AMENDMENT
      NO. 1

     

    TO

     

    EMPLOYMENT
      AGREEMENT

     

    AMENDMENT
      (“Amendment”) made as of this 11th day of March 2008 to the employment agreement
      dated as of January 30, 2005 (the “Employment Agreement”) among Finlay
      Enterprises, Inc., a Delaware corporation (the “Parent”), Finlay Fine Jewelry
      Corporation, a Delaware corporation (the “Operating Company”), and Arthur E.
      Reiner (the “Executive”). The Parent and the Operating Company are hereinafter
      referred to at times collectively as the “Company”.

     

    WHEREAS,
      the
      Company and the Executive have previously entered into the Employment Agreement;
      

     

    WHEREAS,
      the
      Company and the Executive
      desire
      to amend the Employment Agreement.

     

    NOW,
      THEREFORE,
      effective March 11, 2008, the Employment Agreement is hereby amended as
      follows:

     

    1. Section
      9
      of the Employment Agreement is hereby amended to insert a new sentence at the
      end of the first sentence to read as follows:

     

    “Payment
      of the Severance Amount pursuant to this Section 9 shall be subject to the
      Delay
      Period under Section 15(c) hereof.”

     

    2. Clause
      (A) of Section 10(b)(ii) of the Employment Agreement is hereby amended to read
      as follows:

     

    “(F)
      subject to the Delay Period under Section 15(c), 50% of his Base Salary through
      the end of the Employment Term,”

     

    3. Clause
      (F) of Section 10(b)(ii) of the Employment Agreement is hereby amended to read
      as follows:

     

    “(F)
      subject to the Delay Period under Section 15(c), the Severance Amount
      and”

     

    4. Clause
      (E) of Section 10(c)(i) of the Employment Agreement is hereby amended to read
      as
      follows:

     

    “(E)
      receive the insurance and other benefits provided to Executive under Section
      5(b) and 5(e) hereof in accordance therewith, (F) be entitled to receive any
      amounts earned but unpaid prior to Executive’s date of termination pursuant to
      Sections 3, 4, and 5(a) hereof (including accrued but unused vacation), which
      amounts shall be payable within ten (10) days after such termination of
      employment and (G) receive reimbursement pursuant to Section 7 hereof for
      eligible expenses incurred prior to Executive’s date of termination, which
      reimbursements shall be made no later than March 15 of the calendar year next
      following the calendar year in which such reimbursable expenses are incurred
      (items (E) through (G), the “Accrued
      Amounts”),
      provided that payments pursuant to items (A) through (D) shall be subject to
      the
      Delay Period under Section 15(c) hereof.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5. Section
      10(c)(ii) of the Employment Agreement is hereby amended in its entirety to
      read
      as follows:

     

    “(ii)
      Subject to Section 10(f), if Executive’s employment is terminated during the
      Employment Term (x) by the Company without Cause or by Executive for Good Reason
      coincident with or following a Change of Control, or (y) by Executive for any
      reason within ninety (90) days following a Change of Control, Executive shall
      be
      entitled to (A) subject to the Delay Period under Section 15(c) hereof, a cash
      lump sum payment, payable within 10 days after such termination of employment,
      equal to the product of (x) 2.99 times (y) Executive’s “base amount,” as defined
      in Section 280G(b)(3) of the Code (the “Executive Base Amount”), (B) subject to
      the Delay Period under Section 15(c) hereof, all of the Restricted Stock
      issuable under Sections 4(c) and 6 hereof for the entire stated Employment
      Term,
      and (C) the Accrued Amounts. All other benefits, if any, due Executive following
      Executive’s termination of employment pursuant to this Subsection 10(c)(ii)
      shall be determined in accordance with the plans, policies and practices of
      the
      Company.

     

    Subject
      to Section 10(f) and the Delay Period under Section 15(c) as applicable, if
      Executive’s employment is terminated during the Employment Term by the Company
      without Cause or by the Executive for Good Reason within ninety (90) days prior
      to a Change of Control, Executive shall (i) continue to be entitled to the
      benefits and payments provided under Section 10(c)(i) in the form and at the
      times provided thereunder, plus (ii) be entitled to the benefits and payments
      provided under Section 10(c)(ii) in the form and at the time provided under
      Section 10(c)(ii) payable on a Change of Control, solely to the extent that
      the
      benefits and payments under Section 10(c)(ii) exceed the benefits and payments
      under Section 10(c)(i).”

     

    
      
        
        

      

      
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    6. Section
      10(c)(iii) of the Employment Agreement is hereby amended to include a new
      subsection (E) following subsection (D) to read as follows:

     

    “(E)
      the
      failure of the acquirer or successor corporation following a Change of Control
      to expressly assume the Company’s obligations under this Agreement and extend
      the Employment Term so that the unexpired portion thereof is not less than
      3
      years or otherwise offer Executive a contract on terms no less favorable to
      Executive than those provided in this Agreement providing for a term lasting
      at
      least 3 years.”

