CONSULTING AGREEMENT


     Agreement, dated as of February 1, 1999, by and between FINLAY FINE JEWELRY
CORPORATION,  a Delaware corporation (the "Corporation"),  and PINNACLE ADVISORS
LIMITED, a New York corporation (the "Consultant").

     WHEREAS, the Corporation wishes to retain the Consultant and the Consultant
has agreed to undertake and perform the obligations herein set forth, subject to
the terms hereof.

     NOW, THEREFORE, in consideration of the promises,  covenants and agreements
set forth herein, the parties agree as follows:

     1. Engagement of Consultant;  Duties.  The  Corporation  hereby engages the
Consultant,  and the  Consultant  agrees to be engaged,  as a consultant  on the
terms and conditions set forth below. The Consultant  agrees that it will, as an
independent contractor,  serve, on a non-exclusive basis, as a consultant to the
Corporation  and its  affiliates,  performing  such services,  including but not
limited to, advising on domestic and international operations and opportunities,
asset  deployment,  acquisition and divestiture  programs,  department and store
openings and closings,  marketing  strategy,  meeting with lenders,  capital and
operating  budgets and other  business  matters,  subject to the  direction  and
control of the  Corporation's  Chairman of the Board and Chief Executive Officer
and the  Corporation's  Board of Directors.  The Consultant's  role is that of a
consultant  and  advisor  to,  and not  that of a  manager  or  employee  of the
Corporation. It is agreed that a representative of the Consultant will hold such
directorships in the Corporation and its affiliates to which he may from time to
time be elected and he shall be provided  with an adequate  office,  a secretary
and other working facilities at the Corporation's  principal  executive offices;
unless  otherwise  agreed by the parties hereto,  the obligation to provide such
office space shall be satisfied by the Consultant being provided with the office
heretofore  utilized  by David  B.  Cornstein.  The  Consultant  represents  and
warrants that it is not subject to any  agreement,  covenant or legal  restraint
which precludes or otherwise  restricts its ability to enter into this Agreement
and perform the services contemplated hereby.

     2.  Time.  The  Consultant  will  devote  such time to the  affairs  of the
Corporation  (and its  affiliates)  as is  necessary  to  perform  the  services
contemplated  hereby in a professional and effective manner,  subject to illness
and  reasonable   requirements  


<PAGE>

of other businesses and activities of the Consultant's personnel. The Consultant
may perform services hereunder in such manner (whether by conference, telephone,
letter or  otherwise)  and at such time and place as Consultant  may  reasonably
determine.  It is presently contemplated that, if available,  Mr. Cornstein will
attempt to act for the Consultant in the performance of the services required of
the Consultant hereunder. Nothing herein shall prevent any representative of the
Consultant from taking vacation or travel.

     3. Term.

     The Consultant's  engagement shall commence effective as of the date hereof
and shall continue until January 31, 2001 (the "Termination Date").

     4. Compensation.

     As compensation for the  Consultant's  services  hereunder,  the Consultant
shall receive a fee at the rate of $225,000 per year  ("Compensation"),  payable
in equal quarterly installments,  with the first installment payable on February
1, 1999. 

     5. Expense Reimbursement.

     The  Corporation  will  reimburse the  Consultant  for any and all expenses
incident  to  the  Consultant's   rendering  of  services  hereunder  which  the
Corporation deems necessary or desirable,  upon presentation of expense vouchers
or other  documentation  in such detail as the Corporation may from time to time
reasonably  require.  It is acknowledged and agreed that the type of expenses to
be reimbursed  hereunder shall be similar to those incurred by Mr.  Cornstein in
his position as an officer of each of the Corporation and its affiliates.

     6. Non-Competition.

     (a) The  Consultant  recognizes  that the  services to be  performed  by it
hereunder  are  special,  unique and  extraordinary  and that,  by reason of its
engagement hereunder,  the Consultant will acquire confidential  information and
trade secrets  concerning the operation of the Corporation and Enterprises.  For
all purposes hereunder or in respect hereof,  the Consultant,  for and on behalf
of itself and its  representatives,  including without limitation Mr. Cornstein,
agrees  that  during  any  period  or  periods  in or in  respect  of which  the
Consultant  is receiving or has  received any  Compensation  provided for herein
(whether  or not the  Consultant  is engaged  by or  rendering  services  to the
Corporation during such period or periods), the Consultant will not, directly or
indirectly, as an officer, director, stockholder,  partner, associate, employee,
consultant,  owner,  agent,  creditor,  co-venturer  or otherwise,  become or be
interested  in or be  


