Document:

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                                                                    Exhibit 10.3

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                            FINLAY ENTERPRISES, INC.
             DIRECTOR DEFERRED COMPENSATION AND STOCK PURCHASE PLAN

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                              Effective May 1, 2003

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                            FINLAY ENTERPRISES, INC.

             DIRECTOR DEFERRED COMPENSATION AND STOCK PURCHASE PLAN

                             (Effective May 1, 2003)

                                Table Of Contents

Article 1 - Introduction.......................................................1

Article 2 - Definitions........................................................1

Article 3 - Shares Reserved....................................................5

Article 4 - Administration.....................................................5

Article 5 - Eligibility........................................................6

Article 6 - Purchases..........................................................7

Article 7 - Vesting and Payment of RSUs........................................8

Article 8 - Forfeiture Due to Detrimental Activity.............................9

Article 9 - Dividend Equivalent Amounts........................................9

Article 10 - Designation of Beneficiary........................................9

Article 11 - Adjustments......................................................10

Article 12 - Amendment or Termination of Plan.................................10

Article 13 - Miscellaneous Provisions.........................................10

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                            FINLAY ENTERPRISES, INC.
             DIRECTOR DEFERRED COMPENSATION AND STOCK PURCHASE PLAN
                             (EFFECTIVE MAY 1, 2003)

ARTICLE 1 - INTRODUCTION

The purpose of the Finlay Enterprises, Inc. Director Deferred Compensation and
Stock Purchase Plan is to provide equity incentive compensation to directors of
Finlay Enterprises, Inc. who are not employees of Finlay Enterprises, Inc. or
its Subsidiaries (as defined in Section 2.30 hereof) and who are selected to
receive Retainer Fees (as defined in Section 2.27 hereof) by the Committee (as
defined in Section 2.8 hereof). Participants in the Plan are permitted to
purchase RSUs (as defined in Section 2.29 hereof) with their Eligible Director
Fees (as defined in Section 2.18 hereof), and receive a corresponding Matching
RSU (as defined in Section 2.22 hereof) from the Corporation, subject to the
provisions of this Plan. RSUs that are purchased or awarded to a Participant
under the Plan are distributed in the form of shares of Common Stock (and cash
in lieu of fractional shares). The Corporation believes that the Plan creates a
means to provide deferred compensation to such directors and to raise the level
of stock ownership in the Corporation by such directors thereby strengthening
the mutuality of interests between such directors and the Corporation's
stockholders.

The shares of Common Stock available for issuance under this Plan are funded
from shares of Common Stock that are available under the Long Term Incentive
Plans, and such awards under this Plan constitute a "Stock Award" under the Long
Term Incentive Plans.

ARTICLE 2 - DEFINITIONS

2.1      Account - means, with respect to each Participant, the account to which
         Participant RSUs and Matching RSUs purchased or awarded under the Plan
         are credited.

2.2      Award Date - the first business day of each quarter during the
         Corporation's fiscal year, provided that if the Corporation changes its
         Eligible Director Fee payment practices, Award Date is the date
         Eligible Director Fees would otherwise be paid to a Participant if a
         Participant did not elect to purchase Participant RSUs under the Plan.

2.3      Beneficiary - a beneficiary or beneficiaries designated by the
         Participant under Article 10.

2.4      Board of Directors - the Board of Directors of the Corporation.

2.5      Cause - means a termination of a Participant's directorship as a result
         of material malfeasance, fraud, embezzlement or any other act or
         failure to act that constitutes "cause" for removal of a director under
         applicable Delaware law.

2.6      Change in Control - shall be deemed to have occurred if:

              (i)    the stockholders of the Corporation shall have approved:
                     (A) any consolidation or merger of the Corporation in which
                     the Corporation is not
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                     the continuing or surviving corporation or pursuant to
                     which shares of Common Stock would be converted into cash,
                     securities or other property, other than a merger of the
                     Corporation in which the holders of Common Stock
                     immediately prior to the merger have the same proportionate
                     ownership of common stock of the surviving corporation
                     immediately after the merger; (B) any sale, lease, exchange
                     or other transfer (in one transaction or a series of
                     related transactions) of all, or substantially all, of the
                     assets of the Corporation; or (C) the adoption of any plan
                     or proposal for the liquidation or dissolution of the
                     Corporation;

              (ii)   any person (as defined in Sections 13(d)(3) and 14(d)(2) of
                     the Exchange Act), corporation or other entity (other than
                     the Corporation or any employee benefit plan sponsored by
                     the Corporation or any Subsidiary) shall have become the
                     "beneficial owner" (as defined in Rule 13d-3 of the
                     Exchange Act), directly or indirectly, of securities of the
                     Corporation representing 30% or more of the issued and
                     outstanding Common Stock; or

              (iii)  individuals who on the date of the adoption of the Plan
                     constituted the entire Board of Directors shall have ceased
                     for any reason to constitute a majority unless the
                     election, or the nomination for election by the
                     Corporation's stockholders, of each new director was
                     approved by a vote of at least a majority of the directors
                     then still in office.

