt to solicit,  recruit,  persuade,  influence or induce anyone
            employed  or  otherwise  retained  by  any of  the  Company  Parties
            (including any independent  contractor or  consultant),  to cease or
            leave their  employment or  contractual  or consulting  relationship
            with  any  Company  Party,   regardless  of  whether  the  Executive
            initiates contact for such purposes or (B) hire, employ or otherwise
            attempt  to  establish,  for any  Person,  any  employment,  agency,
            consulting,  independent  contractor or other business  relationship
            with any Person who is or was employed or otherwise  retained by any
            of the Company  Parties  (including  any  independent  contractor or
            consultant).

            (c) The parties hereto  acknowledge and agree that,  notwithstanding
anything in Section 5.3(b)(i) hereof,  (i) the Executive may own or hold, solely
as passive investments, securities of Persons engaged in any business that would
otherwise be included in Section 5.3(b)(i), as long as with respect to each such
investment the securities  held by the Executive do not exceed five percent (5%)
of the  outstanding  securities of such Person and such  securities are publicly
traded and registered  under Section 12 of the Securities  Exchange Act of 1934,
as amended (the "Exchange  Act"),  and (ii) the Executive may serve on the board
of directors  (or other  comparable  position) or as an officer of any entity at
the request of the Board;  provided,  however,  that in the case of  investments
otherwise permitted under clause (i) above, the Executive shall not be permitted
to,  directly  or  indirectly,  participate  in, or  attempt to  influence,  the
management,  direction  or policies of (other than  through the  exercise of any
voting rights held by the Executive in connection with such securities), or lend
the Executive's name to, any such Person.

            (d) The Executive  acknowledges  that (i) the restrictive  covenants
contained in this  Section 5.3 hereof are  ancillary to and part of an otherwise
enforceable  agreement,   such  being  the  agreements  concerning  Confidential
Information and other  consideration  as stated in this  Agreement,  (ii) at the
time that these  restrictive  covenants are made,  the  limitations  as to time,
geographic  scope and  activity  to be  restrained,  as  described  herein,  are
reasonable  and do not impose a greater  restraint than necessary to protect the
good will and other legitimate business interests of Holdings, including without
limitation, Confidential Information (including trade secrets), client, customer
and/or  vendor  relationships,  client  and/or  customer  goodwill  and business
productivity,  (iii) in the event of termination of the Executive's  employment,
the  Executive's  experiences and  capabilities  are such that the Executive can
obtain  gainful  employment  without  violating  this  Agreement and without the
Executive  incurring  undue  hardship,  (iv) based on the relevant  benefits and
other new  consideration  provided  for in this  Agreement,  including,  without
limitation, the disclosure and use of Confidential Information,  the restrictive
covenants  of this Section 5.3, as  applicable  according to their terms,  shall
remain in full force and effect even in the event of the Executive's involuntary
termination  from  employment,  with or without  Cause and (v)the  Executive has
carefully  read  this  Agreement  and has  given  careful  consideration  to the
restraints imposed upon the Executive by this Agreement

                                       12
<PAGE>

and consents to the terms of the restrictive covenants in this Section 5.3, with
the  knowledge  that this  Agreement may be terminated at any time in accordance
with the provisions hereof.

      5.4   Definitions.  For purposes of this  Agreement,  the following  terms
shall have the following meanings:

            (a) An "Affiliate"  of any specified  Person means any other Person,
whether  now or  hereafter  existing,  directly  or  indirectly  controlling  or
controlled by, or under direct or indirect  common control with,  such specified
Person. For purposes hereof, "control" or any other form thereof, when used with
respect to any Person,  means the power to direct the management and policies of
such Person,  directly or  indirectly,  whether  through the ownership of voting
securities,   by  contract  or  otherwise;   and  the  terms  "controlling"  and
"controlled" shall have meanings correlative to the foregoing.

            (b) "Company  Parties" means  Holdings,  and its direct and indirect
parents, subsidiaries and Affiliates, and their successors in interest.

            (c) "Competing  Business" means any business that owns or operates a
specialty  retail chain,  which chain derives 15% or more of its revenue for the
trailing 12 months from the sale of costume  jewelry or accessories  targeted to
girls or women,  provided that a competing  business  shall not include any such
chain where the average  revenue per  purchase  transaction  for the trailing 12
months  is  more  than  five  times  Holdings'   average  revenue  per  purchase
transaction for the same period.

            (d) Confidential Information.

                  (i) Definition.  "Confidential  Information" means any and all
            material,  information,   ideas,  inventions,   formulae,  patterns,
            compilations,  programs,  devices, methods,  techniques,  processes,
            know  how,  plans  (marketing,  business,  strategic,  technical  or
            otherwise),  arrangements,  pricing and other data of or relating to
            any of the  Company  Parties  (as  well as  their  customers  and/or
            vendors) that is confidential, proprietary or trade secret (A)by its
            nature,  (B)based  on how it is treated or  designated  by a Company
            Party,  (C)because  the  disclosure  of which  would have a material
            adverse  effect on the  business  or planned  business of any of the
            Company Parties and/or (D)as a matter of law.

                  (ii)  Exclusions.  Confidential  Information  does not include
            material,  data,  and/or  information  (A)that any Company Party has
            voluntarily  placed in the public domain,  (B)that has been lawfully
            and independently developed and publicly disclosed by third parties,
            (C)that constitutes the general non-specialized knowledge and skills
            gained by the Executive  during the Employment  Period or (D)that is
            otherwise  in the public  domain  through  lawful  means;  provided,
            however, that the unauthorized  appropriation,  use or disclosure of
            Confidential  Information by the Executive,  directly or indirectly,
            shall  not  affect  the  protection  and  relief  afforded  by  this
            Agreement regarding such information.

                  (iii) Inclusions.  Confidential Information includes,  without
            limitation, the following information (including without limitation,
            compilations or

                                       13
<PAGE>

            collections  of  information)  relating or  belonging to any Company
            Party  (as well as their  clients,  customers  and/or  vendors)  and
            created,  prepared,  accessed,  used or  reviewed  by the  Executive
            during or after the Employment Period:  (1)product and manufacturing
            information,  such as  ingredients,  combinations of ingredients and
            manufacturing  processes;  (2)scientific and technical  information,
            such as research and development,  tests and test results,  formulae
            and  formulations,  studies  and  analysis;  (3)financial  and  cost
            information,  such as operating and production costs, costs of goods
            sold,  costs of supplies  and  manufacturing  materials,  non-public
            financial  statements  and  reports,  profit  and loss  information,
            margin   information   and   financial   performance    information;
            (4)customer related information, such as customer related contracts,
            engagement and scope of work letters,  proposals and  presentations,
            customer-related   contacts,   lists,   identities   and  prospects,
            practices,   plans,   histories,   requirements  and  needs,   price
            information  and  formulae  and  information  concerning  client  or
            customer products, services, businesses or equipment specifications;
            (5)vendor and supplier related information,  such as the identities,
            practices,  history or  services  of any  vendors or  suppliers  and
            vendor  or  supplier   contacts;   (6)sales,   marketing  and  price
            information,  such as marketing and sales programs and related data,
            sales and  marketing  strategies  and  plans,  sales  and  marketing
            procedures and processes,  pricing methods, practices and techniques
            and pricing  schedules  and lists;  (7)database,  software and other
            computer  related  information,  such as  computer  programs,  data,
            compilations  of  information  and  records,  software  and computer
            files,   presentation  software  and  computer-stored  or  backed-up
            information including, but not limited to, e-mails,  databases, word
            processed documents,  spreadsheets,  notes,  schedules,  task lists,
            images and video;  (8)employee-related information, such as lists or
            directories identifying employees,  representatives and contractors,
            and  information  regarding  the  competencies  (knowledge,   skill,
            experience),  compensation  and needs of employees,  representatives
            and  contractors  and  training   methods;   and   (9)business-  and
            operation-related    information,   such   as   operating   methods,
            procedures,  techniques,  practices and processes, information about
            acquisitions, corporate or business opportunities, information about
            partners  and  potential  investors,  strategies,   projections  and
            related  documents,  contracts  and licenses  and business  records,
            files, equipment,  notebooks,  documents, memoranda, reports, notes,
            sample  books,  correspondence,  lists and other written and graphic
            business records.

            (e)   "Misappropriate", or any form thereof, means:

                  (i)  the  acquisition  of any  Confidential  Information  by a
            Person  who  knows  or has  reason  to know  that  the  Confidential
            Information  was  acquired  by  theft,  bribery,  misrepresentation,
            breach or  inducement  of a breach of a duty to maintain  secrecy or
            espionage  through  electronic  or other means  (each,  an "Improper
            Means"); or

                  (ii) the  disclosure  or use of any  Confidential  Information
            without  the  express  consent of  Holdings  by a Person who (A)used
            Improper Means to acquire knowledge of the Confidential  Information
            (B)at the time of disclosure or use,

                                       14
<PAGE>

            knew  or had  reason  to  know  that  his or  her  knowledge  of the
            Confidential Information was (x)derived from or through a Person who
            had  utilized  Improper  Means  to  acquire  it,  (y)acquired  under
            circumstances giving rise to a duty to maintain its secrecy or limit
            its use or  (z)derived  from or  through a Person who owed a duty to
            Holdings  to maintain  its  secrecy or limit its use or  (C)before a
            material  change of his or her position,  knew or had reason to know
            that it was  Confidential  Information  and that knowledge of it had
            been acquired by accident or mistake.

            (f) "Person" means any individual, corporation, partnership, limited
liability  company,  joint venture,  association,  business  trust,  joint-stock
company, estate, trust, unincorporated organization,  government or other agency
or political subdivision thereof or any other legal or commercial entity.

            (g)  "Restricted  Period" means the longer of (i) twelve  (12)months
after the date of termination of employment  (the  Executive's  last day of work
for  Holdings)  or (ii) the  period  during  which the  Executive  is  receiving
payments from Holdings pursuant to Section 4 hereof.

            (h) "Work  Product" means all patents and patent  applications,  all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings,  reports,  creative works, discoveries,  software,  computer programs,
modifications, enhancements, know-how, formulations, concepts and ideas, and all
similar or related  information  (in each case whether or not  patentable),  all
copyrights and copyrightable works, all trade secrets, confidential information,
and all other  intellectual  property and intellectual  property rights that are
conceived,  reduced to practice, developed or made by the Executive either alone
or with others in the course of employment with Holdings  (including  employment
prior to the date of this Agreement).

      5.5   Remedies.  Because the  Executive's  services are unique and because
the Executive has access to Confidential Information, the Executive acknowledges
and agrees that if the  Executive  breaches any of the  provisions  of Section 5
hereof,  Holdings may suffer  immediate and irreparable  harm for which monetary
damages alone will not be a sufficient remedy. The restrictive  covenants stated
in Section 5 hereof are  without  prejudice  to  Holdings'  rights and causes of
action at law.

      5.6   Interpretation; Severability.

            (a) The Executive has carefully  considered the possible  effects on
the Executive of the covenants not to compete,  the  confidentiality  provisions
and the  other  obligations  contained  in  this  Agreement,  and the  Executive
recognizes that Holdings has made every effort to limit the restrictions  placed
upon the  Executive  to those  that are  reasonable  and  necessary  to  protect
Holdings' legitimate business interests.

            (b) The  Executive  acknowledges  and  agrees  that the  restrictive
covenants set forth in this  Agreement are  reasonable and necessary in order to
protect Holdings' valid business  interests.  It is the intention of the parties
hereto that the covenants,  provisions and agreements  contained herein shall be
enforceable to the fullest extent allowed by law. If any covenant,

                                       15
<PAGE>

provision or agreement  contained herein is found by a court having jurisdiction
to be unreasonable in duration, scope or character of restrictions, or otherwise
to be unenforceable, such covenant, provision or agreement shall not be rendered
unenforceable   thereby,  but  rather  the  duration,   scope  or  character  of
restrictions of such covenant, provision or agreement shall be deemed reduced or
modified with retroactive effect to render such covenant, provision or agreement
reasonable  or otherwise  enforceable  (as the case may be), and such  covenant,
provision  or  agreement  shall be enforced  as  modified.  If the court  having
jurisdiction will not review the covenant,  provision or agreement,  the parties
hereto shall mutually agree to a revision having an effect as close as permitted
by applicable law to the provision  declared  unenforceable.  The parties hereto
agree that if a court having jurisdiction determines, despite the express intent
of the  parties  hereto,  that  any  portion  of the  covenants,  provisions  or
agreements  contained  herein  are not  enforceable,  the  remaining  covenants,
provisions and agreements  herein shall be valid and enforceable.  Moreover,  to
the extent that any provision is declared unenforceable, Holdings shall have any
and all rights  under  applicable  statutes  or common law to enforce its rights
with respect to any and all  Confidential  Information or unfair  competition by
the Executive.

6.    Miscellaneous.

      6.1   Public Statements.

            (a) Media  Nondisclosure.  The  Executive  agrees  that  during  the
Employment  Period or at any time  thereafter,  except as may be  authorized  in
writing by Holdings,  the Executive will not directly or indirectly  disclose or
release to the Media any information concerning or relating to any aspect of the
Executive's  employment or termination  from employment with Holdings and/or any
aspect of any dispute that is the subject of this Agreement. For the purposes of
this  Agreement,  the  term  "Media"  includes,  without  limitation,  any  news
organization,  station,  publication,  show, website,  web log (blog),  bulletin
board, chat room and/or program (past, present and/or future), whether published
through the means of print, radio,  television and/or the Internet or otherwise,
and any member, representative, agent and/or employee of the same.

            (b)   Non-Disparagement.   The  Executive  agrees  that  during  the
Employment  Period or at any time  thereafter,  the Executive  will not make any
statements,  comments or communications in any form, oral, written or electronic
to any Media or any  customer,  client or  supplier  of  Holdings  or any of its
Affiliates,  which would constitute libel,  slander or disparagement of Holdings
or any of its Affiliates,  including,  without limitation,  any such statements,
comments  or  communications  that  criticize,  ridicule  or are  derogatory  to
Holdings or any of its  Affiliates;  provided,  however,  that the terms of this
Section 6.1(b) shall not apply to  communications  between the Executive and, as
applicable,  the Executive's attorneys or other persons with whom communications
would be subject to a claim of privilege  existing under common law,  statute or
rule of procedure.  The Executive  further agrees that the Executive will not in
any way solicit any such statements, comments or communications from others.

      6.2   ARBITRATION.  SUBJECT TO THE RIGHTS UNDER SECTION 6.3 HEREOF TO SEEK
INJUNCTIVE OR OTHER EQUITABLE RELIEF, BINDING ARBITRATION SHALL BE THE EXCLUSIVE
REMEDY FOR ANY AND ALL DISPUTES,

                                       16
<PAGE>

CLAIMS OR CONTROVERSIES,  WHETHER STATUTORY,  CONTRACTUAL OR OTHERWISE,  BETWEEN
THE  PARTIES  HERETO  ARISING  UNDER  OR  RELATING  TO  THIS  AGREEMENT  OR  THE
EXECUTIVE'S  EMPLOYMENT BY OR TERMINATION FROM THE COMPANY  (INCLUDING,  BUT NOT
LIMITED  TO, THE AMOUNT OF  DAMAGES,  OR THE  CALCULATION  OF ANY BONUS OR OTHER
AMOUNT OR BENEFIT DUE)  (COLLECTIVELY,  "DISPUTES").  THE PARTIES EACH WAIVE THE
RIGHT TO A JURY TRIAL AND WAIVE THE RIGHT TO  ADJUDICATE  THEIR  DISPUTES  UNDER
THIS AGREEMENT  OUTSIDE THE  ARBITRATION  FORUM PROVIDED FOR IN THIS  AGREEMENT,
EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT.

            (a) Procedure Generally.  The parties agree to submit the Dispute to
a single arbitrator  selected from a panel of JAMS arbitrators.  The arbitration
will be governed by the JAMS  Comprehensive  Arbitration Rules and Procedures in
effect  at the time the  arbitration  is  commenced,  subject  to the  terms and
modifications  of this  Agreement.  If for any reason JAMS  cannot  serve as the
arbitration  administrator  or  cannot  fulfill  the panel  requirements  of the
Arbitration   Provision,   Holdings  may  select  an   alternative   arbitration
administrator, such as AAA, to serve under the terms of this Agreement.

            (b)  Arbitrator  Selection.  To select the  arbitrator,  the parties
shall make their respective  strikes from a panel of former federal court judges
and magistrates,  to the extent available from JAMS (the "First Panel").  If the
parties cannot agree upon an arbitrator  from the First Panel or if such a panel
is not  available  from JAMS,  then the parties will next make their  respective
strikes from a panel of former Illinois state court trial and appellate  judges,
to the extent available from JAMS (the "Second Panel"). Any arbitrators proposed
for the First and Second  Panels  provided  for in this  Section  6.2(d) must be
available  to serve in the Agreed  Venue.  If the parties  cannot  agree upon an
arbitrator  from the Second Panel or if such a panel is not available from JAMS,
then the parties will next make their  respective  strikes from the panel of all
other JAMS arbitrators available to serve in the Agreed Venue.

            (c) VENUE. THE PARTIES  STIPULATE AND AGREE THAT THE EXCLUSIVE VENUE
OF ANY SUCH ARBITRATION  PROCEEDING (AND OF ANY OTHER PROCEEDING,  INCLUDING ANY
COURT PROCEEDING,  UNDER THIS AGREEMENT) SHALL BE CHICAGO, ILLINOIS (THE "AGREED
VENUE").

            (d) Authority and Decision.  The arbitrator shall have the authority
to award the same  damages  and  other  relief  that a court  could  award.  The
arbitrator  shall issue a reasoned award explaining the decision and any damages
awarded.  The  arbitrator's  decision will be final and binding upon the parties
and enforceable by a court of competent jurisdiction.  The parties will abide by
and perform any award rendered by the  arbitrator.  In rendering the award,  the
arbitrator shall state the reasons therefor,  including (without limitation) any
computations of actual damages or offsets, if applicable.

            (e) Fees and Costs.  In the event of arbitration  under the terms of
this Agreement, the fees charged by JAMS or other arbitration  administrator and
the arbitrator shall be borne by the parties equally.  In addition,  the parties
shall  each bear their own costs,  expenses  and  attorneys'  fees  incurred  in
arbitration.

                                       17
<PAGE>

            (f)  Limited   Scope.   The  following  are  excluded  from  binding
arbitration under this Agreement:  claims for workers'  compensation benefits or
unemployment  benefits;  replevin;  and claims  for which a binding  arbitration
agreement is invalid as a matter of law.

      6.3   Injunctive  Relief. The parties hereto may seek injunctive relief in
arbitration;  provided,  however,  that  as  an  exception  to  the  arbitration
agreement set forth in Section 6.2 hereof, the parties, in addition to all other
available remedies, shall each have the right to initiate an action in any court
of competent  jurisdiction  in order to request  injunctive  or other  equitable
relief  regarding the terms of Sections 5 or 6.2 hereof.  The exclusive venue of
any such proceeding shall be in the Agreed Venue. The parties agree (a)to submit
to the jurisdiction of any competent court in the Agreed Venue,  (b)to waive any
and all defenses the Executive  may have on the grounds of lack of  jurisdiction
of such court and  (c)that  neither  party  shall be  required to post any bond,
undertaking or other financial deposit or guarantee in seeking or obtaining such
equitable relief.  Evidence adduced in any such proceeding for an injunction may
be used in  arbitration  as well. The existence of this right shall not preclude
or  otherwise  limit the  applicability  or  exercise  of any other  rights  and
remedies that a party hereto may have at law or in equity.

      6.4   Settlement  of Existing  Rights.  In exchange for the other terms of
this Agreement,  the Executive  acknowledges and agrees that: (a)the Executive's
entry  into  this  Agreement  is a  condition  of  employment  and/or  continued
employment with Holdings, as applicable; (b)except as otherwise provided herein,
this  Agreement  will  replace any  existing  employment  agreement  between the
parties and thereby act as a novation, if applicable;  (c)the Executive is being
provided with access to Confidential Information, including, without limitation,
proprietary trade secrets of one or more Company Parties, to which the Executive
has not  previously  had access;  (d)all  Company  inventions  and  intellectual
property developed by the Executive during any past employment with Holdings and
all goodwill  developed  with  Holdings'  clients,  customers and other business
contacts  by  the  Executive  during  any  past  employment  with  Company,   as
applicable,  is the  exclusive  property of  Holdings;  and (e)all  Confidential
Information and/or specialized training accessed,  created, received or utilized
by the Executive during any past employment with Company, as applicable, will be
subject  to the  restrictions  on  Confidential  Information  described  in this
Agreement, whether previously so agreed or not.

      6.5   Indemnification.  The Executive shall be entitled from the Effective
Date until the end of the  Employment  Period in the  capacity  as an officer or
director  of  Holdings  or  any  of  its  subsidiaries  to  the  benefit  of the
indemnification  provisions  contained in the By-Laws of Holdings or as a matter
of law,  whichever is greater.  In addition,  during the term of the Executive's
employment,  and for as long as liability  may exist  thereafter,  the Executive
shall be covered under any directors' and officers'  insurance policy maintained
by  Holdings  to the  highest  level of such  coverage  as provided to any other
director or officer of Holdings.

      6.6   Post-Termination  Assistance.  During  the  Restricted  Period,  the
Executive  shall  cooperate,  at the  reasonable  request of Holdings  (i)in the
transition of any matter for which the Executive had authority or responsibility
during the Employment  Period, or (ii)with respect to any other matter involving
Holdings for which the Executive may be of  assistance.  The Executive  shall be
entitled to reimbursement of any  out-of-pocket  expenses he incurs in providing
such assistance upon submission of documentation supporting such expenses.

                                       18
<PAGE>

      6.7   Entire  Agreement;   Waiver.  This  Agreement  contains  the  entire
agreement  between the Executive and Holdings with respect to the subject matter
hereof, and supersedes any and all prior  understandings or agreements,  whether
written or oral. No modification or addition hereto or waiver or cancellation of
any provision  hereof shall be valid except by a writing  signed by the party to
be charged  therewith.  No delay on the part of any party to this  Agreement  in
exercising  any right or privilege  provided  hereunder or by law shall  impair,
prejudice or constitute a waiver of such right or privilege.

      6.8   Governing Law. This Agreement  shall be governed by and construed in
accordance  with the laws of the State of Illinois  without regard to principles
of conflict of laws.

      6.9   Successors   and  Assigns;   Binding   Agreement.   The  rights  and
obligations of the parties under this Agreement  shall be binding upon and inure
to the benefit of the parties hereto and their heirs, personal  representatives,
successors and permitted assigns.  This Agreement is a personal  contract,  and,
except as  specifically  set forth  herein,  the  rights  and  interests  of the
Executive herein may not be sold, transferred, assigned, pledged or hypothecated
by any party  without the prior written  consent of the others.  As used herein,
the term  "successor"  as it  relates to  Holdings,  shall  include,  but not be
limited  to, any  successor  by way of merger,  consolidation  or sale of all or
substantially all of such Person's assets or equity interests.

      6.10  Representation by Counsel; Independent Judgment. Each of the parties
hereto  acknowledges  that (a)it or the Executive has read this Agreement in its
entirety and understands all of its terms and conditions, (b)it or the Executive
has  had  the  opportunity  to  consult  with  any  individuals  of  its  or the
Executive's choice regarding its or the Executive's  agreement to the provisions
contained herein,  including legal counsel of its or the Executive's choice, and
any decision not to was the  Executive's or its alone and (c)it or the Executive
is entering into this Agreement of its or the Executive's own free will, without
coercion  from any source,  based upon its or the  Executive's  own  independent
judgment.

      6.11  Interpretation.  The  parties  and their  respective  legal  counsel
actively participated in the negotiation and drafting of this Agreement,  and in
the event of any ambiguity or mistake  herein,  or any dispute among the parties
with respect to the provisions  hereto,  no provision of this Agreement shall be
construed  unfavorably  against  any  of the  parties  on the  ground  that  the
Executive, it, or the Executive's or its counsel was the drafter thereof.

      6.12  Survival.  The  applicable  provisions of Sections 4, 5 and 6 hereof
shall survive the termination of this Agreement.

      6.13  Notices.  All  notices  and  communications  hereunder  shall  be in
writing and shall be deemed properly given and effective when received,  if sent
by facsimile or telecopy, or by postage prepaid by registered or certified mail,
return receipt  requested,  or by other delivery service which provides evidence
of delivery, as follows:

      If to Holdings or Holdings, to:

                 Bauble Holdings Corp.
                 2400 W. Central Rd.
                 Hoffman Estates, IL 60192
                 Attention:  General Counsel

                                       19
<PAGE>

      with a copy (which shall not constitute notice) to:

                 Morgan Lewis & Bockius
                 101 Park Avenue
                 New York, NY  10178
                 Attention:  Gary Rothstein, Esq.
                 Telephone:  (212) 309-6360
                 Facsimile:  (212) 309-6001
                 E-mail:  grothstein@morganlewis.com

      If to the Executive, to:

                 Eugene S. Kahn
                 at the address most recently on file in the records of Holdings

or to such other  address as one party may provide in writing to the other party
from time to time.

