AMENDMENT No. 1


            AMENDMENT  AGREEMENT  No. 1 dated as of  September  11,  1997  among
FINLAY  ENTERPRISES,  INC. a Delaware  corporation  (the "Parent"),  FINLAY FINE
JEWELRY CORPORATION,  a Delaware corporation (the "Company"),  the lenders named
herein and  signatory  hereto  (the  "Lenders")  and  GENERAL  ELECTRIC  CAPITAL
CORPORATION, as agent (the "Agent"), for the Lenders.

                          W I T N E S S E T H :

            WHEREAS,  the  Parent,  the  Company,  the Lenders and the Agent are
parties to an Amended and Restated  Credit  Agreement  dated as of September 11,
1997 (as heretofore and hereafter amended, modified or supplemented from time to
time in accordance with its terms, the "Credit Agreement") and;

            WHEREAS,  the Company  desires to fund its proposed  acquisition  of
certain  assets  pursuant to that certain Asset  Purchase  Agreement (as defined
herein) by amending the terms of the Credit Agreement; and

            WHEREAS,  subject to the terms and conditions  contained  herein the
parties hereto desire to amend certain provisions of the Credit Agreement;

            NOW THEREFORE,  for good and valuable consideration,  the receipt of
which is hereby  acknowledged,  and subject to the fulfillment of the conditions
set forth below, the parties hereto agree as follows:


1. Defined Terms. Unless otherwise  specifically defined herein, all capitalized
terms used herein shall have the respective  meanings  ascribed to such terms in
the Credit Agreement.

            2. Consent to Asset Purchase  Agreement.  The Lenders hereby consent
to the transactions  contemplated by that certain Asset Purchase Agreement dated
as of September 3, 1997 by and among the Parent,  the Company,  Zale Corporation
and Zale  Delaware Inc. (the "Asset  Purchase  Agreement"),  as in effect on the
date  hereof,  without  any waivers or  modifications  not  consented  to by the
Majority Lenders, provided that such transaction is consummated by no later than
November 14, 1997. This consent shall become








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effective  upon the due execution and delivery of this  Amendment by each of the
Company,   the  Parent  and  each  of  the  Lenders.  In  connection  with  such
acquisition,  the Company  agrees to execute,  deliver and file at the Company's
expense all financing  statements  requested by the Agent to be filed to perfect
the Agent's and the Lenders' Liens on the assets to be purchased.

            3.  Amendments  to Credit  Agreement.  Upon the  Effective  Date (as
defined herein), the Credit Agreement shall be amended as follows:

            (a)  The  definition  of  "Revolving  Credit  Facility   Commitment"
contained in Section 1.1 of the Credit  Agreement is hereby  amended by deleting
the amount  "$175,000,000"  appearing therein,  and substituting  "$225,000,000"
therefor.

            (b) Section  3.1(c)(i) of the Credit  Agreement is hereby amended by
deleting   the  amount   "$10,000,000"   appearing   therein  and   substituting
"$50,000,000" therefor.

            (c) Section  9.1(ii) of the Credit  agreement  is hereby  amended by
deleting   the  amount   "$18,500,000"   appearing   therein  and   substituting
"$19,500,000" therefor.

            (d)  Exhibit A to the  Credit  Agreement  is hereby  amended  in its
entirety to read as set forth on Exhibit A hereto.

            4.  Representations  and  Warranties.  Each  of the  Parent  and the
Company represents and warrants as follows (which representations and warranties
shall survive the execution and delivery of this Amendment):

            (a) Each of the  Parent  and the  Company  has taken  all  necessary
action to authorize the execution, delivery and performance of this Amendment.

            (b) This  Amendment  has been duly  executed  and  delivered  by the
Parent and the Company  and the  acknowledgement  attached  hereto has been duly
executed  and  delivered  by each  Subsidiary.  This  Amendment  and the  Credit
Agreement as amended hereby constitute the legal,  valid and binding  obligation
of the Parent and the Company, enforceable against them in accordance with their
respective terms, subject to applicable bankruptcy, reorganization,  insolvency,
moratorium  and similar laws  affecting the  enforcement  of  creditors'  rights
generally and by general equity principles.



