FINLAY ENTERPRISES INC /DE
AMENDED AND RESTATED GOLD CONSIGNMENT AGREEMENT
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>d26039_ex10-1.txt
<DESCRIPTION>AMENDED AND RESTATED GOLD CONSIGNMENT AGREEMENT
<TEXT>

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                 AMENDED AND RESTATED GOLD CONSIGNMENT AGREEMENT


                           DATED as of March 30, 2001


                                     between


                        FINLAY FINE JEWELRY CORPORATION,
                                  EFINLAY, INC.

                        such other CONSIGNEE SUBSIDIARIES
                     which may become Consignees hereunder,


                                       and


     SOVEREIGN BANK, as successor to Fleet National Bank, f/k/a BankBoston,
         N.A., f/k/a The First National Bank of Boston, as successor to
                    Rhode Island Hospital Trust National Bank


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<PAGE>


                                TABLE OF CONTENTS


<TABLE>
<S>                                                                                                  <C>
1.   DEFINITIONS.....................................................................................1

2.   CONSIGNMENT FACILITY............................................................................18
         2.1.   Agreement to Make Purchases and Consignments of Precious Metal.......................18
         2.2.   Requests For Purchases and Consignments..............................................20
         2.3.   Daily Consignment Fee................................................................21
         2.4.   Payment on Account of Repurchase or Redelivery of Consigned Precious Metal...........22
         2.5.   Conversion Options...................................................................25
         2.6.   Repurchase at Maturity...............................................................26
         2.7.   Overdue Amounts......................................................................26
         2.8.   Settlements for Consignments.........................................................26
         2.9.   Obligations of the Participating Institutions in Respect of Consignments.............27
         2.10.  Change in Fronting Institutions' Commitment Percentages..............................28

3.   INSURANCE; TAXES................................................................................28
         3.1.   Insurance............................................................................28
         3.2.   Taxes, Etc.; Certain Rights of the Agent.............................................30

4.   CHANGES IN CIRCUMSTANCES........................................................................31
         4.1.   Capital Adequacy.....................................................................31
         4.2.   Inability to Determine Eurodollar Rate or Consignment Fixed Rate.....................31
         4.3.   Illegality of Consignment Fixed Rate Amounts.........................................32
         4.4.   Indemnity............................................................................32
         4.5.   Termination of Commitment............................................................32

5.   FEES AND PAYMENTS...............................................................................33
         5.1.   Fees.................................................................................33
         5.2.   No Setoff, etc.......................................................................33
         5.3.   Institutions that are not U.S. Persons...............................................34
         5.4.   Payment and Redelivery...............................................................35
         5.5.   Maximum Rate of Interest.............................................................35

6.   REPRESENTATIONS AND WARRANTIES..................................................................35
         6.1.   Incorporation; Good Standing; Authorization..........................................36
         6.2.   Enforceability.......................................................................36
         6.3.   Title to Properties; Leases..........................................................36
         6.4.   Financial Statements.................................................................36
         6.5.   No Material Changes..................................................................37
         6.6.   Litigation...........................................................................37
         6.7.   No Conflict..........................................................................37
         6.8.   Compliance with other Instruments, Laws, etc.........................................37
</TABLE>

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                                      -2-


<TABLE>
<S>                                                                                                  <C>
         6.9.   Tax Status...........................................................................37
         6.10.  Holding Company and Investment Company Acts..........................................38
         6.11.  Use of Proceeds......................................................................38
         6.12.  No Event of Default..................................................................38
         6.13.  Locations of Specified Gold Jewelry..................................................38
         6.14.  Other Credit.........................................................................38
         6.15.  Perfection of Security Interest......................................................38
         6.16.  Subsidiaries.........................................................................39

7.   CONDITIONS PRECEDENT............................................................................39
         7.1.   Closing Conditions...................................................................39
                  7.1.1.   Consignment Documents.....................................................39
                  7.1.2.   Financial Statements......................................................39
                  7.1.3.   Representations True; No Material Adverse Change..........................39
                  7.1.4.   Opinion of Counsel........................................................40
                  7.1.5.   Satisfaction with Systems.................................................40
                  7.1.6.   Perfection Certificates and UCC Search Results............................40
                  7.1.7.   UCC Filings and Notices...................................................40
                  7.1.8.   Proceedings; Copies of Documents..........................................40
                  7.1.9.   Copies of Agreements......................................................40
                  7.1.10.  License Arrangements......................................................41
                  7.1.11.  Intercreditor Agreement...................................................41
                  7.1.12.  Insurance.................................................................41
                  7.1.13.  Fees......................................................................41
                  7.1.14.  Letter of Credit..........................................................42
                  7.1.15.  Approvals.................................................................42
                  7.1.16.  Vendor Letters etc........................................................42
                  7.1.17.  Consignment Limit Report..................................................42
                  7.1.18.  Other Documents...........................................................42
         7.2.   Conditions to All Purchases and Consignments.........................................42
                  7.2.1.   Representations True......................................................42
                  7.2.2.   No Event of Default.......................................................43
                  7.2.3.   Government Regulation.....................................................43
                  7.2.4.   Consignment Requests......................................................43
                  7.2.5.   Proceedings and Documents.................................................43
                  7.2.6.   Fees......................................................................43

8.   COVENANTS.......................................................................................43
         8.1.   Affirmative Covenants................................................................43
                  8.1.1.   Financial Statements, Certificates and Information........................43
                  8.1.2.   Records and Accounts.  Each Consignee will,
                           and will cause each of its Subsidiaries to................................45
                  8.1.3.   Corporate Existence; Maintenance of Properties............................46
                  8.1.4.   Notices...................................................................46
</TABLE>

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<TABLE>
<S>                                                                                                  <C>
                  8.1.5.   Use of Proceeds...........................................................47
                  8.1.6.   Payment of Claims.........................................................47
                  8.1.7.   Systems...................................................................47
                  8.1.8.   Other Credit..............................................................47
                  8.1.9.   Location of Specified Jewelry.............................................48
                  8.1.10.  Further Assurances........................................................48
                  8.1.11.  Certain Payments..........................................................48
                  8.1.12.  eFinlay...................................................................49
         8.2.   Negative Covenants...................................................................49
                  8.2.1.   Indebtedness..............................................................49
                  8.2.2.   Liens.....................................................................52
                  8.2.3.   Investments...............................................................54
                  8.2.4.   Distributions.............................................................57
                  8.2.5.   Merger, Consolidation and Disposition of Assets...........................59
                  8.2.6.   Joint Ventures; Nature of Business; Accounting Practices..................61
                  8.2.7.   Other Consignments........................................................61
                  8.2.8.   Payments in Respect of Other Indebtedness.................................61
                  8.2.9.   Certain Transactions......................................................62
                  8.2.10.  Commitments to Open Factory Outlet Stores.................................62
         8.3.   Financial Covenants..................................................................62
                  8.3.1.   EBITDA to Financial Obligations...........................................62
                  8.3.2.   Indebtedness to EBITDA....................................................63
                  8.3.3.   Minimum EBITDA............................................................63

9.   EVENTS OF DEFAULT; ACCELERATION.................................................................63
         9.1.   Events of Default and Acceleration...................................................63
         9.2.   Agent's Rights with respect to Consigned Precious Metal..............................69
         9.3.   Remedies.............................................................................69
         9.4.   Distribution of Proceeds.............................................................70

10.   SETOFF.........................................................................................70

11.   EXPENSES.......................................................................................71

12.   INDEMNIFICATION................................................................................72

13.   THE AGENT......................................................................................73
         13.1.   Authorization.......................................................................73
         13.2.   Employees and Agents................................................................73
         13.3.   No Liability........................................................................73
         13.4.   No Representations..................................................................74
         13.5.   Payments............................................................................74
                  13.5.1.   Payments to Agent........................................................74
                  13.5.2.   Distribution by Agent....................................................74
                  13.5.3.   Delinquent Institutions..................................................75
         13.6.   Holders of Notes....................................................................75
</TABLE>

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<TABLE>
<S>                                                                                                  <C>
         13.7.   Indemnity...........................................................................75
         13.8.   Agent as Institution................................................................76
         13.9.   Resignation.........................................................................76
         13.10.  Notification of Defaults and Events of Default......................................76
         13.11.  Duties in the Case of Enforcement...................................................76

14.   ASSIGNMENT AND PARTICIPATION...................................................................77
         14.1.   Conditions to Assignments...........................................................77
                  14.1.1.    Assignment by Institutions..............................................77
         14.2.   Certain Representations and Warranties; Limitations; Covenants......................77
         14.3.   Register............................................................................78
         14.4.   Participations......................................................................79
         14.5.   Disclosure..........................................................................79
         14.6.   Assignee or Participant Affiliated with Consignees..................................79
         14.7.   Miscellaneous Assignment Provisions.................................................80
         14.8.   Assignment by Consignees............................................................80

15.   CONSENTS, AMENDMENTS, WAIVERS, ETC.............................................................80

16.   NEW CONSIGNEES.................................................................................81

17.   CONCERNING JOINT AND SEVERAL LIABILITY OF THE CONSIGNEES.......................................81

18.   NOTICES, ETC...................................................................................84

19.   GOVERNING LAW..................................................................................85

20.   HEADINGS.......................................................................................85

21.   COUNTERPARTS...................................................................................85

22.   ENTIRE AGREEMENT, ETC..........................................................................86

23.   WAIVER OF JURY TRIAL...........................................................................86

24.   TRANSITIONAL ARRANGEMENTS......................................................................86
         24.1.   Original Consignment Agreement Superseded...........................................86
         24.2.   Fees Under Original Consignment Agreement...........................................87

25.   MISCELLANEOUS..................................................................................87
</TABLE>

<PAGE>


                 AMENDED AND RESTATED GOLD CONSIGNMENT AGREEMENT

     AMENDED AND RESTATED GOLD CONSIGNMENT  AGREEMENT  ("Agreement")  made as of
the 30th day of March 2001, by and between SOVEREIGN BANK, as successor to Fleet
National Bank, f/k/a BankBoston,  N.A., f/k/a The First National Bank of Boston,
as successor to Rhode Island  Hospital Trust National Bank,  with an office at 1
West  Mezzanine,   15  Westminster  Street,   Providence,   Rhode  Island  02903
("Sovereign")  and the other  lending  institutions  from time to time listed on
Schedule XII hereto (together with Sovereign, the "Institutions"),  Sovereign as
agent for the Institutions  (the "Agent"),  FINLAY FINE JEWELRY  CORPORATION,  a
Delaware  corporation with its principal  office at 529 Fifth Avenue,  New York,
New York  10017  ("Finlay"),  EFINLAY,  INC.,  a Delaware  corporation  with its
principal office at 529 Fifth Avenue,  New York, New York 10017  ("eFinlay") and
such other Consignee Subsidiaries that may become Consignees hereunder from time
to time pursuant to ss.16 and which are listed on Schedule XIII hereto (together
with Finlay and eFinlay, the "Consignees").

     Finlay and Sovereign have previously entered into a Consignment  Agreement,
dated as of June 15, 1995 (as amended or  otherwise  modified and in effect from
time to time  immediately  prior to the  effectiveness  of this  Agreement,  the
"Original  Consignment  Agreement"),  pursuant  to  which  Sovereign  agreed  to
purchase  Precious Metal (as defined  therein) from Finlay and deliver  Precious
Metal (as  defined  therein)  on  consignment  for sale to  Finlay.  Finlay  and
Sovereign  wish to amend and restate the Original  Consignment  Agreement in its
entirety in order to increase the Consignment  Limit, to cause the  Institutions
to join this  Agreement on the terms set forth  herein and to allow  eFinlay and
any  additional  Consignees  that may from time to time be set forth on Schedule
XIII hereto to join this Agreement on the terms and conditions set forth herein.
Accordingly,  Finlay  and  eFinlay  hereby  request  the  Agent on behalf of the
Institutions (and, by joining this Agreement at any time after the Closing Date,
any  other  Consignee  that  becomes  party  hereto  and the  other  Consignment
Documents  pursuant to ss.16 hereof at such time requests the Agent on behalf of
the  Institutions)  to purchase from such Persons and deliver Precious Metal (as
defined herein) on consignment for sale to such Persons. The Agent, on behalf of
the Institutions, is willing to make those purchases,  consignments and sales on
the terms and conditions of this Agreement. To effectuate this arrangement,  the
Agent,  the  Institutions  and the  Consignees  agree to amend and  restate  the
Original Consignment Agreement as follows:

                                 1. DEFINITIONS.

     For the purposes of this Agreement:

     Additional  Vendor Notice: A Notice given by the Consignees at their option
to the Agent no more  frequently  than once  during  any  fiscal  quarter of the
Consignees,  pursuant to which the Consignees  shall request the Agent's consent
to the addition of additional Approved Vendors hereunder.