      6.14  No Conflicts. The Executive represents and warrants to Holdings that
his acceptance of employment and the performance of his duties for Holdings will
not conflict with or result in a violation or breach of, or constitute a default
under any contract,  agreement or understanding to which he is or was a party or
of which he is aware and that there are no restrictions,  covenants,  agreements
or  limitations  on his right or ability to enter into and  perform the terms of
this Agreement.

      6.15  Counterparts.  This  Agreement  may  be  executed  in  one  or  more
counterparts,  each of  which  shall  be  deemed  an  original  and all of which
together shall constitute one and the same instrument. Facsimile transmission of
any  signed  original   document  or  retransmission  of  any  signed  facsimile
transmission will be deemed the same as delivery of an original.  At the request
of any party,  the parties  will  confirm  facsimile  transmission  by signing a
duplicate original document.

      6.16  Captions.  Paragraph headings are for convenience only and shall not
be considered a part of this Agreement.

      6.17  No Third Party Beneficiary  Rights.  Except as otherwise provided in
this Agreement,  no entity shall have any right to enforce any provision of this
Agreement, even if indirectly benefited by it.

      6.18  Withholdings.  Any payments provided for hereunder shall be paid net
of any applicable  withholdings  required under Federal,  state or local law and
any additional withholdings to which Executive has agreed.

      6.19  No Mitigation.  In the event of any  termination of the  Executive's
employment  hereunder,  the Executive shall be under no obligation to seek other
employment  or  otherwise  mitigate  the  obligations  of  Holdings  under  this
Agreement.

                                       20
<PAGE>

      IN  WITNESS  WHEREOF,  the  parties  have duly  executed  this  Agreement,
intending it as a document  under seal,  to be effective  for all purposes as of
the Closing Date.

                                            BAUBLE HOLDINGS CORP.

                                            By: /s/ Peter P. Copses
                                                --------------------------------
                                            Name: Peter P. Copses
                                            Title: President

                                            EXECUTIVE

                                            /s/ Eugene S. Kahn
                                            ------------------------------------
                                            Name:  Eugene S. Kahn

                                       22
<PAGE>

                                                                       Exhibit A

                                  CLAIRE'S INC.
                              STOCK INCENTIVE PLAN

Section 1. Purpose

      The Plan authorizes the Committee to provide employees or directors of the
Company  or  its  subsidiaries,  who  are in a  position  to  contribute  to the
long-term success of the Company or its subsidiaries,  with Shares or Options to
acquire Shares in the Company.  The Company believes that this incentive program
will cause those  individuals  to increase  their interest in the welfare of the
Company and its  subsidiaries,  and aid in attracting,  retaining and motivating
individuals of outstanding ability.

Section 2.  Definitions

      Capitalized  terms used herein  shall have the  meanings set forth in this
Section.

      (a)   "Affiliate" of any specified Person means any other Person,  whether
            now or hereafter  existing,  directly or indirectly  controlling  or
            controlled by, or under direct or indirect common control with, such
            specified Person.  For purposes hereof,  "control" or any other form
            thereof,  when used with  respect to any Person,  means the power to
            direct the  management  and  policies  of such  Person,  directly or
            indirectly,  whether through the ownership of voting securities,  by
            contract or otherwise;  and the terms "controlling" and "controlled"
            shall have meanings correlative to the foregoing.

      (b)   "Claire's  Investor"  shall mean any of Apollo  Investment  Fund VI,
            L.P., Apollo Investors Claire's A LLC, and Apollo Investors Claire's
            B LLC, and each of their successors or assigns.

      (c)   "Board" means the Board of Directors of the Company.

      (d)   "Cause"  shall have the meaning  ascribed  thereto in any  effective
            employment  agreement  between the Company or  subsidiaries  and the
            Grantee, or if no employment  agreement is in effect that contains a
            definition  of  cause,  then  Cause  shall  mean  a  finding  by the
            Committee  that the  Grantee  has (i)  committed a felony or a crime
            involving  moral   turpitude,   (ii)  committed  any  act  of  gross
            negligence  or  fraud,   (iii)  failed,   refused  or  neglected  to
            substantially perform his duties (other than by reason of a physical
            or mental  impairment) or to implement the reasonable  directives of
            the Company  (which,  if curable,  is not cured within 30 days after
            notice  thereof to the Grantee by the  Committee),  (iv)  materially
            violated any policy of the Company (which, if curable,  is not cured
            within  30  days  after  notice   thereof  to  the  Grantee  by  the
            Committee),  or (v) engaged in conduct that is materially  injurious
            to the Company, monetarily or otherwise.

                                       1
<PAGE>

      (e)   "Committee"  shall  mean the  Compensation  Committee  of the Board,
            unless a different committee is appointed by the Board to administer
            the Plan.

      (f)   "Company"  shall mean Claire's Inc., a corporation  organized  under
            the laws of the State of Delaware.

      (g)   "Disability"   shall  have  the  meaning  ascribed  thereto  in  any
            effective  employment agreement between the Company and the Grantee,
            or  if  no  employment  agreement  is  in  effect  that  contains  a
            definition of disability, then Disability shall mean any physical or
            mental  incapacitation  which  results in a Grantee's  inability  to
            perform his duties and responsibilities  hereunder, as determined by
            the  Committee  in its good  faith  judgment,  for a  period  of 180
            consecutive days.

      (h)   "Employee"  shall mean any individual that is providing  services to
            the Company or any of its subsidiaries as an employee or director.

      (i)   "Grant Letter" shall mean a letter,  certificate or other  agreement
            accepted by the Grantee, evidencing the grant of an Option hereunder
            and containing such terms and conditions,  not inconsistent with the
            express provisions of the Plan, as the Committee shall approve.

      (j)   "Grantee" shall mean an Employee granted an Option under the Plan.

      (k)   "ISO"  shall  mean any  Option or  portion  thereof  that  meets the
            requirements  of an incentive  stock option under Section 422 of the
            Internal  Revenue  Code  of  1986,  and  that is  designated  by the
            Committee to be an ISO.

      (l)   "Nonqualified  Option" shall mean any Option or portion thereof that
            is not an ISO.

      (m)   "Options"  shall  refer to options  issued  under and subject to the
            Plan.

      (n)   "Person" means any  individual,  corporation,  partnership,  limited
            liability  company,  joint  venture,  association,  business  trust,
            joint-stock company,  estate,  trust,  unincorporated  organization,
            government or other agency or political  subdivision  thereof or any
            other legal or commercial entity.

      (o)   "Plan" shall mean this Stock  Incentive Plan as set forth herein and
            as amended from time to time.

      (p)   "Qualified  IPO" means a sale by the Company of Shares in an initial
            underwritten (firm commitment) public offering  registered under the
            Securities  Act of 1933,  with gross  proceeds to the Company of not
            less than $300 million,  resulting in the listing of the Shares on a
            nationally  recognized stock exchange,  including without limitation
            the Nasdaq Stock Market.

                                       2
<PAGE>
      (q)   "Share" shall mean a share of common stock of the Company, or of any
            class of  security,  if any,  into  which such  common  stock may be
            converted or for which such common stock may be exchanged.

      (r)   "Specified Conduct" means a Grantee's (i) unauthorized disclosure of
            confidential  information relating to the Company or its Affiliates,
            (ii)  engaging,  directly or  indirectly,  as an employee,  partner,
            consultant,  director,  stockholder, owner, or agent in any business
            that is competitive with the businesses conducted by the Company and
            its Affiliates at the time of  termination of Grantee's  employment,
            (iii)  soliciting or inducing,  directly or indirectly,  any former,
            present  or  prospective  customer  or client of the  Company or its
            Affiliates  to purchase  any  services  or  products  offered by the
            Company or its Affiliates  from any Person other than the Company or
            its  Affiliates,  or  (iv)  hiring,  directly  or  indirectly,   any
            individual  who was an  employee  of the  Company or its  Affiliates
            within  the six  month  period  prior to  termination  of  Grantee's
            employment, or soliciting or inducing,  directly or indirectly,  any
            such  individual to terminate his or her employment with the Company
            or its Affiliates.

Section 3.  Shares Available under the Plan

      Subject to the  provisions  of Section 7, the total  number of Shares that
may be issued under the Plan shall not exceed 6,160,300.  If, prior to exercise,
any awards are forfeited,  lapse or terminate for any reason without issuance of
Shares,  the Shares  covered  thereby may again be available  for Option  grants
under the Plan.

Section 4.  Administration of the Plan

      (a)  Authority of the  Committee.  The Plan shall be  administered  by the
Committee.  The  Committee  shall  have  full and  final  authority  to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:

            (i) to  select  the  Employees  to whom  Options  or  Shares  may be
      granted;

            (ii) to  determine  the  number of Shares  awarded  or subject to an
      Option;

            (iii) to determine the terms and  conditions of any Shares or Option
      granted  under  the  Plan,  including  the  purchase  or  exercise  price,
      conditions relating to exercise, and termination of the right to exercise;

            (iv)  to  determine  whether  any  Option  shall  be  an  ISO  or  a
      Nonqualified Option;

            (v) to  determine  the  restrictions  or  conditions  related to the
      delivery, holding and disposition of Shares;

            (vi) to prescribe the form of each Grant Letter;

                                       3
<PAGE>

            (vii) to adopt,  amend,  suspend,  waive and rescind  such rules and
      regulations and appoint such agents as the Committee may deem necessary or
      advisable to administer the Plan;

            (viii) to correct any defect or supply any omission or reconcile any
      inconsistency  in the Plan and to construe and  interpret the Plan and any
      Option or award of Shares, or Grant Letter or other instrument  hereunder;
      and

            (ix)  to make  all  other  decisions  and  determinations  as may be
      required  under  the  terms  of the  Plan  or as the  Committee  may  deem
      necessary or advisable for the administration of the Plan.

      (b) Manner of Exercise of Committee Authority. Any action of the Committee
with respect to the Plan shall be final,  conclusive and binding on all Persons,
including the Company,  its  Affiliates,  Grantees,  or any Person  claiming any
rights  under the Plan from or  through  any  Grantee,  except to the extent the
Committee may subsequently  modify,  or take further action not consistent with,
its prior action.  If not specified in the Plan, the time at which the Committee
must or may make any determination shall be determined by the Committee, and any
such  determination  may  thereafter be modified by the  Committee.  The express
grant of any specific  power to the  Committee,  and the taking of any action by
the Committee,  shall not be construed as limiting any power or authority of the
Committee.  The Committee may delegate to officers or managers of the Company or
any  Affiliate  of the  Company  the  authority,  subject  to such  terms as the
Committee  shall  determine,  to perform  such  functions as the  Committee  may
determine, to the extent permitted under applicable law.

      (c)  Limitation  of  Liability.  Each  member  of the  Committee  shall be
entitled  to, in good  faith,  rely or act upon any report or other  information
furnished  to him by any officer or other  employee of the Company or any of its
Affiliates,  the  Company's  independent  certified  public  accountants  or any
executive compensation consultant,  legal counsel or other professional retained
by the  Company  to assist in the  administration  of the Plan.  To the  fullest
extent permitted by applicable law, no member of the Committee,  nor any officer
or  employee  of the  Company  acting  on  behalf  of the  Committee,  shall  be
personally liable for any action,  determination or interpretation taken or made
in good faith with respect to the Plan, and all members of the Committee and any
officer or  employee of the Company  acting on its behalf  shall,  to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action, determination or interpretation.

Section 5.  Option Termination.

      Unless  otherwise  determined  by the  Committee  and set forth in a Grant
Letter, Options shall terminate on the earliest of:

            (a) the 91st day  following  the date the  Grantee  ceases  to be an
      Employee for any reason  (except if such  cessation is on account of death
      or Disability, the 181st day following such cessation); provided, however,
      that (i) in all cases the portion of any Option that did not vest prior to
      or upon the date of termination of employment or

                                       4
<PAGE>

      engagement  for  any  reason  shall   terminate   immediately   upon  such
      termination, and (ii) if such termination is for Cause, the vested portion
      shall terminate as well;

            (b) the seventh anniversary of the date of grant as set forth in the
      Grant Letter; and

            (c) cancellation,  termination or expiration of the Options pursuant
      to action taken by the Committee in accordance with Section 7.

Section 6.  Exercise of Options

            (a) Only the  vested  portion  of any  Option  may be  exercised.  A
      Grantee  shall  exercise an Option by  delivery  of written  notice to the
      Company  setting  forth the  number of Shares  with  respect  to which the
      Option is to be exercised,  together with cash, a certified  check or bank
      draft  payable to the order of the Company,  in amount equal to the sum of
      the  exercise  price for such Shares and any  withholding  tax  obligation
      arising in connection  with such exercise.  The Committee may, in its sole
      discretion,  permit  other  forms  of  payment,  including  notes or other
      contractual obligations of a Grantee to make payment on a deferred basis.

            (b) Before the  Company  issues any Shares to a Grantee  pursuant to
      the  exercise of an Option,  the  Company  shall have the right to require
      that the  Grantee  make  such  provision,  or  furnish  the  Company  such
      authorization,  necessary or desirable so that the Company may satisfy its
      obligation under applicable tax laws to withhold for income or other taxes
      due  upon or  incident  to  such  exercise.  The  Committee,  may,  in its
      discretion, permit such withholding obligation to be satisfied through the
      withholding  of Shares that would  otherwise be delivered upon exercise of
      the Option.

            (c) As a  condition  to the grant of an Option  or  delivery  of any
      Shares  upon  exercise of an Option,  the Company  shall have the right to
      require that the Grantee become party to any  stockholders  agreement then
      in effect.

Section 7.  Adjustment Upon Changes in Capitalization

      In  the  event   any   recapitalization,   forward   or   reverse   split,
reorganization,   merger,  consolidation,   spin-off,  combination,  repurchase,
exchange or issuance of Shares or other securities,  any stock dividend or other
special and nonrecurring  dividend or distribution (whether in the form of cash,
securities  or other  property),  liquidation,  dissolution,  or  other  similar
transactions or events,  affects the Shares,  then the Committee shall make such
equitable  adjustment as it determines in its discretion is appropriate in order
to prevent  dilution or  enlargement  of the rights of Grantees  under the Plan,
including adjustment in (i) the number and kind of Shares deemed to be available
thereafter  for grants of Options or Shares under Section 3, (ii) the number and
kind of Shares that may be delivered or  deliverable  in respect of  outstanding
Options, and (iii) the exercise price. In addition,  the Committee is authorized
to make  such  adjustments  as it  shall in its sole  discretion  determine  are
appropriate  in the terms and  conditions  of,  and the  criteria  included  in,
Options and Shares (including,  without  limitation,  cancellation of Options in
exchange for the  in-the-money  value,  if any, of the vested  portion  thereof,
cancellation of unvested and/or  out-of-the-money  Options for no consideration,
substitution of

                                       5
<PAGE>

Options using  securities of a successor or other  entity,  acceleration  of the
time that Options expire, or adjustment of performance  targets or the manner in
which they are  calculated)  in recognition  of unusual or  nonrecurring  events
(including,  without  limitation,  an event described in the preceding sentence)
affecting  the  Company,  the Claire's  Investors or any other  Affiliate of the
Company or the financial  statements of the Company,  the Claire's  Investors or
any  Affiliate of the  Company,  or in response to changes in  applicable  laws,
regulations or accounting principles.

Section 8.  Restrictions/Rights on Shares.

      (a)  Restrictions  on  Issuing  Shares.  No  Shares  shall  be  issued  or
transferred to an Employee under the Plan unless and until all applicable  legal
requirements  have been complied with to the satisfaction of the Committee.  The
Committee  shall have the right to condition  the  acquisition  of Shares on the
Grantee's  undertaking  in  writing  to  comply  with such  restrictions  on any
subsequent  disposition  of the Shares issued or  transferred  thereunder as the
Committee  shall deem necessary or advisable as a result of any applicable  law,
regulation, official interpretation thereof, or any underwriting agreement.

      (b) ISO Notice.  A Grantee shall notify the Company of any  disposition of
Shares  acquired upon exercise of an ISO if such  disposition  occurs within one
year of the date of such  exercise  or within  two years of the date of grant of
such ISO.  The  Company  may impose  such  procedures  as it  determines  may be
necessary to ensure that such notification is made.

      (c) Transfer Restrictions.  Except for transfers made pursuant to Sections
8(d) or (e) below,  Shares  issued to a Grantee  pursuant to the Plan may not be
sold, pledged,  encumbered or otherwise  transferred,  other than by the laws of
decent and  distribution  (but such Shares shall in any event remain  subject to
the terms of the Plan and Grant Certificate).

      (d) Repurchase Right.  Unless otherwise  determined in a Grant Letter, the
Company shall have the right (but not the  obligation)  to repurchase any or all
of the Shares acquired upon exercise of the Options upon a Grantee's  ceasing to
be an Employee for any reason.  Such right shall be  exercisable  by the Company
during the one year period  following the later of the date of such cessation or
the date the Option is exercised.  The price per Share to be paid by the Company
should it choose to exercise  its  repurchase  right shall equal the fair market
value per share, as determined by the Board in good faith; provided, however, if
the Shares are to be repurchased following a termination for Cause, or if, prior
to such repurchase the Grantee engages in Specified Conduct,  then the price per
Share to be paid by the Company shall not exceed the price per Share paid by the
Grantee,  less any  distributions  paid in respect of such Share.  The price per
Share to be paid by the  Company  should it choose to  exercise  its  repurchase
right shall be paid in cash or by plain check against  delivery of  certificates
representing the repurchased Shares; provided that, if such payment would result
in a default or breach on the part of the  Company or any  subsidiary  under any
loan or other agreement, then payment shall be deferred until the first business
day that it may occur  without any such default or breach  existing or resulting
(and  such  deferral  shall  be  credited  with a  market  rate of  interest  as
determined by the Committee),  provided,  further that if such payment cannot be
made within two years of the date of such  repurchase,  the Grantee may elect to
cancel such repurchase and

                                       6
<PAGE>

receive a return of the repurchased  Shares.  The Company may offset against the
payment of the  repurchase  price any amounts owed by the Grantee to the Company
or any Affiliate of the Company.  Should the Company  choose not to exercise its
repurchase  right, or is otherwise  prohibited by law or contract from doing so,
any Claire's  Investor or its controlling  Affiliates may exercise such right as
if it were the Company.

      (e) Drag-Along Right. If one or more Claire's  Investors notifies a holder
of  Shares  issued  under  the  Plan  that it or  they  desires  to sell  Shares
representing  at least a majority of the  outstanding  Shares of the Company and
specifies the terms and conditions of such proposed  transfer,  then such holder
shall take all  necessary  and desirable  actions  reasonably  requested by such
Claire's  Investors in connection with the consummation of such sale, and within
ten (10)  business  days of the receipt of such notice (or such longer period of
time as such  Claire's  Investors  shall  designate  in such notice) such holder
shall  cause a pro  rata  number  of his  Shares  to be  sold to the  designated
purchaser on the same terms and conditions for the same per share  consideration
and at the same time as the Shares  being sold by such  Claire's  Investors.  In
furtherance,  and not in limitation, of the foregoing, in connection with such a
sale, such holder will, (i) consent to and raise no objections  against the sale
or the process  pursuant to which it was  arranged,  (ii) waive any  dissenter's
rights and other similar rights and (iii) execute all documents  containing such
terms and conditions as those executed by such Claire's Investors as directed by
such Claire's Investors.

      (f) Tag-Along  Right.  If one or more Claire's  Investors  desires to sell
Shares representing at least a majority of the outstanding Shares of the Company
(disregarding  any sale to Affiliates of such  Claire's  Investor),  the Company
shall  notify a holder of Shares in  writing.  After  such  notice,  a holder of
Shares issued under the Plan may, but is not  obligated  to, by written  notice,
request that such Claire's Investor cause such designated  purchaser to purchase
on the same terms and conditions as are  applicable to such Claire's  Investor's
Shares,  the number of such holder's Shares to be sold, which as a percentage of
such Holder's Shares shall not exceed the percentage of such Claire's Investor's
Shares to be sold.  The  Company  shall cause such  Claire's  Investor to agree,
within ten (10)  business  days of the  receipt of such  notice (or such  longer
period of time as such  Claire's  Investor  shall  designate  in such notice) to
cause such holder's  Shares to be purchased by the  designated  purchaser on the
same terms and conditions for the same per share  consideration  and at the same
time as the sale of the Claire's  Investor's Shares. In furtherance,  and not in
limitation,  of the foregoing, in connection with such a sale, such holder will,
(i) consent to and raise no objections  against the sale or the process pursuant
to which it was arranged,  (ii) waive any  dissenter's  rights and other similar
rights and (iii) execute all documents  containing  such terms and conditions as
those executed by such Claire's Investor as directed by such Claire's Investor.

      (g) Voting. Each holder of Shares issued under the Plan shall be deemed to
have  irrevocably  appointed  Apollo  Management  VI,  L.P. on behalf of certain
affiliated co-investment partnerships (with full power of substitution), as such
holder's proxy and  attorney-in-fact  (in such capacity,  the "Proxy Holder") to
vote and give or  withhold  consent,  with  respect to all  Shares  held by such
stockholder at any time, for all matters subject to the vote of such holder from
time to time in such manner as the Proxy Holder shall  determine in its sole and
absolute  discretion,  whether at any  meeting  (whether  annual or special  and
whether or not an adjourned meeting) of

                                       7
<PAGE>

the Company or by written consent or otherwise, giving and granting to the Proxy
Holder all powers such holder  would  possess if  personally  present and hereby
ratifying and confirming all that the Proxy Holder shall lawfully do or cause to
be done by virtue  hereof.  The Proxy Holder shall not have any liability to any
holder of  Shares as a result of any  action  taken or  failure  to take  action
pursuant to the foregoing  proxy except for any action or failure to take action
not taken or omitted in good faith or which involves intentional misconduct or a
knowing  violation of applicable law. The Company  acknowledges  the validity of
the foregoing irrevocable proxy, and agrees to recognize the Proxy Holder as the
sole attorney and proxy for each such holder of Shares at all times.

      (g) Qualified  IPO. The rights and  restrictions  contained in subsections
(d), (e) and (f) above shall lapse upon a Qualified IPO, and the restrictions in
paragraph (c) shall lapse on the first anniversary of a Qualified IPO; provided,
however,  that unless otherwise determined by the Committee,  each Grantee shall
enter into such  standstill  agreements  and related  agreements as the managing
underwriters of such Qualified IPO may request.

      (h) Certificates for Shares. Shares issued under the Plan may be evidenced
in such manner as the Committee shall  determine.  If certificates  representing
Shares are registered in the name of a Grantee,  such  certificates  may bear an
appropriate  legend  referring  to  the  terms,  conditions,   and  restrictions
applicable to such Shares, and the Company may retain physical possession of the
certificates,  in which case the Grantee  shall be required to have  delivered a
power of transfer to the Company, endorsed in blank, relating to the Shares.

      (i) Third Party  Beneficiaries  Rights.  The Claire's  Investors and their
Affiliates shall be third party beneficiaries under subsections (d) and (e), and
Apollo  Management VI, L.P. shall be a third party  beneficiary under subsection
(g), and they each shall be entitled to enforce  their rights  thereunder  as to
any Grantee.

Section 9.  General Provisions

      (a) Grant Letter.  Each award under the Plan shall be evidenced by a Grant
Letter.  The terms and  provisions of such Grant Letters may vary among Grantees
and among different awards granted to the same Grantee.

      (b) No Right to  Employment.  The grant of an award  under the Plan in any
year shall not give the Grantee any right to similar grants in future years, any
right to continue such Grantee's employment relationship with the Company or its
Affiliates,  or, with respect to an Option,  until the Option is  exercised  and
Shares are issued,  any rights as a  stockholder  of the  Company.  All Grantees
shall remain  subject to discharge to the same extent as if the Plan were not in
effect. For purposes of the Plan, a Grantee shall cease to be an Employee upon a
sale of any  subsidiary  of the Company that  employs or engages  such  Grantee,
unless the Grantee shall otherwise  continue to provide  services to the Company
or another subsidiary of the Company as an employee or director.

      (c) No Funding.  No Grantee,  and no beneficiary or other Persons claiming
under or through the Grantee,  shall have any right, title or interest by reason
of any award under the Plan

                                       8
<PAGE>

to any  particular  assets of the Company or Affiliates  of the Company,  or any
Shares  allocated  or  reserved  for the  purposes of the Plan or subject to any
Option  except  as set forth  herein.  The  Company  shall  not be  required  to
establish  any  fund  or  make  any  other   segregation  of  assets  to  assure
satisfaction of the Company's obligations under the Plan.

