AMENDMENT No. 3

     AMENDMENT  AGREEMENT dated as of January 31, 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.

     WHEREAS,  the Parent, the Company,  the Lenders and Agent are parties to an
Amended and Restated Credit  Agreement dated as of March 28, 1995 (as heretofore
and hereafter amended,  modified or supplemented from time to time in accordance
with its terms, the "Credit Agreement");

     WHEREAS, the Company desires to open and operate up to fifty-five (55) fine
jewelry departments in Monoprix and related stores; and

     WHEREAS,  subject to the terms and  conditions  hereof the  parties  hereto
desire to amend certain  provisions of the Credit  Agreement and of the Security
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. Amendments to Credit Agreement.  Upon the Effective Date (as defined herein),
the Credit Agreement shall be amended as follows:

     (a) Section  3.1(c)(A)(iii)  of the Credit  Agreement is hereby  amended by
deleting   the  amount   "$12,000,000"   appearing   therein  and   substituting
"$20,000,000" therefor.

     (b)  Section 7 of the  Credit  Agreement  is hereby  amended  by adding the
following as paragraph (e) thereof:









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          (e)  Notwithstanding  anything to the contrary set forth in (b) above,
     no more than  $13,000,000  in the  aggregate  may be expended in connection
     with the opening and operation of fine jewelry  departments in Monoprix and
     related stores to the extent the operation of such fine jewelry departments
     is permitted hereunder.

     (c) Section 7(b) of the Credit  Agreement is hereby amended by deleting the
first   parenthetical   of  such  section  in  its  entirety  and   substituting
"(including,  without limitation, for the purpose of (i) opening and maintaining
not more than  twenty-two  factory outlet stores  operated by the Company to the
extent set forth in Section 9.1 hereof,  (ii) operating fine jewelry departments
in not more than ten  Debenhams  stores to the extent set forth in Section  9.23
hereof  and  (iii)  operating  fine  jewelry  departments  in (x) not more  than
fifty-five (55) Monoprix and related stores and (y) a store in Berlin,  Germany,
each to the extent set forth in Section 9.25 hereof)" therefor.

     (d) Section  9.1(iv) of the Credit  Agreement is hereby amended by deleting
the  parenthetical in such section in its entirety and  substituting  "(it being
agreed that of such amount,  (A) no more than $4,000,000 may be expended for the
purpose of opening and maintaining factory outlet stores operated by the Company
and  permitted  to be  opened  under  Section  9.24  hereof,  (B) no  more  than
$2,000,000  may be  expended  for the purpose of opening  and  maintaining  fine
jewelry  departments in Debenhams  stores permitted to be operated under Section
9.23 hereof and (C) no more than  $2,000,000  may be expended for the purpose of
opening and maintaining fine jewelry  departments in Monoprix and related stores
and a store in  Berlin,  Germany,  to the  extent  stores  are  permitted  to be
operated under Section 9.25 hereof)" therefor.

     (e) Section  9.1(v) of the Credit  Agreement is hereby  amended by deleting
such section in its entirety and substituting  therefor "(v) $18,500,000 for the
Fiscal Year ending in 1998, and (vi)  $12,100,000 in any subsequent  Fiscal Year
thereafter."

     (f)  Section  9.4(q)  of the  Credit  Agreement  is hereby  amended  in its
entirety to read as follows:



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          (q)  Investments  by the Company in Sonab in the form of  intercompany
     Indebtedness  for  Borrowed  Money  existing  after  the  Fourth  Amendment
     Effective  Date as  evidenced  by an  amended  and  restated  Second  Sonab
     Intercompany  Note;  provided  that  the  aggregate  unpaid  amount  of the
     Indebtedness for Borrowed Money evidenced by the Second Sonab  Intercompany
     Note shall not at any time exceed $33,000,000.

     (g)  Section 9 of the  Credit  Agreement  is hereby  amended  by adding the
following as Section 9.25 thereof:

     ss. 9.25  MONOPRIX  LICENSE  AGREEMENTS.  Enter  into License Agreements to
     operate fine jewelry  departments in more than (x) fifty-five (55) Monoprix
     and related stores and (y) one store in Berlin, Germany.

     (h) The  provisions  of  Section  9.4 and 9.9 of the Credit  Agreement  are
waived to the extent necessary to permit the Company to (a) employ Joseph Melvin
as President and Chief Operating Officer on substantially the terms set forth in
Exhibit A annexed hereto and (b) in connection with such employment, provide (i)
payment of up to  $200,000  of  relocation  expenses  for Mr.  Melvin and (ii) a
bridge loan to Mr.  Melvin of up to $300,000  for the purchase of a residence in
the New York metropolitan  area, such amounts referred to in this clause (b) not
to be applied against the Investment amounts permitted under Section 9.4(i).

     3.  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  Agreement)  as of the date hereof
that:

     (a) Each of the Parent,  the Company and each Subsidiary  thereof has taken
all necessary  action to authorize the  execution,  delivery and  performance of
this  Agreement and each other  agreement,  instrument  or document  executed in
connection herewith or therewith to which such Person is a party  (collectively,
the "Amendment Documents").

     (b) Each of the  Amendment  Documents  has been duly executed and delivered
and each of the Amendment  Documents  constitutes  the valid and legally binding




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obligation of the Parent and/or the Company,  as the case may be, enforceable 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.
                                       
     (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 the Amendment  Documents 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  Agreement  and  the  other  Amendment
Documents,  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) No event has  occurred and is  continuing  which  constitutes  or would
constitute,  with the  giving of  notice  or lapse of time or both,  an Event of
Default under the Credit Agreement or any of the other Loan Documents.

     (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.

     4.  Conditions  Precedent.  Notwithstanding  any term or  provision of this
Agreement to the  contrary,  the  amendments  contained  herein shall not become
effective  until the date and time on which the Agent and the Lenders shall have
determined (as evidenced by delivery of a counterpart of this Agreement executed
by the Agent and each Lender) that each of the  following  conditions  precedent
shall have been satisfied (the "Effective Date"):


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     (a)  Counterparts  of this  Agreement  shall  have been duly  executed  and
delivered on behalf of the Company, the Parent and each of the Lenders.

     (b) All required  corporate  action and  proceedings in connection with the
execution and delivery of the  Amendment  Documents  shall have been taken,  and
each shall be  satisfactory  in form and substance to the Agent and the Lenders,
and the Agent and the Lenders shall have received all  information and copies of
all documents,  including  without  limitation,  records of requisite  corporate
action and proceedings that the Agent or any Lender may reasonably  request,  to
be certified by the appropriate corporate person or government authorities.

     5. 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 Agreement.  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.

     6. Gold Consignment Agreement.  The Lenders hereby consent to the execution
and delivery by the Company of Amendment  No. 2 and Limited  Consent to the Gold
Consignment   Agreement,   such  Amendment  No.  2  and  Limited  Consent  being
substantially in the form attached hereto as Exhibit B.

     7.  Counterparts.  This Agreement 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  Agreement  by  telecopier  shall be  effective  as  delivery of a manually
executed counterpart of this Agreement.




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     8.  Governing  Law. This  Agreement  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.

                              FINLAY ENTERPRISES, INC.


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


                              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/ Richard Luck
                                  -------------------------------- 
                                  Name: Richard Luck
                                  Its Duly Authorized Signatory



                              FLEET  NATIONAL  BANK  (Assignee  and successor in
                              interest to FLEET  NATIONAL BANK OF  MASSACHUSETTS
                              formerly known as Shawmut Bank, N.A.)



                              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      



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<PAGE>




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. 3 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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