AMENDED AND RESTATED SECURITY AGREEMENT

     AMENDED AND RESTATED  SECURITY  AGREEMENT (this  "Agreement"),  dated as of
March 30, 2001, between FINLAY FINE JEWELRY CORPORATION,  a Delaware corporation
("Finlay"),  eFINLAY, INC., a Delaware corporation ("eFinlay" and, together with
Finlay and such other  Subsidiaries of Finlay which may from time to time become
party hereto, the "Companies"),  and SOVEREIGN BANK (successor to Fleet National
Bank, f/k/a BankBoston, N.A., f/k/a The First National Bank of Boston, successor
to Rhode Island Hospital Trust National Bank) ("Sovereign"),  a national banking
association  (hereinafter,  in such capacity,  the "Agent") for itself and other
banking institutions (hereinafter,  collectively,  the "Institutions") which are
or may become parties to an Amended and Restated Gold  Consignment  Agreement of
even date herewith (as amended,  restated or modified and in effect from time to
time, the "Consignment  Agreement"),  among the Companies,  the Institutions and
the Agent.

     WHEREAS,  Finlay entered into a Gold Consignment Agreement dated as of June
15,  1995 (as  amended or  otherwise  modified  and in effect  from time to time
immediately  prior to the date hereof,  the "Original  Consignment  Agreement"),
with Sovereign, pursuant to which Sovereign, subject to the terms and conditions
contained  therein,  agreed  to make  Purchases  and  Consignments  (as  defined
therein) to Finlay;

     WHEREAS, Finlay entered into a Security Agreement dated as of June 15, 1995
(as amended or otherwise  modified  and in effect from time to time  immediately
prior to the  date  hereof,  the  "Original  Finlay  Security  Agreement")  with
Sovereign,  pursuant to which Finlay provided  collateral security to secure the
due and prompt payment and  performance of all of its Obligations (as defined in
the Original Consignment Agreement);

     WHEREAS,  eFinlay entered into the eFinlay Guaranty,  dated as of September
29,  2000 (as  amended or  otherwise  modified  and in effect  from time to time
immediately  prior to the date hereof,  the "eFinlay  Guaranty") with Sovereign,
pursuant to which eFinlay  guaranteed all of the  Obligations (as defined in the
Original Consignment Agreement);

     WHEREAS,  eFinlay entered into the eFinlay  Security  Agreement dated as of
September 29, 2000 (as amended or otherwise  modified and in effect from time to
time  immediately  prior to the date  hereof,  the  "Original  eFinlay  Security
Agreement")  with  Sovereign,  pursuant  to which  eFinlay  provided  collateral
security  to secure the due and prompt  payment and  performance  of the eFinlay
Guaranty;

     WHEREAS,  Finlay and eFinlay have entered into the  Consignment  Agreement,
pursuant to which Finlay, eFinlay, the Agent and the Institutions have

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amended and restated the Original  Consignment  Agreement in its  entirety,  and
pursuant  to which the  Agent,  subject  to the terms and  conditions  contained
therein,  agrees to make  Purchases  and  Consignments  (as defined  therein) to
Finlay and eFinlay on behalf the Institutions;

     WHEREAS,  it is a condition  precedent to the Agent's  making any Purchases
and Consignments to Finlay and eFinlay under the Consignment Agreement on behalf
of the  Institutions  that  Finlay and eFinlay  amend and  restate the  Original
Finlay Security  Agreement and the Original eFinlay Security  Agreement in order
to confirm and continue the provision of  collateral  security to secure the due
and prompt payment and performance of all of Finlay's and eFinlay's  Obligations
(as defined in the Consignment Agreement, the "Obligations"); and

     WHEREAS, each Company (including,  without limitation,  Finlay and eFinlay)
wishes to grant security interests in favor of the Agent, for the benefit of the
Institutions and the Agent, as herein provided;

     NOW,  THEREFORE,  in consideration of the promises contained herein and for
other good and valuable consideration,  the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

     1. Definitions. All capitalized terms used herein without definitions shall
have the respective meanings provided therefor in the Consignment Agreement. All
terms  defined  in  the  Uniform   Commercial   Code  of  the   Commonwealth  of
Massachusetts  and  used  herein  shall  have  the same  definitions  herein  as
specified therein.