     

    7. Section
      10(d) of the Employment Agreement is hereby amended in its entirety to read
      as
      follows:

     

    “(d)
      Termination by Executive. If Executive terminates his employment with the
      Company for any reason during the Employment Term (other than an early
      termination by Executive under Section 1 hereof, a termination by Executive
      for
      Good Reason or a termination by Executive for any reason within ninety (90)
      days
      following a Change of Control), Executive shall be entitled to the same payments
      he would have received if his employment had been terminated by the Company
      for
      Cause.”

     

    8. Section
      10(e)(ii) of the Employment Agreement is hereby amended to read as follows:
      

     

    “(ii)
      during any twelve (12) month period, individuals who at the beginning of such
      period constituted the Parent Board (together with any new directors whose
      election by the Parent Board or whose nomination for election by the Parent’s
      stockholders was approved by a vote of at least a majority of the directors
      then
      still in office who either were directors at the beginning of such period or
      whose election or nomination for election was previously so approved) cease
      for
      any reason to constitute a majority of the directors then in office unless
      such
      majority of the directors then in office has been elected or nominated for
      election by the Principal or his Related Parties or”

     

    9. Section
      10(f)(i) of the Employment Agreement is hereby amended in its entirety to read
      as follows:

     

    “(i)
      In
      the event it is determined pursuant to Clause (ii) below, that part or all
      of
      the consideration, compensation or benefits to be paid to Executive under this
      Agreement in connection with Executive's termination of employment whether
      prior
      to or following a Change of Control or under any other plan, arrangement or
      agreement in connection therewith, constitutes a “parachute payment” (or
      payments) under Section 280G(b)(2) of the Code, then, if the aggregate present
      value of such parachute payments (the “Parachute Amount”) exceeds 2.99 times the
      Executive Base Amount, the amounts constituting “parachute payments” which would
      otherwise be payable to or for the benefit of Executive shall be reduced in
      accordance with Clause (iii) below to the extent necessary so that the Parachute
      Amount is equal to 2.99 times the Executive Base Amount. Notwithstanding the
      foregoing, if it is determined that stockholder approval of the payment of
      such
      compensation and benefits will reduce the applicability of Section 280G of
      the
      Code to such payment, promptly after request by Executive, the Company will
      undertake reasonable efforts to hold such a meeting to obtain such approval
      or
      to solicit such approval by written consent, and to obtain such
      approval.”

     

    
      
        
        

      

      
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    10. Section
      10(f)(iii) of the Employment Agreement is hereby amended in its entirety to
      read
      as follows:

     

    “(iii)
      If
      the final determination made pursuant to Clause (ii) of this Section 10(f)
      results in a reduction of the payments that would otherwise be paid to Executive
      except for the application of Clause (i) of this Section 10(f), the benefits
      payable to Executive under 10(c)(ii)(B) shall be eliminated or reduced to the
      extent necessary in order to not exceed the limitation under Section 10(f)(i),
      and then to the extent necessary pursuant to Section 10(f)(i), the amounts
      payable to Executive under Section 10(c)(ii)(A) shall be reduced. Within ten
      days following such determination, the Parent shall pay to or distribute to
      or
      for the benefit of Executive such amounts as are then due to Executive under
      this Agreement and shall promptly pay to or distribute to or for the benefit
      of
      Executive in the future such amounts as become due to Executive under this
      Agreement.”

     

    11. The
      language “Unforeseen Personal Hardship” in Section 10(j) of the Agreement is
      hereby amended to read as follows:

     

    “for
      any
      reason within ninety (90) days following a Change of Control”

     

    12. A
      new
      sentence is hereby added to the end of Section 10(j) of the Agreement to read
      as
      follows:

     

    “The
      Executive shall pay the balance of such compensation and benefits expense no
      later than thirty (30) days following the close of the fiscal year in which
      the
      compensation and benefits expense is incurred.”

     

    
      
        
        

      

      
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    13. Clause
      (i) of Section 11(a) is amended to read as follows:

     

    “(i)
      in
      the event of a termination of Executive's employment with Cause or Executive's
      voluntary termination of employment (other than for Good Reason or for any
      reason within ninety (90) days following a Change of Control), for a period
      of
      eighteen months following such termination of employment and”

     

    14. The
      following language is hereby inserted following “Good Reason” in clause (ii) of
      Section 11(a):

     

    “or
      for
      any reason within ninety (90) days following a Change of Control”

     

    15. A
      new
      Section 15 is hereby added to the Agreement to read as follows:

     

    “15.
      Section 409A of the Code. 