<PAGE>

                                      -2-


     Affiliate:  Any Person that would be  considered  to be an  affiliate  of a
Consignee  under Rule 144(a) of the Rules and  Regulations of the Securities and
Exchange  Commission,  as in effect on the date hereof,  if such  Consignee were
issuing securities.

     Agent. As defined in the preamble hereto, or any successor thereto pursuant
to the provisions of this Agreement.

     Agreement: As defined in the preamble hereto, which term shall include this
Agreement and the Schedules  and Exhibits  hereto,  all as amended and in effect
from time to time.

     Approved Vendor Agreement:  Those certain letter agreements,  substantially
in the form of  Exhibit A hereto,  addressed  by each of the  Approved  Vendors,
respectively, to the Agent.

     Approved Vendors:  The vendors of gold jewelry Inventory listed on Schedule
I hereto or such other  vendors of gold jewelry  Inventory as may be approved in
writing by the Agent (in its sole discretion)  following receipt by the Agent of
an Additional Vendor Notice;  provided,  however, that each such Approved Vendor
shall have executed and delivered to the Agent an Approved Vendor Agreement, and
such  UCC-3  termination  statements  with  respect  to such  Approved  Vendor's
existing financing  statements  previously filed against any Consignee,  if any,
and other  documentation  as the Agent shall deem  necessary or  appropriate  in
order to preserve and maintain its first priority perfected Lien for the benefit
of the Agent and the Institutions in all Specified Gold Jewelry provided by such
Approved Vendor.

     Base Rate:  The higher of (i) the annual  rate of interest  announced  from
time to time by the Agent at its head office as the Agent's "base rate" and (ii)
one-half of one percent (1/2%) above the Federal Funds Effective Rate.

     Business Day: Any day on which banks in Providence,  Rhode Island, are open
for business generally.

     Capital Expenditures:  For any Person, any expenditures or costs (excluding
any  franchise  or  other  fee or  other  expense  paid  in  cash  by any of the
Consignees  as  consideration  for the initial  granting of a license  under any
license  agreement or arrangement  entered into with any lessor or licensor of a
store location) made by such Person for the  acquisition,  maintenance or repair
of fixed or capital  assets (which are required to be capitalized on the balance
sheet of such Person in accordance with GAAP),  including,  without  limitation,
the  incurrence or assumption  of any  Indebtedness  in respect of such fixed or
capital assets,  and,  without double  counting,  any payment made in respect of
such incurrence or assumption.

     Capitalized  Leases:  Leases  under  which  any  Consignee  or any of  such
Consignee's Subsidiaries is the Lessee or obligor, the discounted, future rental

<PAGE>

                                      -3-


payment   obligations  under  which  are  required  to  be  capitalized  on  the
consolidated  balance sheet of such Consignee and its Subsidiaries in accordance
with GAAP.

     Cash Collateral  Agreement:  The Cash Collateral  Agreement dated as of the
date hereof,  between the Consignees and the Agent,  as the same may be amended,
restated, modified or supplemented from time to time.

     Cash Deposits:  The cash deposits of the Consignees in a depository account
established and maintained by the Consignees with the Agent.

     Cash  Interest  Expense:  For any  period,  the  aggregate  amount  of cash
required to be applied by the Parent and its Subsidiaries to Interest Expense of
the Consignees and its Subsidiaries during such period.

     Charter Documents: In respect of any entity, the certificate or articles of
incorporation  or  organization  and  the  by-laws  of  such  entity,  or  other
constitutive documents of such entity.

     Closing Date. The first date on which the conditions set forth in ss.7 have
been satisfied and any Purchase and Consignments are to be made hereunder.

     Code. The Internal Revenue Code of 1986, as amended from time to time.

     Collateral:  All of the property,  rights and assets of any Consignee  that
are or are  intended  to be  subject  to the  security  interest  created by the
Security Documents.

     Commerz. Commerzbank International S.A.

     Commitment.  With  respect  to each  Institution,  the  amount set forth on
Schedule  XII  hereto as the  amount of such  Institution's  commitment  to make
Consignment Participations, as the same may be modified pursuant to ss.14 hereof
and as the same may be  reduced  from time to time;  or, if such  commitment  is
terminated pursuant to the provisions hereof, zero.

     Commitment Percentage. With respect to each Institution, the percentage set
forth on  Schedule  XII  hereto as such  Institution's  percentage  of the Total
Commitment, as the same may be modified pursuant to ss.14 hereof.

     Consent:  In  respect  of any  person or  entity,  any  permit,  license or
exemption  from,  approval,  consent of,  registration or filing with any local,
state or federal governmental or regulatory agency or authority,  required under
applicable law.

     Consigned  Precious  Metal:  Precious  Metal (a) subject to a Purchase  and
Consignment  and  consigned  by the Agent on behalf of the  Institutions  to the
Consignees pursuant to the terms of this Agreement and (b) for which payment has
not been received or which has not been Redelivered to the Agent.

<PAGE>

                                      -4-


     Consigned Precious Metal Statement: See ss.2.1(e).

     Consignee: As defined in the preamble hereto.

     Consignee  Subsidiaries:  On the Closing  Date,  eFinlay,  and, on any date
subsequent  to the Closing  Date,  such other  Subsidiaries  of Finlay that have
become  Consignees  hereunder  pursuant to and on the terms and  conditions  set
forth on ss.16.

     Consignment  Base Rate: A rate determined by the Agent from time to time in
its sole discretion,  which rate may be changed by the Agent following seven (7)
days' prior Notice to the Consignees.

     Consignment Base Rate Amounts: Consigned Precious Metal which is accruing a
Daily Consignment Fee calculated by reference to the Consignment Base Rate.

     Consignment  Conversion  Request:  A Notice given by the  Consignees to the
Agent of the Consignees'  election to convert or continue the Daily  Consignment
Fee  applicable  to  portions  of  Consigned   Precious  Metals  outstanding  in
accordance with ss.2.5.

     Consignment  Documents:   This  Agreement,   the  Security  Documents,  the
Intercreditor  Agreement,  the Intercompany  Subordination  Agreement,  the Post
Closing  Letter and the Fee Letter,  in each case as from time to time  amended,
restated, modified or supplemented.

     Consignment  Fixed Rate:  With respect to any Interest  Period,  the amount
equal to (a) the greater of (i) the  Eurodollar  Rate for such  Interest  Period
minus the average of rates quoted to the Agent as the London  Interbank  Bullion
Rates as displayed on Reuter's gold loan screen or, if Reuter's gold loan screen
is not  available,  as set by the Agent,  for Precious  Metal  forwards for such
period (the "Contango Rate"), and (ii) zero (O), plus (b) one and three-quarters
percent (1-3/4%).

     Consignment Fixed Rate Amounts:  Consigned Precious Metal which is accruing
a Daily Consignment Fee calculated by reference to the Consignment Fixed Rate.

     Consignment  Limit:  The least of (a) 130,000  fine troy ounces of Precious
Metal,  (b)  Consigned  Precious  Metal  having a Fair  Market  Value or  unpaid
purchase price equal to the Total Commitment,  or (c) the sum of (i) the product
of (A) ninety  percent  (90%)  times (B) the number of troy  ounces of  Precious
Metal  contained in Eligible  Specified Gold Jewelry of the Consignees plus (ii)
the product of (A) ninety  percent  (90%) times (B) the sum of (1) the amount of
Eligible Cash  Deposits  divided by the Second London Gold Fixing for any day of
reference,  plus (2) the Maximum  Drawing Amount of the Letter of Credit divided
by the Second London Gold Fixing for such day of reference.

<PAGE>

                                      -5-


     Notwithstanding  the foregoing,  each of the advance rate  percentages  set
forth in  clauses  (c)(i)(A)  and  (c)(ii)(A)  of the  first  paragraph  of this
definition  shall remain subject to  modification by the Agent in its reasonable
judgment  based upon the results of further  examinations  of the Consignees and
their businesses.

     Consignment  Limit Report:  A report,  in form and with supporting  details
satisfactory to the Agent (including, without limitation, information as to what
portion,  if any, of the Consigned  Precious Metal is subject to Liens permitted
by  ss.8.2.2  hereof  (other  than the  junior  Lien,  subject  to the terms and
provisions  of the  Intercreditor  Agreement,  in favor of the  Dollar  Agent)),
setting forth the Consignees' computation of the Consignment Limit.

     Consignment Participation. See ss.2.9.

     Consolidated  or  consolidated:  With reference to any term defined herein,
shall  mean  that  term  as  applied  to the  accounts  of the  Parent  and  its
Subsidiaries, consolidated in accordance with GAAP.

     Consolidated  EBITDA: For any period, the sum of (a) the net income (or net
loss) from the operations of the Parent and its  Subsidiaries  on a consolidated
basis for such period  determined in accordance with GAAP (without giving effect
to any extraordinary gains or non-cash  extraordinary  losses, but giving effect
to cash  extraordinary  losses),  plus (b) to the extent deducted in calculating
such net  income,  income tax  expense of the Parent and its  Subsidiaries  on a
consolidated  basis with respect to operations for such period,  plus (c) to the
extent deducted in calculating  such net income,  the amount of all depreciation
and amortization of the Parent and its Subsidiaries on a consolidated  basis for
such period, plus (d) without double counting items taken into account in clause
(c) above, all other non-cash charges or credits,  including without  limitation
any charges or credits for such period  relating to  valuation  of  Inventory by
application  of the "LIFO" method of  accounting,  provided,  that such non-cash
charges or credits cannot become cash in accordance  with GAAP,  plus (e) to the
extent deducted in calculating  such net income,  Interest Expense of the Parent
and its  Subsidiaries  on a  consolidated  basis for such period plus (f) to the
extent  deducted  in  calculating  such net  income,  the  gross  amount  of the
write-off associated with the Sonab Transfer,  the liquidation of the balance of
the net assets of Sonab  following  the Sonab  Transfer  and the  closure of the
Sonab operation following the Sonab Transfer,  with the amounts  contemplated by
this subsection (f) not to exceed $28,631,000 in the aggregate.  Any calculation
of Consolidated  EBITDA for the Parent and its Subsidiaries for any period shall
exclude any negative  "Consolidated EBITDA" (as calculated solely for the Parent
and its Subsidiaries) of up to $1,000,000.

     Consolidated  Periodic  Financial  Obligations:  With respect to any fiscal
period, an amount equal to the sum of (a) Cash Interest Expense for such period,
plus (b) the amount of payments of principal on Indebtedness for Borrowed Money,
including,  without  limitation,  payments  in  respect  of  Capitalized  Leases

<PAGE>

                                      -6-


scheduled  to be made  during  such  fiscal  period but  excluding  payments  of
Indebtedness  in  respect  of  revolving  loans  made,  or letters of credit (or
guaranties thereof) issued,  under the Dollar Facility,  plus (c) dividends paid
in cash by the Parent during such period.

     Contango Rate: As defined in the definition of Consignment Fixed Rate.

     Contingent Obligations:  With respect to any Person, any direct or indirect
liability, contingent or otherwise, of such Person:

          (i) with  respect  to any  indebtedness,  lease,  dividend,  letter of
     credit or other  obligation of another if the primary  purpose or intent in
     creating  such  liability  is to provide  assurance  to the obligee of such
     obligation  of another  that such  obligation  of  another  will be paid or
     discharged,  or that any agreements relating thereto will be complied with,
     or that the holders of such  obligation  will be protected  (in whole or in
     part) against loss in respect thereof;

          (ii) under any letter of credit  issued for the account of such Person
     or for which such Person is otherwise liable for reimbursement thereof;

          (iii) under any Hedge Agreement; or

          (iv) to  advance  or  supply  funds or  otherwise  to  assure  or hold
     harmless  the owner of such  primary  obligation  against  loss in  respect
     thereof.

Contingent Obligations shall include, without limitation:

          (a) any direct or indirect guarantee,  endorsement (otherwise than for
     collection  or  deposit in the  ordinary  course of  business),  co-making,
     discounting  with  recourse  or sale with  recourse  by such  Person of the
     obligation of another, and

          (b) any  liability  of such  Person  for the  obligations  of  another
     through any agreement (contingent or otherwise):

               (i) to purchase,  repurchase or otherwise acquire such obligation
          or any  security  therefor,  or to  provide  funds for the  payment or
          discharge of such obligation (whether in the form of loans,  advances,
          stock purchases, capital contributions or otherwise);

               (ii) to maintain the solvency or any balance sheet item, level of
          income or financial condition of another; or

               (iii)  to  make  take-or-pay  or  similar  payments  if  required
          regardless  of  non-performance  by any other  party or  parties to an
          agreement,

<PAGE>

                                      -7-


if, in the case of any agreement  described under subclause (b)(i) or (b)(ii) of
this  sentence,  the primary  purpose or intent  thereof is as  described in the
immediately preceding sentence. The amount of any Contingent Obligation shall be
equal to the amount of the obligation so guaranteed or otherwise supported.