     2. Grant of Security Interest.

          2.1.  Collateral  Granted.  Subject to the terms and provisions of the
     Intercreditor  Agreement,  each Company hereby grants to the Agent, for the
     benefit of the  Institutions  and the  Agent,  to secure  the  payment  and
     performance in full of all of the Obligations,  a security  interest in and
     so pledges  and assigns to the Agent,  for the benefit of the  Institutions
     and the Agent, the following properties, assets and rights of such Company,
     wherever located,  whether now owned or hereafter acquired or arising,  and
     all proceeds and products thereof (all of the same being hereinafter called
     the "Collateral"):

               All  Specified  Gold  Jewelry,  the Cash  Collateral  Account (as
          defined in the Cash Collateral Agreement),  all sums from time to time
          in the Cash  Collateral  Account and all Time  Deposits (as defined in
          the Cash Collateral Agreement).

          2.2.  Delivery of Instruments,  etc.  Pursuant to the terms hereof and
     subject  to the terms of the  Intercreditor  Agreement,  each  Company  has
     endorsed,   assigned  and   delivered  to  the  Agent  all   negotiable  or
     non-negotiable

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     instruments,  certificated  securities  and  chattel  paper  pledged  by it
     hereunder,  together  with  instruments  of  transfer  or  assignment  duly
     executed  in blank as the Agent may have  specified.  In the event that any
     Company  shall,  after  the  date  of this  Agreement,  acquire  any  other
     negotiable  or  non-negotiable  instruments,   certificated  securities  or
     chattel paper to be pledged by it hereunder,  such Company shall  forthwith
     endorse,  assign and  deliver  the same to the Agent,  accompanied  by such
     instruments  of transfer or assignment  duly executed in blank as the Agent
     may from time to time specify.

          2.3. Cash Collateral Agreement.  Concurrently herewith each Company is
     also  executing and delivering to the Agent the Cash  Collateral  Agreement
     pursuant to which each Company is granting a security  interest in favor of
     and  pledging  to the Agent,  for the benefit of the  Institutions  and the
     Agent,  certain  Collateral  consisting of the Cash Collateral  Account (as
     defined therein), all sums from time to time in the Cash Collateral Account
     and all Time  Deposits (as defined  therein).  The  provisions  of the Cash
     Collateral  Agreement are supplemental to the provisions of this Agreement,
     and nothing contained in the Cash Collateral  Agreement shall derogate from
     any of the  rights  or  remedies  of the  Agent or any of the  Institutions
     hereunder. Nor shall anything contained in the Cash Collateral Agreement be
     deemed to prevent or extend the time of  attachment  or  perfection  of any
     security interest in such Collateral created hereby.

     3. Title to Collateral,  etc. Subject to the provisions of ss.2.1(c) of the
Consignment  Agreement,  the Companies are the owner of the Collateral free from
any  adverse  lien,  security  interest  or other  encumbrance,  except  for the
security  interest  created by this  Agreement and other liens  permitted by the
Consignment Agreement.  None of the Collateral  constitutes,  or is the proceeds
of, "farm products" as defined in ss.9-109(3) of the Uniform  Commercial Code of
the Commonwealth of Massachusetts. None of the account debtors in respect of any
accounts,  chattel  paper or general  intangibles  and none of the  obligors  in
respect  of  any  instruments  included  in  the  Collateral  is a  governmental
authority subject to the Federal Assignment of Claims Act.

     4. Continuous Perfection. Each Company's place of business or, if more than
one,  chief  executive  office  is  indicated  on  the  Perfection  Certificates
delivered to the Agent herewith (the "Perfection Certificates"). No Company will
change the same, or the name,  identity or corporate structure of any Company in
any manner,  without providing at least thirty (30) days prior written notice to
the Agent. The Collateral,  to the extent not delivered to the Agent pursuant to
ss.2.2 or the Cash Collateral Agreement,  will be kept at those locations listed
on the Perfection  Certificates  and no Company will remove the Collateral  from
such locations, without providing at least thirty (30) days prior written notice
to the Agent (or, to the extent that the giving of such prior written  notice is
impracticable,  as soon as is  practicable,  but in any  event not less than ten
(10) days prior written notice).

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     5. No Liens.  Except for the  security  interest  herein  granted and liens
permitted by the Consignment Agreement,  the Companies shall be the owner of the
Collateral free from any lien, security interest or other encumbrance,  and each
Company  shall  defend the same against all claims and demands of all persons at
any time claiming the same or any interests  therein adverse to the Agent or any
of the Institutions.  No Company shall pledge,  mortgage or create, or suffer to
exist a security  interest in the  Collateral  in favor of any person other than
the Agent, for the benefit of the  Institutions and the Agent,  except for liens
permitted by the Consignment Agreement or the Intercreditor Agreement.