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<PAGE>

associated  with  any  other  corporation,  firm  or  business  engaged,  in any
geographical  area in which the  Corporation  or  Enterprises  is engaged at the
Termination  Date in a  Competitive  Business  with that of the  Corporation  or
Enterprises on the  Termination  Date. A "Competitive  Business"  shall mean any
business  (i) which  operates  any type of business in the jewelry  field,  (ii)
which acts as a direct  vendor of or advisor  with  respect to diamonds or other
fine  jewelry  to any store  which is a member of a retail  group with which the
Corporation or Enterprises does business at the time the Consultant's engagement
hereunder  expires,  (iii) which is, or owns any entity  which is, a  department
store group in which the Corporation or Enterprises  operates  licensed  jewelry
departments  or (iv) which is in a  business  which is the same as or similar to
any business which the  Corporation or Enterprises is engaged in at the time the
Consultant's  engagement terminates.  The Consultant's (or any representative's)
ownership,  directly or indirectly, of not more than three percent of the issued
and outstanding stock of any corporation except Enterprises, the shares of which
are   regularly   traded  on  a   national   securities   exchange   or  in  the
over-the-counter  market,  shall not in any event be deemed to be a violation of
the  provisions of this Section 6. The ownership of securities by Consultant (or
any representative thereof) of Enterprises shall not be deemed to be a violation
of this  Section  6. For  purposes  of this  Section 6 and  Section  7, the term
"Corporation" and  "Enterprises"  shall also mean any affiliate (as such term is
defined in Rule 144 promulgated under the Securities Act of 1933, as amended, or
any successor rule) of either entity.

     (b) The  Consultant,  for and on behalf of itself and its  representatives,
agrees,  during the period set forth in subsection (a) above, that it shall not,
on behalf of itself or any  business it is  interested  in or  associated  with,
employ or otherwise engage, or seek to employ or engage, any individual employed
by the  Corporation  or  Enterprises  at any time  during the  preceding  twelve
months,  or  solicit  any  business  in the  jewelry  field  from any person the
Corporation  or  Enterprises  was doing  business  with at any time  during  the
engagement  hereunder,  including  without  limitation any lessor from which the
Corporation or Enterprises leases or leased a department or departments.

     (c) The Corporation and Enterprises  shall be entitled,  in addition to any
other  right and  remedy it may have,  at law or in  equity,  to an  injunction,
without the posting of any bond or other security,  enjoining or restraining the
Consultant from any violation or threatened violation of this Section 6, and the
Consultant  hereby  consents  to the  issuance  of  such  injunction;  provided,
however, that the foregoing shall not prevent the Consultant from contesting the
issuance of any such  injunction  on the ground that no violation or  threatened
violation of this Section 6 has occurred.  If any of the restrictions  contained
herein shall be deemed to be unenforceable 


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<PAGE>

by reason of the extent,  duration or geographical scope thereof,  or otherwise,
then the court  making  such  determination  shall have the right to reduce such
extent,  duration,  geographical  scope, or other provisions  hereof, and in its
reduced  form this  Section 6 shall be  enforceable  in the manner  contemplated
hereby.

     (d)  The  Consultant   acknowledges  that  Enterprises  is  a  third  party
beneficiary of the obligations of Consultant under this Sections 6 and 7 herein.
Accordingly,  Enterprises will have the right to enforce against  Consultant and
its  representatives  its  obligations  under such Sections  despite not being a
signatory to this Agreement.

     7.  Confidentiality.  The  Consultant,  for and on behalf of itself and its
representatives, shall not divulge to anyone, either during or at any time after
the termination of its engagement,  any information  constituting a trade secret
or other confidential  information  acquired by it concerning the Corporation or
Enterprises,  except in the  performance  of its duties  hereunder,  without the
prior written consent of the Corporation or Enterprises,  as the case may be, or
if required by law. The Consultant  acknowledges that any such information is of
a  confidential  and secret  character and of great value to the  Corporation or
Enterprises,  and upon the  termination of its  engagement the Consultant  shall
forthwith  deliver up to the  Corporation  all  notebooks  and other data in its
possession  relating to either the Corporation or  Enterprises,  as the case may
be. The Corporation shall be entitled, in addition to any other right and remedy
it may have, at law or in equity,  to an injunction,  without the posting of any
bond or  other  security,  enjoining  or  restraining  the  Consultant  from any
violation or threatened  violation of this Section 7, and the Consultant  hereby
consents  to the  issuance  of such  injunction;  provided,  however,  that  the
foregoing  shall not prevent the Consultant  from contesting the issuance of any
such injunction on the ground that no violation or threatened  violation of this
Section 7 has occurred.