     Current  Liabilities:  With respect to any Person,  determined at any time,
all  liabilities  of such  Person  which  would,  in  accordance  with GAAP,  be
classified  as  current  liabilities  excluding  revolving  loans made under the
Dollar Facility and the current portion of long-term  Indebtedness  for Borrowed
Money.

     Daily Consignment Fee: See ss.2.3.

     Default:  An event or act which with the giving of notice  and/or the lapse
of time, would become an Event of Default.

     Delinquent Institution: See ss.13.5.3.

     Distribution.  The  declaration or payment of any dividend on or in respect
of any  shares  of any  class of  capital  stock of any  Consignee,  other  than
dividends  payable  solely  in shares of  common  stock of such  Consignee;  the
purchase,  redemption, or other retirement of any shares of any class of capital
stock of any  Consignee,  directly or  indirectly  through a Subsidiary  of such
Consignee  or  otherwise;  the  return  of  capital  by  any  Consignee  to  its
shareholders  as such; or any other  distribution on or in respect of any shares
of any class of capital stock of any Consignee.

     Dollar Agent: The Agent, as such term is defined in the Dollar Facility.

     Dollar Facility:  Collectively, the Loan Documents, as such term is defined
in the Amended and Restated  Credit  Agreement  dated as of September  11, 1997,
among Finlay, the Parent, the Dollar Agent and the Lenders (as defined therein),
as such facility has been or may be amended,  restated or otherwise  modified or
as such facility may be replaced, increased, renewed, supplemented,  refunded or
refinanced  by another  facility,  provided that such Dollar  Facility  shall be
subject at all times to the terms and provisions of the Intercreditor Agreement.

     Dollars: Dollars in lawful currency of the United States of America.

     Drawdown Date: The Date on which any Purchase and Consignment is made or is
to be made.

     eFinlay. As defined in the preamble hereto.

     eFinlay  Contribution  Agreement.  The  Contribution  Agreement dated as of
September  29, 2000 between  Finlay and eFinlay,  as in effect on September  29,
2000.

<PAGE>

                                      -8-


     eFinlay FM Services Agreement. The Services Agreement dated as of September
29, 2000 between Finlay Merchandising and eFinlay, as in effect on September 29,
2000.

     eFinlay Lease Agreement. The Lease Agreement dated as of September 29, 2000
between Finlay and eFinlay, as in effect on September 29, 2000.

     eFinlay Marketing  Agreement.  The Marketing  Agreement dated as of July 6,
2000 between  Finlay and  800-Flowers.com,  Inc.,  as in effect on September 29,
2000.

     eFinlay Services  Agreement.  The Services  Agreement dated as of September
29, 2000 between Finlay and eFinlay.

     Eligible  Assignee.  Any  of  (i) a  commercial  bank  or  finance  company
organized  under the laws of the  United  States,  or any State  thereof  or the
District of Columbia, and having total assets in excess of $1,000,000,000;  (ii)
a savings and loan  association or savings bank organized  under the laws of the
United  States,  or any State thereof or the District of Columbia,  and having a
net worth of at least  $100,000,000,  calculated  in accordance  with  generally
accepted accounting principles; (iii) a commercial bank organized under the laws
of any  other  country  which  is a  member  of the  Organization  for  Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, provided that such
bank is acting  through a branch or agency located in the country in which it is
organized  or  another  country  which is also a member  of the  OECD;  (iv) the
central  bank of any  country  which is a member of the OECD;  and (v) any other
bank,   insurance  company,   commercial  finance  company  or  other  financial
institution  or other  Person  approved by the Agent,  such  approval  not to be
unreasonably withheld.

     Eligible  Cash  Deposits:  Cash  Deposits  in which  the  Agent has a first
priority  perfected  Lien for the  benefit  of the  Agent  and the  Institutions
pursuant  to the Cash  Collateral  Agreement  and which are  subject to no other
Liens.

     Eligible  Specified  Gold  Jewelry:  Specified  Gold  Jewelry  which (a) is
located at Permitted Inventory Locations, (b) is (i) subject to a first priority
perfected  Lien,  subject  to the  terms  and  provisions  of the  Intercreditor
Agreement,  in favor of the Agent for the  benefit of the  Institutions  and the
Agent or (ii) is owned by the Agent, (c) is subject to no other Liens other than
a  junior  Lien,  subject  to the  terms  and  provisions  of the  Intercreditor
Agreement,  in favor of the Dollar  Agent,  and,  subject to the  provisions  of
subclause (e) of this definition,  other Liens permitted by ss.8.2.2 hereof, (d)
is not part of the borrowing base under the Dollar  Facility or any other credit
facility  or other  arrangement  pursuant  to which any  lender  makes  loans or
advances of credit to any Consignee,  and (e) the Agent, in its sole discretion,
shall deem eligible,  minus such reserves as the Agent, in its sole  discretion,
shall from time to time deem appropriate.

<PAGE>

                                      -9-


     Environmental Laws: All laws pertaining to environmental matters, including
without   limitation,   the  Resource   Conservation   and  Recovery   Act,  the
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund  Amendments and  Reauthorization  Act of 1986, the Federal Clean Water
Act, the Federal Clean Air Act, the Toxic  Substances  Control Act, in each case
as amended, and all rules, regulations,  judgments, decrees, orders and licenses
arising under all such laws.

     Equity Interests:  Capital stock and all warrants,  options or other rights
to acquire capital stock or that are measured by the value of capital stock (but
excluding any debt  security that is  convertible  into,  or  exchangeable  for,
capital stock).

     ERISA: The Employee Retirement Income Security Act of 1974, as amended, and
all rules, regulations, judgments, decrees, and orders arising thereunder.

     Eurocurrency  Reserve Rate: For any day with respect to a Consignment Fixed
Rate  Amount,  the  maximum  rate  (expressed  as a decimal) at which any lender
subject thereto would be required to maintain reserves under Regulation D of the
Board of Governors of the Federal  Reserve  System (or any  successor or similar
regulations  relating  to  such  reserve   requirements)  against  "Eurocurrency
Liabilities"  (as that term is used in Regulation D), if such  liabilities  were
outstanding.  The Eurocurrency  Reserve Rate shall be adjusted  automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.

     Eurodollar  Business  Day: Any day on which  commercial  banks are open for
international business (including dealings in Dollar deposits) in London or such
other  eurodollar  interbank  market  as may be used  for  determination  of the
Eurodollar Rate.

     Eurodollar  Lending Office: The office designated by the Agent from time to
time as its Eurodollar Lending Office.

     Eurodollar  Rate: For any Interest  Period for purposes of determining  the
Consignment  Fixed Rate,  the rate of  interest  equal to (a) the rate per annum
(rounded  upwards  to the  nearest  1/16 of one  percent)  at which the  Agent's
Eurodollar  Lending Office offers Dollar deposits two Business Days prior to the
beginning of such Interest Period in the interbank  eurodollar  market where the
eurodollar  and foreign  currency and  exchange  operations  of such  Eurodollar
Lending Office are customarily conducted,  for delivery on the first day of such
Interest  Period  for the  number  of days  comprised  therein  and in an amount
comparable to the  Consignment  Fixed Rate Amount to which such Interest  Period
applies,  divided by (b) a number equal to 1.00 minus the  Eurocurrency  Reserve
Rate.

     Event of Default: Any of the events listed in ss.9 hereof.

<PAGE>

                                      -10-


     Fair Market  Value:  On any day,  with  respect to the  calculation  of the
Dollar value of Precious Metal, the Second London Gold Fixing for that day times
the number of ounces of such Precious Metal. If no such price is available for a
particular  day,  the Fair Market  Value for such day shall be the price for the
immediately  preceding day for which such price is available.  In the event that
the London  Bullion  Brokers shall  discontinue  or alter its usual  practice of
quoting a price in United  States  dollars for gold,  the Fair Market  Value for
such day shall be the Agent's Spot Value for that day.

     Federal Funds  Effective Rate: For any day, the rate per annum equal to the
weighted  average of the rates on  overnight  federal  funds  transactions  with
members of the Federal  Reserve  System  arranged by federal funds  brokers,  as
published  for such day (or,  if such day is not a  Business  Day,  for the next
preceding  Business  Day) by the Federal  Reserve Bank of New York,  or, if such
rate is not so published  for any day that is a Business Day, the average of the
quotations  for such day on such  transactions  received by the Agent from three
funds brokers of recognized standing selected by the Agent.

     Fee Letter. The Fee Letter, of even date herewith,  among Sovereign and the
Consignees.

     Final Repayment Amount: See ss.2.6.

     Financials:  In respect of any period,  (a) the consolidated  balance sheet
the Parent and its  Subsidiaries  as at the end of such period,  and the related
consolidated  statement of income and consolidated statement of cash flow of the
Parent and its Subsidiaries  for such period,  each setting forth in comparative
form the figures for the previous  comparable  fiscal period,  all in reasonable
detail and prepared in  accordance  with GAAP,  (b) the  unconsolidated  balance
sheet of Finlay as at the end of such  period,  and the  related  unconsolidated
statement of income and unconsolidated statement of cash flow of Finlay for such
period,  each  setting  forth in  comparative  form the figures for the previous
comparable  fiscal period,  all in reasonable  detail and prepared in accordance
with GAAP or, as the case may be, (c) the  consolidated  balance sheet of Finlay
and its Subsidiaries as at the end of such period, and the related  consolidated
statement  of income and  consolidated  statement of cash flow of Finlay and its
Subsidiaries for such period, each setting forth in comparative form the figures
for the previous comparable fiscal period, all in reasonable detail and prepared
in accordance with GAAP.

     Finlay. As defined in the preamble hereto.

     Finlay  Merchandising.  Finlay  Merchandising and Buying,  Inc., a Delaware
corporation.

     Finlay Merchandising  Contribution  Agreement.  The Contribution  Agreement
dated as of October 28, 1998 between Finlay  Merchandising and the Finlay, as in
effect on such date.

<PAGE>

                                      -11-


     Finlay  Merchandising  License Agreement.  The Trade Name License Agreement
dated as of October 28, 1998  between  Finlay  Merchandising  and Finlay,  as in
effect on such date.

     Finlay Merchandising Services Agreement. The Services Agreement dated as of
October 28, 1998 between Finlay  Merchandising  and Finlay, as in effect on such
date.

     First Sonab Intercompany Note: The demand promissory note dated October 28,
1994 executed by Sonab to the order of Finlay in the original  principal  amount
of $12,000,000,  together with any  replacement or substitution  thereof and any
amendment or modification  thereof provided that the aggregate  principal amount
in respect thereof shall not exceed $12,000,000.

     Fronting   Institutions.   Institutions  that  participate  in  Settlements
pursuant to Section 2.8 hereof and that are otherwise  subject to the provisions
hereof  applicable to Fronting  Institutions,  which,  on the Closing Date,  are
Sovereign and Commerz and, ten (10)  Business Days after the Agent's  receipt of
notice of any other  Institution's  intention to become a Fronting  Institution,
shall include such other Institutions which give such notice.

     GAAP:  Generally  accepted  accounting  principles  consistent  with  those
adopted by the Financial  Accounting  Standards Board and its  predecessor,  (i)
generally,  as in effect from time to time, and (ii) for purposes of determining
compliance by the Consignees with their financial covenants set forth herein, as
in effect on October 28, 2000.

     Hedge  Agreements:  (i)  Interest  rate  swap  agreements,   currency  swap
agreements,  interest rate cap agreements  and interest rate collar  agreements,
(ii) other agreements or arrangements  designed to hedge against fluctuations in
interest  rates or foreign  exchange  rates and (iii) precious metal options and
futures contracts and other precious metal hedging obligations.

     Histoire d'Or: Collectively, Histoire d'Or, a French "societe anonyme", and
its wholly owned Subsidiary, Cogestand, a French "societe anonyme".

     Indebtedness: With respect to any Person, all items (including all debt and
similar monetary  obligations,  whether direct or indirect) which, in accordance
with GAAP, would be included in determining  total liabilities of such Person as
shown on the liability  side of a balance sheet as at the date  Indebtedness  of
such  Person is to be  determined  and,  in any event,  shall  include  (without
limitation and without duplication):

          (i) all trade accounts payable of such Person;

          (ii) any  liability  of such  Person  secured by any Lien on  property
     owned or acquired by such Person,  whether or not such liability shall have
     been assumed;

<PAGE>

                                      -12-


          (iii) all Contingent Obligations of such Person;

          (iv)  letters of credit  issued for the  account of such  Person or an
     Affiliate thereof, and all obligations of such Person relating thereto;

          (v) all obligations  (other than obligations to pay fees in connection
     therewith) of such Person in respect of Hedge Agreements; and

          (vi) all of the Obligations,  whether or not due;  provided,  however,
     that if in accordance with GAAP any such Obligations  would not be included
     in  determining  total  liabilities  of  the  Consignees  as  shown  on the
     liability side of a balance sheet of the  Consignees,  then for purposes of
     the calculation of the financial  covenants in ss.8.3 hereof, such excluded
     Obligations shall not constitute "Indebtedness".