     6. No  Transfers.  No  Company  will  sell or  offer  to sell or  otherwise
transfer the  Collateral  or any  interest  therein  except for,  subject to the
provisions of the Consignment Agreement, sales of assets to the extent permitted
by the Consignment Agreement.

     7. Insurance.

          7.1.  Maintenance  of  Insurance.  Each  Company  will  maintain  with
     financially  sound and responsible  insurers  insurance with respect to its
     properties and business against such casualties and  contingencies as shall
     be in accordance  with general  practices of businesses  engaged in similar
     businesses in similar  geographic  areas.  Such insurance  shall be in such
     minimum  amounts that such  Company  will not be deemed a co-insurer  under
     applicable insurance laws,  regulations and policies and otherwise shall be
     in such  amounts,  contain  such  terms,  be in such  forms and be for such
     periods as may be reasonably  satisfactory to the Agent.  In addition,  all
     such  insurance  with respect to Specified Gold Jewelry shall be payable to
     the Agent for the benefit of the  Institutions  and the Agent as additional
     insured (with respect to liability  insurance policies) or loss payee under
     a  "standard"  or "New York" loss payee  clause  (with  respect to property
     insurance  policies)  as its  interests  may appear.  Without  limiting the
     foregoing,  each Company will (i) keep all of its physical property insured
     with casualty or physical  hazard  insurance on an "all risks" basis,  with
     broad form flood and earthquake  coverages and electronic  data  processing
     coverage,  with a full  replacement cost endorsement and an "agreed amount"
     clause  in an  amount  equal to 100% of the full  replacement  cost of such
     property, (ii) maintain all such workers' compensation or similar insurance
     as may  be  required  by law  and  (iii)  maintain,  in  amounts  and  with
     deductibles  equal to those generally  maintained by businesses  engaged in
     similar  businesses in similar  geographic areas,  general public liability
     insurance  against  claims  of  bodily  injury,  death or  property  damage
     occurring,  on,  in or  about  the  properties  of such  Company;  business
     interruption insurance; and product liability insurance.

          7.2.  Insurance  Proceeds.  The proceeds of any casualty  insurance in
     respect of any casualty loss of any of the Collateral shall, subject to the
     rights,

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                                      -5-


     if any, of other  parties  with a prior  interest in the  property  covered
     thereby,  (i) so long as no Default or Event of Default has occurred and is
     continuing  and to the extent that the amount of such proceeds is less than
     $50,000,  be  disbursed  to the  Companies  for direct  application  by the
     Companies solely to the repair or replacement of the Companies' property so
     damaged or destroyed  and (ii) in all other  circumstances,  be held by the
     Agent as cash  collateral for the  Obligations.  The Agent may, at its sole
     option, disburse from time to time all or any part of such proceeds so held
     as cash  collateral,  upon  such  terms  and  conditions  as the  Agent may
     reasonably prescribe, for direct application by the Companies solely to the
     repair or replacement  of the Companies'  property so damaged or destroyed,
     or the Agent may apply all or any part of such proceeds to the  Obligations
     with the Total  Commitment  (if not then  terminated)  being reduced by the
     amount so applied to the Obligations.

          7.3.  Notice of  Cancellation,  etc. All  policies of insurance  shall
     provide for at least thirty (30) days prior written  cancellation notice to
     the Agent.  In the event of failure by any Company to provide and  maintain
     insurance as herein  provided,  the Agent may, at its option,  provide such
     insurance  and charge the amount  thereof to the  Companies.  The Companies
     shall,  in accordance with the  requirements of the Consignment  Agreement,
     furnish  the  Institution  with  certificates  of  insurance  and  policies
     evidencing compliance with the foregoing insurance provision.

     8.  Maintenance of Collateral;  Compliance with Law. Each Company will keep
the  Collateral  in good order and repair and will not use the same in violation
of law or any policy of  insurance  thereon.  Subject to the  provisions  of the
Consignment Agreement, the Agent, or its designee, may inspect the Collateral at
any reasonable time,  wherever located. In accordance with the provisions of the
Consignment  Agreement,  each  Company  will pay  promptly  when due all  taxes,
assessments,  governmental charges and levies upon the Collateral or incurred in
connection  with  the  use or  operation  of  such  Collateral  or  incurred  in
connection with this Agreement. Each Company has at all times operated, and each
Company will continue to operate, its business in compliance with all applicable
provisions  of the federal Fair Labor  Standards  Act, as amended,  and with all
applicable  provisions  of  federal,  state and local  statutes  and  ordinances
dealing with the control,  shipment,  storage or disposal of hazardous materials
or substances  except where the failure to so comply would not have a Materially
Adverse Effect.