      (d) No Transfers. No Option may be sold, transferred, assigned, pledged or
otherwise  encumbered,  except by will or the laws of descent and  distribution,
and an Option shall be  exercisable  during the  Grantee's  lifetime only by the
Grantee.  Upon a  Grantee's  death,  the  estate  or other  beneficiary  of such
deceased  Grantee  shall be subject to all the terms and  conditions of the Plan
and Grant Letter,  including the provisions  relating to the  termination of the
right to exercise an Option.

      (e)  Governing  Law;  Jurisdiction.  The  Plan  shall be  governed  by and
construed in accordance  with the laws of the State of Illinois,  without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Illinois or any other jurisdiction) that would cause the application of
the laws of any  jurisdiction  other than the State of  Illinois,  except to the
extent  that the  Delaware  General  Corporation  Law applies as a result of the
Company being incorporated in the State of Delaware,  in which case the Delaware
General Corporation Law shall apply. Each Grantee, and each beneficiary or other
Person claiming under or through the Grantee by accepting the grant of an Option
consents to the  exclusive  jurisdiction  of any state or federal  court located
within the State of Illinois, agrees that all actions or proceedings relating to
the Plan shall be  litigated  in such  courts,  waives any  defense of forum non
conveniens,  and  agrees  to be bound by any final  and  nonappealable  judgment
rendered  thereby in  connection  with the Plan.  To the extent the Grantee is a
party to an  employment  agreement  with the Company or any of its  subsidiaries
that provides for binding arbitration of employment disputes,  then any disputes
between the Company and such Grantee  arising under the Plan shall be arbitrated
in accordance with the procedures set forth in such employment agreement.

Section 10. Amendment or Termination

      In addition to its authority  elsewhere in the Plan, the Committee may, at
any time,  amend or terminate the Plan or any Grant Letter;  provided,  however,
that, no such action shall adversely  affect the rights of Grantees with respect
to Options or other  awards  previously  granted  hereunder  or under such Grant
Letter.

                                       9
<PAGE>

                                                                       Exhibit B

                              BAUBLE HOLDINGS CORP.
                         c/o Apollo Management VI, L.P.
                          10250 Constellation Boulevard
                                   Suite 2900
                              Los Angeles, CA 90067

May 29, 2007

Eugene S. Kahn
2400 W. Central Rd.
Hoffman Estates, IL 60192

Re:   Grant of Stock Options

Dear Gene:

We are  pleased to inform  you that you have been  granted  options to  purchase
1,353,280  shares of common stock of Bauble Holdings Corp. (the  "Company").  As
further  described below, the options have varying features  relating to vesting
and are  denominated  as an  "Investment  Option",  a "Time  Option"  a  "Target
Performance Option" and a "Stretch  Performance  Option".  These options and are
collectively referred to as the "Options", and the Target Performance Option and
the Stretch Performance Option are collectively  referred to as the "Performance
Options". The Time Option and the Performance Options have been granted pursuant
to the Company's Stock Incentive Plan (the "Plan"), a copy of which is attached,
and are  subject  in all  respects  to the  provisions  of the  Plan,  except as
specifically  modified hereby.  The Investment Option has not been granted under
the Plan and shall have no effect on the  number of options  that may be awarded
under the Plan. However,  in all other respects,  the Investment Option shall be
treated as if it were awarded under the Plan,  and shall be subject to the terms
and conditions of the Plan, except as specifically modified hereby.  Capitalized
terms not otherwise defined in the text are defined in the Plan.

1.    Investment Option: The key terms of the Investment Option are as follows:

      (a)   Number of Shares. 100,000

      (b)   Exercise Price per Share. $10.00

      (c)   Vesting.  The  Investment  Option is fully  vested  and  immediately
            exercisable.

2.    Time Option: The key terms of the Time Option are as follows:

      (a)   Number of Shares. 477,440

<PAGE>

      (b)   Exercise Price per Share. $10.00

      (c)   Vesting.  The Time Option will vest and become  exercisable  in four
            equal  annual  installments  on May 29, 2008,  2009,  2010 and 2011,
            provided   that  the  Time  Option  will  become  fully  vested  and
            exercisable  immediately  prior to a "Change of Control" (as defined
            in the  Employment  Agreement  among you and the Company dated as of
            April 19, 2007 (the "Employment Agreement").

3.    Target Performance  Option: The key terms of the Target Performance Option
      are as follows:

      (a)   Number of Shares. 477,440

      (b)   Exercise Price per Share. $10.00

      (c)   Vesting.

            (i)   If on any  Measurement  Date,  the Value  Per Share  equals or
                  exceeds  the  Target  Stock  Price  (the  "Target  Performance
                  Goal"),  then (1) if such  Measurement  Date is other than the
                  date  of  a  Bauble  Investors  Liquidity  Event,  the  Target
                  Performance  Option  will vest and become  exercisable  in two
                  equal   annual   installments   on  each  of  the   first  two
                  anniversaries  of such  Measurement  Date,  provided that if a
                  Change of Control occurs after any such Measurement  Date, any
                  unvested  installment  shall become  fully vested  immediately
                  prior to the Change of  Control,  and (2) if such  Measurement
                  Date is the date of a Bauble  Investors  Liquidity  Event, the
                  Target   Performance  Option  will  become  fully  vested  and
                  immediately exercisable at such time.

            (ii)  If, on any  Measurement  Date prior to a  Qualified  IPO,  the
                  Target  Performance Goal would be satisfied by disregarding in
                  the  calculation  of Net Equity Value,  some portion,  but not
                  all,  of your  Target  Performance  Option as well as  similar
                  target performance options granted to other employees,  then a
                  portion of your  Target  Performance  Option  shall  vest,  as
                  determined  by the Option  Committee  in a fair and  equitable
                  manner.

      (d)   Definitions.  For purposes of both the Target Performance Option and
            the Stretch Performance Option:

            (i)   "Bauble  Investors  Liquidity  Event"  means  any  transaction
                  (including,  without limitation,  a stock sale,  redemption or
                  buy back,  merger,  consolidation  or  otherwise)  immediately
                  following which all of the Shares held by all Bauble Investors
                  have been exchanged for or converted into  consideration,  all
                  or  substantially  all of which  consists  of cash or  readily
                  marketable securities that

                                       2
<PAGE>

                  the  Bauble  Investors  can  immediately  resell  for  cash at
                  prevailing quoted prices without legal,  contractual or market
                  restrictions.

            (ii)  "Fully Diluted  Shares" means,  on any  Measurement  Date, the
                  number  of  Shares  outstanding,  plus the  number  of  Shares
                  subject to all  outstanding  options,  warrants  and rights to
                  acquire Shares, whether or not exercisable.

            (iii) "Measurement  Date"  means (1) prior to a Qualified  IPO,  the
                  last day of any fiscal quarter,  starting with the last day of
                  the  eight  full  fiscal  quarter  after  May  29,  2007,  (2)
                  following a Qualified IPO, each trading day, starting with the
                  90th trading day following the Qualified  IPO, or (3) the date
                  of a Bauble Investors Liquidity Event, whether before or after
                  a Qualified IPO.

            (iv)  "Net Equity  Value" means (1) 8.5  multiplied by the Company's
                  consolidated   earnings,   before   interest,   income  taxes,
                  depreciation and  amortization  ("EBITDA") for the four fiscal
                  quarters  ending upon a Measurement  Date, plus (2) the sum of
                  cash, cash  equivalents,  and the aggregate  exercise price of
                  all  outstanding  options  or  warrants  to  purchase  Shares,
                  whether or not exercisable, in each case as of the Measurement
                  Date, less (3) debt as of the Measurement Date.  EBITDA,  cash
                  and debt shall be determined by the Option  Committee based on
                  the Company's financial statements for such period, subject to
                  such   adjustments  to  reflect   unusual,   nonrecurring   or
                  extraordinary  events  as  the  Option  Committee  shall  deem
                  equitable and appropriate.

            (v)   "Stretch  Target Stock Price" means $10.00,  accumulated at an
                  effective  annual  rate  of  32%  from  May  29,  2007  to the
                  Measurement  Date,  provided that the Option  Committee  shall
                  make such  adjustment to the Stretch  Target Stock Price as it
                  reasonably  determines is equitable and appropriate to reflect
                  changes to the outstanding  Shares or capital structure of the
                  Company, including contributions and distributions of capital.

            (vi)  "Target Stock Price" means $10.00, accumulated at an effective
                  annual  rate of  22.5%  from May 29,  2007 to the  Measurement
                  Date,  provided  that the  Option  Committee  shall  make such
                  adjustment   to  the  Target  Stock  Price  as  it  reasonably
                  determines is equitable and  appropriate to reflect changes to
                  the  outstanding  Shares or capital  structure of the Company,
                  including contributions and distributions of capital.

            (vii) "Value Per Share" means (1) prior to a Qualified  IPO, the Net
                  Equity  Value  divided  by  the  Fully  Diluted  Shares,   (2)
                  following a Qualified  IPO,  the  average  closing  price of a
                  Share for the period

                                       3
<PAGE>

                  of 90 consecutive trading days ending on the Measurement Date,
                  or (3) upon a Bauble Investors  Liquidity Event, the price per
                  Share realized by the Bauble Investors.

4.    Stretch  Performance  Option:  The key  terms of the  Stretch  Performance
      Option are as follows:

      (a)   Number of Shares. 298,400

      (b)   Exercise Price per Share. $10.00

      (c)   Vesting.

            (i)   If on any  Measurement  Date,  the Value  Per Share  equals or
                  exceeds the  Stretch  Stock  Price (the  "Stretch  Performance
                  Goal"),  then (1) if such  Measurement  Date is other than the
                  date  of a  Bauble  Investors  Liquidity  Event,  the  Stretch
                  Performance  Option  will vest and become  exercisable  in two
                  equal   annual   installments   on  each  of  the   first  two
                  anniversaries  of such  Measurement  Date,  provided that if a
                  Change of Control occurs after any such Measurement  Date, any
                  unvested  installment  shall become  fully vested  immediately
                  prior to the Change of  Control,  and (2) if such  Measurement
                  Date is the date of a Bauble  Investors  Liquidity  Event, the
                  Stretch  Performance  Option  will  become  fully  vested  and
                  immediately exercisable at such time.

            (ii)  If, on any  Measurement  Date prior to a  Qualified  IPO,  the
                  Stretch Performance Goal would be satisfied by disregarding in
                  the  calculation  of Net Equity Value,  some portion,  but not
                  all,  of your  Stretch  Performance  Option as well as similar
                  stretch performance options granted to other employees, then a
                  portion of your  Stretch  Performance  Option  shall vest,  as
                  determined  by the Option  Committee  in a fair and  equitable
                  manner.

5.    Termination  of the Options.  The Options shall  terminate on the earliest
      of:

      (a)   immediately upon termination of your employment if for Cause;

      (b)   immediately upon termination of your employment for any reason as to
            the  portion  of any  Option  that did not vest prior to or upon the
            date of such termination;

      (c)   the 91st day following the date of termination  of your  employment,
            other than for Cause,  death,  Total  Disability (as defined in your
            Employment  Agreement) or other than under  circumstances  entitling
            you to  severance  benefits  under  Section  4.3 of your  Employment
            Agreement;

                                       4
<PAGE>

      (d)   the 181st day following the date of termination  of your  employment
            under  circumstances  entitling  you  to  severance  benefits  under
            Section 4.3 of your Employment Agreement;

      (e)   the first  anniversary of the date of termination of your employment
            by reason of your death or Total Disability;

      (f)   as to  any  Performance  Option,  the  date  of a  Bauble  Investors
            Liquidity Event to the extent the Target Performance Goal or Stretch
            Performance  Goal, as  applicable,  is not achieved at such time, or
            was not previously achieved;

      (g)   the seventh anniversary of the date hereof; and

      (h)   cancellation,  termination or expiration of the Options  pursuant to
            action taken by the Option Committee in accordance with Section 7 of
            the Plan.

      Notwithstanding  the forgoing,  following a Change of Control,  paragraphs
      5(c), (d) and (e) above shall be inapplicable.

6.    Vesting  upon  Certain  Terminations.  As to  the  Time  Option  and  each
      Performance  Option where the applicable  Performance  Goal had previously
      been   achieved  (i)  each  such  Option  will  become  fully  vested  and
      exercisable upon termination of your employment by reason of your death or
      "Total Disability",  as defined in your Employment  Agreement,  and (ii) a
      portion  of each such  Option  will  become  vested and  exercisable  upon
      termination  of  your  employment  under  circumstances  entitling  you to
      severance  benefits under Section 4.3 of your Employment  Agreement,  such
      portion to equal the portion of each such Option that would have vested on
      the next  scheduled  vesting date had your  employment  not so terminated,
      multiplied  by a fraction,  the  numerator  of which is the number of days
      that  elapsed  from  the  most  recent  vesting  date to the  date of such
      termination, and the denominator of which is 365.

7.    Federal  Taxes:  The Options  granted to you are treated as  "nonqualified
      options" for federal tax purposes, which means that when you exercise, the
      excess of the value of the Shares  issued on  exercise  over the  exercise
      price  paid  for the  Shares  is  income  to you,  subject  to  wage-based
      withholding  and  reporting.  When  you  sell  the  Shares  acquired  upon
      exercise,  the excess (or  shortfall)  between the amount you receive upon
      the sale and the value of the shares at the time of exercise is treated as
      capital gain (or loss).  State and local taxes may also apply.  You should
      consult your personal tax advisor for more information  concerning the tax
      treatment of your Options.

We are  excited to give you this  opportunity  to share in our  future  success.
Please  indicate your  acceptance of this option grant and the terms of the Plan
by signing and returning a copy of this letter.

                                       5
<PAGE>

Sincerely,

BAUBLE HOLDINGS CORP.

By:/s/ Lance Milken
   -------------------------
Name: Lance Milken
Title: Secretary

Agreed to and Accepted by:

/s/ Eugene S. Kahn
   -------------------------
Eugene S. Kahn

                                       6
<PAGE>

                                                                       Exhibit C

                              BAUBLE HOLDINGS CORP.
                         c/o Apollo Management VI, L.P.
                          10250 Constellation Boulevard
                                   Suite 2900
                              Los Angeles, CA 90067

May 29, 2007

Eugene S. Kahn
2400 W. Central Rd.
Hoffman Estates, IL 60192

Re:   Acquisition of Shares

Dear Gene:

This will evidence our agreement, effective on May 29, 2007 (the "Effective
Date") relating to the purchase by you from Bauble Holdings Corp., a Delaware
corporation (the "Company"), of 100,000 shares of the Company's common stock
(the "Common Stock"), as well as the award by the Company to you of 75,000
shares of Common Stock, in each case on the terms and conditions set forth in
this letter agreement (the "Letter Agreement"). The shares of Common Stock so
purchased are hereinafter referred to as the "Purchased Shares" and the shares
of Common Stock so awarded are hereinafter referred to as the "Awarded Shares",
and collectively are referred to as the "Shares". Capitalized terms used below
and not otherwise defined in the text shall have the meaning set forth in
paragraph 7.

1.    Purchase Price. The purchase price per Purchased Share is $10.00, for a
      total of $1,000,000 payable by wire transfer to the Company on the
      Effective Date. The Awarded Shares shall be issued for no cost to you
      (other than in respect of taxes, as provided in paragraph 6 below).

2.    Vesting. All of the Purchased Shares will be treated as "Vested Shares" on
      the Effective Date. The Awarded Shares will be "Unvested Shares" and will
      become "Vested Shares" as to 25% of the total number of Shares on each of
      the first four anniversaries of the Effective Date, provided that all of
      the Unvested Shares will become Vested Shares upon a "Change of Control"
      (as defined in the Employment Agreement among you and the Company dated as
      of April 19, 2007 (the "Employment Agreement")), or upon termination of
      your employment by reason of your death or "Total Disability" as defined
      in your Employment Agreement. In addition, upon a termination of your
      employment under circumstances entitling you to severance benefits under
      Section 4.3 of your Employment Agreement, a number of Unvested Shares
      shall become Vested Shares as is equal to the number of Unvested Shares
      that would have become Vested Shares on the next scheduled vesting date
      had your employment not so

<PAGE>

      terminated, multiplied by a fraction, the numerator of which is the number
      of days that elapsed from the most recent vesting date to the date of such
      termination, and the denominator of which is 365.

3.    Forfeiture; Repurchase Right.

            (a) Upon termination of your employment with the Company and its
      Affiliates for any reason, all of your Unvested Shares shall immediately
      be forfeited to the Company for no consideration.

            (b) The Company shall have the right (but not the obligation) to
      repurchase any or all of your Vested Shares upon termination of your
      employment with the Company and its Affiliates for any reason. Such right
      shall be exercisable by the Company during the one year period following
      the date of such termination' unless prior to the Company's exercise of
      such right you have disposed of the Shares in accordance with the terms of
      this Letter Agreement. Notwithstanding the foregoing, this paragraph 3(b)
      shall not apply to any of the Purchased Shares.

            (c) The price per Share to be paid by the Company should it choose
      to exercise its repurchase right pursuant to paragraph 3(b) shall equal
      the Fair Market Value per Share; provided, however, that the price per
      Share to be paid by the Company shall equal the lower of the price per
      Share you paid to the Company (if any), less any distributions you
      received in respect of such Share, or the Fair Market Value per Share if
      the Shares are to be repurchased following termination of your employment
      for Cause, or are to be repurchased following your termination of
      employment for any reason, and prior to such repurchase you engage in
      "Specified Conduct". For these purposes "Specified Conduct" means (i) your
      unauthorized disclosure of confidential information relating to the
      Company or its Affiliates, (ii) your engaging, directly or indirectly, as
      an employee, partner, consultant, director, stockholder, owner, or agent
      in any business that is competitive with the businesses conducted by the
      Company and its Affiliates at the time of your termination of employment,
      (iii) your soliciting or inducing, directly or indirectly, any former,
      present or prospective customer or client of the Company or its Affiliates
      to purchase any services or products offered by the Company or its
      Affiliates from any Person other than the Company or its Affiliates, or
      (iv) your hiring, directly or indirectly, any individual who was an
      employee of the Company or its Affiliates within the six month period
      prior to your termination of employment, or your soliciting or inducing,
      directly or indirectly, any such individual to terminate his or her
      employment with the Company or its Affiliates.

            (d) The price per Share to be paid by the Company should it choose
      to exercise its repurchase right shall be made paid by cash or plain check
      against delivery of certificates representing the Shares repurchased by
      the Company. The Company may offset against the payment of the repurchase
      price any amounts owed by you to the Company or any Affiliate of

                                       2
<PAGE>

      the Company (including under the Note described in paragraph 6(c) below).
      In such case the amount owed will to the extent of the offset be treated
      as satisfied.

            (e) Should the Company choose not to exercise its repurchase right,
      or is prohibited by law or contract from doing so, each Bauble Investor or
      its controlling Affiliates may exercise such right as if it were the
      Company.

4.    Restrictions/Rights on Shares.

            (a) Drag-Along Right. If one or more Bauble Investors notifies you
      that it or they desire to sell shares of Common Stock representing at
      least a majority of the outstanding shares of Common Stock of the Company
      (disregarding any sale to Affiliates of such Bauble Investor) and
      specifies the terms and conditions of such proposed sale, then you shall
      take all necessary and desirable actions reasonably requested by such
      Bauble Investors in connection with the consummation of such sale, and
      within ten (10) business days of the receipt of such notice (or such
      longer period of time as such Bauble Investors shall designate in such
      notice) you shall cause a pro rata number of your Shares to be sold to the
      designated purchaser on the same terms and conditions for the same per
      share consideration and at the same time as the shares of Common Stock
      being sold by such Bauble Investors. In furtherance, and not in
      limitation, of the foregoing, in connection with such a sale, you will,
      (i) consent to and raise no objections against the sale or the process
      pursuant to which it was arranged, (ii) waive any dissenter's rights and
      other similar rights and (iii) execute all documents containing such terms
      and conditions as those executed by such Bauble Investors as directed by
      such Bauble Investors.

            (b) Tag-Along Right. If one or more Bauble Investors desires to sell
      shares of Common Stock representing at least a majority of the outstanding
      shares of Common Stock of the Company (disregarding any sale to Affiliates
      of such Bauble Investor), the Company shall notify you in writing of the
      impending sale. After such notice, you may, but are not obligated to, by
      written notice, request that such Bauble Investor cause such designated
      purchaser to purchase on the same terms and conditions as are applicable
      to such Bauble Investor's Shares, the number of your shares of Common
      Stock to be sold, which as a percentage of your shares of Common Stock
      shall not exceed the percentage of such Bauble Investor's Shares to be
      sold. The Company shall cause such Bauble Investor to agree, within ten
      (10) business days of the receipt of such notice (or such longer period of
      time as such Bauble Investor shall designate in such notice) to cause your
      shares of Common Stock to be purchased by the designated purchaser on the
      same terms and conditions for the same per share consideration and at the
      same time as the sale of the Bauble Investor's Shares. In furtherance, and
      not in limitation, of the foregoing, in connection with such a sale, you
      will, (i) consent to and raise no objections against the sale or the
      process pursuant to which it was arranged, (ii) waive any dissenter's
      rights and other similar rights and (iii) execute all documents containing
      such terms and conditions as those executed by such Bauble Investor as
      directed by such Bauble Investor.

                                       3
<PAGE>

            (c) Restrictions on Transfer. Except for transfers made pursuant to
      paragraphs 3, 4(a) and 4(b), the Shares may not be sold, pledged,
      encumbered or otherwise transferred, other than by the laws of decent and
      distribution (but the Shares shall in any event remain subject to the
      terms of this Letter Agreement).

            (d) Voting. You hereby irrevocably appoint Apollo Management VI,
      L.P. on behalf of certain affiliated co-investment partnerships (with full
      power of substitution), as your proxy and attorney-in-fact (in such
      capacity, the "Proxy Holder") to vote and give or withhold consent, with
      respect to all shares of Common Stock held by you at any time, for all
      matters subject to your vote from time to time in such manner as the Proxy
      Holder shall determine in its sole and absolute discretion, whether at any
      meeting (whether annual or special and whether or not an adjourned
      meeting) of the Company or by written consent or otherwise, giving and
      granting to the Proxy Holder all powers you would possess if personally
      present and hereby ratifying and confirming all that the Proxy Holder
      shall lawfully do or cause to be done by virtue hereof. The Proxy Holder
      shall not have any liability to you as a result of any action taken or
      failure to take action pursuant to the foregoing proxy except for any
      action or failure to take action not taken or omitted in good faith or
      which involves intentional misconduct or a knowing violation of applicable
      law. You hereby affirm that this irrevocable proxy is given in
      consideration for the mutual agreements contained in this Agreement and
      that this irrevocable proxy is coupled with an interest and may, under no
      circumstances, be revoked. The Company hereby acknowledges receipt of and
      the validity of the foregoing irrevocable proxy, and agrees to recognize
      the Proxy Holder as the sole attorney and proxy for you at all times. You
      intend that this irrevocable proxy is executed and intended to be
      irrevocable in accordance with the provisions of Section 212 of the
      Delaware General Corporation Law.

            (e) Qualified IPO. The restrictions and rights contained in
      paragraphs 3(b), 4(a), 4(b) and 4(d) shall lapse upon a Qualified IPO, and
      the restrictions contained in paragraph 4(c) shall lapse on the first
      anniversary of a Qualified IPO; provided, however, that paragraph 4(c)
      shall remain in effect with respect to Unvested Shares until they become
      Vested Shares; provided further, that unless otherwise determined by the
      Company, you shall enter into such standstill agreements and related
      agreements as the managing underwriters of such Qualified IPO may request.

            (f) Certificates for Shares. The Shares issued may be evidenced in
      such manner as the Company shall determine. If certificates representing
      the Shares are registered in your name, the certificates evidencing your
      Shares may bear an appropriate legend referring to the terms, conditions,
      and restrictions applicable to your Shares, and the Company may retain
      physical possession of the certificates, in which case you shall be
      required to have delivered a power of transfer to the Company, endorsed in
      blank, relating to your Shares.

5.    Representations.

                                       4
<PAGE>

            (a) Authority. You have the requisite power, authority and capacity
      to execute this Letter Agreement and to perform your obligations under
      this Letter Agreement and to consummate the transactions contemplated
      hereby, and your acceptance has been duly and validly executed and
      delivered by you and constitutes your legal, valid and binding obligation,
      enforceable against you in accordance with its terms, except to the extent
      that such validly binding effect and enforceability may be limited by
      applicable bankruptcy, reorganization, insolvency, moratorium and other
      laws relating to or affecting creditors' rights generally.