     Indebtedness  for  Borrowed  Money:   With  respect  to  any  Person,   all
Indebtedness  for borrowed  money or evidenced by notes,  bonds,  debentures  or
similar evidences of Indebtedness of such Person  (including,  in the event that
any  of  the  Obligations  would,  in  accordance  with  GAAP,  be  included  in
determining  total  liabilities of the Consignees as shown on the liability side
of a balance sheet of the Consignees, such Obligations), all obligations of such
Person for the deferred and unpaid purchase price of any property,  service,  or
business (other than trade accounts  payable  incurred in the ordinary course of
business and constituting  Current Liabilities and other than Hedge Agreements),
and all obligations of such Person in respect of Capitalized  Leases and finance
leases.

     Institutions. As defined in the preamble hereto.

     Intercompany   Subordination  Agreement:  The  Intercompany   Subordination
Agreement  dated as of  October  28,  1998  among the  Agent,  Finlay and Finlay
Merchandising.

     Intercreditor  Agreement:  The Intercreditor Agreement dated as of June 15,
1995 between the Agent and the Dollar Agent (and  acknowledged  and consented to
by Finlay),  as the same is amended  and/or  restated on the Closing Date and as
further amended, restated, modified, renewed, replaced or supplemented from time
to time.

     Interest Expense:  With respect to any Person for any period,  the interest
expense (whether cash or accretion) of such Person during such period determined
in accordance  with GAAP,  and shall include in any event,  without  limitation,
interest expense with respect to Indebtedness for Borrowed Money (including,  in
the event  that any of the  Obligations  would,  in  accordance  with  GAAP,  be
included in  determining  total  liabilities  of the  Consignees as shown on the
liability side of a balance sheet of the Consignees, Daily Consignment Fees) and
payments under Hedge Agreements that are designed to hedge against  fluctuations
in interest rates and shall exclude the write off of deferred financing fees.

<PAGE>

                                      -13-


     Interest Period:  With respect to each Consignment  Fixed Rate Amount,  (a)
initially,  the period  commencing  on the  Drawdown  Date of the  Purchase  and
Consignment  relating  to such  Consignment  Fixed Rate Amount and ending on the
last day of any period of 1, 2 or 3 months,  as selected by the  Consignees in a
Purchase and Consignment Request; and (b) thereafter,  each period commencing on
the  last  day  of  the  next  preceding  Interest  Period  applicable  to  such
Consignment  Fixed Rate  Amount and ending on the last day of one of the periods
set forth  above,  as selected by the  Consignees  in a  Consignment  Conversion
Request;  provided  that all of the  foregoing  provisions  relating to Interest
Periods are subject to the following:

          (A) if any Interest  Period with respect to a  Consignment  Fixed Rate
     Amount would otherwise end on a day that is not a Eurodollar  Business Day,
     that Interest  Period shall be extended to the next  succeeding  Eurodollar
     Business  Day unless the  result of such  extension  would be to carry such
     Interest  Period into another  calendar month, in which event such Interest
     Period shall end on the immediately preceding Eurodollar Business Day;

          (B) if the Consignees shall fail to give Notice as provided in ss.2.5,
     the  Consignees  shall be  deemed to have  requested  a  conversion  of the
     affected Consignment Fixed Rate Amount to a Consignment Base Rate Amount on
     the last day of the then current Interest Period with respect thereto;

          (C) any Interest Period relating to any Consignment  Fixed Rate Amount
     that begins on the last Eurodollar  Business Day of a calendar month (or on
     a day for which there is no numerically  corresponding  day in the calendar
     month at the end of such Interest  Period) shall end on the last Eurodollar
     Business Day of a calendar month; and

          (D) any Interest Period relating to any Consignment  Fixed Rate Amount
     that  would  otherwise  extend  beyond the  Maturity  Date shall end on the
     Maturity Date.

     Inventory: All goods, merchandise and other personal property, now owned or
hereafter acquired by, or consigned by the Agent to, a Consignee, which are held
for sale.

     JBR  Acquisition:  The  acquisition by Finlay of the JBR Assets pursuant to
the JBR Asset Purchase Agreement.

     JBR Asset  Purchase  Agreement:  The Asset Purchase  Agreement  dated as of
February 10, 2000 among  Finlay,  Jay B. Rudolph,  Inc., a Florida  corporation,
Richard A. Rudolph and Ronald J. Rudolph,  in the form attached to Amendment No.
9 and Limited  Consent to the Original  Consignment  Agreement dated as of March
23, 2000 between Sovereign and Finlay as Exhibit A.

<PAGE>

                                      -14-


     JBR Assets. The "Assets", as defined in the JBR Asset Purchase Agreement.

     Letter of Credit: The standby letter of credit issued on or before the date
hereof by Deutsche  Bank, or such other issuer as shall be approved by the Agent
in writing in  advance,  in favor of the Agent for the  benefit of the Agent and
the Institutions, having a Maximum Drawing Amount of $2,000,000, which Letter of
Credit is being issued to secure the Obligations of the Consignees hereunder, as
the same may be replaced, amended, increased, modified, extended or renewed from
time to time upon  terms and  conditions  approved  by the Agent in  writing  in
advance and otherwise in accordance  with the provisions  hereof;  provided that
such Letter of Credit  shall either (a) have an expiry date not earlier than the
Maturity  Date or (b) be drawable  without  condition by the Agent no later than
thirty (30) days prior to the stated expiry thereof (if not previously renewed).

     Liens:   Any  encumbrance,   mortgage,   pledge,   hypothecation,   charge,
restriction  or other  security  interest of any kind securing any obligation of
any entity or person.

     Materially  Adverse Effect:  Any materially adverse effect on the financial
condition or business  operations of the Parent and its Subsidiaries  (including
the  Consignees)  taken  together  or of the  Consignees  taken  together or any
material  impairment  of the  ability of the Parent and any of its  Subsidiaries
taken  together or the  Consignees  taken  together  to perform its  obligations
hereunder or under any of the other Consignment Documents.

     Maturity Date: The earliest of (a) December 31, 2001, (b) the maturity date
from time to time in effect under the Dollar Facility, or (c) such other date on
which all Obligations may become due and payable pursuant to the terms hereof.

     Maximum Drawing Amount: The maximum aggregate amount from time to time that
the Agent may draw under the Letter of Credit.

     Notice or  Notices:  All  requests,  demands and other  communications,  in
writing (including telegraphic and telecopy communications),  sent by registered
or  certified  mail,  return  receipt  requested,  overnight  delivery  service,
telegraph,  telecopy  or  hand-delivery  to the  other  party  at  that  party's
Principal Office.

     Obligations:   All  indebtedness,   obligations  and  liabilities  of  each
Consignee and each of their  respective  Subsidiaries to any of the Institutions
or the Agent,  existing  on the date of this  Agreement  or arising  thereafter,
direct or  indirect,  joint or  several,  absolute  or  contingent,  matured  or
unmatured,  liquidated  or  unliquidated,   secured  or  unsecured,  arising  by
contract,  operation  of  law or  otherwise,  arising  or  incurred  under  this
Agreement or any other Consignment  Document or in respect of any instruments at
any time evidencing any thereof.

<PAGE>

                                      -15-


     Original Consignment Agreement. As defined in the preamble hereto.

     Parent: Finlay Enterprises, Inc., a Delaware corporation.

     Participating  Institutions.  Collectively,  each of the Institutions other
than the Agent.

     Permitted  Inventory  Locations:  The  locations of the  Consignees  in the
United States listed on Schedule II hereto,  as such Schedule II may be modified
from time to time in accordance with the provisions of ss.8.1.9 hereof.

     Perfection Certificate: As defined in the Security Agreement.

     Person: Any individual,  corporation,  partnership,  trust,  unincorporated
association,  business,  or  other  legal  entity,  and  any  government  or any
governmental agency or political subdivision thereof.

     Post Closing  Letter:  The letter  agreement  regarding  post closing items
dated as of the  Closing  Date among the Agent and the  Consignees,  in form and
substance satisfactory to the Agent.

     Precious  Metal:  Gold having a fineness  of not less than  .9995,  without
regard to  whether  such gold is  alloyed or  unalloyed,  in bullion  form or is
contained in or processed into other materials which contain elements other than
gold.

     Principals:  David B. Cornstein, Arthur Reiner, Thomas H. Lee, employees of
the Thomas H. Lee Company, a sole proprietorship,  Equity-Linked Investors, L.P.
and Equity-Linked Investors-II.

     Principal Office: With respect to each party, the following address:

          For the Agent:

          Sovereign Bank
          1 West Mezzanine
          15 Westminster Street
          Providence, Rhode Island 02903
          Attention:  Albert L. Brown
          Telecopier Number: 401-752-1412

          with a copy to:

          Bingham Dana LLP
          150 Federal Street
          Boston, Massachusetts  02110
          Attention:  Robert A.J. Barry, Jr., Esq. or Marijane Benner Browne,
          Esq.
          Telecopier Number:  617-951-8736

<PAGE>

                                      -16-


          For the Consignees:

          Finlay Fine Jewelry Corporation
          529 Fifth Avenue
          New York, New York  10017
          Attention:  Bruce Zurlnick, Chief Financial Officer
          Telecopier Number:  212-808-2946

          with a copy to:

          Finlay Fine Jewelry Corporation
          529 Fifth Avenue
          New York, New York  10017
          Attention:  Bonni Davis, Esq.
          Telecopier Number:  212-808-0349

     Purchase and Consignment: See ss.2.1.

     Purchase and Consignment Request: See ss.2.2.

     Redeliver  or  Redelivery:  Any  delivery  by a  Consignee  to the  Agent's
Principal Office,  at such Consignee's sole risk and expense,  of Precious Metal
or of  Eligible  Specified  Gold  Jewelry  of a type and  quality  and in a form
acceptable to the Agent.

     Related  Party:  With  respect  to  any  Principal,   (a)  any  controlling
stockholder,  general or limited partner,  80% (or more) owned Subsidiaries,  or
(in the  case of an  individual)  spouse  or  immediate  family  member  of such
Principal  or  (b)  trust,   corporation,   partnership  or  other  entity,  the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling  interest of which consist of such Principal and/or such
other Persons referred to in the immediately preceding clause (a).

     Required  Institutions.  As of  any  date,  the  Institutions  (other  than
Delinquent   Institutions)  whose  aggregate  Commitments  constitute  at  least
sixty-six  and two thirds  percent  (66-2/3%) of the  outstanding  amount of the
Commitments belonging to non-Delinquent Institutions, provided, however, that if
on any date there exist no more than two  Institutions  that are not  Delinquent
Institutions,  the  definition  of Required  Institutions  on such date shall be
calculated by reference to non-Delinquent Institutions.

     Requirement  of Law: In respect of any person or entity,  any law,  treaty,
rule, regulation or determination of an arbitrator, court, or other governmental
authority,  in each case  applicable to or binding upon such person or entity or
affecting any of its property.

     Second Sonab  Intercompany  Note: The demand  promissory note dated October
28, 1994 executed by Sonab to the order of Finlay in the original

<PAGE>

                                      -17-


principal  amount of $13,000,000,  together with any replacement or substitution
thereof and any amendment or  modification  thereof  provided that the aggregate
principal amount in respect thereof shall not exceed $33,000,000.

     Security Agreement: The Amended and Restated Security Agreement dated as of
the  date  hereof,  among  Finlay,  eFinlay  and the  Agent,  as the same may be
amended,  restated,  modified or supplemented  from time to time,  including any
amendments to add additional Consignees as parties thereto.

     Security  Documents:   Collectively,   the  Security  Agreement,  the  Cash
Collateral Agreement and the Letter of Credit.

     Senior Debentures:  The Parent's Senior Debentures due 2008 in the original
principal amount of $75,000,000, as in effect on the date hereof.

     Senior  Notes:  Finlay's  Senior Notes due 2008 in the  original  principal
amount of $150,000,000, as in effect on the date hereof.

     Settlement.  The actual  shipment,  or the credit of Precious  Metal by the
Fronting   Institutions   to  the  extent   necessary  to  cause  each  Fronting
Institution's  actual share of the outstanding  amount of Consignment Fixed Rate
Amounts to be equal to each Fronting Institution's  Commitment Percentage of the
Consignment  Fixed Rate Amounts  outstanding,  in any case where,  prior to such
event or action, the actual share is not so equal.

     Settlement Amount. See ss.2.8.

     Settlement Date. The Drawdown Date of any Consignment Fixed Rate Amounts or
the  date on  which  any  Consignment  Base  Rate  Amounts  are  converted  into
Consignment Fixed Rate Amounts.

     Settling Fronting Institution. See ss.2.8(a).