     9. Collateral Protection Expenses; Preservation of Collateral.

          9.1.  Expenses  Incurred  by  Agent.  In  its  discretion,   upon  the
     occurrence and during the continuance of an Event of Default, the Agent may
     discharge taxes,  Liens and other encumbrances at any time levied or placed
     on any of the Collateral (to the extent such taxes,  Liens or  encumbrances
     are  required  to be  discharged  by  any  Company  under  the  Consignment

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                                      -6-


     Agreement),  make repairs  thereto and pay any necessary  filing fees.  The
     Companies  jointly and severally agree to reimburse the Agent on demand for
     any and all expenditures so made. The Agent shall have no obligation to any
     Company to make any such expenditures, nor shall the making thereof relieve
     any Company of any default.

          9.2. Agent's  Obligations and Duties.  Anything herein to the contrary
     notwithstanding,  each Company  shall remain  liable under each contract or
     agreement  comprised in the  Collateral to be observed or performed by such
     Company  thereunder.  Neither the Agent nor any Institution  shall have any
     obligation  or liability  under any such contract or agreement by reason of
     or  arising  out of this  Agreement  or the  receipt  by the  Agent  or any
     Institution of any payment relating to any of the Collateral, nor shall the
     Agent or any  Institution  be obligated in any manner to perform any of the
     obligations  of any  Company  under or  pursuant  to any such  contract  or
     agreement,  to make inquiry as to the nature or  sufficiency of any payment
     received by the Agent or any Institution in respect of the Collateral or as
     to the  sufficiency of any performance by any party under any such contract
     or agreement,  to present or file any claim,  to take any action to enforce
     any  performance  or to collect the  payment of any amounts  which may have
     been assigned to the Agent or to which the Agent or any  Institution may be
     entitled at any time or times.  The Agent's  sole duty with  respect to the
     custody,  safe keeping and physical  preservation  of the Collateral in its
     possession,   under  ss.9-207  of  the  Uniform   Commercial  Code  of  the
     Commonwealth  of  Massachusetts  or  otherwise,  shall be to deal with such
     Collateral in the same manner as the Agent deals with similar  property for
     its own account.

     10. Settlements and Deposits.  Whether or not any Obligations are due, upon
the occurrence  and during the  continuance of a Default or an Event of Default,
the Agent may demand,  sue for,  collect,  or make any  settlement or compromise
which it deems  desirable  with  respect to the  Collateral.  Regardless  of the
adequacy of Collateral or any other security for the  Obligations,  any deposits
or other sums at any time  credited by or due from the Agent or any  Institution
to the  Company  may at any time be  applied  to or set off  against  any of the
Obligations.

     11.  Notification  to Account  Debtors and Other  Obligors.  Subject to the
terms of the Intercreditor  Agreement, if a Default or an Event of Default shall
have  occurred  and be  continuing,  each Company  shall,  at the request of the
Agent, notify account debtors on accounts, chattel paper and general intangibles
of such Company and obligors on instruments for which such Company is an obligee
of the security  interest of the Agent in any account,  chattel  paper,  general
intangible or instrument  constituting Collateral and that payment thereof is to
be made directly to the Agent or to any financial institution  designated by the
Agent as the Agent 's agent therefor,  and the Agent may itself, if a Default or
an Event of Default shall have occurred and be continuing,  without notice to or
demand upon any Company, so notify account

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debtors and obligors. Subject to the terms of the Intercreditor Agreement, after
the  making  of such a request  or the  giving  of any such  notification,  each
Company  shall hold any  proceeds of  collection  of  accounts,  chattel  paper,
general intangibles and instruments  received by such Company as trustee for the
Agent, for the benefit of the Institutions  and the Agent,  without  commingling
the same with  other  funds of any  Company  and shall turn the same over to the
Agent in the identical form received,  together with any necessary  endorsements
or assignments.  Subject to the terms of the Intercreditor  Agreement, the Agent
shall apply the proceeds of  collection  of  accounts,  chattel  paper,  general
intangibles  and  instruments  received  by the Agent to the  Obligations,  such
proceeds  to be  immediately  entered  after  final  payment  in cash or solvent
credits of the items giving rise to them.