            (b) Shares Unregistered. You acknowledge that (i) the offer and
      sale, or grant of the Shares has not been registered under applicable
      securities laws; (ii) the Shares acquired by you must be held
      indefinitely; (iii) there is no established market for the Shares and it
      is not anticipated that there will be any such market for the Shares in
      the foreseeable future; (iv) you are acquiring the Shares for the purpose
      of investment and not with a view to, or for resale in connection with,
      the distribution thereof, and not with any present intention of
      distributing the Shares and you have no present plan or intention to sell
      any of the Shares; (v) either you are an "accredited investor" under Rule
      501(a) of the Securities Act of 1933, or your knowledge and experience in
      financial and business matters are such that you are capable of evaluating
      the merits and risks of your investment in the Shares; (vi) you and your
      representatives, including your professional, financial, tax and other
      advisors, if any, have carefully considered your proposed investment in
      the Shares, and you understand and have taken cognizance of (or have been
      advised by your representatives as to) the risk factors related to the
      acquisition of the Shares, and no representations or warranties have been
      made to you or your representatives concerning the Shares, the Company or
      the Company's business, operations, financial condition or prospects or
      other matters; (vii) in making your decision to purchase the Shares, you
      have relied upon independent investigations made by you and, to the extent
      believed by you to be appropriate, your representatives, including your
      professional, financial, tax and other advisors, if any; and (viii) you
      and your representatives have been given the opportunity to request to
      examine all documents of, and to ask questions of, and to receive answers
      from, the Company and its representatives concerning the terms and
      conditions of the acquisition of the Shares and to obtain any additional
      information which you or your representatives deem necessary.

            (c) Acknowledgement. You acknowledge: (i) that this award of the
      opportunity to purchase the Shares is a one-time benefit, which does not
      create any contractual or other right to receive future awards, or
      benefits in lieu of awards; (ii) that all determinations with respect to
      any such future awards, including, but not limited to, the times when
      awards shall be granted, the number of shares subject to each award, the
      exercise or purchase price, and the time or times when each award shall
      vest, will be at the sole discretion of the Company; (iii) that the
      purchase of the Shares shall not create a right to further employment with
      the Company and shall not interfere with the Company's or your ability to
      terminate your employment relationship at any time with or without cause;
      (iv) that your purchase the Shares is voluntary; and (v) that this award
      is not part of normal or expected compensation for

                                       5
<PAGE>

      purposes of calculating any severance, resignation, redundancy, end of
      service payments, bonuses, long-service awards, pension or retirement
      benefits or similar payments.

6.    Taxes on Awarded Shares.

            (a) Awarded Shares. Unless you file an election under Section 83(b)
      of the Internal Revenue Code of 1986, as amended (the "Code"), you will
      recognize income, taxable at ordinary income rates and subject to payroll
      tax withholding, on each date the Awarded Shares become Vested Shares in
      an amount equal to the fair market value of such Shares. However, if you
      timely file a Section 83(b) election, the date for measuring the amount of
      ordinary compensation income you must recognize is the Effective Date. In
      that case, the Company will take the position for all returns and reports
      it must file with the Internal Revenue Service (including your 2007 Form
      W-2) that the value of the Awarded Shares equals $750,000. To be
      effective, a Section 83(b) election must be filed with the Internal
      Revenue Service within 30 days of the Effective Date and attached to your
      2007 federal income tax return, and a copy of the election must be filed
      with the Company. However, if you forfeit the Shares, you will not be
      entitled to recover the taxes you paid. When you sell the Shares, you will
      recognize capital gain (or loss) equal to the difference between the
      amount realized on the sale, and your tax basis in the shares (which is
      the amount of ordinary compensation income previously recognized). Such
      gain (or loss) will be taxed as long term capital gain (or loss) if you
      held the shares for more than one year. Your holding period starts on the
      vesting dates, unless you make a Section 83(b) election, in which case the
      holding period will start on the Effective Date. A sample form of Section
      83(b) election is attached as Appendix I for your information. However, it
      is your responsibility to timely file such election. Because the Company
      is a privately held company, the determination of the fair market value of
      its shares is complicated. If the tax authorities determine that the fair
      market value should be calculated differently than the Company's
      calculation, you may have additional tax consequences. Tax laws change
      frequently and sometimes on a retroactive basis. You are advised to
      consult with your own tax or financial advisor, and should not rely on the
      Company's description of tax consequences above.

            (b) Withholding. The Company shall have the right to withhold from
      any amount payable or allocable to you such amounts as may be required in
      order for the Company to satisfy any withholding obligation that it may
      have under applicable law, and may condition the vesting of any Shares on
      your making arrangements necessary to enable the Company to satisfy any
      such withholding obligation.

            (c) Tax Loan. If you make a Section 83(b) election, upon the
      Company's receipt of its copy thereof, the Company will loan to you an
      amount equal to the federal, state and local taxes due by reason of such
      election (determined assuming you pay taxes at the highest applicable
      marginal rate), subject to your execution of (i) the Note attached as
      Appendix II, which will govern the repayment of such advance and the
      circumstances under which such

                                       6
<PAGE>

      repayment will be forgiven, and (ii) the Pledge Agreement attached as
      Appendix III, which will secure your repayment obligation to the Company.

7.    Definitions.

            (a) "Affiliate" means, with respect to any Person, any other Person
      that controls, is controlled by or is under common control with such
      Person. For the purposes of this definition, "control" (including, with
      its correlative meanings, the terms "controlled by" and "under common
      control with"), as used with respect to any Person, shall mean the
      possession, directly or indirectly, of the power to direct or cause the
      direction of the management and policies of such Person, whether through
      the ownership of securities, by contract or otherwise.

            (b) "Bauble Investor" shall mean any of Apollo Investment Fund VI,
      L.P., Apollo Investors Claire's A LLC, and Apollo Investors Claire's B
      LLC, and each of their successors or assigns.

            (c) "Cause" shall have the meaning ascribed thereto in the
      Employment Agreement.

            (d) "Fair Market Value" of the Shares on any given date shall be
      determined in good faith by the Board of Directors of the Company, taking
      into account such factors as the Board determines are appropriate.

            (e) "Person" means an individual, partnership, corporation, limited
      liability company or partnership, trust, unincorporated organization,
      joint venture, government (or agency or political subdivision thereof) or
      any other entity of any kind.

            (f) "Qualified IPO" means a sale by the Company of shares of Common
      Stock in an initial underwritten (firm commitment) public offering
      registered under the Securities Act of 1933, with gross proceeds to the
      Company of not less than $300 million, resulting in the listing of the
      common stock on a nationally recognized stock exchange, including without
      limitation the Nasdaq National Market System.

8.    Employee Data Privacy. As a condition of the award of this opportunity to
      purchase the Shares, you consent to the collection, use and transfer of
      personal data as described in this paragraph 8. You understand that the
      Company and its Affiliates hold certain personal information about you
      including, but not limited to, your name, home address and telephone
      number, date of birth, social security number, salary, nationality, job
      title, common shares or directorships held in the Company, details of all
      other entitlement to common shares awarded, cancelled, exercised, vested,
      unvested or outstanding in your favor, for the purpose of managing and
      administering the award of this opportunity to purchase Shares ("Data").
      You further understand that the Company and/or its Affiliates will
      transfer Data amongst themselves as necessary for the purposes of
      implementation, administration and

                                       7
<PAGE>

      management of this award, and that the Company and/or any of its
      Affiliates may each further transfer Data to any third parties assisting
      the Company in such implementation, administration and management. You
      authorize them to receive, possess, use, retain and transfer Data in
      electronic or other form, for the purposes of implementing, administering
      and managing the award of this opportunity to purchase Shares, including
      any requisite transfer of such Data as may be required for the
      administration of this award and/or the subsequent holding common shares
      on your behalf to a broker or other third party with whom the shares
      acquired on exercise may be deposited. You understand that he or she may,
      at any time, view the Data, require any necessary amendments to it or
      withdraw the consent herein in writing by contacting the local human
      resources representative.

9.    Third Party Beneficiaries Rights. The Bauble Investors and their
      Affiliates shall be third party beneficiaries under paragraphs 3(e) and
      4(a) above, and Apollo Management VI, L.P. shall be a third party
      beneficiary under paragraph 4(d), and they each shall be entitled to
      enforce their rights thereunder.

10.   Confidentiality. You agree not to disclose or discuss in any way the terms
      of this offer to or with anyone other than members of your immediate
      family, or your personal counsel or financial advisors (and you will
      advise such persons of the confidential nature of this offer).

11.   Governing Law. All questions concerning the construction, validity and
      interpretation of this Letter Agreement shall be governed and construed in
      accordance with the domestic laws of the State of Illinois, without giving
      effect to any choice of law or conflict of law provision or rule (whether
      of the State of Illinois or any other jurisdiction) that would cause the
      application of the laws of any jurisdiction other than the State of
      Illinois, except to the extent that laws of the Delaware apply as a result
      of the Company being incorporated in Delaware.

                                     * * * *

Sincerely,

BAUBLE HOLDINGS CORP.

By:/s/ Lance Milken
----------------------------
Name: Lance Milken
Title: Secretary

Agreed to and Accepted by:

/s/ Eugene S. Kahn
----------------------------
Eugene S. Kahn

                                       8Exhibit 10.8

                                                                  Execution Copy

                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT  AGREEMENT (the "Agreement") is entered as of 29 May 2007,
by and between Bauble Holdings Corp., a Delaware corporation  ("Holdings"),  and
Mark Smith (the "Executive").

      WHEREAS, upon the closing (the "Closing") of the transactions contemplated
by that  certain  Agreement  and Plan of Merger  dated as of March 20, 2007 (the
"Merger  Agreement"),  by and among Holdings,  Bauble  Acquisition  Sub, Inc., a
Florida  corporation  ("Merger  Sub")  and  Claire's  Stores,  Inc.,  a  Florida
corporation ("Claire's"),  Merger Sub will merge with and into the Claire's, and
Claire's shall become a wholly-owned subsidiary of Holdings (the "Acquisition");

      WHEREAS, Holdings desires to employ the Executive on the terms and subject
to the  conditions  set  forth  herein  and the  Executive  has  agreed to be so
employed.

      NOW,   THEREFORE,   in  consideration   of  the  mutual   representations,
warranties,  covenants and agreements  set forth herein,  and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  the  parties  hereto,  intending  to be legally  bound,  agree as
follows:

      1. Employment of Executive; Duties.

            1.1 Title.  During the  Employment  Period (as  defined in Section 2
hereof), the Executive shall serve as Managing Director Europe.

            1.2 Duties.

                  (a) During the Employment  Period,  the Executive shall do and
perform all services  and acts  necessary or advisable to fulfill the duties and
responsibilities  of the Executive's  position and shall render such services on
the terms set forth herein.  In addition,  the  Executive  shall have such other
executive and managerial  powers and duties as may reasonably be assigned to the
Executive by the Chief  Executive  Officer or the Board of Directors of Holdings
(the "Board"),  commensurate  with the Executive  serving as President,  Head of
European  Operations.  Holdings  may adjust the duties and  responsibilities  of
Executive as President, European Operations,  notwithstanding the specific title
set forth in Section 1.1 hereof,  based upon  Holdings  needs from time to time.
Except for sick leave,  reasonable  vacations and excused  leaves of absence and
reasonable  time outside of the Company's  normal working hours to attend to the
exisiting business  commitments  notified to Holdings' lawyers in writing at the
date hereof and  approved by  Holdings,  the  Executive  shall,  throughout  the
Employment Period,  devote the whole of the Executive's working time, attention,
knowledge and skills faithfully,  and to the best of the Executive's ability, to
the duties and  responsibilities of the Executive's  positions in furtherance of
the  business  affairs and  activities  of  Holdings  and its  subsidiaries  and
Affiliates (as defined in Section 5.4(a) hereof).

<PAGE>

                  (b) During the Employment  Period,  the Executive's  principal
place of employment shall be at Holdings UK head office in Birmingham.  Holdings
may require the Executive to work at any other reasonable location including any
other site within the United  Kingdom or Europe on a temporary  basis of no more
than four weeks as part of this Agreement.  The Executive  acknowledges  that as
part of the terms of his  employment  he will be  required  to  travel  globally
including but not limited to Europe, the United States and Asia.

                  (c) The  Executive  shall at all times be subject  to,  comply
with, observe and carry out (i) Holdings rules, regulations,  policies and codes
of ethics and/or  conduct  applicable  to its employees  generally and in effect
from time to time and (ii) such rules,  regulations,  policies,  codes of ethics
and/or conduct,  directions and  restrictions as the Board may from time to time
reasonably establish or approve for senior executive officers of Holdings.

                  (d) The Executive  agrees that he shall work such hours as are
necessary  for the proper  performance  of his duties,  including any such hours
which exceed the maximum  weekly  working time limit of 48 hours  imposed by the
Working Time Regulations 1998 or any re-enactment  thereof.  The Holdings normal
working hours in the UK are 9.00am to 5.00pm  Monday to Friday,  with a break of
one hour for lunch each day.

            1.3 Duties prior to the Closing Date. From the date hereof until the
date of the Closing (the "Closing  Date"),  the Executive agrees to be listed as
Managing  Director  Europe  of  Holdings  or  any  of  its  subsidiaries  in all
documentation in connection with the Acquisition, shall participate in the "road
show" relating to the financing of the Acquisition, and shall perform such other
services as reasonably requested by the Board in order to facilitate  completion
of the Acquisition.

      2.  Term  of  Employment.  This  Agreement  shall  govern  the  terms  and
conditions  of the  Executive's  employment  by  Holdings,  and the  termination
thereof, from the date hereof through the Expiration Date. The "Expiration Date"
shall mean the second  succeeding  31 December that follows the date Holdings or
the Executive  notifies the other in writing that this Agreement shall expire (a
"Notice of Expiration"),  provided that if a Notice of Expiration is provided by
either  party on or before 31  October  2007,  the  Expiration  Date shall be 31
December  2007.  The period after the Closing Date during which the Executive is
actually  employed  by  Holdings  under this  Agreement  is  referred  to as the
"Employment  Period".  Should  the  Merger  Agreement  be  terminated  prior  to
completion of the  Acquisition,  this  Agreement  shall expire and neither party
shall have any further obligations or rights hereunder.

      3. Compensation and General Benefits.

            3.1 Base Salary.

                  (a) During the Employment  Period,  Holdings  agrees to pay to
the  Executive  a base  salary at an annual  rate of  (pound)350,000  (such base
salary,  as may be adjusted  from time to time  pursuant to Section  3.1(b),  is
referred to herein as the "Base  Salary").  The  Executive's  Base Salary,  less
amounts  required to be withheld under applicable law, shall be payable in equal
installments in accordance with Holdings normal payroll practices and

                                       2
<PAGE>

procedures  in effect  from time to time for the payment of salaries to officers
of Holdings, but in no event less frequently than monthly.

                  (b) The Board or the Compensation Committee established by the
Board (the "Compensation Committee") shall review the Executive's performance on
an annual basis and,  based on such review,  may increase (but not decrease) the
Base  Salary,  as it,  acting  in its sole  discretion,  shall  determine  to be
reasonable and appropriate.

                  (c) The parties may enter into an  irrevocable  arrangement to
allow the  Executive to sacrifice  future salary before its accrual ("the Salary
Sacrifice")  subject to agreement between the parties respective tax advisers as
to the terms of the salary  sacrifice  and  compliance  with the  relevant  HMRC
guidance and any restrictions in the relevant pension scheme.

            3.2 Bonus.  With  respect to each fiscal year of Holdings  that ends
during the Employment  Period,  the Executive  shall be eligible to receive from
Holdings an annual  performance  bonus (the "Annual Bonus") based upon Holdings'
attainment  of  annual  goals  established  by the  Board  or  the  Compensation
Committee,  which may include Holdings' comparable store sales,  earnings before
interest, taxes, depreciation and amortization ("EBITDA") and/or cash generation
goals.  The  Executive's  Annual Bonus shall equal one hundred percent (100%) of
the Executive's Base Salary (before any Salary Sacrifice) to which the Executive
is entitled  during such year if the Company  meets target level of  performance
established by the Board or the Compensation  Committee for the applicable year,
and the Executive  shall have an opportunity to receive an Annual Bonus of up to
an additional  twenty five percent (25%) of the Executive's  Base Salary (before
any Salary Sacrifice) to which the Executive is entitled during such year if and
to the extent the Company  achieves levels in excess of target as established by
the Board or the Compensation  Committee for the applicable year;  provided that
for the first fiscal year that ends following the Closing Date, the Annual Bonus
shall be no less than one hundred percent (100%) of the Executive's  Base Salary
(before  any Salary  Sacrifice)  to which the  Executive  is  entitled  from the
Closing  Date to such fiscal year end.  Any Annual Bonus earned shall be payable
in full as soon as reasonably  practicable following the determination  thereof,
but in no event later than May 15 of the following  year, and in accordance with
Holdings' normal payroll practices and procedures.

            3.3 Expenses.  In addition to any amounts to which the Executive may
be entitled  pursuant to the other  provisions  of this Section 3.3 or elsewhere
herein,  the Executive shall be entitled to receive  reimbursement from Holdings
for all reasonable and necessary  expenses  incurred by the Executive during the
Employment  Period in performing the Executive's  duties  hereunder on behalf of
Holdings,  subject  to, and  consistent  with,  Holdings'  policies  for expense
payment and reimbursement, in effect from time to time.

            3.4  Benefits.  During the  Employment  Period,  in  addition to any
amounts to which the Executive may be entitled  pursuant to the other provisions
of this  Section 3 or  elsewhere  herein,  the  Executive  shall be  entitled to
participate in, and to receive benefits under,  any benefit plans,  arrangements
or policies made  available by Holdings to its employees  generally,  subject to
and on a basis consistent with the terms,  conditions and overall administration
of each such plan, arrangement or policy including provision of:

                                       3
<PAGE>

                  (a) private medical insurance for the benefit of the Executive
and his  spouse and  children  (under the age of 18 years of age or in full time
education) and;

                  (b) either, at the Exective's choice:

                        (i) a suitable leasehire motor car in the Company's name
("the  Car")  such as a top of the range  BMW 750,  Range  Rover or  equivalent.
Holdings  will bear the cost of insuring,  taxing and  maintaining  the Car. The
Executive undertakes to comply with all regulations from time to time imposed by
Holdings in relation to the use of the car,  including the  requirements  of any
policy of insurance.  Holdings will reimburse the Executive the cost of all fuel
incurred by him in connection with his business,  and reasonable private, to the
extent  provided by Holdings  policy (which may be changed by the Company in its
discretion),  use of  the  Car  subject  to the  production  of the  appropriate
vouchers and receipts and in accordance with HMRC rates from time to time. or

                        (ii) a gross car allowance  of (pound)1300  per calendar
month.  Holdings  will  reimburse the Executive the cost of all fuel incurred by
him in  connection  with his  business  and  reasonable  private  use of the Car
subject to the  production  of the  appropriate  vouchers  and  receipts  and in
accordance with HMRC rates from time to time.

            3.5 Equity Awards.

                  (a) On or shortly after the Closing Date,  Holdings shall have
adopted a stock  incentive  plan, in the form  attached  hereto as Exhibit A and
incorporated  herein by reference  (the "Plan"),  for the grant of stock options
and  other  stock  awards  to  employees  or  directors  of  Holdings  or of any
subsidiary of Holdings to purchase shares of Common Stock, US$0.01 par value per
share, of Holdings (the "Common Stock").

                  (b) On or shortly  after the  Closing  Date,  pursuant  to the
Plan,  the  Executive  shall be granted  options to  purchase a total of 709,300
shares of Common  Stock at a price per share equal to  US$10.00on  the terms set
forth in the Option Grant Letter attached  hereto as Exhibit B and  incorporated
herein by reference.

                  (c) On or shortly after the Closing Date, the Executive  shall
be awarded  162,500  shares of Common  Stock on the terms set forth in the Stock
Award Letter attached hereto as Exhibit C and incorporated herein by reference.

            3.6 Holiday.  The Executive's total annual  entitlement is 8 English
public holidays and 30 days paid contractual holiday. The Executive may carry up
to a maximum of 5 days unused holiday entitlement over to the subsequent holiday
year. Upon notice of termination of the Executive's  employment  being served by
either  party  Holdings  may either  require  the  Executive  to take any unused
holidays  accrued  at  that  time  during  any  notice  period  or  may,  at its
discretion, make a payment in lieu of such outstanding holiday entitlement.  The
Executive  will be  required  to make a payment to the  Holdings  in lieu of any
holiday taken in excess of the  Executive's  holiday  entitlement at the date of
termination  of the  Employment.  Any sums so due may be deducted from any money
owing to the Executive.

                                       4
<PAGE>

      4. Termination.

            4.1 General.  The  employment  of the Executive  hereunder  (and the
Employment  Period) shall  terminate in accordance  with the  provisions of this
Section  4. Upon any such  termination,  except  as  otherwise  provided  herein
pursuant to Sections  4.2(b),  4.3(a),  4.4 or 4.5(b),  the  Executive  shall be
entitled  to earned but unpaid Base Salary up to the  Expiration  Date  together
with Annual Bonus  calculated on a pro rated basis up to the  effective  date of
termination of the  Executive's  employment  provided that bonus targets are met
for the relevant  fiscal year, such pro rated bonus amount to be paid as soon as
reasonably  practicable  following the  determination  thereof,  but in no event
later than May 15 of the following year, and in accordance with Holdings' normal
payroll  practices  and  procedures  and any other  benefits  accrued and vested
through to the Expiration Date or if earlier, the date his employment terminates
pursuant to Sections 4.2(b),  4.3(a),  4.4 or 4.5(b) but he shall remain subject
to the provisions of Section 5 and Section 6 as applicable. For the avoidance of
doubt,  provided always that the Company  complies with the express  termination
provisions  set out in this  Section  4, any  entitlement  to stock  options  or
restricted  stock that the Executive would have been entitled to receive had the
Executive's  employment  not  terminated,  either  upon the  Expiration  Date or
earlier pursuant to Sections 4.2(b),  4.3(a),  4.4 or 4.5(b)shall lapse upon the
relevant  effective date of termination unless expressly stated otherwise in the
Plan,  the Option Grant  Letter and the Stock Award  Letter,  and the  Executive
shall not be  entitled to any  compensation  in respect of loss of all or any of
such stock options or restricted  stock and/or any diminution in value in or any
losses arising out of such loss of stock options or restricted stock.

            4.2 Notice of Expiration by Holdings.

                  (a)  If  Holdings  delivers  to  the  Executive  a  Notice  of
Expiration,  the  employment  of the  Executive  hereunder  (and the  Employment
Period) shall terminate upon the Expiration Date, or, if earlier, as provided in
Section 4.3 or Section 4.4.

                  (b)  Notwithstanding  the  foregoing,   Holdings  may  at  its
absolute  discretion  elect, upon or at any time after delivery to the Executive
of a Notice of Expiration,  to immediately terminate the Executive's  employment
hereunder (and the Employment Period), and provide the Executive the Base Salary
to which the Executive  would have been entitled  pursuant to Section 3.1 hereof
(at the Base  Salary  rate  during  the year of  termination)  and  health  care
benefits  detailed in Section 3.4 hereof to which the Executive  would have been
entitled had he remained in the employ of Holdings  until the  Expiration  Date,
with all such  amounts  payable in  accordance  with  Holdings'  normal  payroll
practices  and  procedures in the same manner and at the same time as though the
Executive remained employed by Holdings together with Annual Bonus calculated on
a pro rated basis up to the effective  date of  termination  of the  Executive's
employment  provided  that bonus  targets are met for the relevant  fiscal year,
such  pro  rated  bonus  amount  to be paid as  soon as  reasonably  practicable
following the  determination  thereof,  but in no event later than May 15 of the
following  year, and in accordance with Holdings'  normal payroll  practices and
procedures but not including for the avoidance of any doubt any Annual Bonus, or
any share options  (unless  expressly  stated  otherwise in the Plan, the Option
Grant Letter and the Stock Award  Letter,  and provided  always that the Company
complies with the express  termination  provisions  set out in this Section 4.2)
that would have  accrued  between  the  effective  date of  termination  and the
Expiration Date

                                       5
<PAGE>

                  (c) provided  that if such  termination  occurs upon or within
six (6) months  following  a Change of Control (as defined in Exhibit D attached
hereto),  Holdings  shall  continue  to pay the  Executive  such Base Salary and
provide the healthcare  benefits detailed in Section 3.4 hereof for no less than
one year following such date of termination.

