AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT

     AMENDMENT  NO. 2, dated as of March 5, 1997, to the  Employment  Agreement,
dated  as of  January  3,  1995  (as  previously  amended  by the  Amendment  to
Employment  Agreement dated as of May 17, 1995, the  "Employment  Agreement") by
and among Finlay Enterprises, Inc., a Delaware corporation,  Finlay Fine Jewelry
Corporation, a Delaware corporation, and Arthur E. Reiner (the "Executive").

                              W I T N E S S E T H :

     WHEREAS,  the parties hereto mutually desire to amend certain provisions of
the Employment Agreement;

     NOW,  THEREFORE,  for good and valuable  consideration,  the parties hereto
agree as follows:

     1. The provisions of Section 1 of the Employment Agreement shall be amended
so that the ending date is January 31, 2001.

     2. The  provisions  of Section 5(b) of the  Employment  Agreement  shall be
amended so that the following sentence is inserted at the end of said paragraph:

     "The Company shall pay  additional compensation  to the  Executive to hold 
     him harmless  from any income taxes  he may owe as a result of the premiums
     paid by the Company  with respect to  any and all life  insurance provided 
     under this paragraph and as a result of such additional compensation."

     3. The existing  provisions of Section 6 of the Employment  Agreement shall
become a sub-paragraph  (a) of such Section and a new sub-paragraph (b) added as
follows:

     "(b) In addition to expenses reimbursable  pursuant to paragraph (a) above,
     the Company shall reimburse Executive   for the use, for business purposes,
     of an automobile purchased by or  leased  to him,  including  all  expenses
     of purchase, lease, operation, maintenance  and insurance  thereof,  in the
     amount of up to $15,000 per year."

     

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     4. Section 7(b) of the Employment Agreement shall be, and hereby is amended
so that the  reference  (appearing  on the  eighteenth  line of such Section) to
"7.92%"  shall be  modified  effective  as of the date  hereof to  "6.92%".  The
parties  agree that a  corresponding  change shall be made to the interest  rate
reference in the Note.

     5. Except as amended hereby, the Employment  Agreement shall remain in full
force and effect,  without change or  modification.  The  Employment  Agreement,
together with this  Amendment No. 2 and the other  documents  referred to in the
Employment Agreement,  is intended by the parties as a final expression of their
agreement and  understanding  in respect of the subject matter  contained herein
and therein.  The  Employment  Agreement,  this  Amendment  No. 2 and such other
documents supersede all prior agreements and understandings  between the parties
with respect to such subject matter.

     6. This  instrument  may be executed in two or more  counterparts,  each of
which shall be deemed an original,  but all of which together  shall  constitute
one and the same instrument.

     7. Terms defined in the  Employment  Agreement  and not  otherwise  defined
herein shall have the meanings set forth in the Employment Agreement.

     8. This Amendment No. 2 to Employment Agreement shall become effective upon
the receipt of all required third-party consents, including, without limitation:
(a) consent under the Amended and Restated Credit  Agreement,  dated as of March
28,  1995,  as  amended,  among the Parent,  Finlay,  General  Electric  Capital
Corporation,  individually  and as agent  for the  lenders  named  therein  (the
"Lenders")  and the Lenders,  as amended;  and (b) consent under the Amended and
Restated  Stockholders'  Agreement,  dated as of March 6, 1995, among the Parent
and certain stockholders of the Parent.




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     IN WITNESS WHEREOF,  the parties hereto have signed this Amendment No. 2 as
of the day and year first above written.





                                         /s/ Arthur E. Reiner        
                                         --------------------        
                                         Arthur E. Reiner


                                         FINLAY ENTERPRISES, INC.


                                         By /s/ Barry Scheckner      
                                            ----------------------------      
                                            Name:  Barry Scheckner
                                            Title: Senior Vice President


                                         FINLAY FINE JEWELRY CORPORATION


                                         By /s/ Barry Scheckner      
                                            ----------------------------      
                                            Name:  Barry Scheckner
                                            Title: Senior Vice President