2.7      Code - the Internal Revenue Code of 1986, as amended from time to time.

2.8      Committee - the Compensation Committee of the Board of Directors,
         and/or any other committee or subcommittee the Board of Directors may
         appoint to administer the Plan as provided herein. A Committee composed
         solely of two or more members of the Board of Directors who meet (i)
         the definition of "outside director" under Section 162(m) of the Code,
         (ii) the definition of "non-employee director" under Section 16 of the
         Exchange Act and (iii) any similar or successor laws hereinafter
         enacted, shall administer the Plan with respect to Participants who are
         subject to Section 16 of the Exchange Act at the time of the relevant
         Committee actions; provided, however, that if, at any time, no
         Committee shall be in office, then the functions of the Committee
         specified in this Plan shall be exercised by the Board of Directors or
         by any other committee appointed by the Board of Directors. If for any
         reason the appointed Committee does not meet the requirements of Rule
         16b-3 or Section 162(m) of the Code, such noncompliance shall not
         affect the validity of any RSUs hereunder, interpretations or other
         actions of the Committee.

2.9      Common Stock - Common Stock of the Corporation, par value $.01 per
         share or such other class of shares or other securities as may be
         applicable pursuant to the provisions of Article 11.

2.10     Confidential Information - means confidential or proprietary
         information relating to the business of the Corporation or a
         Subsidiary, which includes: (1) information of a

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         commercial nature (for example, customers, clients or vendors of the
         Corporation or a Subsidiary, selling strategies, costs, prices and
         markets), (2) information of a technical nature (for example, methods,
         know-how, processes, drawings and design data), (3) information of a
         strategic nature (for example, future developments or strategies
         pertaining to research and development, marketing and sales or other
         matters concerning the Corporation's or a Subsidiary's planning), (4)
         information as to employees and consultants (for example, capabilities,
         competence, status with the Corporation or a Subsidiary and
         compensation levels), and (5) information conceived, originated,
         discovered or developed by a Participant while serving as a director of
         the Corporation. Confidential Information shall not include information
         that is otherwise public knowledge or known within the applicable
         industry or information that a Participant is compelled to disclose
         pursuant to the order of a court or other governmental or legal body
         having jurisdiction over such matter.

2.11     Corporation - Finlay Enterprises, Inc., a corporation organized under
         the laws of the State of Delaware (or any successor).

2.12     Deferral Agreement - an agreement executed by a Participant setting
         forth his or her election to defer receipt of his or her Eligible
         Director Fees for the Deferral Period (as elected by the Participant)
         and to authorize the Corporation to credit such amount to a book-entry
         Account maintained by the Corporation on behalf of the Participant in
         order to purchase a Participant RSU under the Plan. A Deferral
         Agreement shall contain such provisions, consistent with the provisions
         of the Plan, as may be established from time to time by the Corporation
         or Committee.

2.13     Deferral Period - a period of time (expressed in whole years) beginning
         on each Award Date and ending on the third, fifth or seventh year
         following each Award Date, as specified by the Participant in his or
         her Deferral Agreement with respect to RSUs purchased on the applicable
         Award Date. The Deferral Period may be extended as provided in Section
         6.4 and will expire upon certain circumstances as provided in Section
         7.2 and Article 12.

2.14     Detrimental Activity - any of the following activities:

         (a)  the disclosure to anyone outside the Corporation or its
              Subsidiaries, or the use in any manner other than in the
              furtherance of the Corporation's or its Subsidiaries' business,
              without written authorization from the Corporation, of any
              Confidential Information;

         (b)  activity that results or could reasonably be expected to result in
              a Participant's termination that is classified by the Corporation
              or a Subsidiary as a termination for Cause; or

         (c)  a Participant's Disparagement of, or inducement of others to
              Disparage, the Corporation or its Subsidiaries or their past and
              present directors, employees or products.

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         For purposes of all subsections in this Section (other than subsection
         (b)), the Committee shall have authority to provide a Participant with
         written authorization to engage in the activities contemplated thereby
         and no other person or entity shall have authority to provide a
         Participant with such authorization.

2.15     Disability - a "disability" as defined under the Social Security Act.

2.16     Disparagement or Disparage - making comments or statements to the
         press, the Corporation's or its Subsidiaries' employees, consultants,
         customers, suppliers or any other individual or entity with whom the
         Corporation or its Subsidiaries has a business relationship which could
         reasonably be expected to adversely affect in any manner: (a) the
         conduct of the business of the Corporation or its Subsidiaries
         (including, without limitation, any products or business plans or
         prospects); or (b) the business reputation of the Corporation or its
         Subsidiaries, or any of their products, or their past or present
         directors or employees.

2.17     Effective Date - the effective date of the Plan as provided in
         Section 13.13.

2.18     Eligible Director Fees - annual fees received by a Participant for
         services as a chair of any committee of the Board of Directors during a
         Plan Year and any Retainer Fees.

2.19     Exchange Act - the Securities Exchange Act of 1934, as amended.

2.20     Fair Market Value - as applied to any date, shall mean the volume
         weighted average trading price of a share of Common Stock on the
         principal national securities exchange or the Nasdaq Stock Market,
         Inc., as the case may be, on which such stock is listed and traded for
         such date or, if there is no sale on that date, then on the last
         preceding date on which a sale was reported. If the Common Stock is not
         quoted or listed on an exchange or on the Nasdaq Stock Market, Inc., or
         representative quotes are not otherwise available, the Fair Market
         Value shall mean the amount determined by the Committee to be the fair
         market value based upon a good faith attempt to value the Common Stock
         accurately and computed in accordance with the applicable regulations
         under the Code.

2.21     Long Term Incentive Plans - the Finlay Enterprises, Inc. 1997 Long Term
         Incentive Plan and the Finlay Enterprises, Inc. Long Term Incentive
         Plan, as each may be amended from time to time.