            4.3 Death or Disability of the Executive.

                  (a) Whether or not a Notice of Expiration  has been  provided,
the  employment of the Executive  hereunder  (and the  Employment  Period) shall
terminate  upon  (i) the  death  of the  Executive  and  (ii) at the  option  of
Holdings,  upon not less than  fifteen  (15) days' prior  written  notice to the
Executive  or  the  Executive's  personal  representative  or  guardian,  if the
Executive  suffers a "Total  Disability"  (as defined in Section 4.3(b) hereof).
Upon  termination  for  death or Total  Disability,  Holdings  shall  pay to the
Executive,  guardian or personal representative,  as the case may be, a prorated
share of the Annual Bonus pursuant to Section 3.2 hereof (based on the period of
actual  employment)  that the  Executive  would  have been  entitled  to had the
Executive worked the full year during which the termination  occurred,  provided
that bonus targets are met for the year of such termination.  Any bonus shall be
payable as soon as reasonably  practicable following the determination  thereof,
but in no event later than May 15 of the following  year, and in accordance with
Holdings' normal payroll practices and procedures.

                  (b) For purposes of this Agreement,  "Total  Disability" shall
mean (i) if the Executive is subject to a legal decree of incompetency (the date
of such decree being deemed the date on which such  disability  occurred),  (ii)
the written  determination  by a physician  selected by Holdings  (which expense
shall be paid by Holdings) that,  because of a medically  determinable  disease,
injury  or  other  physical  or  mental  disability,  the  Executive  is  unable
substantially to perform, with or without reasonable accommodation, the material
duties of the Executive required hereby, and that such disability has lasted for
ninety (180)  consecutive  days or any one hundred  twenty (240) days during the
immediately  preceding  twelve  (24)-month  period  or  is,  as of the  date  of
determination,  reasonably  expected to last twelve (12) months or longer  after
the date of determination,  in each case based upon medically available reliable
information  or  (iii)  Executive's  qualifying  for  benefits  under  Holdings'
long-term  disability  coverage,  if any. In conjunction with determining mental
and/or physical disability for purposes of this Agreement,  the Executive hereby
consents to (x) any examinations  that the Board or the  Compensation  Committee
determines are relevant to a determination  of whether the Executive is mentally
and/or physically  disabled or are required by Holdings  physician,  (y) furnish
such  medical  information  as may be  reasonably  requested  and (z)  waive any
applicable   physician   patient  privilege  that  may  arise  because  of  such
examination.  All expenses incurred by the Executive under this subsection shall
be paid by Holdings.

            4.4 Termination by Holdings for Cause.

                  (a) Whether or not a Notice of Expiration  has been  provided,
Holdings may  terminate  the  employment  of the  Executive  hereunder  (and the
Employment Period) immediately for Cause.

                                       6
<PAGE>

                  (b)  For  purposes  of  this  Agreement,   "Cause"  means  the
occurrence of any one or more of the following  events,  and Holdings shall have
the sole discretion to determine the existence of Cause:

                        (i)  the  Executive  breaches  or  fails  to observe his
obligations  under this  Agreement  or refuses or  neglects  to comply  with any
reasonable and lawful direction of Holdings; or

                        (ii)  the Executive acts in  a  manner  tending to bring
himself or the Holdings into disrepute; or

                        (iii)  the  Executive  becomes  bankrupt  or  makes  any
arrangement  with or for the  benefit  of his  creditors  or had a County  Court
administration order against him under the County Court Act 1984; or

                        (iv) the  Executive was  negligent  or failed to perform
his duties to a standard  satisfactory  to the Board  acting  reasonably,  after
having received a written warning from Holdings relating to the same; or

                        (v)  the   Executive  breaches  or fails to observe  any
code of  conduct,  rule or  regulation  of  Holdings  or  failed or ceased to be
registered  (where such  registration is, in the opinion of the Board,  required
for the  performance of his duties) by any regulatory body in the United Kingdom
or elsewhere;

                        (vi)  the  Executive is convicted of a criminal  offence
(other than an offence  under any road traffic  legislation  for which a fine or
non-custodial  penalty is imposed)  under any statutory  enactment or regulation
relating to insider dealing;

                        (vii)  the  Executive  becomes  of  unsound  mind  or  a
patient within the meaning of any statute relating to mental health;

                        (viii) the Executive engages in any activity giving rise
to a material conflict with Holdings;

                        (ix)  the Executive misappropriates a  material business
opportunity of Holdings or confidential information.

                  (c) Before  Holdings may  terminate  the  Executive  for Cause
pursuant to Section  4.4(a),  the Board shall deliver to the Executive a written
notice of  Holdings'  intent to  terminate  the  Executive  for  Cause,  and the
Executive  shall have been given a reasonable  opportunity to cure any such acts
or omissions  (which are  susceptible  of cure as  reasonably  determined by the
Board) within thirty (30) days after the Executive's receipt of such notice.

            4.5 Notice of Expiration by the Executive.

                  (a)  If  the  Executive  delivers  to  Holdings  a  Notice  of
Expiration,  the  employment  of the  Executive  hereunder  (and the  Employment
Period) shall terminate upon the Expiration Date, or, if earlier, as provided in
Section 4.3 or Section 4.4.

                                       7
<PAGE>

Notwithstanding  the foregoing,  Holdings may at its absolute  discretion elect,
upon or at any time after receipt of a Notice of Expiration from  the Executive,
to  immediately   terminate  the  Executive's   employment  hereunder  (and  the
Employment  Period),  and  provide  the  Executive  the Base Salary to which the
Executive  would have been entitled  pursuant to Section 3.1 hereof (at the Base
Salary rate during the year of termination) and health care benefits detailed in
Section  3.4  hereof to which the  Executive  would  have been  entitled  had he
remained  in the employ of Holdings  until the  Expiration  Date,  with all such
amounts  payable in  accordance  with  Holdings'  normal  payroll  practices and
procedures  in the same  manner  and at the same  time as though  the  Executive
remained  employed by Holdings  together  with Annual Bonus  calculated on a pro
rated  basis  up to  the  effective  date  of  termination  of  the  Executive's
employment  provided  that bonus  targets are met for the relevant  fiscal year,
such  pro  rated  bonus  amount  to be paid as  soon as  reasonably  practicable
following the  determination  thereof,  but in no event later than May 15 of the
following  year, and in accordance with Holdings'  normal payroll  practices and
procedures but not including for the avoidance of any doubt any Annual Bonus, or
any share options  (unless  expressly  stated  otherwise in the Plan, the Option
Grant  Letter and the Stock Award  Letter, and provided  always that the Company
complies with the express  termination  provisions  set out in this Section 4.5)
that would have  accrued  between  the  effective  date of  termination  and the
Expiration Date..

            4.6 Garden Leave.

                  (a)  Notwithstanding  any other provision of this Agreement to
the contrary,  during any period of employment between the date that a Notice of
Expiration is provided by either party until the Expiration  Date,  Holdings may
in its absolute discretion direct the Executive:

                        (i) to perform no duties; and/or

                        (ii)   to  refrain   from  contacting   any   customers,
clients,  advertisers,  suppliers,  agents,  professional  advisors,  brokers or
employees of Holdings or any of its Affiliates; and/or

                        (iii)  not to enter all or any  premises  of Holdings or
any of its Affiliates; and/or

                        (iv)   to    immediately   resign   without  claim   for
compensation  from office as director of Holdings and any Affiliate and from any
other office held by him in Holdings or any Affiliate; and/or

                        (v) return  all documents,  computer  disks or tapes and
all other tangible items in the Executive's  possession or control  belonging to
or containing any confidential information of Holdings or any of its Affiliates.

                  (b) During any period when the  provisions of this Section 4.6
are  invoked,   the  Executive's  salary  and  other  contractual  benefits  and
compensation  (including  the vesting and  exercisability  of any equity awards)
will continue to be paid or provided by Holdings and the Executive will continue
to comply without  exception  with all the  Executive's  obligations  under this
Agreement.

                                       8
<PAGE>

            4.7 Mutual  Agreement.  The parties may enter a mutual  agreement in
writing to waive any  applicable  notice  requirements.  Where such agreement is
reached, the Executive's employment (and the Employment Period) shall come to an
immediate termination on the date specified in such agreement.  Mutual agreement
to waive  applicable  notice  requirements  shall,  unless the agreement  states
otherwise,  be  without  prejudice  to the  Executive's  obligations  set out in
Section 5 which shall continue to have full effect.

            4.8 Resignation from Officer Positions.  Upon the termination of the
Executive's  employment  for any reason (unless  otherwise  agreed in writing by
Holdings and the  Executive),  the  Executive  will be deemed to have  resigned,
without any further action by the Executive,  from any and all officer, director
and/or  director  positions  that  the  Executive,  immediately  prior  to  such
termination,  (a) held with Holdings or any of its  Affiliates and (b) held with
any other  entities  at the  direction  of,  or as a result  of the  Executive's
affiliation  with,  Holdings  or any of its  Affiliates.  If for any reason this
Section 4.8 is deemed to be insufficient to effectuate such  resignations,  then
Executive  will,  upon Holdings'  request,  execute any documents or instruments
that Holdings may deem necessary or desirable to effectuate such resignations.

      5. Confidentiality, Work Product and Non-Competition and Non-Solicitation.

            5.1 Confidentiality.

                  (a)  In  connection  with  the  Executive's   employment  with
Holdings,   Holdings   promises  to  provide  the   Executive   with  access  to
"Confidential  Information"  (as defined in Section 5.4(d) hereof) in support of
the  Executive's  employment  duties.  The Executive  recognizes  that Holdings'
business interests require a confidential  relationship between Holdings and the
Executive and the fullest practical protection and confidential treatment of all
Confidential  Information.  At all  times  on and  after  the date  hereof,  the
Executive shall not directly or indirectly:  (i) appropriate,  download,  print,
copy, remove, use, disclose, divulge,  communicate or otherwise "Misappropriate"
(as defined in Section 5.4(e) hereof), any Confidential Information,  including,
without limitation,  originals or copies of any Confidential Information, in any
media or format, except for Holdings' benefit within the course and scope of the
Executive's  employment or with the prior  written  consent of a majority of the
Disinterested  Directors;  or (ii)  take or  encourage  any  action  that  would
circumvent,  interfere  with or  otherwise  diminish the value or benefit of the
Confidential  Information  to any of the Company  Parties (as defined in Section
5.4(b) hereof).

                  (b) All Confidential  Information,  and all other  information
and property  affecting or relating to the business of Holdings  Parties  within
the Executive's  possession,  custody or control,  regardless of form or format,
shall remain, at all times, the property of the respective Company Parties,  the
appropriation, use and/or disclosure of which is governed and restricted by this
Agreement.

                  (c) The Executive acknowledges and agrees that:

                                       9
<PAGE>

                        (i) the  Executive  occupies a  unique  position  within
Holdings,  and  the  Executive  is  and  will  be  intimately  involved  in  the
development and/or implementation of Confidential Information;

                        (ii)  in  the  event the Executive breaches this Section
5.1 with respect to any Confidential Information, such breach shall be deemed to
be a Misappropriation of such Confidential Information; and

                        (iii) any  Misappropriation  of Confidential Information
will result in immediate and irreparable harm to Holdings.

                  (d) Upon receipt of any formal or informal  request,  by legal
process or otherwise,  seeking the Executive's direct or indirect  disclosure or
production of any  Confidential  Information to any Person,  the Executive shall
promptly  and  timely  notify  Holdings  and  provide  a  description   and,  if
applicable,  hand  deliver a copy of such  request to  Holdings.  The  Executive
irrevocably  nominates and appoints  Holdings as the Executive's true and lawful
attorney-in-fact  to act in the Executive's name, place and stead to perform any
act that  the  Executive  might  perform  to  defend  and  protect  against  any
disclosure of Confidential Information.

                  (e) At any time on or  after  the date  hereof,  Holdings  may
request the  Executive  shall  deliver to Holdings all  originals  and copies of
Confidential  Information and all other  information  and property  affecting or
relating  to  the  business  of  the  Company  Parties  within  the  Executive's
possession, custody or control, regardless of form or format, including, without
limitation any Confidential  Information produced by the Executive.  At any time
on or after the date hereof,  Holdings shall have the right of reasonable access
to review,  inspect, copy and/or confiscate any Confidential  Information within
the Executive's possession, custody or control.

                  (f) Upon  termination  or  expiration of this  Agreement,  the
Executive shall immediately return to Holdings all Confidential Information, and
all other information and property  affecting or relating to the business of the
Company  Parties,  within  the  Executive's  possession,   custody  or  control,
regardless of form or format, without the necessity of a prior Company request.

                  (g) From and after the date hereof,  the Executive  represents
and agrees that the  Executive  will not use or  disclose  any  confidential  or
proprietary information or trade secrets of others, including but not limited to
former  employers,  and that the  Executive  will not bring onto the premises of
Holdings or access such confidential or proprietary information or trade secrets
of such others,  unless  consented  to in writing by said others,  and then only
with the prior written authorization of Holdings.

            5.2 Work Product/Intellectual Property.

                  (a) Assignment.  The Executive  hereby assigns to Holdings all
right,  title and interest to all "Work  Product" (as defined in Section  5.4(h)
hereof) that (i) relates to any of the Company  Parties'  actual or  anticipated
business,  research and  development or existing or future products or services,
or  (ii) is  conceived,  reduced  to  practice,  developed  or

                                       10
<PAGE>

made using any equipment, supplies, facilities, assets, information or resources
of any of the Company Parties (including,  without limitation,  any intellectual
property rights).

                  (b)  Disclosure.  The Executive  shall promptly  disclose Work
Product to the  Disinterested  Directors  and  perform  all  actions  reasonably
requested by Holdings at any time on or after the date hereof to  establish  and
confirm the ownership and proprietary  interest of any of the Company Parties in
any Work Product (including,  without limitation,  the execution of assignments,
consents, powers of attorney, applications and other instruments). The Executive
shall not file any patent or copyright  applications related to any Work Product
except with the written consent of a majority of the Disinterested Directors.

            5.3 Non-Competition and Non-Solicitation.

                  (a) In  consideration of the  Confidential  Information  being
provided to the  Executive  as stated in Section 5.1 hereof,  and other good and
valuable  new  consideration  as stated in this  Agreement,  including,  without
limitation,  employment  and/or  continued  employment  with  Holdings,  and the
business  relationships,  Company goodwill,  work experience,  client,  customer
and/or vendor  relationships  and other fruits of employment  that the Executive
will have the opportunity to obtain,  use and develop under this Agreement,  the
Executive agrees to the restrictive covenants stated in this Section 5.3.

                  (b) From  the  date  hereof  until  the end of the  Restricted
Period (as defined in Section  5.4(g)  hereof),  the  Executive  agrees that the
Executive will not, directly or indirectly,  on the Executive's own behalf or on
the  behalf of any other  Person,  within  England  or in any other  country  or
territory in which the businesses of Holdings are conducted:

                        (i)  engage  in  a  Competing  Business  (as  defined in
Section 5.4(c) hereof),  including,  without  limitation,  by owning,  managing,
operating,  controlling,  being employed by, providing services as a consultant,
agent  or  independent   contractor  to  or   participating  in  the  ownership,
management, operation or control of any Competing Business;

                        (ii)  deal  in  a  Competing  Business  (as  defined  in
Section 5.4(c) hereof),  including,  without  limitation,  by owning,  managing,
operating,  controlling,  being employed by, providing services as a consultant,
agent  or  independent   contractor  to  or   participating  in  the  ownership,
management, operation or control of any Competing Business;

                        (iii)   induce   or  attempt  to  induce  any  customer,
vendor,  supplier,  licensor or other Person in a business relationship with any
Company  Party,  for or with which the Executive or employees  working under the
Executive's  supervision  had any direct or indirect  responsibility  or contact
during his  employment,  (A) to do business with a Competing  Business or (B) to
cease,  restrict,  terminate or otherwise  reduce business with Holdings for the
benefit of a Competing  Business,  regardless of whether the Executive initiates
contact; or

                        (iv)  (A)  solicit,  recruit,  persuade,   influence  or
induce,  or attempt to solicit,  recruit,  persuade,  influence or induce anyone
employed or  otherwise  retained by any of the Company  Parties  (including  any
independent contractor, agent or consultant), to cease or leave their employment
or contractual or consulting  relationship with any Company

                                       11
<PAGE>

Party,  regardless of whether the Executive  initiates contact for such purposes
or (B) hire,  employ or  otherwise  attempt to  establish,  for any Person,  any
employment,  agency,  consulting,   independent  contractor  or  other  business
relationship with any Person who is or was employed or otherwise retained by any
of the Company Parties (including any independent contractor or consultant).

                  (c)  The   parties   hereto   acknowledge   and  agree   that,
notwithstanding  anything in Section 5.3(b)(i) hereof, (i) the Executive may own
or hold,  solely as passive  investments,  securities of Persons  engaged in any
business that would otherwise be included in Section 5.3(b)(i),  as long as with
respect to each such  investment  the  securities  held by the  Executive do not
exceed five percent (5%) of the  outstanding  securities of such Person and such
securities are publicly  traded on a recognised  investment  market and (ii) the
Executive may serve on the board of directors (or other comparable  position) or
as an officer of any entity at the request of the Board; provided, however, that
in the case of  investments  otherwise  permitted  under  clause (i) above,  the
Executive shall not be permitted to, directly or indirectly,  participate in, or
attempt to  influence,  the  management,  direction  or  policies of (other than
through the exercise of any voting  rights held by the  Executive in  connection
with such securities), or lend the Executive's name to, any such Person.

                  (d) The Executive  acknowledges  and agrees that, for purposes
of this Section 5.3,  indirect  acts by the  Executive  shall  include,  without
limitation,  an act by the  Executive's  spouse,  ancestor,  lineal  descendant,
lineal descendant's spouse, sibling or other member of the Executive's immediate
family.

                  (e)  The  Executive  acknowledges  that  (i)  the  restrictive
covenants  contained in this Section 5.3 hereof are  ancillary to and part of an
otherwise   enforceable   agreement,   such  being  the  agreements   concerning
Confidential  Information and other  consideration  as stated in this Agreement,
(ii) at the time that these  restrictive  covenants are made, the limitations as
to time,  geographic scope and activity to be restrained,  as described  herein,
are reasonable  and do not impose a greater  restraint than necessary to protect
the good will and other  legitimate  business  interests of Holdings,  including
without limitation,  Confidential Information (including trade secrets), client,
customer  and/or  vendor  relationships,  client  and/or  customer  goodwill and
business  productivity,  (iii) in the event of  termination  of the  Executive's
employment,  the  Executive's  experiences  and  capabilities  are such that the
Executive can obtain  gainful  employment  without  violating this Agreement and
without the  Executive  incurring  undue  hardship,  (iv) based on the  relevant
benefits and other new consideration provided for in this Agreement,  including,
without  limitation,  the disclosure and use of  Confidential  Information,  the
restrictive  covenants  of this Section  5.3, as  applicable  according to their
terms,  shall  remain  in  full  force  and  effect  even  in the  event  of the
Executive's termination from employment, howsoever arising (v) the Executive has
carefully  read  this  Agreement  and has  given  careful  consideration  to the
restraints  imposed upon the Executive by this  Agreement and taken legal advice
in relation to the same and consents to the terms of the  restrictive  covenants
in this Section 5.3, with the knowledge that this Agreement may be terminated at
any time in accordance with the provisions hereof.

            5.4 Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:

                                       12
<PAGE>

                  (a) An  "Affiliate"  of any  specified  Person means any other
Person, whether now or hereafter existing, directly or indirectly controlling or
controlled by, or under direct or indirect  common control with,  such specified
Person. For purposes hereof, "control" or any other form thereof, when used with
respect to any Person,  means the power to direct the management and policies of
such Person,  directly or  indirectly,  whether  through the ownership of voting
securities,   by  contract  or  otherwise;   and  the  terms  "controlling"  and
"controlled" shall have meanings correlative to the foregoing.

                  (b)  "Company  Parties"  means  Holdings,  and its  direct and
indirect parents, subsidiaries and Affiliates, and their successors in interest.

                  (c) "Competing Business" means any business that competes with
any of the Company Parties,  including,  without limitation, any enterprise that
engages in, owns or operates any retail business that derives 10% or more of its
business  from sales of costume  jewelry and  accessories  targeted to girls and
women.

                  (d) Confidential Information.

                        (i) Definition. "Confidential Information" means any and
all material, information, ideas, inventions,  formulae, patterns, compilations,
programs, devices, methods,  techniques,  processes, know how, plans (marketing,
business, strategic,  technical or otherwise),  arrangements,  pricing and other
data of or relating to any of the  Company  Parties (as well as their  customers
and/or  vendors) that is  confidential,  proprietary  or trade secret (A) by its
nature,  (B) based on how it is treated or  designated by a Company  Party,  (C)
because  the  disclosure  of which would have a material  adverse  effect on the
business  or planned  business  of any of the  Company  Parties  and/or (D) as a
matter of law.

                        (ii)  Exclusions.  Confidential  Information   does  not
include  material,  data,  and/or  information  (A) that any  Company  Party has
voluntarily  placed  in the  public  domain,  (B)  that has  been  lawfully  and
independently  developed  and  publicly  disclosed  by third  parties,  (C) that
constitutes  the  general  non-specialized  knowledge  and skills  gained by the
Executive at any time on or after the date hereof,  or (D) that otherwise enters
the public domain through lawful means; provided, however, that the unauthorized
appropriation,  use or disclosure of Confidential  Information by the Executive,
directly or indirectly,  shall not affect the protection and relief  afforded by
this Agreement regarding such information.

                        (iii)  Inclusions.  Confidential  Information  includes,
without  limitation,  the following  information  (including without limitation,
compilations or collections of information) relating or belonging to any Company
Party  (as  well as  their  clients,  customers  and/or  vendors)  and  created,
prepared,  accessed,  used or reviewed by the  Executive at any time on or after
the date hereof: (1) product and manufacturing information, such as ingredients,
combinations  of ingredients  and  manufacturing  processes;  (2) scientific and
technical information, such as research and development, tests and test results,
formulae  and  formulations,  studies  and  analysis;  (3)  financial  and  cost
information,  such as operating and production costs, costs of goods sold, costs
of supplies and manufacturing  materials,  non-public  financial  statements and
reports,   profit  and  loss  information,   margin  information  and  financial
performance  information;  (4) customer  related  information,  such as customer
related  contracts,

                                       13
<PAGE>

engagement   and   scope  of  work   letters,   proposals   and   presentations,
customer-related  contacts, lists, identities and prospects,  practices,  plans,
histories,   requirements  and  needs,   price   information  and  formulae  and
information  concerning  client or customer  products,  services,  businesses or
equipment specifications;  (5) vendor and supplier related information,  such as
the identities,  practices,  history or services of any vendors or suppliers and
vendor or supplier contacts; (6) sales, marketing and price information, such as
marketing and sales  programs and related data,  sales and marketing  strategies
and plans,  sales and  marketing  procedures  and  processes,  pricing  methods,
practices and techniques and pricing schedules and lists; (7) database, software
and  other  computer  related  information,  such as  computer  programs,  data,
compilations   of  information   and  records,   software  and  computer  files,
presentation  software and computer-stored or backed-up  information  including,
but not limited to, e-mails, databases, word processed documents,  spreadsheets,
notes,   schedules,   task  lists,   images  and  video;  (8)   employee-related
information, such as lists or directories identifying employees, representatives
and contractors,  and information regarding the competencies (knowledge,  skill,
experience),   compensation   and  needs  of  employees,   representatives   and
contractors  and  training  methods;  and (9)  business-  and  operation-related
information,  such as operating methods, procedures,  techniques,  practices and
processes, information about acquisitions,  corporate or business opportunities,
information about partners and potential investors, strategies,  projections and
related  documents,   contracts  and  licenses  and  business  records,   files,
equipment,  notebooks,  documents,  memoranda,  reports,  notes,  sample  books,
correspondence, lists and other written and graphic business records.

                  (e) "Misappropriate", or any form thereof, means:

                        (i)  the  acquisition  of any  Confidential  Information
by a Person  who knows or has reason to know that the  Confidential  Information
was acquired by theft,  bribery,  misrepresentation,  breach or  inducement of a
breach of a duty to maintain  secrecy or espionage  through  electronic or other
means (each, an "Improper Means"); or

                        (ii)   the   disclosure  or  use  of   any  Confidential
Information  without  the  express  consent of Holdings by a Person who (A) used
Improper Means to acquire  knowledge of the Confidential  Information (B) at the
time of  disclosure or use, knew or had reason to know that his or her knowledge
of the Confidential Information was (x) derived from or through a Person who had
utilized Improper Means to acquire it, (y) acquired under  circumstances  giving
rise to a duty to maintain  its secrecy or limit its use or (z) derived  from or
through a Person who owed a duty to Holdings  to  maintain  its secrecy or limit
its use or (C)  before a  material  change of his or her  position,  knew or had
reason to know that it was Confidential Information and that knowledge of it had
been acquired by accident or mistake.

