<PAGE>


                                 AMENDMENT NO. 2
                                     TO THE
                          FINLAY RETIREMENT INCOME PLAN
                         (As Restated February 20, 2002)
                         -------------------------------


                  The Finlay Retirement Income Plan (the "Plan"), as restated
February 20, 2002 and thereafter amended April 1, 2003, is hereby further
amended in the following respects, effective January 1, 1997:

                  1.      Section 3.5.2 of the Plan is amended as follows:

                          (a)   The sixth sentence thereof is amended by adding
the following language at the end thereof after the words "beginning with the
highest of such amounts":

                          , in the following manner. First, determine how much
                          the actual contribution ratio (ACR) of the Highly
                          Compensated Employee with the highest ACR would have
                          to be reduced to satisfy the actual contribution
                          percentage (ACP) test or cause such ratio to equal the
                          ACR of the Highly Compensated Employee with the next
                          highest ratio. Second, this process is repeated until
                          the ACP test would be satisfied. The amount of excess
                          aggregate contributions is equal to the sum of these
                          hypothetical reductions multiplied, in each case, by
                          the Highly Compensated Employee's Total Compensation.

                          (b)   The following sentence is added at the end
of Section 3.5.2:

                          The distribution (or forfeiture, if applicable) of
                          excess aggregate contributions shall be made on the
                          basis of the respective amounts attributable to each
                          Highly Compensated Employee. The Highly Compensated
                          Employees subject to actual distribution or forfeiture
                          are determined using the "dollar leveling method"
                          starting with the Highly Compensated Employee with the
                          greatest dollar amount of employee, matching and other
                          contributions treated as Matching Contributions for
                          the Plan Year and continuing until the amount of the
                          excess aggregate contributions has been accounted for.


<PAGE>

                  2.      Section 14.3 is amended by revising the third sentence
thereof to read as follows:

                          Any such distribution of excess Elective
                          Contributions, and the corrective measures with
                          respect to Matching Contributions and other excess
                          contributions set forth below, shall be limited to the
                          extent such excess Annual Additions result from
                          contributions based on estimated annual compensation,
                          the allocation of forfeitures, or a reasonable error
                          in determining the amount of elective deferrals
                          (within the meaning of Code section 402(g)(3)) that
                          are permitted.


                  IN WITNESS WHEREOF, the Company has caused this instrument to
be executed by its duly authorized officers this 29th day of May, 2003.


                                                 FINLAY ENTERPRISES, INC.



                                                 By:  /s/ Joseph M. Melvin
                                                      -----------------------
                                                      Joseph M. Melvin,
                                                      Chief Operating Officer

ATTEST:


/s/ Bonni G. Davis
-----------------------------
Bonni G. Davis
Secretary