AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT



     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."
<PAGE>

     (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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<PAGE>



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

                                                FINLAY FINE JEWELRY CORPORATION


                                                By /s/Arthur E. Reiner        
                                                   ----------------------------
                                                   Arthur E. Reiner  
                                                   Chairman and Chief Executive
                                                     Officer



                                                   /s/David B. Cornstein       
                                                   ----------------------------
                                                   David B. Cornstein

The undersigned agrees to
and accepts the foregoing
amendment:

FINLAY ENTERPRISES, INC.


By:  /s/Arthur E. Reiner           
     -----------------------------------
     Arthur E. Reiner  
     President, Chief Executive Officer
       and Vice Chairman   
 









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