2.22     Matching RSU - an RSU awarded to the Participant by the Corporation in
         accordance with Section 6.3.

2.23     Participant - a director of the Corporation who satisfies the
         eligibility requirements under Article 5 of the Plan and elects to
         participate in the Plan in accordance with its terms.

2.24     Participant RSU - an RSU purchased by the Participant in accordance
         with Section 6.2.

2.25     Plan - the Finlay Enterprises, Inc. Director Deferred Compensation and
         Stock Purchase Plan, as amended from time to time.

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2.26     Plan Year - the calendar year, except that the first Plan Year shall be
         the short Plan Year commencing on the Effective Date and ending on
         December 31, 2003.

2.27     Retainer Fee - the retainer fee received by the Participant for service
         on the Board of Directors as a director during a Plan Year. Retainer
         Fees shall not include any fees paid for attendance at Board of
         Director meetings or meetings of any committee thereof of which the
         director is a member, any fees paid for services as chair of any
         committee of the Board of Directors, expense reimbursements, amounts
         realized upon the exercise of a stock option, restricted stock or any
         other amounts paid to the Participant.

2.28     Rule 16b-3 - means the "short-swing" profit recovery rule pursuant to
         Rule 16b-3 promulgated under Section 16(b) of the Exchange Act or any
         successor provision.

2.29     RSU - a restricted stock unit, which is a unit of measurement
         equivalent to one share of Common Stock but with none of the attendant
         rights of a stockholder of a share of Common Stock, including the right
         to vote (if any); except that an RSU shall have the dividend right (if
         any) described in Article 9. The Fair Market Value of an RSU on any
         date shall be deemed to be the Fair Market Value of a share of Common
         Stock on that date. RSUs may be in the form of either Participant RSUs
         (as described in Section 6.2) or Matching RSUs (as described in Section
         6.3). All references to RSUs in the Plan shall be deemed to refer to
         Participant RSUs and Matching RSUs, unless the context clearly requires
         otherwise.

2.30     Subsidiary - a corporation or other form of business association of
         which shares (or other ownership interests) having 50% or more of the
         voting power are owned or controlled, directly or indirectly, by the
         Corporation. As of the Effective Date, Finlay Fine Jewelry Corporation,
         Finlay Merchandising and Buying, Inc. and eFinlay, Inc. are
         Subsidiaries for purposes of this Plan.

ARTICLE 3 - SHARES RESERVED

Shares of Common Stock that may be issued or used for reference purposes under
the Plan are funded from shares of Common Stock that are available for issuance
under the Long Term Incentive Plans. The aggregate number of shares of Common
Stock that may be issued or used for reference purposes under the Plan may not
exceed the maximum number of shares of Common Stock available for issuance under
the Long Term Incentive Plans, subject to adjustment as provided in Article 11
hereof.

ARTICLE 4 - ADMINISTRATION

4.1      The Plan shall be administered by the Committee. The Committee may
         select an administrator or any other person to whom its duties and
         responsibilities hereunder may be delegated. The Committee shall have
         full power and authority, subject to the provisions of the Plan, to
         promulgate such rules and regulations as it deems necessary for the
         proper administration of the Plan, to interpret the provisions and
         supervise the administration of the Plan, and to take all actions in
         connection therewith or in relation

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         thereto as it deems necessary or advisable. All interpretations,
         determinations and decisions of the Committee shall be made in its sole
         and absolute discretion based on the Plan document and shall be final,
         conclusive and binding on all parties with respect to all matters
         relating to the Plan.

4.2      The Committee may employ such legal counsel, consultants, brokers and
         agents as it may deem desirable for the administration of the Plan and
         may rely upon any opinion received from any such counsel or consultant
         and any computation received from any such consultant, broker or agent.
         The Committee may, in its sole discretion, designate an agent to
         administer the Plan, keep records, send statements of Account to
         Participants and to perform other duties relating to the Plan, as the
         Committee may request from time to time. The Committee may adopt, amend
         or repeal any guidelines or requirements necessary for the delivery of
         the Common Stock.

4.3      The Corporation shall, to the fullest extent permitted by law, the
         Certificate of Incorporation and By-laws of the Corporation and, to the
         extent not covered by insurance, indemnify each director or employee of
         the Corporation and its Subsidiaries (including the heirs, executors,
         administrators and other personal representatives of such person) and
         each member of the Committee against all expenses, costs, liabilities
         and losses (including attorneys' fees, judgments, fines, excise taxes
         or penalties, and amounts paid or to be paid in settlement) actually
         and reasonably incurred by such person in connection with any
         threatened, pending or actual suit, action or proceeding (whether
         civil, administrative or investigative in nature or otherwise) in which
         such person may be involved by reason of the fact that he or she is or
         was serving this Plan in any capacity at the request of the Corporation
         or a Subsidiary, except in instances where any such person engages in
         willful misconduct, a crime or fraud. Such right of indemnification
         shall include the right to be paid by the Corporation for expenses
         incurred or reasonably anticipated to be incurred in defending any such
         suit, action or proceeding in advance of its disposition; provided,
         however, that the payment of expenses in advance of the settlement or
         final disposition of a suit, action or proceeding shall be made only
         upon delivery to the Corporation of an undertaking by or on behalf of
         such person to repay all amounts so advanced if it is ultimately
         determined that such person is not entitled to be indemnified
         hereunder. Such indemnification shall be in addition to any rights of
         indemnification the person may have as a director or employee or under
         the Certificate of Incorporation of the Corporation or the By-Laws of
         the Corporation. Expenses incurred by the Committee or the Board of
         Directors in the engagement of any such counsel, consultant or agent
         shall be paid by the Corporation.