                  (f) "Person" means any individual,  corporation,  partnership,
limited  liability  company,   joint  venture,   association,   business  trust,
joint-stock company, estate, trust, unincorporated  organization,  government or
other agency or political  subdivision  thereof or any other legal or commercial
entity.

                  (g)  "Restricted  Period"  means  twelve (12) months after the
date of  termination  of  employment  (the  Executive's  last  day of  work  for
Holdings) such period to be

                                       14
<PAGE>

reduced by one day for every day in respect of which  Holdings  has  invoked any
provision set out at Section 4.6..

                  (h) "Work Product" means all patents and patent  applications,
all  inventions,  innovations,  improvements,  developments,  methods,  designs,
analyses,  drawings,  reports, creative works, discoveries,  software,  computer
programs,  modifications,  enhancements,  know-how,  formulations,  concepts and
ideas,  and all  similar or  related  information  (in each case  whether or not
patentable),   all  copyrights  and  copyrightable  works,  all  trade  secrets,
confidential  information,  and all other intellectual property and intellectual
property  rights that are conceived,  reduced to practice,  developed or made by
the  Executive  either  alone or with  others in the course of  employment  with
Holdings (including employment prior to the date of this Agreement).

            5.5  Remedies.  Because  the  Executive's  services  are  unique and
because the  Executive  has access to  Confidential  Information,  the Executive
acknowledges and agrees that if the Executive  breaches any of the provisions of
Section 5 hereof,  Holdings may suffer  immediate and irreparable harm for which
monetary  damages  alone  will  not  be a  sufficient  remedy.  The  restrictive
covenants  stated in Section 5 hereof are without  prejudice to Holdings' rights
and causes of action at law.

            5.6 Interpretation; Severability.

                  (a)  The  Executive  has  carefully  considered  the  possible
effects on the Executive of the covenants  not to compete,  the  confidentiality
provisions  and the  other  obligations  contained  in this  Agreement,  and the
Executive   recognizes  that  Holdings  has  made  every  effort  to  limit  the
restrictions  placed  upon the  Executive  to  those  that  are  reasonable  and
necessary to protect Holdings' legitimate business interests.

                  (b) The Executive acknowledges and agrees that the restrictive
covenants set forth in this  Agreement are  reasonable and necessary in order to
protect Holdings' valid business  interests.  It is the intention of the parties
hereto that the covenants,  provisions and agreements  contained herein shall be
enforceable to the fullest extent allowed by law. If any covenant,  provision or
agreement  contained  herein  is  found  by a court  having  jurisdiction  to be
unreasonable in duration, scope or character of restrictions, or otherwise to be
unenforceable,  such  covenant,  provision  or  agreement  shall not be rendered
unenforceable   thereby,  but  rather  the  duration,   scope  or  character  of
restrictions of such covenant, provision or agreement shall be deemed reduced or
modified with retroactive effect to render such covenant, provision or agreement
reasonable  or otherwise  enforceable  (as the case may be), and such  covenant,
provision  or  agreement  shall be enforced  as  modified.  If the court  having
jurisdiction will not review the covenant,  provision or agreement,  the parties
hereto shall mutually agree to a revision having an effect as close as permitted
by applicable law to the provision  declared  unenforceable.  The parties hereto
agree that if a court having jurisdiction determines, despite the express intent
of the  parties  hereto,  that  any  portion  of the  covenants,  provisions  or
agreements  contained  herein  are not  enforceable,  the  remaining  covenants,
provisions and agreements  herein shall be valid and enforceable.  Moreover,  to
the extent that any provision is declared unenforceable, Holdings shall have any
and all rights  under  applicable  statutes  or common law to enforce its rights
with respect to any and all  Confidential  Information or unfair  competition by
the Executive.

                                       15
<PAGE>

      6. Miscellaneous.

            6.1 Public Statements.

                  (a) Media  Nondisclosure.  The Executive  agrees that from and
after the date hereof,  except as may be authorized in writing by Holdings,  the
Executive will not directly or  indirectly  disclose or release to the Media any
information  concerning or relating to any aspect of the Executive's  employment
or termination  from  employment  with Holdings and/or any aspect of any dispute
that is the subject of this Agreement.  For the purposes of this Agreement,  the
term "Media"  includes,  without  limitation,  any news  organization,  station,
publication,  show,  website,  web log (blog),  bulletin board, chat room and/or
program (past,  present and/or future),  whether  published through the means of
print,  radio,  television  and/or the  Internet or  otherwise,  and any member,
representative, agent and/or employee of the same.

                  (b)  Non-Disparagement.  The  Executive  agrees  and  Holdings
agrees that it will  procure  that from and after the date  hereof,  neither the
Executive nor any Executive Officer of the Company (as applicable) will make any
statements,  comments or communications in any form, oral, written or electronic
to any Media or any  customer,  client or  supplier  of  Holdings  or any of its
Affiliates,  which would constitute libel,  slander or disparagement of Holdings
or any of its  Affiliates or the Executive (as  applicable), including,  without
limitation,  any such  statements,  comments or  communications  that criticize,
ridicule  or  are  derogatory  to  Holdings  or any  of  its  Affiliates  or the
Executive (as applicable);  provided,  however,  that  the terms of this Section
6.1(b) shall not apply to communications between the Parties and, as applicable,
his or its attorneys or other persons with whom communications  would be subject
to a claim of privilege existing under common law, statute or rule of procedure.
The Executive  further agrees that the Executive will not in any way solicit any
such statements,  comments or communications  from others regarding  Holdings or
any of its Affiliates and Holdings  agrees to procure that no Executive  Officer
will do likewise regarding the Executive.

            6.2 Settlement of Existing  Rights.  In exchange for the other terms
of  this  Agreement,  the  Executive  acknowledges  and  agrees  that:  (a)  the
Executive's  entry into this  Agreement  is a  condition  of  employment  and/or
continued  employment  with  Holdings,  as  applicable;  (b) except as otherwise
provided herein, this Agreement will replace any existing  employment  agreement
between  the parties and  thereby  act as a  novation,  if  applicable;  (c) the
Executive is being provided with access to Confidential Information,  including,
without limitation, proprietary trade secrets of one or more Company Parties, to
which the Executive has not  previously had access;  (d) all Company  inventions
and intellectual  property developed by the Executive during any past employment
with Holdings and all goodwill developed with Holdings'  clients,  customers and
other  business  contacts  by the  Executive  during  any past  employment  with
Company,  as  applicable,  is the  exclusive  property of Holdings;  and (e) all
Confidential Information and/or specialized training accessed, created, received
or  utilized  by the  Executive  during any past  employment  with  Company,  as
applicable,  will be subject to the  restrictions  on  Confidential  Information
described in this Agreement, whether previously so agreed or not.

            6.3  Indemnification.  The Executive shall be entitled from the date
hereof until the end of the  Employment  Period in the capacity as an officer or
director  of  Holdings  or  any  of  its  subsidiaries  to  the  benefit  of the
indemnification  provisions contained in

                                       16
<PAGE>

the  By-Laws  of  Holdings,  or as a matter of law,  whichever  is  greater.  In
addition,  during the term of the Executive's employment,  and, where applicable
under the terms of the relevant  liability  policy,  thereafter,  the  Executive
shall be covered under any directors' and officers'  insurance policy maintained
by Holdings.

            6.4 Post-Termination Assistance. In addition to the other provisions
of this Agreement,  during the Restricted Period, the Executive shall cooperate,
at the  reasonable  request of Holdings (i) in the  transition of any matter for
which the  Executive  had  authority  or  responsibility  during the  Employment
Period,  or (ii) with respect to any other matter  involving  Holdings for which
the Executive may be of assistance  provided  always that the Executive shall be
entitled to receive a reasonable  daily rate of pay (being no less than the Base
Salary prevailing at the effective date of termination  divided by 270) for each
day or part  thereof on which he  provides  such  assistance  at the  reasonable
request of Holdings.  The Executive also shall be entitled to  reimbursement  of
any reasonable  out-of-pocket  expenses he incurs in providing  such  assistance
upon submission of documentation supporting such expenses.

            6.5 Entire  Agreement;  Waiver.  This Agreement  contains the entire
agreement  between the Executive and Holdings with respect to the subject matter
hereof, and supersedes any and all prior  understandings or agreements,  whether
written or oral. No modification or addition hereto or waiver or cancellation of
any provision  hereof shall be valid except by a writing  signed by the party to
be charged  therewith.  No delay on the part of any party to this  Agreement  in
exercising  any right or privilege  provided  hereunder or by law shall  impair,
prejudice or constitute a waiver of such right or privilege.

            6.6 Governing Law. This Agreement shall be governed by and construed
in accordance  with the laws of England without regard to principles of conflict
of laws.

            6.7  Successors  and  Assigns;  Binding  Agreement.  The  rights and
obligations of the parties under this Agreement  shall be binding upon and inure
to the benefit of the parties hereto and their heirs, personal  representatives,
successors and permitted assigns.  This Agreement is a personal  contract,  and,
except as  specifically  set forth  herein,  the  rights  and  interests  of the
Executive herein may not be sold, transferred, assigned, pledged or hypothecated
by any party  without the prior written  consent of the others.  As used herein,
the term  "successor"  as it  relates to  Holdings,  shall  include,  but not be
limited  to, any  successor  by way of merger,  consolidation  or sale of all or
substantially all of such Person's assets or equity interests.

            6.8  Representation by Counsel;  Independent  Judgment.  Each of the
parties hereto acknowledges that (a) it or the Executive has read this Agreement
in its entirety and understands  all of its terms and conditions,  (b) it or the
Executive has had the  opportunity to consult with any individuals of its or the
Executive's choice regarding its or the Executive's  agreement to the provisions
contained herein,  including legal counsel of its or the Executive's choice, and
any decision not to was the Executive's or its alone and (c) it or the Executive
is entering into this Agreement of its or the Executive's own free will, without
coercion  from any source,  based upon its or the  Executive's  own  independent
judgment.

                                       17
<PAGE>

            6.9  Interpretation.  The parties and their respective legal counsel
actively participated in the negotiation and drafting of this Agreement,  and in
the event of any ambiguity or mistake  herein,  or any dispute among the parties
with respect to the provisions  hereto,  no provision of this Agreement shall be
construed  unfavorably  against  any  of the  parties  on the  ground  that  the
Executive, it, or the Executive's or its counsel was the drafter thereof.

            6.10  Survival.  The  provisions  of  Sections 5 and 6 hereof  shall
survive the termination of this  Agreement,  unless this Agreement is terminated
pursuant to the last sentence of Section 2.

            6.11 Notices.  All notices and communications  hereunder shall be in
writing and shall be deemed properly given and effective when received,  if sent
by facsimile or telecopy, or by postage prepaid by registered or certified mail,
return receipt  requested,  or by other delivery service which provides evidence
of delivery, as follows:

                  If to Holdings, to:

                  Bauble Holdings Corp.
                  2400 W. Central Rd.
                  Hoffman Estates, IL 60192
                  Attention: General Counsel

            with a copy (which shall not constitute notice) to:

                  Morgan Lewis & Bockius
                  101 Park Avenue
                  New York, NY  10178
                  Attention: Gary Rothstein, Esq.
                  Telephone: (212) 309-6360
                  Facsimile: (212) 309-6001
                  E-mail:  grothstein@morganlewis.com

                  If to the Executive, to:

                  Mark Smith
                  27 Farquhar Road
                  Edgbaston
                  Birmingham
                  B15 3RA

or to such other  address as one party may provide in writing to the other party
from time to time.

            6.12 No Conflicts. The Executive represents and warrants to Holdings
that his acceptance of employment and the performance of his duties for Holdings
will not conflict  with or result in a violation  or breach of, or  constitute a
default under any contract,  agreement or  understanding to which he is or was a
party or of which he is aware  and that  there are no  restrictions,  covenants,
agreements or  limitations on his right or ability to enter into and perform the
terms of this Agreement.

                                       18
<PAGE>

            6.13  Counterparts.  This  Agreement  may be executed in one or more
counterparts,  each of  which  shall  be  deemed  an  original  and all of which
together shall constitute one and the same instrument. Facsimile transmission of
any  signed  original   document  or  retransmission  of  any  signed  facsimile
transmission will be deemed the same as delivery of an original.  At the request
of any party,  the parties  will  confirm  facsimile  transmission  by signing a
duplicate original document.

            6.14 Captions. Paragraph headings are for convenience only and shall
not be considered a part of this Agreement.

            6.15 No Third  Party  Beneficiary  Rights.  In  accordance  with the
provisions of the Contracts  (Rights of Third Parties) Act,  except as otherwise
provided  in this  Agreement,  no entity  shall  have any right to  enforce  any
provision of this Agreement, even if indirectly benefited by it.

            6.16 Withholdings. Any payments provided for hereunder shall be paid
net of any  applicable  withholdings  required  under  applicable  law  and  any
additional  withholdings to which Executive has agreed.  For the purposes of the
Employment  Rights Act 1996,  sections 13-27,  the Executive  hereby  authorises
Holdings  to  deduct  from his  salary  and/or  any other  sums due  under  this
Agreement any sums due from him to Holdings including,  without limitation,  any
debits to his corporate credit card not authorised by Holdings,  the Executive's
pension contributions (if any), any overpayments,  loans or advances made to him
by  Holdings,  the cost of repairing  any damage or loss to  Holdings'  property
caused by him and any losses  suffered by Holdings as a result of any negligence
or breach of duty by the Executive.

            6.17 Grievance And Disciplinary Procedures. The Executive is subject
to Holdings' disciplinary procedure and grievance procedure. These procedures do
not form part of the Executive's contract of employment. If the Executive wishes
to appeal against a  disciplinary  decision he may apply in writing to do so, in
accordance with Holdings' disciplinary procedure.

            6.18 Collective Agreement.  The Executive acknowledges that there is
no collective agreement which directly affects his employment with Holdings.

            6.19 Data  Protection.  The Executive  acknowledges  and agrees that
Holdings is permitted to hold personal  information  about the Executive as part
of its personnel and other business  records and may use such information in the
course of Holdings'  business.  The Executive  agrees that Holdings may disclose
such  information  to third  parties  in the event  that such  disclosure  is in
Holdings' view required for the proper conduct of Holdings'  business or that of
any Group Company. This clause applies to information held, used or disclosed in
any medium.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       19
<PAGE>

      IN  WITNESS  WHEREOF,  the  parties  have duly  executed  this  Agreement,
intending  it to be signed and  delivered  as a deed,  to be  effective  for all
purposes as of the Closing Date.

                                   BAUBLE HOLDINGS CORP.

                                   By: /s/ Lance Milken
                                       -----------------------------------------
                                   Name: Lance Milken
                                         ---------------------------------------
                                   Title: Secretary
                                          --------------------------------------

                                   EXECUTIVE

                                   /s/  Mark Smith
                                   ---------------------------------------------
                                   Mark Smith

                                   Witness signature:

                                   Witness name:

                                   Witness address:

<PAGE>

                                                                       Exhibit A

                                  CLAIRE'S INC.
                              STOCK INCENTIVE PLAN

Section 1. Purpose

      The Plan authorizes the Committee to provide employees or directors of the
Company  or  its  subsidiaries,  who  are in a  position  to  contribute  to the
long-term success of the Company or its subsidiaries,  with Shares or Options to
acquire Shares in the Company.  The Company believes that this incentive program
will cause those  individuals  to increase  their interest in the welfare of the
Company and its  subsidiaries,  and aid in attracting,  retaining and motivating
individuals of outstanding ability.

Section 2. Definitions

      Capitalized  terms used herein  shall have the  meanings set forth in this
Section.

      (a)   "Affiliate" of any specified Person means any other Person,  whether
            now or hereafter  existing,  directly or indirectly  controlling  or
            controlled by, or under direct or indirect common control with, such
            specified Person.  For purposes hereof,  "control" or any other form
            thereof,  when used with  respect to any Person,  means the power to
            direct the  management  and  policies  of such  Person,  directly or
            indirectly,  whether through the ownership of voting securities,  by
            contract or otherwise;  and the terms "controlling" and "controlled"
            shall have meanings correlative to the foregoing.

      (b)   "Claire's  Investor"  shall mean any of Apollo  Investment  Fund VI,
            L.P., Apollo Investors Claire's A LLC, and Apollo Investors Claire's
            B LLC, and each of their successors or assigns.

      (c)   "Board" means the Board of Directors of the Company.

      (d)   "Cause"  shall have the meaning  ascribed  thereto in any  effective
            employment  agreement  between the Company or  subsidiaries  and the
            Grantee, or if no employment  agreement is in effect that contains a
            definition  of  cause,  then  Cause  shall  mean  a  finding  by the
            Committee  that the  Grantee  has (i)  committed a felony or a crime
            involving  moral   turpitude,   (ii)  committed  any  act  of  gross
            negligence  or  fraud,   (iii)  failed,   refused  or  neglected  to
            substantially perform his duties (other than by reason of a physical
            or mental  impairment) or to implement the reasonable  directives of
            the Company  (which,  if curable,  is not cured within 30 days after
            notice  thereof to the Grantee by the  Committee),  (iv)  materially
            violated any policy of the Company (which, if curable,  is not cured
            within  30  days  after  notice   thereof  to  the  Grantee  by  the
            Committee),  or (v) engaged in conduct that is materially  injurious
            to the Company, monetarily or otherwise.

                                       21
<PAGE>

      (e)   "Committee"  shall  mean the  Compensation  Committee  of the Board,
            unless a different committee is appointed by the Board to administer
            the Plan.

      (f)   "Company"  shall mean Claire's Inc., a corporation  organized  under
            the laws of the State of Delaware.

      (g)   "Disability"   shall  have  the  meaning  ascribed  thereto  in  any
            effective  employment agreement between the Company and the Grantee,
            or  if  no  employment  agreement  is  in  effect  that  contains  a
            definition of disability, then Disability shall mean any physical or
            mental  incapacitation  which  results in a Grantee's  inability  to
            perform his duties and responsibilities  hereunder, as determined by
            the  Committee  in its good  faith  judgment,  for a  period  of 180
            consecutive days.

      (h)   "Employee"  shall mean any individual that is providing  services to
            the Company or any of its subsidiaries as an employee or director.

      (i)   "Grant Letter" shall mean a letter,  certificate or other  agreement
            accepted by the Grantee, evidencing the grant of an Option hereunder
            and containing such terms and conditions,  not inconsistent with the
            express provisions of the Plan, as the Committee shall approve.

      (j)   "Grantee" shall mean an Employee granted an Option under the Plan.

      (k)   "ISO"  shall  mean any  Option or  portion  thereof  that  meets the
            requirements  of an incentive  stock option under Section 422 of the
            Internal  Revenue  Code  of  1986,  and  that is  designated  by the
            Committee to be an ISO.

      (l)   "Nonqualified  Option" shall mean any Option or portion thereof that
            is not an ISO.

      (m)   "Options"  shall  refer to options  issued  under and subject to the
            Plan.

      (n)   "Person" means any  individual,  corporation,  partnership,  limited
            liability  company,  joint  venture,  association,  business  trust,
            joint-stock company,  estate,  trust,  unincorporated  organization,
            government or other agency or political  subdivision  thereof or any
            other legal or commercial entity.

      (o)   "Plan" shall mean this Stock  Incentive Plan as set forth herein and
            as amended from time to time.

      (p)   "Qualified  IPO" means a sale by the Company of Shares in an initial
            underwritten (firm commitment) public offering  registered under the
            Securities  Act of 1933,  with gross  proceeds to the Company of not
            less than $300 million,  resulting in the listing of the Shares on a
            nationally  recognized stock exchange,  including without limitation
            the Nasdaq Stock Market.

                                       22
<PAGE>

      (q)   "Share" shall mean a share of common stock of the Company, or of any
            class of  security,  if any,  into  which such  common  stock may be
            converted or for which such common stock may be exchanged.

      (r)   "Specified Conduct" means a Grantee's (i) unauthorized disclosure of
            confidential  information relating to the Company or its Affiliates,
            (ii)  engaging,  directly or  indirectly,  as an employee,  partner,
            consultant,  director,  stockholder, owner, or agent in any business
            that is competitive with the businesses conducted by the Company and
            its Affiliates at the time of  termination of Grantee's  employment,
            (iii)  soliciting or inducing,  directly or indirectly,  any former,
            present  or  prospective  customer  or client of the  Company or its
            Affiliates  to purchase  any  services  or  products  offered by the
            Company or its Affiliates  from any Person other than the Company or
            its  Affiliates,  or  (iv)  hiring,  directly  or  indirectly,   any
            individual  who was an  employee  of the  Company or its  Affiliates
            within  the six  month  period  prior to  termination  of  Grantee's
            employment, or soliciting or inducing,  directly or indirectly,  any
            such  individual to terminate his or her employment with the Company
            or its Affiliates.

Section 3. Shares Available under the Plan

      Subject to the  provisions  of Section 7, the total  number of Shares that
may be issued under the Plan shall not exceed 6,160,300.  If, prior to exercise,
any awards are forfeited,  lapse or terminate for any reason without issuance of
Shares,  the Shares  covered  thereby may again be available  for Option  grants
under the Plan.

Section 4. Administration of the Plan

      (a)  Authority of the  Committee.  The Plan shall be  administered  by the
Committee.  The  Committee  shall  have  full and  final  authority  to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:

            (i) to  select  the  Employees  to whom  Options  or  Shares  may be
      granted;

            (ii) to  determine  the  number of Shares  awarded  or subject to an
      Option;

            (iii) to determine the terms and  conditions of any Shares or Option
      granted  under  the  Plan,  including  the  purchase  or  exercise  price,
      conditions relating to exercise, and termination of the right to exercise;

            (iv)  to  determine  whether  any  Option  shall  be  an  ISO  or  a
      Nonqualified Option;

            (v) to  determine  the  restrictions  or  conditions  related to the
      delivery, holding and disposition of Shares;

            (vi) to prescribe the form of each Grant Letter;

                                       23
<PAGE>

            (vii) to adopt,  amend,  suspend,  waive and rescind  such rules and
      regulations and appoint such agents as the Committee may deem necessary or
      advisable to administer the Plan;

            (viii) to correct any defect or supply any omission or reconcile any
      inconsistency  in the Plan and to construe and  interpret the Plan and any
      Option or award of Shares, or Grant Letter or other instrument  hereunder;
      and

            (ix)  to make  all  other  decisions  and  determinations  as may be
      required  under  the  terms  of the  Plan  or as the  Committee  may  deem
      necessary or advisable for the administration of the Plan.

      (b) Manner of Exercise of Committee Authority. Any action of the Committee
with respect to the Plan shall be final,  conclusive and binding on all Persons,
including the Company,  its  Affiliates,  Grantees,  or any Person  claiming any
rights  under the Plan from or  through  any  Grantee,  except to the extent the
Committee may subsequently  modify,  or take further action not consistent with,
its prior action.  If not specified in the Plan, the time at which the Committee
must or may make any determination shall be determined by the Committee, and any
such  determination  may  thereafter be modified by the  Committee.  The express
grant of any specific  power to the  Committee,  and the taking of any action by
the Committee,  shall not be construed as limiting any power or authority of the
Committee.  The Committee may delegate to officers or managers of the Company or
any  Affiliate  of the  Company  the  authority,  subject  to such  terms as the
Committee  shall  determine,  to perform  such  functions as the  Committee  may
determine, to the extent permitted under applicable law.

      (c)  Limitation  of  Liability.  Each  member  of the  Committee  shall be
entitled  to, in good  faith,  rely or act upon any report or other  information
furnished  to him by any officer or other  employee of the Company or any of its
Affiliates,  the  Company's  independent  certified  public  accountants  or any
executive compensation consultant,  legal counsel or other professional retained
by the  Company  to assist in the  administration  of the Plan.  To the  fullest
extent permitted by applicable law, no member of the Committee,  nor any officer
or  employee  of the  Company  acting  on  behalf  of the  Committee,  shall  be
personally liable for any action,  determination or interpretation taken or made
in good faith with respect to the Plan, and all members of the Committee and any
officer or  employee of the Company  acting on its behalf  shall,  to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action, determination or interpretation.

Section 5. Option Termination.

      Unless  otherwise  determined  by the  Committee  and set forth in a Grant
Letter, Options shall terminate on the earliest of:

            (a) the 91st day  following  the date the  Grantee  ceases  to be an
      Employee for any reason  (except if such  cessation is on account of death
      or Disability, the 181st day following such cessation); provided, however,
      that (i) in all cases the portion of any Option that did not vest prior to
      or upon the date of termination of employment or

                                       24
<PAGE>

      engagement  for  any  reason  shall   terminate   immediately   upon  such
      termination, and (ii) if such termination is for Cause, the vested portion
      shall terminate as well;

            (b) the seventh anniversary of the date of grant as set forth in the
      Grant Letter; and

            (c) cancellation,  termination or expiration of the Options pursuant
      to action taken by the Committee in accordance with Section 7.