     Sonab:  Societe  Nouvelle  D'Achat De  Bijouterie  -  S.O.N.A.B.,  a French
"societe en nom collectif".

     Sonab Intercompany Notes:  Collectively,  the First Sonab Intercompany Note
and the Second Sonab Intercompany Note.

     Sonab Purchase  Agreement:  The Asset Purchase Agreement dated December 23,
1999 among Sonab and  Histoire  d'Or,  and the  ancillary  documents  associated
therewith,  each  respectively  in the forms  attached  to  Amendment  No. 8 and
Limited Consent to the Original  Consignment  Agreement dated as of December 30,
1999 between Sovereign and Finlay as Exhibits A, A-1, A-2, A-3 and A-4.

     Sonab Transfer: The sale by Sonab to Histoire d'Or of certain of its assets
pursuant  to and on the terms  and  conditions  set forth in the Sonab  Purchase
Agreement. Without limiting the foregoing, neither Sonab nor Finlay shall

<PAGE>

                                      -18-


retain any  liabilities  or  obligations  with respect to such assets other than
such  liabilities  or  obligations  as are  specifically  set forth in the Sonab
Purchase Agreement.

     Sovereign. As defined in the preamble hereto.

     Specified  Gold Jewelry:  Gold jewelry  Inventory of a Consignee  having no
stone content,  which (a) has been sold to such  Consignee by Approved  Vendors,
and (b) has been marked with the hallmark of the applicable  Approved Vendor and
with an item or SKU number identifying it as Specified Gold Jewelry.

     Spot Value:  At any time,  with  respect to the  calculation  of the Dollar
value of Precious Metal, (a) (i) in all cases in which a Consignee is purchasing
Precious Metal or in which the value of Consigned Precious Metal for purposes of
the Consignment Limit is being calculated,  the Agent's "ask" spot quotation for
Precious  Metal at such time times the number of ounces of such  Precious  Metal
and (ii) in all cases in which  the  Agent is  purchasing  Precious  Metal,  the
Agent's  "bid"  spot  quotation  for  Precious  Metal at such time times (b) the
number of ounces of such Precious Metal.

     Subsidiary: In respect of the Parent or a Consignee, any business entity of
which  the  Parent  or such  Consignee,  as the case may be, at any time owns or
controls directly or indirectly more than fifty percent (50%) of the outstanding
shares of stock having  voting  power,  regardless of whether such right to vote
depends upon the occurrence of a contingency.

     Supervisory Policy: See ss.8.2.3(xviii).

     Tax Allocation Agreement: That certain Tax Allocation Agreement dated as of
November 1, 1992,  between  Finlay and the Parent,  as the same is  currently in
effect.

     Total  Commitment.  The sum of the Commitments of the  Institutions,  as in
effect from time to time.

     Vendor  Agreement:  Those certain letter  agreements,  substantially in the
form of Exhibit B hereto, addressed by each of the consignment vendors listed on
Schedule III hereto, respectively (as such Schedule III may be amended from time
to time pursuant to ss.8.2.7 hereof) to the Agent.

                            2. CONSIGNMENT FACILITY.

     2.1. Agreement to Make Purchases and Consignments of Precious Metal.

          (a) Subject to the terms and conditions set forth in this  Consignment
     Agreement, the Agent agrees, at the option of the Consignees, that it will,
     on  behalf  of the  Institutions,  purchase  from and  consign  back to the
     Consignees (each such purchase and consignment, a

<PAGE>

                                      -19-


     "Purchase and Consignment"),  from time to time between the date hereof and
     the  Maturity  Date,  upon  Notice by a  Consignee  to the  Agent  given in
     accordance  with  ss.2.2,  such amounts of the  Precious  Metal  content of
     Eligible  Specified Gold Jewelry as such Consignee  shall request under the
     terms and conditions of this Agreement.  Notwithstanding the foregoing,  in
     no event will the Agent be obligated to make a Purchase and  Consignment if
     either the Fair Market Value of all Consigned  Precious Metal or the number
     of troy ounces of all Consigned  Precious Metal (after giving effect to all
     amounts  requested)  exceeds the  Consignment  Limit.  Notwithstanding  the
     foregoing,  (i) for at least one period of seven  consecutive  days  during
     each month from January 1 through  October 31 of each year, and (ii) for at
     least one day during each week from November 1 through  December 31 of each
     year, the Consignees shall assure that the outstanding  amount of Consigned
     Precious  Metal does not exceed the sum of (i) the number of troy ounces of
     the  Precious  Metal  content of  Eligible  Specified  Gold  Jewelry of the
     Consignees  (including  Consigned Precious Metal),  plus (ii) the amount of
     Eligible Cash Deposits divided by the Second London Gold Fixing for any day
     of reference.

          (b) The  purchase  price  to be paid by the  Agent  on  behalf  of the
     Institutions  for the Precious  Metal  content of Eligible  Specified  Gold
     Jewelry  in  respect  of each  Purchase  and  Consignment  shall be, at the
     Consignees'  option,  (i) the  Fair  Market  Value of such  Precious  Metal
     content two (2) Business  Days prior to the Drawdown  Date of such Purchase
     and Consignment, (ii) the Spot Value of such Precious Metal content two (2)
     Business Days prior to the Drawdown Date of such Purchase and  Consignment,
     or (iii) the amount of troy ounces of such  Precious  Metal  content.  Each
     request  for a  Purchase  and  Consignment  hereunder  shall  constitute  a
     representation and warranty by each Consignee that the conditions set forth
     in ss.7 have been satisfied on the date of such request.

          (c) This  Agreement  is intended to be a true  consignment  agreement.
     Upon each  Purchase  and  Consignment,  the Agent  shall  take title to the
     Precious Metal content of such Eligible Specified Gold Jewelry which is the
     subject  of  such  Purchase  and  Consignment.  Thereafter,  title  to such
     Precious  Metal  shall  remain  in the  Agent  and  shall  not  vest in the
     Consignee of such Precious  Metal until the Agent has received  payment for
     such  Consigned  Precious  Metal in  accordance  with the  requirements  of
     ss.ss.2.4 or 2.6, as applicable.  If, notwithstanding the foregoing,  it is
     determined  for any  reason  that the  consignment  created  hereby  is one
     intended as security or that the  consignment  is a sale or return or other
     sale, the Consigned  Precious Metal shall  constitute  Collateral under the
     terms of the Security  Agreement,  and the terms of the Security  Agreement
     shall govern the Agent's and the  Institutions'  security interest therein.
     Following  each Purchase and  Consignment,  the  Consignees  shall bear the
     entire risk of loss, theft, damage or destruction of the Consigned Precious
     Metal from any cause whatsoever, whether or not insured, and

<PAGE>

                                      -20-


     the Consignees agree to hold the Consigned  Precious Metal in trust for the
     Agent and the  Institutions  (until the Agent has received payment for such
     Consigned  Precious Metal in accordance with the  requirements of ss.ss.2.4
     or 2.6, as applicable) and to indemnify and hold harmless the Agent and the
     Institutions  against  any and all  liabilities,  damages,  losses,  costs,
     expenses,  suits,  claims,  demands or judgment  of any nature  (including,
     without limitation, attorneys' fees and expenses) arising from or connected
     with any loss,  theft,  damage or  destruction  of the  Consigned  Precious
     Metal.

          (d) Each Consignee  irrevocably  authorizes the Agent, at or about the
     time of the Drawdown Date of any Purchase and Consignment or at the time of
     any payment or Redelivery with respect to Consigned Precious Metal, to make
     an appropriate notation in the records of the Agent customarily  maintained
     by the Agent  reflecting the making of such Purchase and Consignment or the
     receipt of such payment or Redelivery.  The outstanding amount of Consigned
     Precious Metal set forth in the records of the Agent customarily maintained
     by the Agent shall be prima facie  evidence of the amount thereof owing and
     unpaid or not  Redelivered,  but the  failure  to record or any error in so
     recording  any such  amount in the  records of the Agent shall not limit or
     otherwise  affect  the  obligations  of any  Consignee  hereunder  to  make
     payments or Redeliveries in accordance with the terms hereof.

          (e) The Agent shall provide the Consignees with a monthly statement of
     the  quantity  of  Consigned  Precious  Metal  held  by the  Consignees  (a
     "Consigned Precious Metal Statement").  If the Consignees do not agree with
     the information  reported in the Consigned  Precious Metal  Statement,  the
     Consignees  shall  give  Notice of such  disagreement  to the Agent  within
     fifteen (15) days following the date of receipt of such Consigned  Precious
     Metal Statement.  If the Consignees fail to give Notice to the Agent within
     such  fifteen  (15) day  period,  each  Consignee  shall be  deemed to have
     affirmed the accuracy of the information reported in the Consigned Precious
     Metal Statement and to have waived any claim that any Consignee may have by
     reason of a dispute as to such Consigned Precious Metal Statement. At least
     once each  year,  the  Consignees  shall  provide  the Agent with a written
     confirmation,  signed by duly authorized officers of the Consignees, of the
     quantity of Consigned  Precious Metal as of the date of such  confirmation.
     Upon and after the occurrence of an Event of Default,  each Consignee shall
     provide to the  Agent,  on a daily  basis,  written  confirmation,  in form
     acceptable  to the Agent,  of the quantity  and  location of all  Consigned
     Precious Metal and Specified Gold Jewelry.

     2.2. Requests For Purchases and Consignments.  The Consignees shall give to
the  Agent  Notice of each  Purchase  and  Consignment  requested  hereunder  (a
"Purchase  and  Consignment  Request")  no later than 2:00 p.m. two (2) Business
Days prior to the proposed Drawdown Date of any Consignment

<PAGE>

                                      -21-


Base Rate  Amount or  Consignment  Fixed Rate  Amount.  Each such  Notice  shall
specify  (i) the number of troy  ounces of  Precious  Metal  content of Eligible
Specified Gold Jewelry to be purchased and consigned, (ii) the proposed Drawdown
Date  of  such  Purchase  and  Consignment,  (iii)  whether  such  Purchase  and
Consignment is to be a Consignment  Fixed Rate Amount or a Consignment Base Rate
Amount,  (iv) if such Purchase and Consignment is to be a Consignment Fixed Rate
Amount,  the Interest Period  applicable to such Purchase and  Consignment,  (v)
whether  the  purchase  price for such  Purchase  and  Consignment  pursuant  to
ss.2.1(b) is to be determined  by reference to the Fair Market  Value,  the Spot
Value or the number of troy ounces, and (vi) whether the purchase price for such
Purchase and Consignment pursuant to ss.2.1(b) (whether in Dollars or in ounces)
is to be  delivered  to the  Consignees  or to a third party  designated  by the
Consignees. Promptly after receipt of any such Purchase and Consignment Request,
the Agent shall  notify each of the  Institutions  thereof.  Each  Purchase  and
Consignment Request shall be irrevocable and binding on the Consignees and shall
obligate the  Consignees to sell and take on  consignment  such  Precious  Metal
content of Eligible  Specified Gold Jewelry on the proposed  Drawdown Date. Each
Purchase and Consignment Request for Consignment Base Rate Amounts shall, unless
otherwise  agreed by the Agent, be in a minimum  aggregate  amount of 1,000 troy
ounces or an  integral  multiple  of one  hundred  (100)  troy  ounces in excess
thereof,  and each Purchase and Consignment  Request for Consignment  Fixed Rate
Amounts shall,  unless otherwise agreed by the Agent, be in a minimum  aggregate
amount of three  thousand  (3,000)  troy ounces or an  integral  multiple of one
thousand (1,000) troy ounces in excess thereof.

     2.3. Daily  Consignment Fee. With respect to Consigned  Precious Metal, the
Consignees  jointly and severally agree to pay to the Agent, for the accounts of
the Agent and the Institutions to be allocated amount them as set forth below, a
consignment fee (the "Daily Consignment Fee") equal to:

          (a) for each day with respect to  Consignment  Base Rate Amounts,  the
     product of the  Consignment  Base Rate times a fraction,  the  numerator of
     which is one (1) and the  denominator  of which is three  hundred and sixty
     (360) times the Fair Market Value (as of such date) of  Consigned  Precious
     Metal outstanding on such day which are Consignment Base Rate Amounts; and

          (b)  for  each  day  during  each  Interest  Period  with  respect  to
     Consignment  Fixed Rate Amounts,  the product of the Consignment Fixed Rate
     applicable to such Interest Period times a fraction, the numerator of which
     is one (1) and the  denominator  of which is three  hundred and sixty (360)
     times the Fair Market Value (as of such date) of Consigned  Precious  Metal
     outstanding  for such  Interest  Period  which are  Consignment  Fixed Rate
     Amounts.

