As of February 28, 2006


Mr. Edward J. Stein
678 S. Frontier Court
Anaheim Hills, CA 92807

Dear Mr. Stein:

     We write to set forth our agreement with respect to your employment by
Finlay Fine Jewelry Corporation (the "Company").

     1. (a) As full compensation for your services hereunder (including
services, if any, as an officer of the Company and an officer and director of
its subsidiaries and divisions), you shall receive base salary at the rate of
$390,056 per annum, payable in equal monthly installments and an annual bonus
payable on April 25th during each year you are employed by the Company based on
the attainment of financial goals as set by the Company's Compensation
Committee, less all applicable withholding taxes and lawful deductions. Nothing
in this Agreement shall prevent the Company from increasing the compensation to
be paid to you if the Company shall determine it advisable to do so in order to
compensate you fairly for services rendered.

        (b) The Company shall include you in any employee benefit plans and
other fringe benefit programs that it maintains for senior executives. The
Company shall reimburse you for your ordinary and necessary business expenses
incurred in the course of your performance of services hereunder, subject to
submission of adequate substantiation thereof and to conformance with the
Company's regular policies from time to time in effect with respect to
reimbursement of expenses.

     2. You shall continue to be an employee at-will of the Company whose
employment may be terminated by either the Company or you at any time, with or
without notice or cause.

     3. (a) In the event you are employed by the Company on January 31, 2009 and
the Company terminates your employment solely by virtue of the failure to renew
the Company's license agreement dated as of July 26, 2001 with Macy's Central,
Inc. as



Mr. Edward J. Stein
Page 2
As of February 28, 2006


amended, for a period of more than one fiscal year from its current expiration
date of January 31, 2009, following your timely execution of a release and
waiver of all claims against the Company (which shall be in form and substance
satisfactory to the Company in its sole discretion), you shall be entitled to
receive, as severance pay, the sum of $595,420 payable as follows: (i) $297,710
(plus interest at the prime rate reported in The Wall Street Journal from the
date of your termination until the date of payment), payable on the Company's
next regular pay date for executives immediately following six calendar months
after your termination date, and (ii) beginning with the seventh calendar month
thereafter, six monthly installments of $49,618.33 each.

     Notwithstanding anything of the foregoing to the contrary, any severance
payments made pursuant to this Section 3(a) shall be reduced by an amount equal
to the gross amounts you receive or earn as compensation, benefits, profits or
otherwise from your employment or engagement in any other business or activity
(excluding any investment income or capital gains) ("Other Income"). As a
condition to receipt of each payment to be made pursuant to Section 3(a) hereof,
you shall, no later than the 15th day of each calendar month prior to the date
such payment is due, certify in writing to Joyce Manning Magrini, Executive Vice
President - Administration of the Company, all amounts of Other Income received
by you during the preceding calendar month(s) so that the appropriate offsets
can be made.

        (b) This Agreement supercedes, and is in lieu of, any other severance
payments to which you may be entitled under any other severance plans or
arrangements maintained by the Company, whether now existing or hereafter
implemented.

        (c) In the event your employment is terminated on or before January 31,
2009, whether by you or by the Company for any reason other than criminal
misconduct or gross negligence, the Company shall pay, in accordance with the
Company's current relocation policy for executives, all expenses associated with
the relocation of your primary residence to the destination of your choice in
southern California.

     4. This letter sets forth our final and entire agreement with respect to
its subject matter, cannot be changed, waived or terminated orally and shall be
governed by the internal law of the State of New York (without reference to its
rules as to



Mr. Edward J. Stein
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As of February 28, 2006


conflicts of laws). The parties agree that any action or proceeding with respect
to this Agreement shall be brought in a court of competent jurisdiction in the
City, County and State of New York and that all claims with respect to an
inconvenient forum are irrevocably waived. This Agreement shall bind and benefit
the parties and their respective successors and assigns, but no right or
obligation hereunder may be assigned without the other party's written consent,
except by the Company to an enterprise that succeeds to a substantial portion of
its business or assets by purchase, merger, consolidation or otherwise.

     5. If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provisions and shall not affect or render invalid or unenforceable any other
provision of this Agreement and this Agreement shall be construed as if such
provision had been drawn so as not to be invalid or unenforceable. The language
in this Agreement shall be construed according to its fair meaning and not
strictly for or against either party because that party drafted it.

     If the forgoing correctly sets forth your understanding of our agreement,
please so indicate by signing and returning to us a copy of this letter.


                                              FINLAY FINE JEWELRY CORPORATION



                                              By /s/ Arthur E. Reiner
                                                 -------------------------------
                                                 Arthur E. Reiner
                                                 Chairman & CEO


ACCEPTED AND AGREED TO:



/s/ Edward J. Stein
-----------------------
Edward J. Stein