     8.  Severability.  If any provision of this  Agreement  shall be held to be
invalid or unenforceable,  such invalidity or unenforceability shall attach only
to such  provision 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.

     9. Entire Agreement,  Etc. This Agreement sets forth the parties' final and
entire agreement,  and supersedes any and all prior  understandings with respect
to its subject matter.  This Agreement shall bind and benefit the parties hereto
and their  respective  heirs,  successors  and assigns,  except as otherwise set
forth herein.  This Agreement is personal in nature and none of the Consultant's
obligations under this Agreement may 


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<PAGE>

be assigned or  delegated by the  Consultant.  The  Corporation  may assign this
Agreement to any affiliate  thereof.  This Agreement shall also be assignable by
the  Corporation or any of its affiliates to any other person in connection with
the sale,  transfer or other disposition of all or a substantial  portion of its
business and assets;  and this Agreement  shall inure to and be binding upon any
successor  to  all  or a  substantial  portion  of  the  business,  or to all or
substantially  all of  the  assets,  of  the  Corporation,  whether  by  merger,
consolidation,  purchase of stock or assets or otherwise.  This Agreement cannot
be  changed,  waived  or  terminated  except  by a  writing  signed  by both the
Consultant  and the  Corporation  and shall be  governed  by, and  construed  in
accordance  with, the laws of the State of New York applicable to contracts made
and performed entirely within such state.

     10.  Independent  Contractor.  The parties agree that the Corporation shall
have no right to  control or direct  the  details,  manner or means by which the
Consultant  accomplishes  the results of the services  performed  hereunder,  it
being  acknowledged that the Consultant shall for all purposes be an independent
contractor of the Corporation.

     11.  Counterparts.   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.

     12. Notices. Any notice or other communication  required to or which may be
given  to any  party  hereunder  shall be in  writing  and  shall  be  delivered
personally  to  such  party  (or  the  Secretary  thereof  in  the  case  of the
Corporation)  or if mailed,  by registered or certified mail,  postage  prepaid,
return receipt requested, addressed to such other party at the address first set
forth above and shall be deemed  delivered in all cases upon receipt.  Any party
may change the address to which notices are to be sent by giving  written notice
of any such change in the manner provided herein.

     13.  Captions.  The  descriptive  headings of the several  sections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

     14.  No Right of  Set-Off.  The  obligation  to pay to the  Consultant  all
Compensation and any other amounts payable to the Consultant  hereunder shall be
an absolute  obligation of the Corporation and shall not be subject to any right
of set-off or similar right.

     15.  Arbitration.  Any  controversy  or claim arising out of or relating to
this  Agreement  or any breach or  asserted  breach  hereof or  questioning  the
validity and binding effect hereof shall be determined by arbitration  conducted
in the City of New York in accordance with the Commercial  Rules of the American


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<PAGE>

Arbitration Association then obtaining, and judgment upon any award rendered may
be  entered  in any court  having  jurisdiction  thereof.  The  decision  of the
arbitrators shall be final and binding upon the parties hereto.  The Corporation
shall pay all of the costs and expenses (including  reasonable  attorneys' fees)
incurred  by  the  Executive  in  connection  with  any  matters   submitted  to
arbitration pursuant to this Section 15 if the Consultant substantially prevails
in such arbitration.

     IN WITNESS WHEREOF,  the parties hereto have set their hands as of the date
first written above.

                           FINLAY FINE JEWELRY CORPORATION


                                   By: /s/ Arthur E. Reiner
                                   ---------------------------------------------
                                   Name:  Arthur E. Reiner
                                   Title: Chairman & Chief Executive Officer

                                   PINNACLE ADVISORS LIMITED


                                    By: /s/ David B. Cornstein
                                    --------------------------------------------
                                    Name:  David B. Cornstein
                                    Title: President and Chief Executive Officer

The undersigned agrees to and
accepts the foregoing Agreement:

FINLAY ENTERPRISES, INC.


By: /s/ Arthur E. Reiner                        
    --------------------------------------------
    Name:  Arthur E. Reiner
    Title: President and Chief Executive Officer
















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