     

    (a)
      It is
      intended that the payments and benefits under this Agreement be exempt from,
      or
      comply with, Section 409A of Code and the regulations and guidance promulgated
      thereunder (collectively “Code Section 409A”), and all provisions of this
      Agreement shall be construed in a manner consistent with the requirements for
      avoiding taxes or penalties under Code Section 409A. If any provision of this
      Agreement (or of any award of compensation, including equity compensation or
      benefits) would cause Executive to incur any additional tax or interest under
      Code Section 409A, the Company shall, upon the specific request of
      Executive, use its reasonable business efforts to in good faith reform such
      provision to comply with Code Section 409A; provided, that to the maximum
      extent practicable, the original intent and economic benefit to Executive and
      the Company of the applicable provision shall be maintained, but the Company
      shall have no obligation to make any changes that could create any additional
      economic cost or loss of benefit to the Company. The Company shall have no
      liability with regard to any failure to comply with Code Section
      409A.

     

    (b)
      A
      termination of employment shall not be deemed to have occurred for purposes
      of
      any provision of this Agreement providing for the payment of any amounts or
      benefits upon or following a termination of employment unless such termination
      is also a “Separation from Service” within the meaning of Section 409A and, for
      purposes of any such provision of this Agreement, references to a “termination,”
“termination of employment” or like terms shall mean Separation from Service.


     

    
      
        
        

      

      
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    (c)
      If
      Executive is deemed on the date of termination of his employment to be a
“specified employee,” within the meaning of that term under Section
      409A(a)(2)(B) of the Code and using the identification methodology selected
      by
      the Company from time to time, or if none, the default methodology, then with
      regard to any payment or the providing of any benefit made subject to this
      Section 15(c), to the extent required to be delayed in compliance with
      Section 409A(a)(2)(B) of the Code, and any other payment, the provision of
      any
      other benefit or any other distribution of equity that is required to be delayed
      in compliance with Section 409A(a)(2)(B) of the Code, such payment, benefit
      or
      distribution shall not be made or provided prior to the earlier of (i) the
      expiration of the six-month period measured from the date of Executive’s
      Separation from Service or (ii) the date of Executive’s death (the “Delay
      Period”). On the first day of the seventh month following the date of
      Executive’s Separation from Service or, if earlier, on the date of his death,
      all payments delayed pursuant to this Section 15(c) (whether they would
      have otherwise been payable in a single sum or in installments in the absence
      of
      such delay) shall be paid or reimbursed to Executive in a lump sum, and any
      remaining payments and benefits due under this Agreement shall be paid or
      provided in accordance with the normal payment dates specified for them
      herein.
      Promptly following the expiration of such six-month period, all compensation
      suspended pursuant to the foregoing sentence (whether it would have otherwise
      been payable in a single sum or in installments in the absence of such
      suspension) shall be paid or reimbursed to Executive in a lump sum.


     

    (d)
      With
      regard to any provision herein that provides for reimbursement of costs and
      expenses or in-kind benefits, except as permitted by Code Section 409A, (i)
      the
      right to reimbursement or in-kind benefits shall not be subject to liquidation
      or exchange for another benefit, (ii) the amount of expenses eligible for
      reimbursement, or in-kind benefits, provided during any taxable year shall
      not
      affect the expenses eligible for reimbursement, or in-kind benefits to be
      provided, in any other taxable year, provided,
      that
      the foregoing clause (ii) shall not be violated with regard to expenses
      reimbursed under any arrangement covered by Section 105(b) of the Code solely
      because such expenses are subject to a limit related to the period the
      arrangement is in effect and (iii) such payments shall be made on or before
      the
      last day of Executive’s taxable year following the taxable year in which the
      expense was incurred.”

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF,
      the
      undersigned has caused this Amendment to be executed this 11th day of March,
      2008.

    
 

    
      
        	 	
                EXECUTIVE

              
	 	 
	 	
                /s/
                  Arthur E.
                  Reiner                                                               
                  

              
	 	
                Arthur
                  E. Reiner

              
	 	 
	 	 
	 	
                FINLAY
                  ENTERPRISES, INC.

              
	 	 
	 	 
	 	
                By:
                  /s/ Bruce E.
                  Zurlnick                                                    
                  

              
	 	
                Title: Senior
                  Vice President, Treasurer and Chief 

              
	 	
                Financial
                  Officer 

              
	 	 
	 	 
	 	
                FINLAY
                  FINE JEWELRY CORPORATION

              
	 	 
	 	
                By:
                  /s/ Bruce E.
                  Zurlnick                                                      
                  

              
	 	
                Title: Senior
                  Vice President, Treasurer and Chief

              
	 	
                Financial
                  Officer 

              


      

    

    


     

    
      
        
        

      

      
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