     12. Further Assurances.  Each Company, at its own expense,  shall do, make,
execute  and deliver  all such  additional  and  further  acts,  things,  deeds,
assurances and  instruments as the Agent may reasonably  require more completely
to vest in and assure to the Agent and the Institutions  their respective rights
hereunder  or in any of  the  Collateral,  including,  without  limitation,  (i)
executing,  delivering and, where appropriate,  filing financing  statements and
continuation  statements  under the Uniform  Commercial Code, and (ii) obtaining
any necessary or  appropriate  governmental  and other third party  consents and
approvals.

     13. Power of Attorney.

          13.1.  Appointment  and Powers of  Institutions.  Each Company  hereby
     irrevocably  constitutes  and  appoints  the Agent and any officer or agent
     thereof,  with  full  power  of  substitution,   as  its  true  and  lawful
     attorneys-in-fact  with full  irrevocable  power and authority in the place
     and stead of such  Company or in the Agent's  own name,  for the purpose of
     carrying out the terms of this  Agreement,  to take any and all appropriate
     action and to execute any and all  documents  and  instruments  that may be
     necessary or desirable to accomplish  the purposes of this  Agreement  and,
     without  limiting  the  generality  of the  foregoing,  hereby  gives  said
     attorneys the power and right, on behalf of such Company, without notice to
     or assent by such Company, to do the following:

               (a) upon the occurrence  and during the  continuance of a Default
          or an Event of  Default,  subject  to the  terms of the  Intercreditor
          Agreement,  generally to sell,  transfer,  pledge,  make any agreement
          with respect to or otherwise  deal with any of the  Collateral in such
          manner  as is  consistent  with  the  Uniform  Commercial  Code of the
          Commonwealth  of  Massachusetts  and as fully and completely as though
          the Agent were the absolute owner thereof for all purposes,  and to do
          at the Companies' joint and several expense, at any time, or from time
          to time,  all acts and  things  which the  Agent  deems  necessary  to
          protect,  preserve  or realize  upon the  Collateral  and the  Agent's
          security interest

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          therein, in order to effect the intent of this Agreement, all as fully
          and  effectively  as  such  Company  might  do,   including,   without
          limitation, the execution,  delivery and recording, in connection with
          any sale or other disposition of any Collateral,  of the endorsements,
          assignments  or other  instruments  of  conveyance  or  transfer  with
          respect to such Collateral; and

               (b) to file such financing  statements with respect hereto,  with
          or without such Company's signature,  or a photocopy of this Agreement
          in  substitution  for a  financing  statement,  as the  Agent may deem
          appropriate  and to  execute  in such  Company's  name such  financing
          statements and amendments  thereto and  continuation  statements which
          may require such Company's signature.

          13.2.  Ratification by Companies. To the extent permitted by law, each
     Company hereby  ratifies all that said attorneys shall lawfully do or cause
     to be done by virtue hereof. This power of attorney is a power coupled with
     an  interest  and shall be  irrevocable  so long as any  Obligations  shall
     remain outstanding and the Total Commitment shall not have been terminated.

          13.3. No Duty on Agent.  The powers  conferred on the Agent  hereunder
     are solely to protect the  interests of the Agent and the  Institutions  in
     the Collateral and shall not impose any duty upon the Agent to exercise any
     such powers.  The Agent shall be  accountable  only for the amounts that it
     actually receives as a result of the exercise of such powers and neither it
     nor  any  of  its  officers,  directors,   employees  or  agents  shall  be
     responsible  to any Company  for any act or failure to act,  except for the
     Agent's own gross negligence or willful misconduct.

     14. Remedies.  Subject to the terms of the Intercreditor  Agreement,  if an
Event of Default shall have occurred and be continuing,  the Agent may,  without
notice to or demand upon any Company,  declare this  Agreement to be in default,
and the Agent shall  thereafter have in any  jurisdiction  in which  enforcement
hereof is sought,  in addition to all other rights and remedies,  the rights and
remedies  of a secured  party  under the  Uniform  Commercial  Code,  including,
without limitation, the right to take possession of the Collateral, and for that
purpose  the Agent may, so far as the  Companies  can give  authority  therefor,
enter upon any premises on which the  Collateral  may be situated and remove the
same therefrom.  Subject to the terms of the Intercreditor  Agreement, the Agent
may in its  discretion  require  each Company to assemble all or any part of the
Collateral  at such location or locations  reasonably  convenient to the parties
within  the  state(s)  of any  Company's  principal  office(s)  or at such other
locations  reasonably  convenient  to the  parties  as the Agent may  designate.
Unless the Collateral is perishable or threatens to decline speedily in value or
is of a type  customarily sold on a recognized  market,  the Agent shall give to
the Companies at least five (5) Business  Days prior written  notice of the time
and place of any public