ARTICLE 5 - ELIGIBILITY

Any director of the Corporation who is not an active employee of the Corporation
or any of its Subsidiaries who is selected to receive Retainer Fees by the
Committee shall be eligible to participate in the Plan.

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ARTICLE 6 - PURCHASES

6.1      General

         As of the applicable Award Date, RSUs shall be awarded to Participants
         and credited to Accounts held under the Plan on behalf of Participants
         on a book entry basis calculated in the manner provided under Sections
         6.2, 6.3 and 6.5 hereof.

6.2      Voluntary Purchases

         No later than December 31 of each Plan Year, each Participant may
         voluntarily elect to receive 100% of his or her Eligible Director Fees
         that would otherwise be payable to a Participant during the following
         year in the form of RSUs by executing a Deferral Agreement (a
         "Participant RSU"). Notwithstanding the foregoing, for the first Plan
         Year, a Participant may elect to participate in the Plan no later than
         July 1, 2003 with respect to the Eligible Director Fees that would
         otherwise be payable to the Participant on the first day of the
         commencement of the third and fourth quarters of the Corporation's 2003
         fiscal year. If a Participant first becomes eligible to participate
         hereunder during a Plan Year, such Participant may elect to participate
         in the Plan with respect to Eligible Director Fees that would otherwise
         be payable during that Plan Year no later than 30 days following the
         date such director first becomes a Participant.

         The Deferral Agreement shall provide that the Participant elects to
         defer 100% of the Participant's Eligible Director Fees that would
         otherwise be payable to the Participant during the following year (or
         with respect to the first Plan Year, during the remainder of 2003) and,
         in lieu thereof, the Participant shall receive Participant RSUs. The
         Deferral Agreement shall also specify the Deferral Period, as elected
         by the Participant.

6.3      Corporation Matching RSUs

         With respect to each Participant RSU that a Participant elects to
         purchase under the Plan, the Corporation shall credit the book entry
         Account of the Participant with one Matching RSU on the applicable
         Award Date relating to such Participant's election.

6.4      Deferral Period

         Each Deferral Agreement shall specify a Deferral Period with respect to
         the RSU to which it pertains. Notwithstanding the foregoing, the
         Deferral Period may be extended as provided below, or may expire
         earlier, as provided in Section 7.2 and Article 12. The Committee may,
         in its sole discretion, permit a Participant to extend the Deferral
         Period with respect to the RSUs to which it pertains for additional two
         year periods, provided that such extension is made at least one year
         prior to the expiration of the applicable Deferral Period. Unless
         otherwise determined by the Committee, there is no limit on the number
         of two year extensions that may be elected by a Participant.

         Other than with respect to the first Plan Year or with respect to a
         Participant who first becomes eligible to participate in the Plan
         during a Plan Year, Deferral Agreements must

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         be received by the Corporation no later than December 31 of the Plan
         Year prior to which the Eligible Director Fees will be earned. With
         respect to any Plan Year, a Deferral Agreement is irrevocable on and
         after the date the Deferral Agreement must be submitted to the
         Corporation in accordance with procedures established by the Committee,
         and is valid solely for the Plan Year to which the election relates. If
         no new Deferral Agreement is timely made or filed in accordance with
         procedures established by the Committee with respect to any subsequent
         Plan Year, Eligible Director Fees may not be used to purchase
         Participant RSUs under the Plan.

6.5      Awards of RSUs

         The Corporation shall credit the applicable number of RSUs to each
         Participant's Account on each Award Date. Each Participant's Account
         shall be credited with a number of RSUs (in whole and fractional RSUs)
         determined by dividing (a) 100% of the Participant's Eligible Director
         Fees that the Participant elects to receive in the form of Participant
         RSUs in accordance with the Participant's Deferral Agreement by (b) the
         Fair Market Value of a share of Common Stock on each Award Date. Each
         Participant's Account shall also be simultaneously credited with an
         equivalent number of corresponding Matching RSUs. Fractional RSUs shall
         be carried to one-thousandth of one percent (i.e., three decimal
         places), and shall be rounded-down for fractions less than one-half and
         rounded-up for fractions equal to or greater than one-half.

ARTICLE 7 - VESTING AND PAYMENT OF RSUS

7.1      Vesting

         Participant RSUs shall be fully vested at all times. Subject to Article
         8, Matching RSUs shall vest on the one year anniversary of the
         applicable Award Date, provided the Participant continuously serves as
         a director of the Corporation from the applicable Award Date through
         the applicable vesting date. In the event a Participant's directorship
         is terminated for any reason (other than death, Disability or Change in
         Control) all unvested Matching RSUs shall be forfeited. Notwithstanding
         the foregoing, upon a Participant's death, Disability or Change in
         Control, in each case while serving as a director of the Corporation,
         all unvested Matching RSUs shall become 100% vested.

7.2      Payment

         With respect to each Participant RSU, the Corporation shall issue to
         the Participant one share of Common Stock and cash in lieu of any
         fractional RSU (fractional RSUs shall be calculated in accordance with
         Section 6.5 hereof) as soon as practicable after the end of the
         Deferral Period pertaining to such Participant RSU, or, if earlier, as
         soon as practicable after the Participant's termination of directorship
         with the Corporation.

