As of June 16, 2005

Ms. Joyce Manning Magrini
122 Clarewill Avenue
Upper Montclair, NJ 07043

Dear Ms. Magrini:

         We write to set forth our agreement with respect to your continued
employment by Finlay Fine Jewelry Corporation (the "Company").

         1.       The Company hereby agrees to continue to employ you, and you
agree to continue to be employed by the Company, on the terms and conditions
hereinafter set forth. You will serve as Executive Vice President -
Administration of the Company and you will hold such other offices in the
Company and its parent company, subsidiaries and divisions to which you may from
time to time be appointed or elected. You agree to serve the Company faithfully
and to the best of your ability, to promote the Company's best interests and to
devote your full working time, energy and skills to the Company's business.

         2.       (a) As full compensation for your services hereunder
(including services, if any, as an officer of the Company and an officer and
director of its subsidiaries and divisions), you shall receive base salary
("Base Salary") at the rate of $325,000 per annum, payable in equal monthly
installments and an annual bonus payable on or about April 25th during each year
of the term hereof based on the attainment of financial goals as set by the
Company's Compensation Committee ("Annual Bonus"), less all applicable
withholding taxes and lawful deductions. The Company shall include you in any
employee benefit plans and other fringe benefit programs that it maintains for
senior executives. The Company shall reimburse you for your ordinary and
necessary business expenses incurred in the course of your performance of
services hereunder, subject to submission of adequate substantiation thereof and
to conformance with the Company's regular policies from time to time in effect
with respect to reimbursement of expenses.

                  (b) Nothing in this Agreement shall prevent the Company from
increasing the compensation to be paid to you if the Company shall determine it
advisable to do so in order to compensate you fairly for services rendered.

Ms. Joyce Manning Magrini
Page 2
As of June 16, 2005

                  (c) Notwithstanding anything herein to the contrary, in the
event that you are employed by the Company on June 30, 2008, you shall receive,
with the Company's regular July 2008 payroll cycle, in addition to your Base
Salary and Annual Bonus, a special bonus equal to 50% of your then current Base
Salary.

         3.       (a) The term of your employment hereunder shall continue until
the earliest of the following dates: (a) June 30, 2008 (b) the day on which you
die; (c) such date as the Company terminates your employment for "good cause";
(d) if you become "Totally Disabled" or (e) the day on which you voluntarily
resign. For purposes of this Agreement, you shall be Totally Disabled if, based
upon appropriate medical evidence, you are physically or mentally incapacitated
so as to render you incapable of performing the essential functions of your job
duties and such incapacity cannot be reasonably accommodated by the Company
without undue hardship. In the event your employment continues after the
expiration of the term without a superceding employment agreement, you will be
deemed to be an employee at-will of the Company whose employment may be
terminated by either the Company or you at any time, with or without notice or
cause.

                  (b) The Company shall have "good cause" to terminate your
employment (i) if you have substantially failed to perform your job duties, (ii)
in the event of your willful misconduct in connection with your employment or
intentional breach of any of the Company's policies, (iii) if you have been
convicted of, or plead nolo contendere to, any crime constituting a felony under
the laws of The United States or any State thereof, or any crime constituting a
misdemeanor under any such law involving moral turpitude, or (iv) if you breach
any provision of this Agreement which you have failed to cure within ten
business days after written notice to you of such breach.

         4.       (a) If the Company terminates your employment at any time for
any reason whatsoever, without "good cause", following your execution of a
release and waiver of all claims against the Company, you shall be entitled to
receive, as severance pay, in a lump sum, an amount equal to the greater of (i)
your Base Salary at your then current rate up to and including June 30, 2008 or
(ii) one year's Base Salary at your then current rate plus one year's bonus
calculated by averaging the Annual Bonus amounts paid or payable to you over the
course of the prior three fiscal years.

