We write to set forth our agreement

                                                            As of June 16, 2005

Ms. Leslie A. Philip

40 Tiffany Circle

Manhasset, NY 11030

Dear Ms. Philip:

         We write to set forth our agreement with respect to your continued

employment by Finlay Merchandising & Buying, Inc. (the "Company").

         1.       The Company hereby agrees to continue to employ you, and you

agree to continue to be employed by the Company, on the terms and conditions

hereinafter set forth. You will serve as Executive Vice President and Chief

Merchandising Officer of the Company and shall be responsible for the

merchandising and marketing areas of the business, and you will hold such other

offices in the Company and its parent company, subsidiaries and divisions to

which you may from time to time be appointed or elected. You agree to serve the

Company faithfully and to the best of your ability, to promote the Company's

best interests and to devote your full working time, energy and skills to the

Company's business.

         2.      (a) As full compensation for your services hereunder (including

services, if any, as an officer of the Company and an officer and director of

its subsidiaries and divisions), you shall receive base salary ("Base Salary")

at the rate of $471,690 per annum, payable in equal monthly installments and an

annual bonus payable on or about April 25th during each year of the term hereof

based on the attainment of financial goals as set by the Company's Compensation

Committee ("Annual Bonus"), less all applicable withholding taxes and lawful

deductions. The Company shall include you in any employee benefit plans and

other fringe benefit programs that it maintains for senior executives. The

Company shall reimburse you for your ordinary and necessary business expenses

incurred in the course of your performance of services hereunder, subject to

submission of adequate substantiation thereof and to conformance with the

Company's regular policies from time to time in effect with respect to

reimbursement of expenses.

                  (b) Nothing in this Agreement shall prevent the Company from

increasing the compensation to be paid to you if the Company shall determine it

advisable to do so in order to compensate you fairly for services rendered.

Ms. Leslie A. Philip

Page 2

As of June 16, 2005

                  (c) Notwithstanding anything herein to the contrary,

in the event that you are employed by the Company on June 30, 2008, you shall

receive, with the Company's regular July 2008 payroll cycle, in addition to your

Base Salary and Annual Bonus, a special bonus equal to 50% of your then current

Base Salary.

         3.       (a) The term of your employment hereunder shall continue until

the earliest of the following dates: (a) June 30, 2008 (b) the day on which you

die; (c) such date as the Company terminates your employment for "good cause";

(d) if you become "Totally Disabled" or (e) the day on which you volun