         With respect to each vested Matching RSU, the Corporation shall issue
         to the Participant one share of Common Stock and cash in lieu of any
         fractional RSU (fractional RSUs shall be calculated in accordance with
         Section 6.5 hereof) as soon

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         as practicable after the end of the Deferral Period pertaining to such
         vested Matching RSU, or, if earlier, as soon as practicable after the
         Participant's termination of directorship with the Corporation,
         provided, however, a Participant who terminates directorship for any
         reason other than due to death, Disability, or a Change in Control or a
         termination of the Plan, shall be issued Common Stock with respect to
         each vested Matching RSU (and cash in lieu of fractional shares
         calculated in accordance with Section 6.5 hereof) 12 months after such
         termination.

         Except as provided in Section 7.1, upon any termination of directorship
         or the termination of the Plan, all unvested Matching RSUs shall be
         canceled and terminated, and if a Participant's directorship is
         terminated by the Corporation for Cause all Matching RSUs (whether
         vested or unvested to the extent unpaid) shall be canceled and
         terminated.

ARTICLE 8 - FORFEITURE DUE TO DETRIMENTAL ACTIVITY

In the event a Participant engages in Detrimental Activity while serving as a
director of the Corporation or during a period commencing on the Participant's
termination date and ending one year following the date a Participant terminates
directorship: (i) a Participant shall forfeit any unvested and vested Matching
RSUs to the extent unpaid and (ii) the Corporation shall be entitled to recover
from the Participant, and the Participant shall promptly pay to the Corporation,
the value of any shares of Common Stock that were distributed to the Participant
under the Plan as a result of any Matching RSUs, valued at the greater of the
Fair Market Value on the date a Participant received payment under the Plan or
the date that a Participant engaged in Detrimental Activity.

ARTICLE 9 - DIVIDEND EQUIVALENT AMOUNTS

Whenever dividends (if any) are paid with respect to shares of Common Stock,
each Participant's Account shall be credited as follows: (i) with respect to a
dividend that is paid in Common Stock, each Participant's Account shall be
credited with a corresponding number of RSUs and (ii) with respect to a dividend
that is paid in cash, each Participant's Account shall be credited with a
corresponding number of RSUs, based on the Fair Market Value of a share of
Common Stock on the date the dividend is paid. The Committee, in its sole
discretion, shall determine when, and if, dividends will be credited to
Participant Accounts.

ARTICLE 10 - DESIGNATION OF BENEFICIARY

A Participant may designate one or more Beneficiaries to receive the
Participant's benefits under the Plan in the event of his or her death. Such
designation, or any change therein, must be in writing in a form acceptable to
the Committee and shall be effective upon receipt by the Committee. If there is
no effective Beneficiary designation, the Participant's Beneficiary shall be the
Participant's estate. Upon the acceptance by the Committee of a new Beneficiary
designation form, all Beneficiary designations previously filed shall be
canceled. The Committee shall be entitled to rely on the last Beneficiary
designation form filed by the Participant and accepted by the Committee prior to
his or her death.

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ARTICLE 11 - ADJUSTMENTS

In the event of a stock dividend, stock split, reverse stock split, combination
or reclassification of shares, recapitalization, merger, consolidation,
exchange, spin-off or otherwise which affects the Common Stock, the Committee
shall make appropriate equitable adjustments in:

         (a)  the number or kind of shares of Common Stock or securities with
              respect to which RSUs shall thereafter be purchased or awarded;

         (b)  the number and kind of shares of Common Stock remaining subject to
              outstanding RSUs;

         (c)  the number of RSUs credited to the Account of each Participant;
              and

         (d)  the method of determining the value of RSUs.

ARTICLE 12 - AMENDMENT OR TERMINATION OF PLAN

The Corporation reserves the right to amend, terminate or freeze the Plan at any
time, by action of its Board of Directors (or a duly authorized committee
thereof) or the Committee, provided that no such action shall adversely affect a
Participant's rights under the Plan with respect to RSUs purchased or awarded
and vested before the date of such action. No amendment shall be effective
unless approved by the stockholders of the Corporation if stockholder approval
of such amendment is required to comply with any applicable law, regulation or
stock exchange rule. Upon termination of the Plan, any vested RSU shall be paid
in accordance with Section 7.2 of the Plan (except that any such payments shall
be paid as soon as administratively practicable following the Plan termination)
and any nonvested RSU shall be canceled and terminated. Upon freezing of the
Plan, all vested RSUs purchased or awarded prior to freezing shall continue to
be held under the Plan until the Deferral Period expires and all nonvested RSUs
awarded prior to freezing shall vest or become canceled in accordance with the
terms of the Plan. Any action taken by the Committee pursuant to this Article 12
shall be subject to ratification by the Board of Directors.

ARTICLE 13 - MISCELLANEOUS PROVISIONS

13.1     No Distribution; Compliance with Legal Requirements

         The Committee may require each person acquiring shares of Common Stock
         under the Plan to represent to, and agree with, the Corporation in
         writing that such person is acquiring the shares without a view to
         distribution thereof. No shares of Common Stock shall be issued until
         all applicable securities law and other legal and stock exchange
         requirements have been satisfied. The Committee may require the placing
         of such stop-orders and restrictive legends on certificates for Common
         Stock as it deems appropriate.

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13.2     Withholding

         To the extent legally required, participation in the Plan is subject to
         any required tax withholding on RSUs purchased by, or awarded to, the
         Participant under the Plan.