Section 6. Exercise of Options

      (a) Only the vested  portion of any  Option  may be  exercised.  A Grantee
shall  exercise an Option by delivery of written  notice to the Company  setting
forth the number of Shares with respect to which the Option is to be  exercised,
together with cash, a certified  check or bank draft payable to the order of the
Company,  in amount equal to the sum of the  exercise  price for such Shares and
any  withholding tax obligation  arising in connection  with such exercise.  The
Committee may, in its sole discretion,  permit other forms of payment, including
notes or  other  contractual  obligations  of a  Grantee  to make  payment  on a
deferred basis.

      (b) Before the  Company  issues  any Shares to a Grantee  pursuant  to the
exercise  of an Option,  the  Company  shall have the right to require  that the
Grantee  make  such  provision,  or  furnish  the  Company  such  authorization,
necessary  or  desirable  so that the Company may satisfy its  obligation  under
applicable  tax laws to withhold  for income or other taxes due upon or incident
to such exercise. The Committee, may, in its discretion, permit such withholding
obligation  to be  satisfied  through  the  withholding  of  Shares  that  would
otherwise be delivered upon exercise of the Option.

      (c) As a  condition  to the grant of an Option or  delivery  of any Shares
upon exercise of an Option, the Company shall have the right to require that the
Grantee become party to any stockholders agreement then in effect.

Section 7. Adjustment Upon Changes in Capitalization

      In  the  event   any   recapitalization,   forward   or   reverse   split,
reorganization,   merger,  consolidation,   spin-off,  combination,  repurchase,
exchange or issuance of Shares or other securities,  any stock dividend or other
special and nonrecurring  dividend or distribution (whether in the form of cash,
securities  or other  property),  liquidation,  dissolution,  or  other  similar
transactions or events,  affects the Shares,  then the Committee shall make such
equitable  adjustment as it determines in its discretion is appropriate in order
to prevent  dilution or  enlargement  of the rights of Grantees  under the Plan,
including adjustment in (i) the number and kind of Shares deemed to be available
thereafter  for grants of Options or Shares under Section 3, (ii) the number and
kind of Shares that may be delivered or  deliverable  in respect of  outstanding
Options, and (iii) the exercise price. In addition,  the Committee is authorized
to make  such  adjustments  as it  shall in its sole  discretion  determine  are
appropriate  in the terms and  conditions  of,  and the  criteria  included  in,
Options and Shares (including,  without  limitation,  cancellation of Options in
exchange for the  in-the-money  value,  if any, of the vested  portion  thereof,
cancellation of unvested and/or  out-of-the-money  Options for no consideration,
substitution  of

                                       25
<PAGE>

Options using  securities of a successor or other  entity,  acceleration  of the
time that Options expire, or adjustment of performance  targets or the manner in
which they are  calculated)  in recognition  of unusual or  nonrecurring  events
(including,  without  limitation,  an event described in the preceding sentence)
affecting  the  Company,  the Claire's  Investors or any other  Affiliate of the
Company or the financial  statements of the Company,  the Claire's  Investors or
any  Affiliate of the  Company,  or in response to changes in  applicable  laws,
regulations or accounting principles.

Section 8. Restrictions/Rights on Shares.

      (a)  Restrictions  on  Issuing  Shares.  No  Shares  shall  be  issued  or
transferred to an Employee under the Plan unless and until all applicable  legal
requirements  have been complied with to the satisfaction of the Committee.  The
Committee  shall have the right to condition  the  acquisition  of Shares on the
Grantee's  undertaking  in  writing  to  comply  with such  restrictions  on any
subsequent  disposition  of the Shares issued or  transferred  thereunder as the
Committee  shall deem necessary or advisable as a result of any applicable  law,
regulation, official interpretation thereof, or any underwriting agreement.

      (b) ISO Notice.  A Grantee shall notify the Company of any  disposition of
Shares  acquired upon exercise of an ISO if such  disposition  occurs within one
year of the date of such  exercise  or within  two years of the date of grant of
such ISO.  The  Company  may impose  such  procedures  as it  determines  may be
necessary to ensure that such notification is made.

      (c) Transfer Restrictions.  Except for transfers made pursuant to Sections
8(d) or (e) below,  Shares  issued to a Grantee  pursuant to the Plan may not be
sold, pledged,  encumbered or otherwise  transferred,  other than by the laws of
decent and  distribution  (but such Shares shall in any event remain  subject to
the terms of the Plan and Grant Certificate).

      (d) Repurchase Right.  Unless otherwise  determined in a Grant Letter, the
Company shall have the right (but not the  obligation)  to repurchase any or all
of the Shares acquired upon exercise of the Options upon a Grantee's  ceasing to
be an Employee for any reason.  Such right shall be  exercisable  by the Company
during the one year period  following the later of the date of such cessation or
the date the Option is exercised.  The price per Share to be paid by the Company
should it choose to exercise  its  repurchase  right shall equal the fair market
value per share, as determined by the Board in good faith; provided, however, if
the Shares are to be repurchased following a termination for Cause, or if, prior
to such repurchase the Grantee engages in Specified Conduct,  then the price per
Share to be paid by the Company shall not exceed the price per Share paid by the
Grantee,  less any  distributions  paid in respect of such Share.  The price per
Share to be paid by the  Company  should it choose to  exercise  its  repurchase
right shall be paid in cash or by plain check against  delivery of  certificates
representing the repurchased Shares; provided that, if such payment would result
in a default or breach on the part of the  Company or any  subsidiary  under any
loan or other agreement, then payment shall be deferred until the first business
day that it may occur  without any such default or breach  existing or resulting
(and  such  deferral  shall  be  credited  with a  market  rate of  interest  as
determined by the Committee),  provided,  further that if such payment cannot be
made within two years of the date of such  repurchase,  the Grantee may elect to
cancel such  repurchase  and

                                       26
<PAGE>

receive a return of the repurchased  Shares.  The Company may offset against the
payment of the  repurchase  price any amounts owed by the Grantee to the Company
or any Affiliate of the Company.  Should the Company  choose not to exercise its
repurchase  right, or is otherwise  prohibited by law or contract from doing so,
any Claire's  Investor or its controlling  Affiliates may exercise such right as
if it were the Company.

      (e) Drag-Along Right. If one or more Claire's  Investors notifies a holder
of  Shares  issued  under  the  Plan  that it or  they  desires  to sell  Shares
representing  at least a majority of the  outstanding  Shares of the Company and
specifies the terms and conditions of such proposed  transfer,  then such holder
shall take all  necessary  and desirable  actions  reasonably  requested by such
Claire's  Investors in connection with the consummation of such sale, and within
ten (10)  business  days of the receipt of such notice (or such longer period of
time as such  Claire's  Investors  shall  designate  in such notice) such holder
shall  cause a pro  rata  number  of his  Shares  to be  sold to the  designated
purchaser on the same terms and conditions for the same per share  consideration
and at the same time as the Shares  being sold by such  Claire's  Investors.  In
furtherance,  and not in limitation, of the foregoing, in connection with such a
sale, such holder will, (i) consent to and raise no objections  against the sale
or the process  pursuant to which it was  arranged,  (ii) waive any  dissenter's
rights and other similar rights and (iii) execute all documents  containing such
terms and conditions as those executed by such Claire's Investors as directed by
such Claire's Investors.

      (f) Tag-Along  Right.  If one or more Claire's  Investors  desires to sell
Shares representing at least a majority of the outstanding Shares of the Company
(disregarding  any sale to Affiliates of such  Claire's  Investor),  the Company
shall  notify a holder of Shares in  writing.  After  such  notice,  a holder of
Shares issued under the Plan may, but is not  obligated  to, by written  notice,
request that such Claire's Investor cause such designated  purchaser to purchase
on the same terms and conditions as are  applicable to such Claire's  Investor's
Shares,  the number of such holder's Shares to be sold, which as a percentage of
such Holder's Shares shall not exceed the percentage of such Claire's Investor's
Shares to be sold.  The  Company  shall cause such  Claire's  Investor to agree,
within ten (10)  business  days of the  receipt of such  notice (or such  longer
period of time as such  Claire's  Investor  shall  designate  in such notice) to
cause such holder's  Shares to be purchased by the  designated  purchaser on the
same terms and conditions for the same per share  consideration  and at the same
time as the sale of the Claire's  Investor's Shares. In furtherance,  and not in
limitation,  of the foregoing, in connection with such a sale, such holder will,
(i) consent to and raise no objections  against the sale or the process pursuant
to which it was arranged,  (ii) waive any  dissenter's  rights and other similar
rights and (iii) execute all documents  containing  such terms and conditions as
those executed by such Claire's Investor as directed by such Claire's Investor.

      (g) Voting. Each holder of Shares issued under the Plan shall be deemed to
have  irrevocably  appointed  Apollo  Management  VI,  L.P. on behalf of certain
affiliated co-investment partnerships (with full power of substitution), as such
holder's proxy and  attorney-in-fact  (in such capacity,  the "Proxy Holder") to
vote and give or  withhold  consent,  with  respect to all  Shares  held by such
stockholder at any time, for all matters subject to the vote of such holder from
time to time in such manner as the Proxy Holder shall  determine in its sole and
absolute  discretion,  whether at any  meeting  (whether  annual or special  and
whether or not an  adjourned  meeting) of

                                       27
<PAGE>

the Company or by written consent or otherwise, giving and granting to the Proxy
Holder all powers such holder  would  possess if  personally  present and hereby
ratifying and confirming all that the Proxy Holder shall lawfully do or cause to
be done by virtue  hereof.  The Proxy Holder shall not have any liability to any
holder of  Shares as a result of any  action  taken or  failure  to take  action
pursuant to the foregoing  proxy except for any action or failure to take action
not taken or omitted in good faith or which involves intentional misconduct or a
knowing  violation of applicable law. The Company  acknowledges  the validity of
the foregoing irrevocable proxy, and agrees to recognize the Proxy Holder as the
sole attorney and proxy for each such holder of Shares at all times.

      (g) Qualified  IPO. The rights and  restrictions  contained in subsections
(d), (e) and (f) above shall lapse upon a Qualified IPO, and the restrictions in
paragraph (c) shall lapse on the first anniversary of a Qualified IPO; provided,
however,  that unless otherwise determined by the Committee,  each Grantee shall
enter into such  standstill  agreements  and related  agreements as the managing
underwriters of such Qualified IPO may request.

      (h) Certificates for Shares. Shares issued under the Plan may be evidenced
in such manner as the Committee shall  determine.  If certificates  representing
Shares are registered in the name of a Grantee,  such  certificates  may bear an
appropriate  legend  referring  to  the  terms,  conditions,   and  restrictions
applicable to such Shares, and the Company may retain physical possession of the
certificates,  in which case the Grantee  shall be required to have  delivered a
power of transfer to the Company, endorsed in blank, relating to the Shares.

      (i) Third Party  Beneficiaries  Rights.  The Claire's  Investors and their
Affiliates shall be third party beneficiaries under subsections (d) and (e), and
Apollo  Management VI, L.P. shall be a third party  beneficiary under subsection
(g), and they each shall be entitled to enforce  their rights  thereunder  as to
any Grantee.

Section 9. General Provisions

      (a) Grant Letter.  Each award under the Plan shall be evidenced by a Grant
Letter.  The terms and  provisions of such Grant Letters may vary among Grantees
and among different awards granted to the same Grantee.

      (b) No Right to  Employment.  The grant of an award  under the Plan in any
year shall not give the Grantee any right to similar grants in future years, any
right to continue such Grantee's employment relationship with the Company or its
Affiliates,  or, with respect to an Option,  until the Option is  exercised  and
Shares are issued,  any rights as a  stockholder  of the  Company.  All Grantees
shall remain  subject to discharge to the same extent as if the Plan were not in
effect. For purposes of the Plan, a Grantee shall cease to be an Employee upon a
sale of any  subsidiary  of the Company that  employs or engages  such  Grantee,
unless the Grantee shall otherwise  continue to provide  services to the Company
or another subsidiary of the Company as an employee or director.

      (c) No Funding.  No Grantee,  and no beneficiary or other Persons claiming
under or through the Grantee,  shall have any right, title or interest by reason
of any  award  under  the  Plan  to any  particular  assets  of the  Company  or
Affiliates of the Company,  or any Shares allocated or

                                       28
<PAGE>

reserved  for the  purposes  of the Plan or subject to any Option  except as set
forth  herein.  The Company  shall not be required to establish any fund or make
any  other  segregation  of  assets  to  assure  satisfaction  of the  Company's
obligations under the Plan.

      (d) No Transfers. No Option may be sold, transferred, assigned, pledged or
otherwise  encumbered,  except by will or the laws of descent and  distribution,
and an Option shall be  exercisable  during the  Grantee's  lifetime only by the
Grantee.  Upon a  Grantee's  death,  the  estate  or other  beneficiary  of such
deceased  Grantee  shall be subject to all the terms and  conditions of the Plan
and Grant Letter,  including the provisions  relating to the  termination of the
right to exercise an Option.

      (e)  Governing  Law;  Jurisdiction.  The  Plan  shall be  governed  by and
construed in accordance  with the laws of the State of Illinois,  without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Illinois or any other jurisdiction) that would cause the application of
the laws of any  jurisdiction  other than the State of  Illinois,  except to the
extent  that the  Delaware  General  Corporation  Law applies as a result of the
Company being incorporated in the State of Delaware,  in which case the Delaware
General Corporation Law shall apply. Each Grantee, and each beneficiary or other
Person claiming under or through the Grantee by accepting the grant of an Option
consents to the  exclusive  jurisdiction  of any state or federal  court located
within the State of Illinois, agrees that all actions or proceedings relating to
the Plan shall be  litigated  in such  courts,  waives any  defense of forum non
conveniens,  and  agrees  to be bound by any final  and  nonappealable  judgment
rendered  thereby in  connection  with the Plan.  To the extent the Grantee is a
party to an  employment  agreement  with the Company or any of its  subsidiaries
that provides for binding arbitration of employment disputes,  then any disputes
between the Company and such Grantee  arising under the Plan shall be arbitrated
in accordance with the procedures set forth in such employment agreement.

Section 10. Amendment or Termination

      In addition to its authority  elsewhere in the Plan, the Committee may, at
any time,  amend or terminate the Plan or any Grant Letter;  provided,  however,
that, no such action shall adversely  affect the rights of Grantees with respect
to Options or other  awards  previously  granted  hereunder  or under such Grant
Letter.

                                       29
<PAGE>

                                                                       Exhibit B

                              BAUBLE HOLDINGS CORP.
                         c/o Apollo Management VI, L.P.
                          10250 Constellation Boulevard
                                   Suite 2900
                              Los Angeles, CA 90067

May 29, 2007

Mark Smith
27 Farquhar Road
Edgbaston, Birmingham B15 3RA

Re: Grant of Stock Options

Dear Mark:

We are  pleased to inform  you that you have been  granted  options to  purchase
709,300 shares of common stock of Bauble  Holdings  Corp.  (the  "Company").  As
further  described below, the options have varying features  relating to vesting
and are  denominated  as an  "Investment  Option",  a "Time  Option"  a  "Target
Performance Option" and a "Stretch  Performance  Option".  These options and are
collectively referred to as the "Options", and the Target Performance Option and
the Stretch Performance Option are collectively  referred to as the "Performance
Options". The Time Option and the Performance Options have been granted pursuant
to the Company's Stock Incentive Plan (the "Plan"), a copy of which is attached,
and are  subject  in all  respects  to the  provisions  of the  Plan,  except as
specifically  modified hereby.  The Investment Option has not been granted under
the Plan and shall have no effect on the  number of options  that may be awarded
under the Plan. However,  in all other respects,  the Investment Option shall be
treated as if it were awarded under the Plan,  and shall be subject to the terms
and conditions of the Plan, except as specifically modified hereby.  Capitalized
terms not otherwise defined in the text are defined in the Plan.

1.    Investment Option: The key terms of the Investment Option are as follows:

      (a)   Number of Shares. 112,500

      (b)   Exercise Price per Share. US$10.00

      (c)   Vesting.  The  Investment  Option is fully  vested  and  immediately
            exercisable,  except to the extent  forfeitable  as  provided in the
            Letter  Agreement  between you and the Company  dated as of the date
            hereof relating to your Investment Shares as defined therein.

2.    Time Option: The key terms of the Time Option are as follows:

                                       30
<PAGE>

      (a)   Number of Shares. 223,800

      (b)   Exercise Price per Share. US$10.00

      (c)   Vesting.  The Time Option will vest and become  exercisable  in four
            equal  annual  installments  on May 29, 2008,  2009,  2010 and 2011,
            provided   that  the  Time  Option  will  become  fully  vested  and
            exercisable  immediately  prior to a "Change of Control" (as defined
            in the  Employment  Agreement  among you and the Company dated as of
            May 29, 2007 (the "Employment Agreement").

3.    Target Performance  Option: The key terms of the Target Performance Option
      are as follows:

      (a)   Number of Shares. 223,800

      (b)   Exercise Price per Share. US$10.00

      (c)   Vesting.

            (i)   If on any  Measurement  Date,  the Value  Per Share  equals or
                  exceeds  the  Target  Stock  Price  (the  "Target  Performance
                  Goal"),  then (1) if such  Measurement  Date is other than the
                  date  of  a  Bauble  Investors  Liquidity  Event,  the  Target
                  Performance  Option  will vest and become  exercisable  in two
                  equal   annual   installments   on  each  of  the   first  two
                  anniversaries  of such  Measurement  Date,  provided that if a
                  Change of Control occurs after any such Measurement  Date, any
                  unvested  installment  shall become  fully vested  immediately
                  prior to the Change of  Control,  and (2) if such  Measurement
                  Date is the date of a Bauble  Investors  Liquidity  Event, the
                  Target   Performance  Option  will  become  fully  vested  and
                  immediately exercisable at such time.

            (ii)  If, on any  Measurement  Date prior to a  Qualified  IPO,  the
                  Target  Performance Goal would be satisfied by disregarding in
                  the  calculation  of Net Equity Value,  some portion,  but not
                  all,  of your  Target  Performance  Option as well as  similar
                  target performance options granted to other employees,  then a
                  portion of your  Target  Performance  Option  shall  vest,  as
                  determined  by the Option  Committee  in a fair and  equitable
                  manner.

      (d)   Definitions.  For purposes of both the Target Performance Option and
            the Stretch Performance Option:

            (i)   "Bauble  Investors  Liquidity  Event"  means  any  transaction
                  (including,  without limitation,  a stock sale,  redemption or
                  buy back,  merger,  consolidation  or  otherwise)  immediately
                  following which all of the Shares held by all Bauble Investors
                  have been exchanged for or converted into  consideration,  all
                  or  substantially  all of which  consists  of cash or  readily
                  marketable   securities   that  the   Bauble   Investors   can
                  immediately  resell  for

                                       31
<PAGE>

                  cash at prevailing quoted prices without legal, contractual or
                  market restrictions.

            (ii)  "Fully Diluted  Shares" means,  on any  Measurement  Date, the
                  number  of  Shares  outstanding,  plus the  number  of  Shares
                  subject to all  outstanding  options,  warrants  and rights to
                  acquire Shares, whether or not exercisable.

            (iii) "Measurement  Date"  means (1) prior to a Qualified  IPO,  the
                  last day of any fiscal quarter,  starting with the last day of
                  the  eight  full  fiscal  quarter  after  May  29,  2007,  (2)
                  following a Qualified IPO, each trading day, starting with the
                  90th trading day following the Qualified  IPO, or (3) the date
                  of a Bauble Investors Liquidity Event, whether before or after
                  a Qualified IPO.

            (iv)  "Net Equity  Value" means (1) 8.5  multiplied by the Company's
                  consolidated   earnings,   before   interest,   income  taxes,
                  depreciation and  amortization  ("EBITDA") for the four fiscal
                  quarters  ending upon a Measurement  Date, plus (2) the sum of
                  cash, cash  equivalents,  and the aggregate  exercise price of
                  all  outstanding  options  or  warrants  to  purchase  Shares,
                  whether or not exercisable, in each case as of the Measurement
                  Date, less (3) debt as of the Measurement Date.  EBITDA,  cash
                  and debt shall be determined by the Option  Committee based on
                  the Company's financial statements for such period, subject to
                  such   adjustments  to  reflect   unusual,   nonrecurring   or
                  extraordinary  events  as  the  Option  Committee  shall  deem
                  equitable and appropriate.

            (v)   "Stretch Target Stock Price" means US$10.00, accumulated at an
                  effective  annual  rate  of  32%  from  May  29,  2007  to the
                  Measurement  Date,  provided that the Option  Committee  shall
                  make such  adjustment to the Stretch  Target Stock Price as it
                  reasonably  determines is equitable and appropriate to reflect
                  changes to the outstanding  Shares or capital structure of the
                  Company, including contributions and distributions of capital.

            (vi)  "Target  Stock  Price"  means  US$10.00,   accumulated  at  an
                  effective  annual  rate of  22.5%  from  May  29,  2007 to the
                  Measurement  Date,  provided that the Option  Committee  shall
                  make  such   adjustment  to  the  Target  Stock  Price  as  it
                  reasonably  determines is equitable and appropriate to reflect
                  changes to the outstanding  Shares or capital structure of the
                  Company, including contributions and distributions of capital.

            (vii) "Value Per Share" means (1) prior to a Qualified  IPO, the Net
                  Equity  Value  divided  by  the  Fully  Diluted  Shares,   (2)
                  following a Qualified  IPO,  the  average  closing  price of a
                  Share for the period of 90 consecutive  trading days ending on
                  the Measurement Date, or (3) upon a Bauble Investors Liquidity
                  Event, the price per Share realized by the Bauble Investors.

                                       32
<PAGE>

4.    Stretch  Performance  Option:  The key  terms of the  Stretch  Performance
      Option are as follows:

      (a)   Number of Shares. 149,200

      (b)   Exercise Price per Share. US$10.00

      (c)   Vesting.

            (i)   If on any  Measurement  Date,  the Value  Per Share  equals or
                  exceeds the  Stretch  Stock  Price (the  "Stretch  Performance
                  Goal"),  then (1) if such  Measurement  Date is other than the
                  date  of a  Bauble  Investors  Liquidity  Event,  the  Stretch
                  Performance  Option  will vest and become  exercisable  in two
                  equal   annual   installments   on  each  of  the   first  two
                  anniversaries  of such  Measurement  Date,  provided that if a
                  Change of Control occurs after any such Measurement  Date, any
                  unvested  installment  shall become  fully vested  immediately
                  prior to the Change of  Control,  and (2) if such  Measurement
                  Date is the date of a Bauble  Investors  Liquidity  Event, the
                  Stretch  Performance  Option  will  become  fully  vested  and
                  immediately exercisable at such time.

            (ii)  If, on any  Measurement  Date prior to a  Qualified  IPO,  the
                  Stretch Performance Goal would be satisfied by disregarding in
                  the  calculation  of Net Equity Value,  some portion,  but not
                  all,  of your  Stretch  Performance  Option as well as similar
                  stretch performance options granted to other employees, then a
                  portion of your  Stretch  Performance  Option  shall vest,  as
                  determined  by the Option  Committee  in a fair and  equitable
                  manner.

5.    Termination  of the Options:  Whether or not  exercisable  or scheduled to
      become exercisable, the Options will terminate as provided in Section 5 of
      the Plan;  provided that the  Performance  Options will terminate no later
      than  a  Bauble  Investors  Liquidity  Event  to  the  extent  the  Target
      Performance  Goal or  Stretch  Performance  Goal,  as  applicable,  is not
      achieved at such time, or was not previously achieved.

6.    Vesting  upon  Certain  Terminations.  As to  the  Time  Option  and  each
      Performance  Option where the applicable  Performance  Goal had previously
      been  achieved,  a portion  of each such  Option  will  become  vested and
      exercisable upon termination of your employment by reason of your death or
      "Total Disability",  as defined in your Employment Agreement, such portion
      to equal the  portion of each such  Option  that would have  vested on the
      next  scheduled  vesting  date  had  your  employment  not so  terminated,
      multiplied  by a fraction,  the  numerator  of which is the number of days
      that  elapsed  from  the  most  recent  vesting  date to the  date of such
      termination, and the denominator of which is 365.

7.    National  Insurance  Contributions.  By acceptance of these  Options,  you
      agree to indemnify  the Company and its  subsidiaries  for any  employer's
      Class 1 national  insurance  contributions  due on the  exercise  or other
      disposition of the Options.

                                       33
<PAGE>

We are  excited to give you this  opportunity  to share in our  future  success.
Please  indicate your  acceptance of this option grant and the terms of the Plan
by signing and returning a copy of this letter.

Sincerely,

BAUBLE HOLDINGS CORP.