The Daily  Consignment  Fee for each day shall be allocated as follows:  (i) for
the account of the Institutions in accordance with their  respective  Commitment

<PAGE>

                                      -22-


Percentages, that portion of the Daily Consignment Fee for such day equal to the
product of (A) one and three quarters percent (1.75%) times (B) a fraction,  the
numerator of which is one (1) and the  denominator of which is three hundred and
sixty (360) times the Fair Market Value (as of such date) of Consigned  Precious
Metal  outstanding  on  such  day  and  (ii)  for the  account  of the  Fronting
Institutions  (other  than  the  Agent)  in  accordance  with  their  respective
Commitment  Percentages,  that portion of the Daily Consignment Fee for such day
equal to the  product  of (A) the  Consignment  Fixed  Rate  applicable  to such
Interest  Period  minus  one and  three  quarters  percent  (1.75%)  times (B) a
fraction,  the  numerator  of which is one (1) and the  denominator  of which is
three  hundred and sixty (360) times the Fair Market  Value (as of such date) of
Consigned  Precious Metal  outstanding on such day which are  Consignment  Fixed
Rate Amounts,  and (iii) for the account of the Agent the remainder of the Daily
Consignment  Fee for  such  day.  The  Daily  Consignment  Fee with  respect  to
Consignment  Base Rate Amounts shall be payable  monthly in arrears on the first
Business Day of each calendar month, commencing on the first such date following
the  date  hereof,  with  a  final  payment  on the  Maturity  Date.  The  Daily
Consignment Fee with respect to Consignment  Fixed Rate Amounts shall be payable
on the last day of each Interest Period applicable thereto, with a final payment
on the Maturity Date.  Notwithstanding  the  foregoing,  upon the occurrence and
during the continuance of an Event of Default,  the Daily  Consignment Fee shall
be an amount equal to the Base Rate plus two percent (2%).

     2.4.  Payment on Account of Repurchase or Redelivery of Consigned  Precious
Metal.

          (a) Upon the occurrence of an Event of Default (other than an Event of
     Default  described  in  ss.ss.9.1(j)  and  9.1(k)) and upon Notice from the
     Agent to the  Consignees  of the  purchase  referred  to below,  unless the
     Consignees  shall,  on the date of  dispatch  of such  Notice,  immediately
     Redeliver to the Agent an amount of Precious  Metal, in bullion form (which
     Precious  Metal  shall be subject to no  Liens),  equal to all  outstanding
     Consigned  Precious Metal, the Consignees shall be deemed to have purchased
     from the Agent,  on the date of dispatch of such  Notice,  all  outstanding
     Consigned  Precious Metal at the then applicable Fair Market Value thereof,
     and the  Consignees  shall  immediately  pay (such  obligation to pay to be
     borne  jointly and  severally by the  Consignees)  to the Agent such amount
     equal to the Fair Market Value of all outstanding Consigned Precious Metal.

          (b) If,  on any date,  either  the  number of troy  ounces or the Fair
     Market Value of all Consigned  Precious Metal shall exceed the  Consignment
     Limit,  the Agent shall  calculate the amount of Consigned  Precious  Metal
     (measured in troy ounces) of such excess,  and the  Consignees  jointly and
     severally  agree to either (i) pay to the Agent an amount in Dollars  equal
     to the  Fair  Market  Value  (on the  Business  Day  following  the date of
     determination) of such excess plus twenty-five cents

<PAGE>

                                      -23-


     ($0.25)  per troy ounce of such  excess,  and the Agent  shall be deemed to
     have sold to the Consignees an amount of Consigned  Precious Metal equal to
     such  excess,  (ii)  Redeliver  to the Agent  Consigned  Precious  Metal in
     quantities  (measured  in troy  ounces)  equal  to such  excess,  or  (iii)
     Redeliver  to the Agent,  Precious  Metal,  in bullion  form,  in an amount
     (measured  in troy ounces)  equal to the amount of such  excess;  provided,
     that any such Precious Metal Redelivered to the Agent in bullion form shall
     not be subject to any Lien.

          (c) In connection with any sale by any Consignee of Consigned Precious
     Metal  (other than as part of a Purchase  and  Consignment  pursuant to the
     terms  hereof),  so long as no Default or Event of Default has occurred and
     is continuing,  the Consignees  jointly and severally agree that they shall
     immediately  either (i) pay to the Agent an amount in Dollars  equal to the
     Fair Market Value (on the Business Day  following the date of such sale) of
     such sold Consigned  Precious Metal plus twenty-five cents ($0.25) per troy
     ounce of such sold Consigned  Precious Metal,  (ii) Redeliver to the Agent,
     Precious  Metal,  in bullion form,  in an amount  (measured in troy ounces)
     equal to the amount of such sold Consigned Precious Metal;  provided,  that
     any such Precious Metal  Redelivered to the Agent in bullion form shall not
     be subject to any Lien, or (iii) Redeliver to the Agent additional Eligible
     Specified Gold Jewelry (which Redelivery,  if the Consignees shall not have
     purchased such sold Consigned  Precious Metal pursuant to clause (i) hereof
     or Redelivered  such Precious  Metal,  in bullion form,  pursuant to clause
     (ii) hereof,  shall be automatic) which shall constitute Consigned Precious
     Metal in  quantities  equal to any  Consigned  Precious  Metal sold. At all
     times  following the occurrence  and during the  continuance of an Event of
     Default,  upon any sale by any  Consignee of Precious  Metal which prior to
     such  Consignee's  purchase  thereof  pursuant  to  ss.2.4(a)   constituted
     Consigned  Precious  Metal,  the  Consignees  shall  (except  as  otherwise
     provided in the Intercreditor  Agreement) hold the proceeds of such sale in
     trust for the Agent and shall immediately deliver to the Agent the proceeds
     of such sale to be applied to the  Obligations  in  accordance  with ss.9.4
     hereof.  Prior to the  occurrence  of a Default or an Event of Default  and
     absent other  instruction by the  Consignees,  the Agent shall apply Dollar
     amounts received to reduction of Consigned  Precious Metal, for application
     first to Consignment  Base Rate Amounts and then to Consignment  Fixed Rate
     Amounts  and,  subject  to a Gold  Settlement,  for  allocation  among  the
     Fronting  Institutions  in  accordance  with  their  respective  Commitment
     Percentages of the Consignment Fixed Rate Amounts reduced.

          (d) At any time before the Maturity  Date,  any Consignee  may, at its
     election,  purchase any or all Consigned  Precious  Metal from the Agent in
     whole or in  part,  without  penalty,  provided  that  any full or  partial
     repurchase of the outstanding  amount of Consignment  Fixed Rate Amounts of
     Consigned Precious Metal pursuant to this ss.2.4(d) may be made only on the
     last day of the Interest Period relating thereto. The

<PAGE>

                                      -24-


     Consignees shall give the Agent, no later than 2:00 p.m.,  Boston time, two
     (2)  Business  Days' prior  Notice of any  proposed  purchase of  Consigned
     Precious Metal  specifying the amount of Consigned  Precious Metal to be so
     purchased,  the proposed date of purchase and the identity of the Consignee
     making such purchase,  which Notice shall be irrevocable and binding on the
     Consignees  and shall  obligate the  Consignees to purchase such  Consigned
     Precious  Metal on the  proposed  date of purchase.  Each such  purchase of
     Consignment Base Rate Amounts shall,  unless otherwise agreed by the Agent,
     be in a minimum  amount of one thousand  (1,000) troy ounces or an integral
     multiple of one hundred (100) troy ounces in excess  thereof,  with accrued
     Daily  Consignment  Fees on the Consignment  Base Rate Amounts so purchased
     being due on the earliest to occur of a Default or Event of Default and the
     first day of the calendar month  following the calendar month in which such
     purchase is made, and each such purchase of Consignment  Fixed Rate Amounts
     shall,  unless  otherwise agreed by the Agent, be in a minimum amount three
     thousand  (3,000)  troy  ounces or an  integral  multiple  of one  thousand
     (1,000) troy ounces in excess thereof and shall be accompanied by a payment
     of  all  accrued  but  unpaid  Daily  Consignment  Fees  on the  amount  so
     purchased.  Each  such  purchase  shall  be at a  price  equal  to,  at the
     Consignees'  option,  (i) the sum of (A) the Fair Market  Value of Precious
     Metal two (2) Business Days prior to the date of the  Consignee's  purchase
     of Consigned  Precious Metal,  plus (B) twenty-five  cents ($0.25) per troy
     ounce of Precious Metal being purchased, or (ii) the Spot Value on the date
     of the Agent's  receipt of the Notice  described  above,  and, prior to the
     occurrence of a Default or an Event of Default,  shall be applied to effect
     a  reduction  of  Consigned   Precious  Metal,  for  application  first  to
     Consignment  Base Rate Amounts and then to  Consignment  Fixed Rate Amounts
     for  allocation  among the  Fronting  Institutions  other than the Agent in
     accordance with their respective Commitment  Percentages of the Consignment
     Fixed Rate Amounts reduced;  provided,  however, that, in lieu of paying in
     Dollars the Fair Market Value,  or Spot Value,  as the case may be, of such
     Consigned Precious Metal, the Consignees may, at their option, Redeliver to
     the Agent,  Precious Metal, in bullion form, in an amount (measured in troy
     ounces) equal to the amount of Consigned  Precious  Metal being  purchased;
     provided,  that any such Precious Metal Redelivered to the Agent in bullion
     form shall not be subject to any Lien.

          (e) All purchases of  Consignment  Fixed Rate Amounts prior to the end
     of an Interest  Period shall jointly and severally  obligate the Consignees
     to pay any  breakage  costs  associated  with such  Consignment  Fixed Rate
     Amounts in accordance with ss.4.3 hereof.

          (f) The  Consignees  shall have the right at any time and from time to
     time upon five (5)  Business  Days'  prior  written  notice to the Agent to
     reduce the Total Commitment by $5,000,000 or an integral  multiple thereof;
     provided that the Total Commitment  shall not be reduced below  $10,000,000
     at any time; and provided  further that any  repurchase of any

<PAGE>

                                      -25-


     outstanding  amount of Consignment Fixed Rate Amounts of Consigned Precious
     Metal resulting from any such reduction of the Total Commitment pursuant to
     this  ss.2.4(f)  may be made  only on the last day of the  Interest  Period
     relating  thereto and provided further that any such reduction in the Total
     Commitment  shall result in a pro rata reduction in the Commitments of each
     Institution.   Promptly  after  receiving  any  notice  of  the  Consignees
     delivered   pursuant  to  this   ss.2.4(f),   the  Agent  will  notify  the
     Institutions of the substance thereof.  Upon the effective date of any such
     reduction of the Total  Commitment,  the Consignees shall, at their option,
     (a) purchase from the Agent all Consigned  Precious  Metal  outstanding  in
     excess of such reduced  Total  Commitment  by paying to the Agent,  for the
     respective  accounts  of  the  Fronting  Institutions  to  the  extent  the
     Consignment  Fixed Rate  Amounts are  reduced,  an amount equal to the Fair
     Market  Value  as of such  date of the  amount  of  such  excess  Consigned
     Precious Metal plus twenty-five cents ($0.25) per troy ounce of such excess
     Consigned  Precious  Metal,  together  with any and all  accrued and unpaid
     Daily Consignment Fees and other amounts accrued thereon,  or (b) Redeliver
     to the Agent, for its own account,  and for the respective  accounts of the
     Fronting Institutions to the extent that Consignment Fixed Rate Amounts are
     reduced,  Precious Metal,  in bullion form, in an amount  (measured in troy
     ounces) equal to all Consigned Precious Metal outstanding in excess of such
     reduced  Total  Commitment,  together  with any and all  accrued and unpaid
     Daily  Consignment Fees and other amounts accrued thereon.  No reduction of
     the Total Commitment pursuant to this ss.2.4(f) may be reinstated.

     2.5. Conversion Options.

          (a) Prior to the  occurrence of a Default or an Event of Default,  the
     Consignees  may elect from time to time to have the Daily  Consignment  Fee
     applicable to portions of Consigned  Precious Metal  outstanding  which are
     not subject to a Settlement  calculated  based upon either the  Consignment
     Base Rate or Consignment Fixed Rate,  provided that (i) with respect to any
     such conversion of Consigned  Precious Metal, the Consignees shall give the
     Agent,  no later than 2:00 p.m.  (Boston time), at least two (2) Eurodollar
     Business Days' prior Notice of such election;  and (ii) with respect to any
     such conversion of a Consignment  Fixed Rate Amount into a Consignment Base
     Rate Amount or another Consignment Fixed Rate Amount, such conversion shall
     only be made on the last day of the Interest  Period with respect  thereto.
     All or any part of  outstanding  Consigned  Precious Metal may be converted
     into a  Consignment  Fixed Rate Amount or  Consignment  Base Rate Amount as
     provided herein,  provided that any partial  conversion of Consignment Base
     Rate Amounts shall,  unless  otherwise agreed by the Agent, be for Precious
     Metal in a  minimum  amount at least  equal to one  thousand  (1,000)  troy
     ounces or an integral  multiple of one hundred  (100) troy ounces in excess
     thereof and any partial conversion of Consignment Fixed Rate Amounts shall,
     unless  otherwise  agreed by the Agent,  be for Precious Metal in an amount
     equal

<PAGE>

                                      -26-


     to three  thousand  (3,000)  troy  ounces or an  integral  multiple  of one
     thousand  (1,000) troy ounces in excess thereof.  Each  conversion  request
     relating to the  conversion  of Consigned  Precious  Metal to a Consignment
     Fixed Rate Amount shall be irrevocable by the Consignees.