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sale of  Collateral  or of the time after  which any  private  sale or any other
intended  disposition is to be made. Each Company hereby  acknowledges that five
(5) Business Days prior written notice of such sale or sales shall be reasonable
notice. In addition,  each Company waives any and all rights that it may have to
a judicial  hearing in advance of the  enforcement  of any of the Agent's rights
hereunder, including, without limitation, its right following the occurrence and
during the  continuance of an Event of Default to take  immediate  possession of
the  Collateral and to exercise its rights with respect  thereto.  To the extent
that any of the  Obligations  are to be paid or performed by a person other than
the  Companies,  each  Company  waives  and  agrees  not to assert any rights or
privileges  which it may have under ss.9-112 of the Uniform  Commercial  Code of
the Commonwealth of Massachusetts.

     15. No Waiver, etc. Each Company waives demand, notice (except as expressly
provided herein or in the Consignment Agreement),  protest, notice of acceptance
of this Agreement, notice of loans made, credit extended, Collateral received or
delivered  or other action  taken in reliance  hereon and all other  demands and
notices  of any  description.  With  respect  to both  the  Obligations  and the
Collateral, each Company assents to any extension or postponement of the time of
payment or any other indulgence, to any substitution,  exchange or release of or
failure to perfect any security  interest in any Collateral,  to the addition or
release  of  any  party  or  person  primarily  or  secondarily  liable,  to the
acceptance  of partial  payment  thereon  and the  settlement,  compromising  or
adjusting  of any  thereof,  all in such manner and at such time or times as the
Agent may deem  advisable.  The Agent shall have no duty as to the collection or
protection of the Collateral or any income thereon,  nor as to the  preservation
of rights  against  prior  parties,  nor as to the  preservation  of any  rights
pertaining  thereto beyond the safe custody thereof as set forth in ss.9.2.  The
Agent  shall not be deemed to have  waived any of its  rights  upon or under the
Obligations or the Collateral  unless such waiver shall be in writing and signed
by the Required  Institutions.  No delay or omission on the part of the Agent in
exercising any right shall operate as a waiver of such right or any other right.
A waiver on any one occasion shall not be construed as a bar to or waiver of any
right on any future occasion.  All rights and remedies of the Agent with respect
to the Obligations or the Collateral,  whether  evidenced hereby or by any other
instrument  or papers,  shall be  cumulative  and may be  exercised  singularly,
alternatively, successively or concurrently at such time or at such times as the
Agent deems expedient.

     16. Marshalling. Neither the Agent nor any Institution shall be required to
marshal any present or future collateral  security (including but not limited to
this Agreement and the Collateral)  for, or other  assurances of payment of, the
Obligations  or any of them or to resort to such  collateral  security  or other
assurances of payment in any particular  order,  and all of its rights hereunder
and in respect of such collateral security and other assurances of payment shall
be cumulative and in addition to all other rights,  however existing or arising.
To the extent that it lawfully may, each

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                                      -10-


Company  hereby  agrees  that  it  will  not  invoke  any  law  relating  to the
marshalling of collateral  which might cause delay in or impede the  enforcement
of the  Agent's  rights  under  this  Agreement  or under any  other  instrument
creating  or  evidencing  any of  the  Obligations  or  under  which  any of the
Obligations  is  outstanding  or by which any of the  Obligations  is secured or
payment thereof is otherwise  assured,  and, to the extent that it lawfully may,
each Company hereby irrevocably waives the benefits of all such laws.

     17. Proceeds of Dispositions; Expenses. Each Company shall pay to the Agent
on demand any and all reasonable expenses,  including reasonable attorneys' fees
and  disbursements,  incurred or paid by the Agent in protecting,  preserving or
enforcing the Agent's  rights under or in respect of any of the  Obligations  or
any of the Collateral.  After deducting all of said expenses, the residue of any
proceeds of collection or sale of the  Obligations or Collateral  shall,  to the
extent  actually  received in cash, be applied to the payment of the Obligations
in such order or preference as is provided in the Consignment Agreement,  proper
allowance and provision  being made for any  Obligations  not then due. Upon the
final  payment  and  satisfaction  in full of all of the  Obligations  and after
making any payments  required by Section  9-504(l)(c) of the Uniform  Commercial
Code of the Commonwealth of  Massachusetts,  any excess shall be returned to the
Companies,  and the Companies shall remain jointly and severally  liable for any
deficiency in the payment of the Obligations.