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            (c) No consent or  approval  of any  person,  firm,  corporation  or
entity, and no consent,  license,  approval or authorization of any governmental
authority is or will be required in  connection  with the  execution,  delivery,
performance,  validity  or  enforcement  of this  Amendment  other than any such
consent,  approval, license or authorization which has been obtained and remains
in full force and effect or where the failure to obtain such consent,  approval,
license or authorization would not result in a Material Adverse Effect.

            (d) After giving effect to this  Amendment,  each of the Company and
the Parent is in compliance with all of the various covenants and agreements set
forth in the Credit Agreement and each of the other Loan Documents.

            (e) After giving effect to this Amendment, no event has occurred and
is continuing which constitutes a Default or an Event of Default.

            (f) All  representations  and  warranties  contained  in the  Credit
Agreement  and each of the other  Loan  Documents  are true and  correct  in all
material  respects  as of the  date  hereof,  except  to  the  extent  that  any
representation  or warranty  relates to a specified date, in which case such are
true and correct in all material  respects as of the specific date to which such
representations and warranties relate.

     5. Effective Date. The amendments to the Credit Agreement  contained herein
shall not become  effective (the "Effective  Date") until (i) this Amendment has
been duly  executed and  delivered  by the  Company,  the Parent and each of the
Lenders;  (ii) the acknowledgement  attached hereto shall have been executed and
delivered by each of the  Subsidiaries;  (iii) the transactions  contemplated by
the Asset  Purchase  Agreement  shall  have been  consummated  by no later  than
November  14, 1997 and a letter from the Company to that effect  shall have been
delivered to the Agent and (iv) the Parent and the Company shall have  delivered
to the Agent for each of the Lenders new Revolving  Notes  reflecting  their new
Revolving  Commitments.  On the Effective  Date, upon the written request of the
Agent,  each Lender whose  Revolving  Commitment  has increased on the Effective
Date shall wire transfer  immediately  available funds to the Agent in an amount
required to purchase  such  Lender's new pro rata share of the then  outstanding
amount  of the  Revolving  Loan.  Such  funds  will be paid by the Agent to each





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Lender whose  Revolving  Commitment did not increase on the Effective Date so as
to reduce such Lender's pro rata share of the Revolving Loan  immediately  prior
to the  Effective  Date to its new pro rata share of the  Revolving  Loan on the
Effective Date.

            6.  Expenses.  The  Company  agrees to pay on  demand  all costs and
expenses,  including  reasonable  attorneys'  fees,  of the  Agent  incurred  in
connection with this Amendment and related UCC financing statement filings.

            7. Continued Effectiveness. The term "Agreement", "hereof", "herein"
and similar terms as used in the Credit  Agreement,  and references in the other
Loan Documents to the Credit Agreement,  shall mean and refer to, from and after
the Effective Date, the Credit  Agreement as amended by this Amendment.  Each of
the  Company  and  the  Parent  hereby  agrees  that  all of the  covenants  and
agreements  contained in the Credit  Agreement and the Loan Documents are hereby
ratified and confirmed in all respects.

            8.  Counterparts.  This  Amendment may be executed in  counterparts,
each of which shall be an  original,  and all of which,  taken  together,  shall
constitute  a  single  instrument.  Delivery  of an  executed  counterpart  of a
signature page to this Amendment by telecopier shall be effective as delivery of
a manually executed counterpart of this Amendment.

            9. Governing Law. This Amendment shall be governed by, and construed
in accordance  with,  the laws of the State of New York without giving effect to
the conflict of laws provisions thereof.

            IN WITNESS  WHEREOF the parties hereto have caused this Amendment to
be duly  executed  by their  respective  officers  as of the date first  written
above.

                              FINLAY ENTERPRISES, INC.


