AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT
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            AMENDMENT  NO.  2,  dated  as of July  1,  1997,  to the  employment
agreement dated May 26, 1993 (as heretofore and hereafter  amended,  modified or
supplemented  from time to time in accordance  with its terms,  the  "Employment
Agreement"),  by  and  between  Finlay  Fine  Jewelry  Corporation,  a  Delaware
corporation (the "Corporation"), and David B. Cornstein (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. (a) The preamble to the Employment  Agreement shall be amended by
deleting the clause ",  President  and Chief  Executive  Officer" from the third
"WHEREAS" clause therein.

                  (b) Section 2(a) of the Employment  Agreement shall be amended
by deleting the clause ", President and Chief Executive Officer" from the second
sentence thereof.

                  (c) Section 2(b) of the Employment  Agreement shall be amended
by deleting the clause ",  President and Chief  Executive  Officer" in the first
sentence thereof.

                  (d) Each of  Section  8(c)(i)  and (ii)  shall be  amended  by
deleting the clause ", President and Chief Executive Officer" therefrom.

                  (e) A new  Section  8(c)A  shall be  added  to the  Employment
Agreement  immediately after the text of Section 8(c) thereof,  which shall read
in its entirety as follows:

                  "8(c)A.  The Executive  may elect to terminate his  employment
            hereunder and such  termination  shall be deemed to be a termination
            of his employment  without "cause" in the event Executive  commences
            service,  whether on a full-time or part-time  basis, as an officer,
            director, commissioner,  employee or assumes any other position with
            a    federal,    state,    municipal    or    other    governmental,
            quasi-governmental   or  regulatory  agency,   commission  or  other
            authority, or assumes any other public or political office."

                                     

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                  (f) The provisions of Section 9(b) of the Employment Agreement
shall be amended so that the clause "or Section  8(c)A above" is inserted in the
first sentence thereof immediately after the clause "Section 8(c) above".

                  (g) The  provisions of this  Paragraph 1 shall be effective as
of January 30, 1996.

            2. (a) Section 2(a) of the Employment  Agreement shall be amended by
deleting  the  date  "January  31,  1998"  in the  first  sentence  thereof  and
substituting  therefor  the date  "January  31,  1999" and  Section  8(a) of the
Employment Agreement shall be amended by deleting the date "January 31, 1998" in
clause (iv) thereof and substituting therefor the date "January 31, 1999."

                  (b) Except as expressly set forth herein,  the Executive shall
have no other title with the Corporation or any affiliate thereof.

                  (c) The  provisions of this  Paragraph 2 shall be effective as
of July 1, 1997.

            3.  Upon  expiration  of the  term of the  Employment  Agreement  on
January  31,  1999,  the  Executive  shall be  appointed  Chairman  Emeritus  of
Enterprises  and shall be  retained in such  capacity  for a period of two years
thereafter.

            4. Except as amended hereby,  the Employment  Agreement shall remain
in full force and effect, without change or modification.

            5. 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.


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                  IN WITNESS  WHEREOF,  the  parties  hereto  have  signed  this
Amendment as of the day and year first above written.

                                        FINLAY FINE JEWELRY CORPORATION


                                        By _____________________________ 
                                           Name:
                                           Title:





The undersigned agrees to
and accepts the foregoing
amendment:

FINLAY ENTERPRISES, INC.


By:  ____________________
     Name:
     Title:

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