     18. Overdue Amounts. Until paid, all amounts due and payable by any Company
hereunder  shall be a debt  secured by the  Collateral  and shall bear,  whether
before or after judgment, interest at the rate of interest for overdue principal
set forth in the Consignment Agreement.

     19. Governing Law;  Consent to Jurisdiction.  THIS AGREEMENT IS INTENDED TO
TAKE EFFECT AS A SEALED  INSTRUMENT  AND SHALL BE GOVERNED BY, AND  CONSTRUED IN
ACCORDANCE  WITH, THE LAWS OF THE  COMMONWEALTH OF  MASSACHUSETTS.  Each Company
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the Commonwealth of Massachusetts or any federal court sitting therein
and consents to the  non-exclusive  jurisdiction of such court and to service of
process in any such suit being made upon such Company by registered or certified
mail  at such  Company's  Principal  Office.  Each  Company  hereby  waives  any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.

     20.  Waiver of Jury Trial.  EACH OF THE AGENT AND EACH  COMPANY  WAIVES ITS
RIGHT TO A JURY TRIAL WITH  RESPECT  TO ANY ACTION OR CLAIM  ARISING  OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT,  ANY RIGHTS OR OBLIGATIONS  HEREUNDER
OR THE  PERFORMANCE OF ANY SUCH RIGHTS OR  OBLIGATIONS.  Except as prohibited by
law, each Company waives

<PAGE>

                                      -11-


any right which it may have to claim or recover in any litigation referred to in
the preceding sentence any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual  damages.  Each Company (i)
certifies  that  neither the Agent or any  Institution  nor any  representative,
agent or attorney of the Agent or any Institution has represented,  expressly or
otherwise,  that  the  Agent  or any  Institution  would  not,  in the  event of
litigation, seek to enforce the foregoing waivers and (ii) acknowledges that, in
entering into the Consignment  Agreement and the other Consignment  Documents to
which the Agent or any  Institution is a party,  the Agent and the  Institutions
are relying upon, among other things, the waivers and  certifications  contained
in this ss.20.

     21.  Concerning  Revised  Article 9 of the  Uniform  Commercial  Code.  The
parties  acknowledge and agree to the following  provisions of this Agreement in
anticipation of the possible  application,  in one or more  jurisdictions to the
transactions  contemplated  hereby,  of the  revised  Article  9 of the  Uniform
Commercial  Code in the  form  or  substantially  in the  form  approved  by the
American Law Institute and the National  Conference of  Commissioners on Uniform
State Law and contained in the 1999 official text of Revised Article 9 ("Revised
Article 9").

          21.1.  Attachment.  In applying the law of any  jurisdiction  in which
     Revised  Article 9 is in  effect,  the  Collateral  is all  Specified  Gold
     Jewelry,  the Cash  Collateral  Account (as defined in the Cash  Collateral
     Agreement),  all sums from time to time in the Cash Collateral  Account and
     all Time Deposits (as defined in the Cash  Collateral  Agreement),  in each
     case whether or not within the scope of Revised Article 9.

          21.2. Perfection by Filing. The Agent may at any time and from time to
     time,  pursuant to the  provisions  of ss.13,  file  financing  statements,
     continuation statements and amendments thereto that describe the Collateral
     of each Company and which contain any other information  required by Part 5
     of Revised Article 9 for the sufficiency or filing office acceptance of any
     financing statement, continuation statement or amendment, including whether
     any  Company  is  an  organization,   the  type  of  organization  and  any
     organization  identification  number issued to such  Company.  Each Company
     agrees to furnish any such  information to the Agent promptly upon request.
     Any such financing statements, continuation statements or amendments may be
     signed by the Agent on behalf of such  Company,  as provided in ss.13,  and
     may be filed at any time in any jurisdiction whether or not Revised Article
     9 is then in effect in that jurisdiction.