                              By: /s/ Barry D. Scheckner
                                  -------------------------------
                                  Name:  Barry D. Scheckner
                                  Title: Senior Vice President and 
                                  Chief Financial Officer   




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                              FINLAY FINE JEWELRY CORPORATION


                              By: /s/ Barry D. Scheckner
                                  -------------------------------
                                  Name:  Barry D. Scheckner
                                  Title: Senior Vice President and 
                                  Chief Financial Officer   


                              GENERAL ELECTRIC CAPITAL CORPORATION,
                              Individually and as Agent


                              By: /s/ Rick Luck
                                  -------------------------------
                                  Name:  Rick Luck
                                  Its Duly Authorized Signatory      
                                    

                              FLEET PRECIOUS METALS, INC.


                              By: /s/ David P. Berube 
                                  -------------------------------
                                  Name:  David P. Berube
                                  Title: Assistant Vice President


                                  By: /s/ Anthony J. Capuano
                                  -------------------------------
                                  Name:  Anthony J. Capuano
                                  Title: Senior Vice President


                              THE CHASE MANHATTAN BANK


                              By: /s/ Dolores A. Walsh
                                  -------------------------------- 
                                  Name:  Dolores A. Walsh
                                  Title: Vice President


                              GOLDMAN SACHS CREDIT PARTNERS L.P.


                              By: /s/ Ed Forst
                                  -----------------------------
                                  Name:  Ed Forst
                                  Title: Managing Director       





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Each of the Guarantors, by signing below, confirms in favor of the Agent and the
Lenders that it consents to the terms and conditions of the foregoing  Amendment
No. 1 to this Amended and Restated  Credit  Agreement  and agrees that it has no
defense,  offset,  claim,  counterclaim or recoupment with respect to any of its
obligations or liabilities  under its respective  Guaranty and that all terms of
such  Guaranty  shall  continue in full force and  effect,  subject to the terms
thereof.


FINLAY JEWELRY, INC.


By: /s/ Barry D. Scheckner
    -------------------------------
    Name:  Barry D. Scheckner
    Title: Senior Vice President and 
    Chief Financial Officer   



SONAB HOLDINGS, INC.


By: /s/ Barry D. Scheckner
    -------------------------------
    Name:  Barry D. Scheckner
    Title: Senior Vice President and 
    Chief Financial Officer   



SONAB INTERNATIONAL, INC.


By: /s/ Barry D. Scheckner
    -------------------------------
    Name:  Barry D. Scheckner
    Title: Senior Vice President and 
    Chief Financial Officer   



SOCIETE NOUVELLE D'ACHAT DE BIJOUTERIE - S.O.N.A.B.


By: /s/ Barry D. Scheckner
    -------------------------------
    Name:  Barry D. Scheckner
    Attorney-in-Fact




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                                    EXHIBIT A
               LENDERS, COMMITMENTS AND INITIAL EURODOLLAR OFFICES

Lender and Initial                           Revolving
Eurodollar Office                           Commitment
                                              Amount               %

General Electric                           $75,000,000          33.333%
Capital
Corporation
201 High Ridge Road
Stamford, CT  06927

Fleet Precious Metals, Inc.                $50,000,000          22.222%
111 Westminster Street
Providence, Rhode Island 02903

Goldman Sachs Credit Partners L.P.         $50,000,000          22.222%
85 Broad Street
New York, New York 10004

The Chase Manhattan Bank                   $50,000,000          22.222%
111 West 40th Street, 10th Floor
New York, New York 10018
                                              Revolving
                                              Sublimit
                                              Commitment%
                                              -----------
                                              
General Electric                           $8,333,500           33.333%
Capital
Corporation
201 High Ridge Road
Stamford, CT  06927

Fleet Precious Metals, Inc.                $5,555,5000          22.222%
111 Westminster Street
Providence, Rhode Island 02903

Goldman Sachs Credit Partners              $5,555,5000          22.222%
85 Broad Street
New York, New York 10004

The Chase Manhattan Bank                   $5,555,500           22.222%
111 West 40th Street
--------
As such amount may vary pursuant to the  definition of Parent  Revolving  Credit
Facility Sublimit Commitment.