          (b)  Prior to the  occurrence  of a  Default  or an Event of  Default,
     Consigned Precious Metal may be continued as Consignment Fixed Rate Amounts
     upon  the  expiration  of  an  Interest  Period  with  respect  thereto  by
     compliance  by the  Consignees  with the  notice  provisions  contained  in
     ss.2.5(a).

          (c) Any conversion to or from Consignment  Fixed Rate Amounts shall be
     in such  amounts and be made  pursuant  to such  elections  so that,  after
     giving effect thereto,  the aggregate  principal  amount of all Consignment
     Fixed Rate Amounts  having the same Interest  Period shall not be less than
     three  thousand  (3,000)  troy ounces or a whole  multiple of one  thousand
     (1,000) troy ounces in excess thereof.

     2.6. Repurchase at Maturity.  Subject to the option set forth in clause (b)
of this ss.2.6,  there shall become  absolutely  due and payable on the Maturity
Date,  an amount in Dollars  (the "Final  Repayment  Amount")  equal to the Fair
Market  Value as of the  Maturity  Date of the  outstanding  amount of Consigned
Precious Metal plus twenty-five cents ($0.25) per troy ounce of such outstanding
Consigned  Precious  Metal,  together  with any and all accrued and unpaid Daily
Consignment Fees and other amounts accrued thereon,  and the Consignees  jointly
and severally  agree, on the Maturity Date and at their option,  (a) to purchase
from the Agent all Consigned  Precious Metal and to pay to the Agent all amounts
constituting  the Final  Repayment  Amount  or (b) to  Redeliver  to the  Agent,
Precious Metal, in bullion form, in an amount (measured in troy ounces) equal to
all Consigned  Precious  Metal  outstanding,  together with payment of all other
amounts owed under this Agreement.

     2.7.  Overdue  Amounts.  Any amount not paid when due under this  Agreement
shall bear interest at two percent (2%) in excess of the Base Rate until paid in
full (whether or not this  Agreement  has been  terminated),  whether  before or
after judgment.

     2.8. Settlements for Consignments.

          (a) On each  Settlement  Date,  the Agent shall,  not later than 11:00
     a.m. (Boston time), give telephonic or facsimile notice (i) to the Fronting
     Institutions  and the  Consignees  of the  outstanding  amount of Consigned
     Precious  Metal which is, or is intended  to be,  subject to a  Consignment
     Fixed  Rate  and  (ii)  to  the  Fronting  Institutions  of the  amount  (a
     "Settlement  Amount") that each  Fronting  Institution  (each,  a "Settling
     Fronting Institution") shall pay to effect a Settlement. A statement of the
     Agent submitted to the Fronting  Institutions  and the Consignees or to the
     Fronting  Institutions  with respect to any amounts owing under this ss.2.8

<PAGE>

                                      -27-


     shall be prima facie  evidence of the amount due and owing.  Each  Settling
     Fronting  Institution shall, not later than 3:00 p.m. (Boston time) on such
     Settlement  Date,  effect a transfer of Precious  Metal to the Agent in the
     amount of such Fronting Institution's Settlement Amount.

          (b) The Agent may,  unless  notified to the  contrary by any  Fronting
     Institution  prior to a Settlement  Date,  assume that such Institution has
     made  available  to the Agent on such  Settlement  Date the  amount of such
     Fronting Institution's Settlement Amount. If any Fronting Institution makes
     available  to the Agent such amount on a date after such  Settlement  Date,
     such  Fronting  Institution  shall  pay to the  Agent on  demand  an amount
     determined by the Agent which will  compensate the Agent for any loss, cost
     or expense (including loss of anticipated  profits) that the Agent sustains
     as a result of such Fronting Institution's failure to deliver such amounts.

          (c)  The  failure  or  refusal  of any  Fronting  Institution  to make
     available to the Agent at the  aforesaid  time and place on any  Settlement
     Date the amount of its  Settlement  Amount (i) shall not  relieve any other
     Fronting  Institution  from  its  several  obligations  hereunder  to  make
     available  to the Agent the  amount of such  other  Fronting  Institution's
     Settlement  Amount  and (ii)  shall not  impose  upon such  other  Fronting
     Institution  any  liability  with  respect  to such  failure  or refusal or
     otherwise  increase the Commitment of such other Fronting  Institution.  If
     such Fronting Institution's  Settlement Amount is not made available to the
     Agent by such Fronting Institution within three (3) Business Days following
     such  Settlement  Date,  the Agent shall be entitled to recover such amount
     from the  Consignees on demand (the  Consignees to be jointly and severally
     liable  therefor),  with  consignment  fees  thereon  at the rate per annum
     applicable to the Consignment Base Rate Amounts as of such Settlement Date.

     2.9.   Obligations  of  the   Participating   Institutions  in  Respect  of
Consignments.  In the event  that the  Consignees  shall fail to  repurchase  or
Redeliver to the Agent any Consigned Precious Metal in accordance with the terms
of this ss.2, each Participating  Institution  severally agrees that it shall be
absolutely  liable,  without regard to the occurrence of any Default or Event of
Default or any other condition  precedent  whatsoever,  upon demand by the Agent
either (a) pay to the Agent an amount in Dollars  equal to the Fair Market Value
(on the Business Day  following the date of  determination)  of such excess plus
twenty-five  cents  ($0.25)  per troy ounce of such excess of (i) in the case of
Participating   Institutions   which  are  not   Fronting   Institutions,   such
Participating  Institution's  Commitment  Percentage of such Consigned  Precious
Metal and (ii) in the case of Fronting Institutions, the difference between such
Fronting  Institution's  Commitment  Percentage of such Consigned Precious Metal
and such Fronting Institution's  Commitment Percentage of Consignment Fixed Rate
Amounts with respect to which the Fronting  Institution has made a Settlement or
(b) deliver to the Agent an amount of Precious Metal equal to (i) in

<PAGE>

                                      -28-


the case of Participating Institutions which are not Fronting Institutions, such
Participating  Institution's  Commitment  Percentage of such Consigned  Precious
Metal and (ii) in the case of Fronting Institutions, the difference between such
Fronting  Institution's  Commitment  Percentage of such Consigned Precious Metal
and such Fronting Institution's  Commitment Percentage of Consignment Fixed Rate
Amounts  with respect to which the  Fronting  Institution  has made a Settlement
(such agreement of a  Participating  Institution or Fronting  Institution  being
called  herein the  "Consignment  Participation"  of such  Institution).  If any
Institution shall fail to make the payment or delivery required hereby, it shall
also be liable to the Agent for any hedging or other cost  incurred by the Agent
in its  discretion.  Each  such  payment  or  delivery  made by a  Participating
Institution  shall  be  treated  as  the  purchase  by  such  Institution  of  a
participating  interest in such Purchase and  Consignment  in an amount equal to
its Commitment Percentage thereof. Each Participating Institution shall share in
accordance with its  participating  interest in any Daily Consignment Fees which
accrue with respect to such  Purchase and  Consignment  pursuant to ss.2.3 as if
such  Participating  Institution was the Agent with respect to its participating
interest.

     2.10 Change in Fronting Institutions' Commitment Percentages.  In the event
of any change in the Fronting Institutions' respective Commitment Percentages as
a result of any  assignment  by any  Institution  of any  interests,  rights and
obligations under this Agreement in accordance with ss.14 or any election of any
assignee  Institution  as to  whether  to  become a  Fronting  Institution,  any
Fronting  Institution  whose Commitment  Percentage has increased as a result of
such change  shall  purchase  from the  Fronting  Institution  whose  Commitment
Percentage has decreased as a result of such change that percentage equal to the
resulting increase in such Fronting  Institution's  Commitment Percentage of all
Consignment Fixed Rate Amounts multiplied by the Fair Market Value thereof as of
the effective date of such change.

                              3. INSURANCE; TAXES.

     3.1. Insurance.

          (a) Each Consignee,  at its sole cost and expense,  shall,  and, where
     applicable,  shall cause each of its  Subsidiaries to, procure and maintain
     (i) property  insurance to cover all locations where Specified Gold Jewelry
     or other  properties or assets of such Consignee or such Subsidiary will be
     located on an all risk form,  including flood and earthquake and such other
     insurance  (including  but  not  limited  to,  fidelity  insurance  for all
     employees,  including  officers) with respect to the Specified Gold Jewelry
     and all other properties and assets of such Consignee or such Subsidiary as
     may from time to time be  reasonably  required by the Agent and as shall be
     in accordance with such insurance customarily maintained by owners or users
     of such properties and assets in similar  businesses in similar  geographic
     areas,  and  (ii)  commercial   general   liability   insurance,

<PAGE>

                                      -29-


     workers' compensation  insurance,  business interruption insurance and such
     other  insurance  with respect to its business  properties or assets as may
     from time to time be  reasonably  required  by the Agent and as shall be in
     accordance with such insurance customarily maintained by businesses engaged
     in similar  activities in similar  geographic areas. All insurance provided
     for in this ss.3.1 shall be effected under valid and enforceable  policies,
     in such forms,  in such amounts and with such  deductibles as may from time
     to time be reasonably  required by the Agent,  issued by financially  sound
     and responsible insurance companies which are qualified in the jurisdiction
     in which the Specified  Gold Jewelry and such other property and assets are
     located,  or are  approved  under  the  applicable  states'  surplus  lines
     insurance  laws.  On or prior to the  first  Drawdown  Date  hereunder  and
     promptly  following any renewal,  extension or replacement of any insurance
     policy  maintained  pursuant  hereto,  the Consignees  shall deliver to the
     Agent such  certificates  of insurance or  endorsements  to the Consignees'
     (and  such  Subsidiaries')   insurance  policies  as  shall  be  reasonably
     acceptable to the Agent,  demonstrating the Consignees' compliance with the
     provisions  of  this  ss.3.1.  Upon  request  of  the  Agent,  as  soon  as
     practicable following the date hereof and following any renewal,  extension
     or replacement of any insurance  policy  maintained  pursuant  hereto,  the
     Consignees  shall  deliver to the Agent  copies of all  insurance  policies
     (together with Accord Form 27 (2/84) or other similar forms satisfactory to
     the Agent)  evidencing the insurance  coverage  required by the Agent.  All
     policies of insurance  shall provide for thirty (30) days  notification  in
     advance  of any  cancellation,  non-renewal  or  material  change in policy
     conditions, including cancellation for non-payment of premium. All policies
     of insurance provided for or contemplated by this Agreement with respect to
     Specified  Gold  Jewelry  shall  name the  Agent,  for the  benefit  of the
     Institutions  and the Agent,  as an  additional  insured  (with  respect to
     liability  insurance  policies)  or loss payee  (with  respect to  property
     insurance policies), as its interest may appear.

          (b) All property  insurance  policies  provided for or contemplated by
     this Agreement  shall contain clauses or endorsements to the effect that no
     act or negligence of any  Consignee or any of its  Subsidiaries,  or anyone
     acting for any  Consignee  or any such  Subsidiary,  which might  otherwise
     result in a forfeiture  of such  insurance or any part thereof shall in any
     way affect the validity or  enforceability of such insurance insofar as the
     Agent is concerned.

          (c) Losses under each policy of insurance provided for or contemplated
     by this ss.3.1 shall be adjusted with the insurers and/or  underwriters and
     paid directly to the Agent and the  Consignees  or, as the case may be, any
     of its  Subsidiaries,  as their interests may appear.  As between the Agent
     and the Consignees,  the Consignees  jointly and severally agree to pay all
     costs and expenses of collecting or recovering

<PAGE>

                                      -30-


     any insurance proceeds under such policies,  including, but not limited to,
     any and all fees of attorneys, appraisers and adjusters.

