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                  FIRST SUPPLEMENTAL INDENTURE, dated as of August 8, 2002,
among FINLAY ENTERPRISES, INC., a Delaware corporation (the "Company"), and HSBC
Bank USA (formerly known as Marine Midland Bank), as trustee (the "Trustee").

                              W I T N E S S E T H:

                  WHEREAS, the Company and the Trustee have entered into that
certain Indenture dated as of April 24, 1998 (the "Indenture"), for the equal
and ratable benefit of the Holders of the Company's 9% Senior Debentures due
2008 (the "Securities"); and

                  WHEREAS, in accordance with Section 9.02 of the Indenture, the
Company has obtained the written consent of the Holders of a majority in
aggregate principal amount of the Securities outstanding to an amendment to the
Indenture and Finlay Jewelry has obtained a written consent of the holders of a
majority in aggregate principal amount of its Senior Notes outstanding to an
amendment to the Senior Note Indenture; and

                  NOW THEREFORE, for the purpose of memorializing the amendment
to the Indenture so consented to by the Holders of the Securities, the parties
hereto do hereby agree as follows:

                  SECTION 1.  Definitions and Terms.
                              ---------------------

                  Unless otherwise defined herein, all initially capitalized
terms used herein shall have the meanings assigned to such terms in the
Indenture.

                  SECTION 2.  Amendment to Indenture.
                              ----------------------

                  Section 4.09(b)(iv) of the Indenture is amended to read in its
entirety as follows (CHANGED TEXT IS SHOWN IN BOLD AND DOUBLE UNDERLINED):

                  "(iv) the incurrence by Finlay Jewelry of Indebtedness or
         other obligations in an aggregate principal amount of up to the greater
         of (x) $50.0 million and (y) 90% of the fair market value of the fine
         gold content of specified Consignment Inventory eligible to be
         consigned under (a) the Gold Consignment Agreement or (b) a
         substantially similar gold consignment agreement that Finlay Jewelry
         may enter into subsequent to the date of this Indenture which provides
         for the transfer of title to the gold content of Consignment Inventory
         from the relevant vendor to a gold consignor; provided that such $50.0
         million specified in clause (x) above shall be permanently reduced by
         the aggregate amount of all Net Proceeds of Asset Sales applied to
         repay such Indebtedness pursuant to Section 4.10(b)(i) hereof;"

                  SECTION 3.  Ratification of Indenture, as Amended.
                              -------------------------------------

                  The Indenture, as amended hereby, is hereby ratified and
confirmed and continues in full force and effect.

                  SECTION 4.  Effectiveness.
                              -------------

                  This First Supplemental Indenture shall become effective upon
the execution hereof by the Company and the Trustee, the Company having
delivered to the Trustee evidence of consent from the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding.
Notwithstanding the foregoing, this First Supplemental Indenture shall not
become effective unless Finlay Jewelry obtains the consent of holders of not
less than a majority in aggregate principal amount of the Senior Notes then
outstanding to an amendment to the Senior Note Indenture which is substantially
the same as this First Supplemental Indenture.





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                  SECTION 5.  References to the Indenture.
                              ---------------------------

                  On and after the date of this First Supplemental Indenture,
each reference in the Indenture to "this Indenture," "hereunder," "hereof" or
"herein" shall mean and be a reference to the Indenture as amended hereby unless
the context otherwise requires.

                  SECTION 6.  Governing Law.
                              -------------

                  This First Supplemental Indenture shall be construed and
enforced in accordance with the laws of the State of New York.

                  SECTION 7.  Counterparts and Method of Execution.
                              ------------------------------------

                  This First Supplemental Indenture may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.

                  SECTION 8.  Titles.
                              ------

                  Section titles are for descriptive purposes only and shall not
control or alter the meaning of this First Supplemental Indenture as set forth
in the text.

















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                  IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the date first above written.



                                 FINLAY ENTERPRISES, INC.


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



                                 HSBC BANK USA,
                                 as Trustee



                                 By: /s/ Frank J. Godino
                                    --------------------------------------------
                                    Name:  Frank J. Godino
                                    Title:    Vice President