13.3     Notices; Delivery of Stock Certificates

         Any notice required or permitted to be given by the Corporation or the
         Committee pursuant to the Plan shall be deemed given when personally
         delivered by hand, a nationally recognized overnight courier or
         deposited in the United States mail, registered or certified, postage
         prepaid, addressed to the Participant at the last address shown for the
         Participant on the records of the Corporation or such other address
         that the Participant shall designate in writing to the Corporation.
         Delivery of stock certificates to persons entitled to receive them
         under the Plan shall be deemed effected for all purposes when the
         Corporation or a share transfer agent of the Corporation shall have
         deposited such certificates in the United States mail or personally
         delivered such certificates by hand or by a nationally recognized
         overnight courier, addressed to such person at his/her last known
         address on file with the Corporation or such other address that may be
         designated in writing to the Corporation.

13.4     Nontransferability of Rights

         RSUs are not transferable other than by will or by the laws of descent
         and distribution. No RSU or other interest under the Plan shall be
         subject in any manner to anticipation, alienation, sale, transfer,
         assignment, pledge, encumbrance, garnishment, execution, levy or
         charge, and any attempt by a Participant or any Beneficiary under the
         Plan to do so shall be void. No interest under the Plan shall in any
         manner be liable for or subject to the debts, contracts, liabilities,
         engagements or torts of a Participant or Beneficiary entitled thereto.

13.5     Obligations Unfunded and Unsecured

         The Plan shall at all times be entirely unfunded, and no provision
         shall at any time be made with respect to segregating assets of the
         Corporation or any Subsidiary (including Common Stock) for payment of
         any amounts or issuance of any shares of Common Stock hereunder. No
         Participant or other person shall own any interest in any particular
         assets of the Corporation or any Subsidiary (including Common Stock) by
         reason of the right to receive payment under the Plan, and any
         Participant or other person shall have only the rights of a general
         unsecured creditor of the Corporation with respect to any rights under
         the Plan. Nothing contained in this Plan and no action taken pursuant
         to the provisions of this Plan shall create or be construed to create a
         trust of any kind, or a fiduciary relationship amongst the Corporation,
         any Subsidiary, the Committee, and the Participants, their designated
         Beneficiaries or any other person. Any funds which may be invested
         under the provisions of this Plan shall continue for all purposes to be
         part of the general funds of the Corporation and no person other than
         the Corporation shall by virtue of the provisions of this Plan have any
         interest in such funds. If the Corporation decides

                                       11
<PAGE>

         to establish any accrued reserve on its books against the future
         expense of benefits payable hereunder, or if the Corporation
         establishes a rabbi trust under this Plan, such reserve or trust shall
         not under any circumstances be deemed to be an asset of the Plan.

13.6     Governing Law

         Except to the extent preempted by the Code, this Plan shall be
         governed, construed, administered and regulated in accordance with the
         laws of New York. In the event any provision of this Plan shall be
         determined to be illegal or invalid for any reason, the other
         provisions shall continue in full force and effect as if such illegal
         or invalid provision had never been included herein. As a condition of
         participation in the Plan, all Participants consent to the jurisdiction
         of the Federal courts whose districts encompass any part of Manhattan
         in connection with any dispute arising under the Plan and waives, to
         the maximum extent permitted by law, any objection based on forum non
         conveniens, to the conducting of any such proceeding in such
         jurisdiction.

13.7     Short-Swing Profit Recovery Rule under Rule 16b-3

         The Plan is intended to comply with the "short-swing" profit recovery
         rule pursuant to Rule 16b-3 and the Committee shall interpret and
         administer the provisions of the Plan in a manner consistent therewith.
         Any provisions inconsistent with Rule 16b-3 shall be inoperative and
         shall not affect the validity of the Plan.

13.8     No Directorship Rights

         The establishment and operation of this Plan shall not confer any legal
         rights upon any Participant or other person for a continuation of
         directorship, nor shall it interfere with the rights of the Corporation
         or Subsidiary to terminate a Participant's directorship and to treat
         him or her without regard to the effect which that treatment might have
         upon him or her as a Participant or potential Participant under the
         Plan.

13.9     Severability of Provisions

         If any provision of the Plan shall be held invalid or unenforceable,
         such invalidity or unenforceability shall not affect any other
         provisions hereof, and the Plan shall be construed and enforced as if
         such provisions had not been included.

13.10    Construction

         The use of a masculine pronoun shall include the feminine, and the
         singular form shall include the plural form, unless the context clearly
         indicates otherwise. The headings and captions herein are provided for
         reference and convenience only, shall not be considered part of the
         Plan, and shall not be used in the construction of the Plan.

                                       12
<PAGE>

13.11    Assignment

         The Plan shall be binding upon and inure to the benefit of the
         Corporation, its successors and assigns and the Participants and their
         heirs, executors, administrators and legal representatives. In the
         event that the Corporation sells all or substantially all of the assets
         of its business and the acquiror of such assets assumes the obligations
         hereunder, the Corporation shall be released from any liability imposed
         herein and shall have no obligation to provide any benefits payable
         hereunder.

13.12    Use of Funds

         All Eligible Director Fees that are received or held under the Plan may
         be used by the Corporation for any corporate purpose.

13.13    Effective Date of Plan

         The Plan is adopted, effective as of May 1, 2003, subject to approval
         of the stockholders of the Corporation as provided under applicable
         law, regulation or stock exchange rule. In the event that Participants
         make elections pursuant to a Deferral Agreement and stockholder
         approval is not obtained, any such Deferral Agreements and any
         elections thereunder shall be null and void ab initio.