Ms. Joyce Manning Magrini
Page 3
As of June 16, 2005

                  (b) In the event your employment is terminated by reason of
your death, Total Disability, by you voluntarily or by the Company with or
without "good cause", you shall receive (i) any accrued but unpaid salary for
services rendered through and including the date of your death, Total
Disability, resignation or termination, as the case may be, (ii) any accrued but
unpaid expenses and (iii) any benefits to which you may be entitled pursuant to
the Company's employee benefits plans then in effect.

                  (c) This Agreement supercedes and is in lieu of any other
severance payments to which you may be entitled under any other severance plans
or arrangements maintained by the Company, whether now existing or hereafter
implemented.

         5.       (a) During the period commencing on the date hereof and
ending on the later to occur of (i) one year following the termination of your
employment, or (ii) June 30, 2008, you shall not (1) directly or indirectly,
engage or be interested in any fine jewelry business or (2) on behalf of
yourself or any business in which you may, directly or indirectly, be engaged or
interested, employ or otherwise engage, or seek to employ or engage, any
individual employed by the Company at any time during your employment hereunder.
You will be considered to be engaged or interested in a business if you engage
or are interested in such business as a stockholder, director, officer,
employee, agent, broker, partner, individual proprietor, lender, consultant or
in any capacity, except that nothing herein contained will prevent you from
owning less than 1% of any class of equity or debt securities listed on a
national securities exchange or traded in any established over-the-counter
securities market.

                  (b) During the term of your employment hereunder and for a
period of two years thereafter, or as otherwise required by law, whichever is
longer, you will not knowingly divulge, furnish or make accessible to any third
person or organization, other than in the regular course of the Company's
business, any confidential information concerning the Company, its parent,
subsidiaries or affiliates or its or their business or affairs, including
without limitation, confidential methods of operation and organization, employee
information including salaries and qualifications, confidential sources of
supply and customer lists, and you shall not disparage the Company, its business
or affairs or any individual connected with the Company.

Ms. Joyce Manning Magrini
Page 4
As of June 16, 2005

                  (c) In the event of any breach or threatened or attempted
breach of this paragraph 5, the Company shall be entitled to a decree of
specific performance and to a temporary and permanent injunction enforcing such
provisions without being required to prove actual damage or to post bond or
furnish other security. In any proceeding brought to enforce the provisions of
this paragraph 5, the party who prevails shall be entitled to recover its
reasonable costs, including attorneys' fees, from the losing party.

         6.       This letter sets forth our final and entire agreement with
respect to its subject matter, cannot be changed, waived or terminated orally
and shall be governed by the internal law of the State of New York (without
reference to its rules as to conflicts of laws). The parties agree that any
action or proceeding with respect to this Agreement shall be brought in a court
of competent jurisdiction in the City, County and State of New York and that all
claims with respect to an inconvenient forum are irrevocably waived. This
Agreement shall bind and benefit the parties and their respective successors and
assigns, but no right or obligation hereunder may be assigned without the other
party's written consent, except by the Company to an enterprise that succeeds to
a substantial portion of its business or assets by purchase, merger,
consolidation or otherwise.

         7.       If any provision of this Agreement shall be held to be invalid
or unenforceable, such invalidity or unenforceability shall attach only to such
provisions and shall not affect or render invalid or unenforceable any other
provision of this Agreement and this Agreement shall be construed as if such
provision had been drawn so as not to be invalid or unenforceable. The language
in this Agreement shall be construed according to its fair meaning and not
strictly for or against either party because that party drafted it.

Ms. Joyce Manning Magrini
Page 5
As of June 16, 2005

         If the forgoing correctly sets forth your understanding of our
agreement, please so indicate by signing and returning to us a copy of this
letter.

                                         FINLAY FINE JEWELRY CORPORATION

                                         By /s/ Arthur E. Reiner
                                            ---------------------------
                                           Arthur E. Reiner
                                           Chairman & CEO

ACCEPTED AND AGREED TO:

/s/ Joyce Manning Magrini
-------------------------------
Joyce Manning Magrini