By: /s/ Lance Milken
    -------------------------
Name: Lance Milken
Title: Secretary

Agreed to and Accepted by:

/s/ Mark Smith
-----------------------------
Mark Smith

                                       34
<PAGE>

                                                                       Exhibit C

                              BAUBLE HOLDINGS CORP.
                         c/o Apollo Management VI, L.P.
                          10250 Constellation Boulevard
                                   Suite 2900
                              Los Angeles, CA 90067

May 29, 2007

Mark Smith
27 Farquhar Road
Edgbaston, Birmingham B15 3RA

Re: Award of Shares

Dear Mark:

This will  evidence our  agreement,  effective  on May 29, 2007 (the  "Effective
Date"), relating to the award from Bauble Holdings Corp., a Delaware corporation
(the  "Company"),  of 162,500 shares of the Company's  common stock (the "Common
Stock") on the terms and  conditions  set forth in this  letter  agreement  (the
"Letter Agreement").  Of the 162,500 shares of Common Stock so awarded,  112,500
are  hereinafter   referred  to  as  the  "Investment  Shares"  and  50,000  are
hereinafter referred to as the "Incentive Shares", and collectively are referred
to as the "Shares".  Capitalized  terms used below and not otherwise  defined in
the text shall have the meaning set forth in paragraph 7.

1.    Vesting.  All of the Investment  Shares will be treated as "Vested Shares"
      on the Effective Date. The Incentive Shares will be "Unvested  Shares" and
      will  become  "Vested  Shares" as to 25% of the total  number of Shares on
      each of the first four anniversaries of the Effective Date,  provided that
      all of the  Unvested  Shares will become  Vested  Shares upon a "Change of
      Control" (as defined in the Employment Agreement among you and the Company
      dated as of May 29,  2007  (the  "Employment  Agreement")),  and  provided
      further that upon  termination of your  employment by reason of your death
      or "Total Disability" as defined in your Employment Agreement, a number of
      Unvested  Shares shall become  Vested  Shares as is equal to the number of
      Unvested Shares that would have become Vested Shares on the next scheduled
      vesting  date had  your  employment  not so  terminated,  multiplied  by a
      fraction,  the  numerator of which is the number of days that elapsed from
      the most  recent  vesting  date to the date of such  termination,  and the
      denominator of which is 365.

<PAGE>

2.    Forfeiture; Repurchase Right; Put Right.

            (a) Upon  termination  of your  employment  with the Company and its
      Affiliates for any reason,  all of your Unvested Shares shall  immediately
      be forfeited to the Company for no consideration.

            (b) The  Company  shall have the right (but not the  obligation)  to
      repurchase  any or all of your  Vested  Shares  upon  termination  of your
      employment with the Company and its Affiliates for any reason.  Such right
      shall be exercisable  by the Company during the one year period  following
      the date of such  termination  unless prior to the  Company's  exercise of
      such right you have disposed of the Shares in accordance with the terms of
      this Letter Agreement.  Notwithstanding the foregoing, this paragraph 2(b)
      shall not apply to any of the Investment Shares.

            (c) The price per Share to be paid by the  Company  should it choose
      to exercise its  repurchase  right  pursuant to paragraph 3(b) shall equal
      the Fair Market  Value per Share;  provided,  however,  that the price per
      Share to be paid by the  Company  shall  equal  the lower of the price per
      Share  you  paid to the  Company  (if  any),  less any  distributions  you
      received in respect of such Share,  or the Fair Market  Value per Share if
      the Shares are to be repurchased  following termination of your employment
      for  Cause,  or  are  to be  repurchased  following  your  termination  of
      employment  for any  reason,  and prior to such  repurchase  you engage in
      "Specified Conduct". For these purposes "Specified Conduct" means (i) your
      unauthorized  disclosure  of  confidential  information  relating  to  the
      Company or its Affiliates,  (ii) your engaging, directly or indirectly, as
      an employee, partner, consultant,  director,  stockholder, owner, or agent
      in any business that is competitive  with the businesses  conducted by the
      Company and its Affiliates at the time of your  termination of employment,
      (iii) your  soliciting or inducing,  directly or  indirectly,  any former,
      present or prospective customer or client of the Company or its Affiliates
      to  purchase  any  services  or  products  offered  by the  Company or its
      Affiliates  from any Person other than the Company or its  Affiliates,  or
      (iv) your  hiring,  directly  or  indirectly,  any  individual  who was an
      employee  of the  Company or its  Affiliates  within the six month  period
      prior to your  termination of employment,  or your soliciting or inducing,
      directly  or  indirectly,  any such  individual  to  terminate  his or her
      employment with the Company or its Affiliates.

            (d) The price per Share to be paid by the  Company  should it choose
      to exercise its  repurchase  right,  or should you choose to exercise your
      right under paragraph (f) below, shall be made paid by cash or plain check
      against delivery of certificates  representing  the Shares  repurchased by
      the Company.  The Company may offset against the payment of the repurchase
      price any  amounts  owed by you to the  Company  or any  Affiliate  of the
      Company.  In such case the amount owed will to the extent of the offset be
      treated as satisfied.

            (e) Should the Company choose not to exercise its repurchase  right,
      or is prohibited by law or contract from doing so, each Bauble Investor or
      its  controlling  Affiliates  may  exercise  such  right as if it were the
      Company.

            (f) Should your  employment  terminate  on or prior to December  31,
      2007 by reason of the  provision of a Notice of Expiration by either party
      under your  Employment  Agreement

<PAGE>

      on or before 31 October 2007, then you shall have the right, during the 30
      day  period  following  such  termination,   to  require  the  Company  to
      repurchase  up to 37,500  Investment  Shares for such  amount as  mutually
      agreed by you and the Company.  Should you choose to exercise  this right,
      your Investment Option which is being granted to you as of the date hereof
      as it  relates  to  37,500  shares of Common  Stock  shall be  immediately
      forfeited (or, to the extent already  exercised,  the shares acquired upon
      exercise  shall be forfeited  back to the Company and you shall  receive a
      return of your exercise price).

3.    Restrictions/Rights on Shares.

            (a) Drag-Along  Right. If one or more Bauble Investors  notifies you
      that it or they  desire to sell  shares of Common  Stock  representing  at
      least a majority of the outstanding  shares of Common Stock of the Company
      (disregarding  any  sale  to  Affiliates  of  such  Bauble  Investor)  and
      specifies the terms and conditions of such proposed  sale,  then you shall
      take all  necessary  and desirable  actions  reasonably  requested by such
      Bauble  Investors in connection  with the  consummation  of such sale, and
      within  ten (10)  business  days of the  receipt  of such  notice (or such
      longer  period of time as such Bauble  Investors  shall  designate in such
      notice) you shall cause a pro rata number of your Shares to be sold to the
      designated  purchaser  on the same terms and  conditions  for the same per
      share  consideration  and at the same time as the  shares of Common  Stock
      being  sold  by  such  Bauble  Investors.  In  furtherance,   and  not  in
      limitation,  of the foregoing,  in connection  with such a sale, you will,
      (i)  consent to and raise no  objections  against  the sale or the process
      pursuant to which it was arranged,  (ii) waive any dissenter's  rights and
      other similar rights and (iii) execute all documents containing such terms
      and conditions as those  executed by such Bauble  Investors as directed by
      such Bauble Investors.

            (b) Tag-Along Right. If one or more Bauble Investors desires to sell
      shares of Common Stock representing at least a majority of the outstanding
      shares of Common Stock of the Company (disregarding any sale to Affiliates
      of such Bauble  Investor),  the Company shall notify you in writing of the
      impending sale.  After such notice,  you may, but are not obligated to, by
      written  notice,  request that such Bauble  Investor cause such designated
      purchaser to purchase on the same terms and  conditions as are  applicable
      to such  Bauble  Investor's  Shares,  the number of your  shares of Common
      Stock to be sold,  which as a  percentage  of your shares of Common  Stock
      shall not exceed the  percentage  of such Bauble  Investor's  Shares to be
      sold.  The Company shall cause such Bauble  Investor to agree,  within ten
      (10) business days of the receipt of such notice (or such longer period of
      time as such Bauble Investor shall designate in such notice) to cause your
      shares of Common Stock to be purchased by the designated  purchaser on the
      same terms and conditions for the same per share  consideration and at the
      same time as the sale of the Bauble Investor's Shares. In furtherance, and
      not in limitation,  of the foregoing,  in connection with such a sale, you
      will,  (i)  consent  to and raise no  objections  against  the sale or the
      process  pursuant  to which it was  arranged,  (ii) waive any  dissenter's
      rights and other similar rights and (iii) execute all documents containing
      such terms and  conditions  as those  executed by such Bauble  Investor as
      directed by such Bauble Investor.

            (c) Restrictions on Transfer.  Except for transfers made pursuant to
      paragraphs  2,  3(a)  and  3(b),  the  Shares  may not be  sold,  pledged,
      encumbered or otherwise transferred,  other

<PAGE>

      than by the laws of decent and  distribution  (but the Shares shall in any
      event remain subject to the terms of this Letter Agreement).

            (d) Voting.  You hereby  irrevocably  appoint Apollo  Management VI,
      L.P. on behalf of certain affiliated co-investment partnerships (with full
      power  of  substitution),  as your  proxy  and  attorney-in-fact  (in such
      capacity,  the "Proxy Holder") to vote and give or withhold consent,  with
      respect  to all shares of Common  Stock  held by you at any time,  for all
      matters subject to your vote from time to time in such manner as the Proxy
      Holder shall determine in its sole and absolute discretion, whether at any
      meeting  (whether  annual  or  special  and  whether  or not an  adjourned
      meeting) of the  Company or by written  consent or  otherwise,  giving and
      granting to the Proxy  Holder all powers you would  possess if  personally
      present and hereby  ratifying  and  confirming  all that the Proxy  Holder
      shall lawfully do or cause to be done by virtue  hereof.  The Proxy Holder
      shall not have any  liability  to you as a result of any  action  taken or
      failure to take action  pursuant  to the  foregoing  proxy  except for any
      action or  failure  to take  action  not taken or omitted in good faith or
      which involves intentional misconduct or a knowing violation of applicable
      law.  You  hereby  affirm  that  this   irrevocable   proxy  is  given  in
      consideration  for the mutual  agreements  contained in this Agreement and
      that this irrevocable  proxy is coupled with an interest and may, under no
      circumstances,  be revoked. The Company hereby acknowledges receipt of and
      the validity of the foregoing  irrevocable  proxy, and agrees to recognize
      the Proxy Holder as the sole attorney and proxy for you at all times.  You
      intend  that  this  irrevocable  proxy  is  executed  and  intended  to be
      irrevocable  in  accordance  with the  provisions  of  Section  212 of the
      Delaware General Corporation Law.

            (e)  Qualified  IPO.  The   restrictions  and  rights  contained  in
      paragraphs 2(b), 3(a), 3(b) and 3(d) shall lapse upon a Qualified IPO, and
      the  restrictions  contained  in  paragraph  3(c) shall lapse on the first
      anniversary of a Qualified  IPO;  provided,  however,  that paragraph 3(c)
      shall remain in effect with  respect to Unvested  Shares until they become
      Vested Shares;  provided further,  that unless otherwise determined by the
      Company,  you shall  enter into such  standstill  agreements  and  related
      agreements as the managing underwriters of such Qualified IPO may request.

            (f) Certificates  for Shares.  The Shares issued may be evidenced in
      such manner as the Company shall determine.  If certificates  representing
      the Shares are registered in your name, the  certificates  evidencing your
      Shares may bear an appropriate legend referring to the terms,  conditions,
      and  restrictions  applicable  to your Shares,  and the Company may retain
      physical  possession  of the  certificates,  in which  case  you  shall be
      required to have delivered a power of transfer to the Company, endorsed in
      blank, relating to your Shares.

      4. Representations.

            (a) Authority.  You have the requisite power, authority and capacity
      to execute this Letter  Agreement  and to perform your  obligations  under
      this Letter  Agreement and to  consummate  the  transactions  contemplated
      hereby,  and your  acceptance  has  been  duly and  validly  executed  and
      delivered by you and constitutes your legal, valid and binding obligation,
      enforceable against you in accordance with its terms, except to the extent
      that such  validly  binding  effect and  enforceability  may be limited by
      applicable bankruptcy,

<PAGE>

      reorganization,  insolvency,  moratorium  and other  laws  relating  to or
      affecting creditors' rights generally.

            (b)  Shares  Unregistered.  You  acknowledge  that (i) the offer and
      sale,  or grant of the Shares  has not been  registered  under  applicable
      securities   laws;   (ii)  the  Shares   acquired  by  you  must  be  held
      indefinitely;  (iii) there is no established  market for the Shares and it
      is not  anticipated  that there will be any such  market for the Shares in
      the foreseeable  future; (iv) you are acquiring the Shares for the purpose
      of investment  and not with a view to, or for resale in  connection  with,
      the  distribution   thereof,   and  not  with  any  present  intention  of
      distributing  the Shares and you have no present plan or intention to sell
      any of the Shares; (v) you are an "accredited  investor" under Rule 501(a)
      of the  Securities  Act of 1933,  and your  knowledge  and  experience  in
      financial and business matters are such that you are capable of evaluating
      the merits and risks of your  investment in the Shares;  (vi) you and your
      representatives,  including your  professional,  financial,  tax and other
      advisors,  if any, have carefully  considered your proposed  investment in
      the Shares,  and you understand and have taken cognizance of (or have been
      advised by your  representatives  as to) the risk  factors  related to the
      acquisition of the Shares,  and no representations or warranties have been
      made to you or your representatives  concerning the Shares, the Company or
      the Company's  business,  operations,  financial condition or prospects or
      other  matters;  (vii) in making your decision to acquire the Shares,  you
      have relied upon independent investigations made by you and, to the extent
      believed by you to be appropriate,  your  representatives,  including your
      professional,  financial,  tax and other advisors,  if any; and (viii) you
      and your  representatives  have been given the  opportunity  to request to
      examine all documents of, and to ask questions of, and to receive  answers
      from,  the  Company  and its  representatives  concerning  the  terms  and
      conditions of the  acquisition  of the Shares and to obtain any additional
      information which you or your representatives deem necessary.

            (c)  Acknowledgement.  You  acknowledge:  (i) that this award of the
      opportunity  to accept the Shares is a  one-time  benefit,  which does not
      create  any  contractual  or other  right to  receive  future  awards,  or
      benefits in lieu of awards;  (ii) that all determinations  with respect to
      any such  future  awards,  including,  but not  limited to, the times when
      awards shall be granted,  the number of shares subject to each award,  the
      exercise  or purchase  price,  and the time or times when each award shall
      vest,  will be at the  sole  discretion  of the  Company;  (iii)  that the
      acceptance  of the Shares  shall not create a right to further  employment
      with the  Company  and  shall not  interfere  with the  Company's  or your
      ability to  terminate  your  employment  relationship  at any time with or
      without cause; (iv) that your acceptance the Shares is voluntary;  and (v)
      that  this  award is not  part of  normal  or  expected  compensation  for
      purposes of calculating  any severance,  resignation,  redundancy,  end of
      service  payments,  bonuses,  long-service  awards,  pension or retirement
      benefits or similar payments.

5.    Withholding.  The Company shall have the right to withhold from any amount
      payable or  allocable  to you such amounts as may be required in order for
      the Company to satisfy any  withholding  obligation that it may have under
      applicable law, and may condition the vesting of any Shares on your making
      arrangements   necessary  to  enable  the  Company  to  satisfy  any  such
      withholding obligation.

<PAGE>

6.    Definitions.

            (a) "Affiliate"  means, with respect to any Person, any other Person
      that  controls,  is  controlled  by or is under  common  control with such
      Person. For the purposes of this definition,  "control"  (including,  with
      its  correlative  meanings,  the terms  "controlled  by" and "under common
      control  with"),  as used  with  respect  to any  Person,  shall  mean the
      possession,  directly or  indirectly,  of the power to direct or cause the
      direction of the management and policies of such Person,  whether  through
      the ownership of securities, by contract or otherwise.

            (b) "Bauble  Investor" shall mean any of Apollo  Investment Fund VI,
      L.P.,  Apollo Investors  Claire's A LLC, and Apollo  Investors  Claire's B
      LLC, and each of their successors or assigns.

            (c)  "Cause"  shall  have  the  meaning   ascribed  thereto  in  the
      Employment Agreement.

            (d) "Fair  Market  Value" of the  Shares on any given  date shall be
      determined in good faith by the Board of Directors of the Company,  taking
      into account such factors as the Board determines are appropriate.

            (e) "Person" means an individual, partnership,  corporation, limited
      liability  company or  partnership,  trust,  unincorporated  organization,
      joint venture,  government (or agency or political subdivision thereof) or
      any other entity of any kind.

            (f) "Qualified  IPO" means a sale by the Company of shares of Common
      Stock  in  an  initial  underwritten  (firm  commitment)  public  offering
      registered  under the Securities  Act of 1933,  with gross proceeds to the
      Company of not less than $300  million,  resulting  in the  listing of the
      common stock on a nationally recognized stock exchange,  including without
      limitation the Nasdaq National Market System.

      7. Employee Data Privacy.  As a condition of the award of this opportunity
to receive  the  Shares,  you  consent to the  collection,  use and  transfer of
personal data as described in this paragraph 7. You understand  that the Company
and its Affiliates hold certain personal  information  about you including,  but
not limited to, your name,  home address and  telephone  number,  date of birth,
social  security  number,  salary,  nationality,  job  title,  common  shares or
directorships  held in the Company,  details of all other  entitlement to common
shares awarded,  cancelled,  exercised,  vested, unvested or outstanding in your
favor,  for  the  purpose  of  managing  and  administering  the  award  of this
opportunity to receive Shares ("Data").  You further understand that the Company
and/or its Affiliates will transfer Data amongst themselves as necessary for the
purposes of  implementation,  administration  and management of this award,  and
that the Company and/or any of its Affiliates may each further  transfer Data to
any third parties assisting the Company in such  implementation,  administration
and management. You authorize them to receive, possess, use, retain and transfer
Data  in   electronic  or  other  form,   for  the  purposes  of   implementing,
administering  and managing  the award of this  opportunity  to receive  Shares,
including  any  requisite  transfer  of  such  Data as may be  required  for the
administration of this award and/or the subsequent holding common shares on your
behalf  to a broker  or other  third  party  with whom the  shares  acquired  on

<PAGE>

exercise may be deposited.  You understand that he or she may, at any time, view
the Data, require any necessary  amendments to it or withdraw the consent herein
in writing by contacting the local human resources representative.

8.    Third Party  Beneficiaries  Rights.  Bauble Investors and their Affiliates
      shall be third party  beneficiaries  under paragraphs 2(e) and 3(a) above,
      and Apollo  Management VI, L.P. shall be a third party  beneficiary  under
      paragraph  3(d),  and they each shall be entitled to enforce  their rights
      thereunder.

9.    Confidentiality. You agree not to disclose or discuss in any way the terms
      of this  offer to or with  anyone  other than  members  of your  immediate
      family,  or your  personal  counsel or  financial  advisors  (and you will
      advise such persons of the confidential nature of this offer).

10.   Governing  Law. All questions  concerning the  construction,  validity and
      interpretation of this Letter Agreement shall be governed and construed in
      accordance with the domestic laws of the State of Illinois, without giving
      effect to any choice of law or conflict of law  provision or rule (whether
      of the State of Illinois or any other  jurisdiction)  that would cause the
      application  of the  laws of any  jurisdiction  other  than  the  State of
      Illinois, except to the extent that laws of the Delaware apply as a result
      of the Company being incorporated in Delaware.

                                     * * * *

Sincerely,

BAUBLE HOLDINGS CORP.

By: /s/ Lance Milken
    --------------------------
Name: Lance Milken
Title: Secretary

Agreed to and Accepted by:

/s/ Mark Smith
------------------------------
Mark Smith

<PAGE>

                                                                       EXHIBIT D

                         Definition of Change of Control

      "Change of Control" means:

      (1) any event  occurs  the result of which is that any  "Person,"  as such
term is used in Sections  13(d) and 14(d) of the Exchange Act, other than one or
more Permitted  Holders or their Related Parties,  becomes the beneficial owner,
as defined in Rules l3d-3 and l3d-5 under the Exchange Act (except that a Person
shall be deemed  to have  "beneficial  ownership"  of all  shares  that any such
Person has the right to acquire within one year) directly or indirectly, of more
than 50% of the Voting Stock of Holdings or any  successor  company,  including,
without  limitation,  through a merger or  consolidation  or  purchase of Voting
Stock of Holdings;  provided that none of the Permitted Holders or their Related
Parties  have the right or ability by voting  power,  contract or  otherwise  to
elect or designate for election a majority of the Board;  provided  further that
the  transfer  of 100% of the Voting  Stock of  Holdings to a Person that has an
ownership structure  identical to that of Holdings prior to such transfer,  such
that Holdings  becomes a wholly owned  Subsidiary  of such Person,  shall not be
treated as a Change of Control;

      (2) after an initial public offering of Capital Stock of Holdings,  during
any period of two (2)consecutive years, individuals who at the beginning of such
period constituted the Board,  together with any new directors whose election by
such Board or whose  nomination for election by the stockholders of Holdings was
approved by a vote of a majority  of the  directors  of  Holdings  then still in
office  who were  either  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 Board then in office;

      (3) the sale, lease, transfer,  conveyance or other disposition, in one or
a series of related transactions other than a merger or consolidation, of all or
substantially  all of the assets of  Holdings  and its  Subsidiaries  taken as a
whole to any Person or group of related Persons other than a Permitted Holder or
a Related Party of a Permitted Holder; or

      (4) the adoption of a plan relating to the  liquidation  or dissolution of
Holdings.

      For  purposes  of this  definition,  the  following  terms  shall have the
meanings set forth below:

      An "Affiliate" of any specified Person means any other Person, whether now
or hereafter existing,  directly or indirectly  controlling or controlled by, or
under  direct or indirect  common  control  with,  such  specified  Person.  For
purposes hereof,  "control" or any other form thereof, when used with respect to
any  Person,  means the power to direct  the  management  and  policies  of such
Person,  directly  or  indirectly,  whether  through  the  ownership  of  voting
securities,   by  contract  or  otherwise;   and  the  terms  "controlling"  and
"controlled" shall have meanings correlative to the foregoing.

      "Apollo" means Apollo  Management V, L.P. and its Affiliates or any entity
controlled thereby or any of the partners thereof.

<PAGE>

      "Board" means the Board of Directors of Holdings or any committee  thereof
duly authorized to act on behalf of such Board of Directors.

      "Capital Stock" of any Person means any and all shares, interests,  rights
to  purchase,  warrants,  options,  participations  or other  equivalents  of or
interests in, however designated, equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      "Holdings" means Bauble Holdings Corp., a Delaware corporation.

      "Permitted Holder" means Apollo.

      "Person" means any individual, corporation, partnership, limited liability
company,  joint  venture,  association,  business  trust,  joint-stock  company,
estate,  trust,  unincorporated  organization,  government  or other  agency  or
political subdivision thereof or any other legal or commercial entity.

      "Preferred Stock" as applied to the Capital Stock of any corporation means
Capital Stock of any class or classes, however designated,  that is preferred as
to the  payment  of  dividends,  or as to the  distribution  of assets  upon any
voluntary or involuntary  liquidation or dissolution of such  corporation,  over
shares of Capital Stock of any other class of such corporation.

      "Related Party" means:

      (1) any  controlling  stockholder,  50% (or  more)  owned  Subsidiary,  or
immediate family member (in the case of an individual) of any Permitted  Holder;
or

      (2) any trust,  corporation,  partnership,  limited  liability  company or
other entity,  the beneficiaries,  stockholders,  partners,  members,  owners or
Persons beneficially holding a 50% or more controlling interest of which consist
of any one or more Permitted  Holders  and/or such other Persons  referred to in
the immediately preceding clause (1).

      "Subsidiary" means, with respect to any specified Person:

      (1) any  corporation,  association or other business  entity of which more
than 50% of the total voting power of shares of Capital Stock entitled  (without
regard to the  occurrence  of any  contingency  and after  giving  effect to any
voting  agreement or stockholders'  agreement that effectively  transfers voting
power)  to vote in the  election  of  directors,  managers  or  trustees  of the
corporation,  association  or other  business  entity  is at the  time  owned or
controlled,  directly or indirectly,  by that Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and

      (2) any partnership (a) the sole general  partner or the managing  general
partner of which is such  Person or a  Subsidiary of such Person or (b) the only
general  partners of which are that Person or one or more  Subsidiaries  of that
Person (or any combination thereof).

<PAGE>

      "Voting  Stock" of an entity  means all  classes of Capital  Stock of such
entity  then  outstanding  and  normally  entitled  to vote in the  election  of
directors  or all  interests  in such  entity  with the  ability to control  the
management or actions of such entity.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00134-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00134-of-00352.parquet"}]]