                                       13<PAGE>

                                                                    Exhibit 10.4

                                                                  EXECUTION COPY

                                 AMENDMENT No. 1

         AMENDMENT No. 1 (this "Amendment") dated as of July 6, 2003 among
FINLAY FINE JEWELRY CORPORATION, a Delaware corporation (the "Borrower"), FINLAY
ENTERPRISES, INC., a Delaware corporation (the "Parent"), the lenders named
herein and signatory hereto (the "Lenders") and GENERAL ELECTRIC CAPITAL
CORPORATION, as agent (the "Agent"), for the Lenders.

                              W I T N E S S E T H :
                              - - - - - - - - - -

         WHEREAS, the Parent, the Borrower, the Lenders and the Agent are
parties to a Second Amended and Restated Credit Agreement dated as of January
22, 2003 (as heretofore and hereafter amended, modified or supplemented from
time to time in accordance with its terms, the "Credit Agreement"); and

         WHEREAS, subject to the terms and conditions contained herein the
parties hereto desire to amend certain provisions of the Credit Agreement;

         NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and subject to the fulfillment of the conditions
set forth below, the parties hereto agree as follows:

         1. Defined Terms. Unless otherwise specifically defined herein, all
capitalized terms used herein shall have the respective meanings ascribed to
such terms in the Credit Agreement.

         2. Amendment to Credit Agreement.

         (a) As of the Effective Date (as defined herein), Section 1.1 of the
Credit Agreement is hereby amended by adding the following definitions in their
appropriate alphabetical order:

         "Amendment No. 1" shall mean the Amendment No. 1 entered into between
the Parent, the Borrower, the Agent and the Lenders party thereto.

         "Amendment No. 1 Effective Date" shall mean July 6, 2003, the Effective
Date as defined in Amendment No. 1.

         (b) As of the Effective Date, Section 9.5 of the Credit Agreement is
hereby amended by deleting the "and" immediately following Section 9.5(h),
deleting the period at the end of Section 9.5(i), inserting a semi-colon
followed by the word "and" immediately thereafter and inserting the following
new subsection (j) immediately thereafter:

         "(j) the sale, transfer and assignment by the Borrower to eFinlay of
Inventory as required for eFinlay to sell such Inventory to fulfill purchases
consummated in the normal course of business through websites."

<PAGE>

         (c) As of the Effective Date, Section 9.6(a)(vi) of the Credit
Agreement is hereby amended by deleting subsection (vi) in its entirety and
replacing it with the following:

         "(vi) the Borrower may pay dividends to the Parent for the repurchase,
acquisition or redemption by the Parent of up to $24,000,000 of its common stock
in open market or privately negotiated transactions (which may be with
Affiliates of the Parent), during the period from the Amendment No. 1 Effective
Date to and including September 29, 2004; provided, that immediately after
giving effect to any stock repurchase the Borrower shall have the ability to
draw an additional Revolving Advance in the amount of at least $30,000,000;
provided, further that the Parent shall give the Agent quarterly notice, in
arrears, of each repurchase made by it pursuant to this clause (vi), specifying
the amount of aggregate repurchases and the source from which the Borrower
obtained the funds to be used to effectuate such repurchases."

         (d) As of the Effective Date, Section 9.6(a) of the Credit Agreement is
hereby amended by deleting the "and" immediately following Section 9.6(a)(v),
deleting the period at the end of Section 9.6(a)(vi), inserting a semi-colon
followed by the word "and" immediately thereafter and inserting the following
new subsection (vii):

         "(vii) the Borrower may pay dividends to the Parent for the payment of
cash dividends by the Parent of up to $5,000,000 plus 25% of net income (without
giving effect to extraordinary gains or losses or gains or losses resulting from
the repurchase, acquisition or redemption of Senior Debentures and Senior Notes)
of the Borrower and its subsidiaries after January 31, 2003; provided, that
immediately after giving effect to any cash dividend the Borrower shall have the
ability to draw an additional Revolving Advance in the amount of at least
$30,000,000; provided, further that the Parent shall give the Agent quarterly
notice, in arrears, of cash dividends made by it pursuant to this clause (vii),
specifying the amount of aggregate cash dividends and the source from which the
Borrower obtained the funds to be used to effectuate such cash dividends."

         (e) As of the Effective Date, Section 9.14 of the Credit Agreement is
hereby amended by inserting the following after "material respect": "(it being
understood that the Borrower and eFinlay shall be permitted to engage in the
business of selling inventory through websites)".

         3. Representations and Warranties. Each of the Parent and the Borrower
represents and warrants as follows (which representations and warranties shall
survive the execution and delivery of this Amendment):

         (a) Each of the Parent and the Borrower has taken all necessary action
to authorize the execution, delivery and performance of this Amendment.

         (b) This Amendment has been duly executed and delivered by the Parent
and the Borrower and the acknowledgement attached hereto has been duly executed
and delivered by each Subsidiary party hereto. This Amendment and the Credit
Agreement as amended hereby constitute the legal, valid and binding obligation
of the

                                       2
<PAGE>

Parent and the Borrower, enforceable against them in accordance with their
respective terms, subject to applicable bankruptcy, reorganization, insolvency,
moratorium and similar laws affecting the enforcement of creditors' rights
generally and by general equity principles.

         (c) No consent or approval of any person, firm, corporation or entity,
and no consent, license, approval or authorization of any governmental authority
is or will be required in connection with the execution, delivery, performance,
validity or enforcement of this Amendment other than any such consent, approval,
license or authorization which has been obtained and remains in full force and
effect or where the failure to obtain such consent, approval, license or
authorization would not result in a Material Adverse Effect.

         (d) After giving effect to this Amendment, each of the Borrower and the
Parent is in compliance with all of the various covenants and agreements set
forth in the Credit Agreement and each of the other Loan Documents.