          21.3. Other  Perfection,  etc. Each Company shall at any time and from
     time  to  time,  whether  or not  Revised  Article  9 is in  effect  in any
     particular  jurisdiction,  take  such  steps as the  Agent  may  reasonably
     request  for the  Agent  (a) to  obtain  an  acknowledgement,  in form  and
     substance satisfactory to the Agent, of any bailee having possession of any
     of the

<PAGE>

                                      -12-


     Collateral  that the bailee  holds such  Collateral  for the Agent,  (b) to
     obtain   "control"   of  any   investment   property,   deposit   accounts,
     letter-of-credit   rights  or  electronic  chattel  paper  that  constitute
     Collateral   (as  such  terms  are  defined  in  Revised   Article  9  with
     corresponding  provisions  in Rev.  ss.ss.  9-104,  9-105,  9-106 and 9-107
     relating to what constitutes "control" for such items of Collateral),  with
     any   agreements   establishing   control  to  be  in  form  and  substance
     satisfactory  to the  Agent,  and (c)  otherwise  to insure  the  continued
     perfection  and  priority  of the Agent's  security  interest in any of the
     Collateral  and of the  preservation  of its  rights  therein,  whether  in
     anticipation  and following the  effectiveness  of Revised Article 9 in any
     jurisdiction.

          21.4.  Other  Provisions.  In applying the law of any  jurisdiction in
     which Revised Article 9 is in effect, the following  references to sections
     in this Agreement to existing  Article 9 of that  jurisdiction  shall be to
     the Revised Article 9 Section of that jurisdiction indicated below:

     ---------------------------------------------------------------------------
     Agreement Section         Existing Article 9       Revised Article 9
     ---------------------------------------------------------------------------
     3                         ss. 9-109(3)             Rev.ss.9-102(a)(34)
     ---------------------------------------------------------------------------
     9.2                       ss. 9-207                Rev.ss.9-207
     ---------------------------------------------------------------------------
     17                        ss. 9-504(1)(c)          Rev.ss.ss.9-608(a)(1)(C)
                                                        and 9-615(a)(3)
     ---------------------------------------------------------------------------

          21.5.  Savings  Clause.  Nothing  contained  in this  ss.21  shall  be
     construed  to narrow the scope of the Agent's  security  interest in any of
     the  Collateral  or the  perfection  or  priority  thereof  or to impair or
     otherwise  limit any of the rights,  powers,  privileges or remedies of the
     Agent or any  Institution  hereunder  except  (and then only to the extent)
     mandated by Revised Article 9 to the extent then applicable.

     22.  Miscellaneous.  The headings of each section of this Agreement are for
convenience  only and shall not  define or limit the  provisions  thereof.  This
Agreement and all rights and  obligations  hereunder  shall be binding upon each
Company  and its  respective  successors  and  assigns,  and shall  inure to the
benefit of the Agent,  the  Institutions  and their  respective  successors  and
assigns.  If any term of this Agreement shall be held to be invalid,  illegal or
unenforceable,  the  validity  of all  other  terms  hereof  shall  in no way be
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid,  illegal or unenforceable term had not been included herein.  Each
Company acknowledges receipt of a copy of this Agreement.

<PAGE>

                                      -13-


     IN WITNESS  WHEREOF,  intending to be legally bound, the Company has caused
this Agreement to be duly executed as of the date first above written.

                                  FINLAY FINE JEWELRY
                                    CORPORATION


                                  By:  /s/ Bruce Zurlnick
                                      ----------------------------------
                                      Title:  Senior Vice President, Treasurer
                                                and Chief Financial Officer



                                  eFINLAY, INC.


                                  By:  /s/ Bruce Zurlnick
                                      ----------------------------------
                                      Title:  Senior Vice President, Treasurer
                                                and Chief Financial Officer


Accepted:

SOVEREIGN BANK (successor
to Fleet National Bank, f/k/a
BankBoston, N.A., f/k/a The First
National Bank of Boston,
successor to Rhode Island
Hospital Trust National Bank),
as Agent


By:  /s/ Patricia Malerba
   --------------------------
     Title: V.P.

<PAGE>

                                      -14-


                          CERTIFICATE OF ACKNOWLEDGMENT


COMMONWEALTH OR STATE OF NEW YORK     )
                                      )  ss.
COUNTY OF NEW YORK                    )

     Before  me,  the  undersigned,  a  Notary  Public  in and  for  the  county
aforesaid,  on this  30th  day of  March,  2001,  personally  appeared  Bruce E.
Zurlnick to me known  personally,  and who, being by me duly sworn,  deposes and
says that  he/she is the Sr.  V.P.  Treasurer  and CFO of  Finlay  Fine  Jewelry
Corporation and eFinlay, Inc., and that said instrument was signed and sealed on
behalf of said corporations by authority of their Boards of Directors,  and said
Bruce E. Zurlinck  acknowledged  said  instrument to be the free act and deed of
said corporation.


                                        /s/ Bonni G. Davis
                                        ---------------------------------------
                                        Notary Public