         (e) After giving effect to this Amendment, no event has occurred and is
continuing which constitutes a Default or an Event of Default.

         (f) All representations and warranties contained in the Credit
Agreement and each of the other Loan Documents are true and correct in all
material respects as of the date hereof, except to the extent that any
representation or warranty relates to a specified date, in which case such are
true and correct in all material respects as of the specific date to which such
representations and warranties relate.

         4. Effective Date. The amendment to the Credit Agreement contained
herein shall become effective as of July 6, 2003 only at such time as (i) this
Amendment has been duly executed and delivered by the Borrower, the Parent and
the Majority Lenders and (ii) the acknowledgement attached hereto has been
executed and delivered by each of the Subsidiaries party hereto. Upon the
satisfaction of the conditions contained in the foregoing clauses (i) and (ii),
July 6, 2003 shall be the "Effective Date".

         5. Gold Consignment Agreement. The Majority Lenders hereby consent to
the execution and  delivery by the Parent, the
Borrower and eFinlay of an amendment to the Gold Consignment Agreement (and any
ancillary documents thereto) consistent with the terms of this Amendment.

         6. Expenses. The Borrower agrees to pay on demand all costs and
expenses, including reasonable attorneys' fees, of the Agent incurred in
connection with this Amendment.

         7. Continued Effectiveness. The term "Agreement", "hereof", "herein"
and similar terms as used in the Credit Agreement, and references in the other
Loan Documents to the Credit Agreement, shall mean and refer to, from and after
the Effective Date, the Credit Agreement as amended by this Amendment. Each of
the Borrower and the Parent hereby agrees that all of the covenants and
agreements

                                       3
<PAGE>

contained in the Credit Agreement and the Loan Documents are hereby ratified and
confirmed in all respects.

         8. Counterparts. This Amendment may be executed in counterparts, each
of which shall be an original, and all of which, taken together, shall
constitute a single instrument. Delivery of an executed counterpart of a
signature page to this Amendment by telecopier shall be effective as delivery of
a manually executed counterpart of this Amendment.

         9. Governing Law. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York without giving effect to the
conflict of laws provisions thereof.

                                      * * *

                                        4
<PAGE>

         IN WITNESS WHEREOF the parties hereto have caused this Amendment No. 1
to be duly executed by their respective officers as of the date first written
above.

                               FINLAY FINE JEWELRY CORPORATION

                               By: /s/ Bruce E. Zurlnick
                                   -------------------------------------
                                   Name:  Bruce E. Zurlnick
                                   Title: Senior Vice President,
                                          Treasurer and CFO

                               FINLAY ENTERPRISES, INC.

                               By: /s/ Bruce E. Zurlnick
                                   -------------------------------------
                                   Name:  Bruce E. Zurlnick
                                   Title: Senior Vice President,
                                          Treasurer and CFO

                               GENERAL ELECTRIC CAPITAL CORPORATION,
                               Individually and as Agent

                               By: /s/ Charles Chiodo
                                   -------------------------------------
                                   Name:  Charles Chiodo
                                   Title: Duly Authorized Signatory

                               FLEET PRECIOUS METALS INC.

                               By: /s/ Anthony J. Capuano
                                   -------------------------------------
                                   Name:  Anthony J. Capuano
                                   Title: Senior Vice President

                               By: /s/ Richard M. Seufert
                                   -------------------------------------
                                   Name:  Richard M. Suefert
                                   Title: Senior Vice President

                               ABN AMRO BANK N.V.

                               By:
                                   -------------------------------------
                                   Name:
                                   Title:

                       Signature Pages to Amendment No. 1

<PAGE>
                               BANK LEUMI USA

                               By:
                                   -------------------------------------
                                   Name:
                                   Title:

                               JPMORGAN CHASE BANK

                               By: /s/ Irene B. Spector
                                   -------------------------------------
                                   Name:  Irene B. Spector
                                   Title: Vice President

                               WELLS FARGO FOOTHILL, LLC

                               By: /s/ Lan Wong
                                   -------------------------------------
                                   Name:  Lan Wong
                                   Title: Assistant Vice President

                               TRANSAMERICA BUSINESS CAPITAL CORPORATION

                               By: /s/ Michael S. Burns
                                   -------------------------------------
                                   Name:  Michael S. Burns
                                   Title: SVP-Region Manager

                       Signature Pages to Amendment No. 1
<PAGE>

Each of the Guarantors, by signing
below, confirms in favor of the Agent
and the Lenders that it consents to the
terms and conditions of the foregoing
Amendment No. 1 to the Second Amended
and Restated Credit Agreement and agrees
that it has no defense, offset, claim,
counterclaim or recoupment with respect
to any of its obligations or liabilities
under its respective Guaranty and that
all terms of such Guaranty shall
continue in full force and effect,
subject to the terms thereof.

FINLAY JEWELRY, INC.

By: /s/ Bruce E. Zurlnick
    -----------------------------
    Name:  Bruce E. Zurlnick
    Title: Senior Vice President,
           Treasurer and CFO

FINLAY MERCHANDISING & BUYING, INC.

By: /s/ Bruce E. Zurlnick
    -----------------------------
    Name:  Bruce E. Zurlnick
    Title: Senior Vice President,
           Treasurer and CFO

eFINLAY, INC.

By: /s/ Bruce E. Zurlnick
    -----------------------------
    Name:  Bruce E. Zurlnick
    Title: Senior Vice President,
           Treasurer and CFO

                       Signature Pages to Amendment No. 1

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