     3.2. Taxes, Etc.; Certain Rights of the Agent.

          (a) Each Consignee will, and will cause each of its  Subsidiaries  to,
     make or file all  federal  and state  income  and all  other  tax  returns,
     reports and declarations at the times required by any jurisdiction to which
     any of them is subject, except where the failure to do so does not have and
     could not reasonably be expected to have a Materially  Adverse Effect,  and
     set aside, on its books,  provisions reasonably adequate for the payment of
     all taxes for  periods  subsequent  to the  periods to which such  returns,
     reports or  declarations  apply.  Each  Consignee  will, and will cause its
     Subsidiaries to, pay all material taxes, assessments and other governmental
     charges  (including  without  limitation  all sales  taxes and  withholding
     taxes)  shown  or  determined  to be  due  on  such  returns,  reports  and
     declarations, and including without limitation, all such taxes, assessments
     and  governmental  charges upon the Consigned  Precious  Metal or Specified
     Gold  Jewelry  or other  properties  or  assets of such  Consignee  or such
     Subsidiary, prior to the date on which penalties attach thereto, unless (A)
     such Consignee or such  Subsidiary  shall be  contesting,  in good faith by
     appropriate  proceedings,  the  validity  or  amount  of  any  such  taxes,
     assessments or governmental  charges, (B) such Consignee or such Subsidiary
     has  established  adequate  reserves in  accordance  with GAAP with respect
     thereto,  and (C) no Lien (other than Liens which,  in the  aggregate,  are
     permitted under ss.8.2.2(ix)  hereof) arising from the non-payment  thereof
     when due has attached to any property or assets of such Consignee or any of
     its Subsidiaries in a manner which could have priority over the Lien of the
     Agent thereon and there is no imminent  risk of the sale of or  foreclosure
     on any property or assets of such Consignee or any of its  Subsidiaries  by
     the holder of any Liens arising from the  non-payment  thereof when due. No
     Consignee  will use the Consigned  Precious Metal or Specified Gold Jewelry
     in violation of any statute or ordinance. The Agent may examine and inspect
     the Consigned  Precious  Metal or Specified Gold Jewelry at any time during
     normal business hours (provided that no unreasonable  interference with the
     Consignees'  business shall result therefrom),  wherever located,  and each
     Consignee  agrees to keep all records  relating to the  Consigned  Precious
     Metal at its Principal Office.

          (b) At its option,  upon the occurrence and during the  continuance of
     an Event of Default,  the Agent may discharge Liens,  security interests or
     other  encumbrances at any time levied or placed on the Consigned  Precious
     Metal or  Specified  Gold  Jewelry  (which are not being  contested in good
     faith),  may pay for insurance on the Consigned Precious Metal or Specified
     Gold  Jewelry  and  may pay for the  maintenance  and  preservation  of the
     Consigned Precious Metal or Specified Gold Jewelry.  The Consignees jointly
     and severally  agree to reimburse the Agent on

<PAGE>
                                      -31-


     demand for any  payment  made,  or any  expense  incurred,  by the Agent in
     connection with the foregoing,  together with interest  thereon at the Base
     Rate plus two  percent  (2%),  computed  from the date of such  payment  or
     expense until paid.

                          4. CHANGES IN CIRCUMSTANCES.

     4.1.  Capital  Adequacy.  If after the date hereof any  Institution  or the
Agent  determines  that (i) the  adoption of or any change in any  banking  law,
rule,  regulation  or guideline or the  administration  thereof  (whether or not
having the force of law), or (ii)  compliance by any Institution or the Agent or
such  Institution's  or  the  Agent's  parent  bank  holding  company  with  any
guideline,  request or directive  (whether or not having the force of law),  has
the effect of reducing the return on such  Institution's  or the Agent's or such
holding  company's  (as  the  case  may be)  capital  as a  consequence  of such
Institution's Commitment or the Purchases and Consignments to a level below that
which such  Institution,  the Agent or such holding company (as the case may be)
could have  achieved but for such  adoption,  change or compliance by any amount
deemed by the such Institution or the Agent (as the case may be) to be material,
such  Institution  or the Agent (as the case may be) may notify  the  Consignees
thereof.  The Consignees  jointly and severally agree to pay such Institution or
the Agent (as the case may be) the amount of the Consignees'  allocable share of
the amount of such reduction in the return on capital as and when such reduction
is determined, upon presentation by the Agent or such Institution of a statement
in the amount and setting  forth the Agent's or such  Institution's  calculation
thereof, which statement shall be deemed true and correct absent manifest error.
The Agent or such  Institution  (as the case may be) agree to allocate shares of
such reduction among the Consignees and the Agent's or such Institution's  other
customers similarly situated on a fair and non-discriminatory basis.

     4.2.  Inability to Determine  Eurodollar Rate or Consignment Fixed Rate. In
the event,  prior to the  commencement  of any Interest  Period  relating to any
Consignment  Fixed Rate  Amount,  the Agent shall  determine  in good faith that
adequate and  reasonable  methods do not exist for  ascertaining  the Eurodollar
Rate or the Contango Rate that would otherwise determine the rate of interest to
be applicable to any Consignment  Fixed Rate Amount during any Interest  Period,
the  Agent  shall  forthwith  give  Notice of such  determination  and the basis
therefor  (which  shall be  conclusive  and  binding on the  Consignees)  to the
Consignees.  In such event (a) any request for  Consignment  Fixed Rate  Amounts
shall be automatically  withdrawn, and shall be deemed a request for Consignment
Base Rate Amounts, (b) each Consignment Fixed Rate Amount will automatically, on
the last day of the then current  Interest  Period  relating  thereto,  become a
Consignment  Base  Rate  Amount,  and (c) the  obligations  of the Agent and the
Institutions to make Consignment Fixed Rate Amounts shall be suspended until the
Agent determines that the circumstances giving rise to such suspension no longer
exist, whereupon the Agent shall so notify the Consignees.

<PAGE>

                                      -32-


     4.3.  Illegality of  Consignment  Fixed Rate Amounts.  Notwithstanding  any
other provisions  herein,  if any present or future law,  regulation,  treaty or
directive or in the interpretation or application thereof shall make it unlawful
for any  Institution to make or maintain  Consignment  Fixed Rate Amounts,  such
Institution shall forthwith give Notice of such  circumstances to the Consignees
and thereupon (a) the commitment of such Institution to make  Consignment  Fixed
Rate Amounts or convert  Consigned  Precious Metal into  Consignment  Fixed Rate
Amounts  shall  forthwith be  suspended,  and (b) such  Institution's  Consigned
Precious Metal then outstanding as Consignment Fixed Rate Amounts, if any, shall
be converted  automatically  to Consignment Base Rate Amounts on the last day of
each Interest Period applicable to such Consignment Fixed Rate Amounts or within
such earlier period as may be required by law. The Consignees hereby jointly and
severally  agree  promptly  to pay to  such  Institution,  upon  demand  by such
Institution, any additional amounts necessary to compensate such Institution for
any reasonable  costs  incurred by such  Institution in making any conversion in
accordance  with this  ss.4.3,  including  any  interest or fees payable by such
Institution  to lenders of funds obtained by it in order to make or maintain its
Consignment Fixed Rate Amounts hereunder.

     4.4. Indemnity. The Consignees jointly and severally agree to indemnify the
Agent and each Institution and to hold the Agent and each  Institution  harmless
from and  against  any loss,  cost or  expense  (including  loss of  anticipated
profits)  that such  Institution  may sustain or incur as a  consequence  of (i)
default by any  Consignee  in making a Purchase  and  Consignment,  including  a
Purchase and  Consignment  as a Consignment  Fixed Rate Amount,  or a conversion
after the  Consignees  have given (or are deemed to have  given) a Purchase  and
Consignment  Request or a conversion request relating thereto in accordance with
ss.2.2 or ss.2.5 or (ii) the making of any payment of a  Consignment  Fixed Rate
Amount or the making of any conversion of any such Consignment Fixed Rate Amount
to a  Consignment  Base  Rate  Amount  on a day  that is not the last day of the
applicable  Interest  Period with respect  thereto,  including  interest or fees
payable  by such  Institution  to lenders  of funds  obtained  by it in order to
maintain any such Purchases and Consignments.

     4.5.  Termination  of  Commitment.  If,  as a direct  result  of any of the
changes in circumstances  described in the foregoing  provisions of this ss.4, a
material  increase  shall occur in the amounts  payable by the Consignees to the
Agent or the Institutions  under this Agreement,  then the Consignees shall have
the  right  within  thirty  (30)  Business   Days   following   such  change  in
circumstances and upon five (5) Business Days' prior written notice to the Agent
and the Institutions,  to terminate the Total Commitment in full by repurchasing
from the Agent all Consigned  Precious Metal in accordance with the requirements
of this  ss.4.5;  provided  that any  repurchase  of any  outstanding  amount of
Consignment  Fixed Rate Amounts of Consigned  Precious Metal  resulting from any
such  termination  of the Total  Commitment  pursuant to this ss.4.5 may be made
only on the last day of the Interest Period relating thereto. Upon the effective
date of any such termination of the Total  Commitment,  the

<PAGE>

                                      -33-


Consignees  shall,  at their  option,  (a) purchase from the Agent all Consigned
Precious  Metal  outstanding  by paying to the Agent an amount equal to the Fair
Market Value as of such date of the amount of such Consigned Precious Metal plus
twenty-five  cents  ($0.25)  per troy ounce of such  Consigned  Precious  Metal,
together  with any and all accrued and unpaid Daily  Consignment  Fees and other
amounts  accrued  thereon,  or (b) Redeliver to the Agent,  Precious  Metal,  in
bullion  form,  in an amount  (measured in troy ounces)  equal to all  Consigned
Precious Metal  outstanding,  together with any and all accrued and unpaid Daily
Consignment Fees and other amounts accrued thereon.  No termination of the Total
Commitment pursuant to this ss.4.5 may be reinstated.

                              5. FEES AND PAYMENTS.

     5.1. Fees. The Consignees  jointly and severally  agree to pay to the Agent
for its own account the fees set forth in the Fee Letter.  The Consignees  shall
also pay to the Agent,  for the pro rata  accounts of the  Institutions,  on the
first day of each calendar month following the Closing Date and upon the earlier
to occur of the Maturity Date or the date upon which the Commitment is no longer
in effect, a commitment fee calculated at a rate per annum which is equal to one
half of one percent  (1/2%) of the average  daily  difference by which the Total
Commitment amount (in Dollars) exceeds the aggregate of the Fair Market Value of
all Consigned  Precious Metal outstanding during the preceding calendar month or
portion thereof; provided,  however, that no such commitment fee shall accrue or
be payable with respect to any calendar  month or portion  thereof  during which
the average Fair Market Value of all Consigned Precious Metal outstanding during
such calendar month or portion thereof during which the Fair Market Value of all
Consigned  Precious  Metal  outstanding  during such  calendar  month or portion
thereof shall exceed $12,000,000.

     5.2. No Setoff, etc. All payments made by the Consignees hereunder or under
any of the other  Consignment  Documents shall be made in Dollars in immediately
available  funds (except as otherwise  provided with respect to  Redeliveries of
Precious  Metal or Eligible  Specified  Gold Jewelry) at the Agent's office at 1
West Mezzanine, 15 Westminster Street,  Providence,  Rhode Island 02903, without
set-off or  counterclaim  and without any  withholding  or deduction  whatsoever
(unless the  Consignees  are  compelled  to make such  withholding  or deduction
pursuant  to any  law).  If any  such  obligation  is  imposed  upon  any of the
Consignees  with  respect to any amount  payable by it hereunder or under any of
the other  Consignment  Documents,  the Consignees  will,  except as provided in
ss.5.3,  pay to the Agent,  for the account of the  Institutions or (as the case
may be) the Agent, on the date on which such amount is due and payable hereunder
or under such other Consignment  Document,  such additional amount in Dollars as
shall be necessary to enable the  Institutions  or the Agent to receive the same
net amount which the  Institutions  or the Agent would have received on such due
date had no such  obligation  been imposed upon the Borrower.  The Borrower will
deliver promptly to the Agent certificates or other valid vouchers for all taxes
or other  charges  deducted  from or paid with  respect to payments  made by the
Borrower  hereunder  or under  such  other  Loan  Document.  The Agent  shall be

<PAGE>

                                      -34-


entitled to charge any account of any  Consignee  with the Agent for any sum due
and payable by any Consignee to the Agent or any Institution  hereunder or under
any of the other Consignment Documents.  Except as otherwise expressly set forth
herein,  if any payment hereunder is required to be made on a day which is not a
Business Day, it shall be paid on the immediately  succeeding Business Day, with
interest and any  applicable  fees adjusted  accordingly.  All  computations  of
interest or of the commitment fee payable  hereunder  shall be made by the Agent
on the basis of actual days elapsed and on a 360-day year.

     5.3.  Institutions that are not U.S. Persons.  (a) Each Institution that is
not a U.S.  Person as defined in Section  7701(a)(30)  of the Code hereby agrees
that,  if and to the extent it is legally able to do so, it shall,  prior to the
date  of the  first  payment  by the  Consignees  hereunder  to be  made to such
Institution or for such Institution's account, deliver to the Consignees and the
Agent, as applicable,  such  certificates,  documents or other evidence,  as and
when  required  by the Code or Treasury  Regulations  issued  pursuant  thereto,
including two (2) duly completed  copies of Internal Revenue Service Form W-8BEN
or Form W-8ECI and any other  certificate or statement of exemption  required by
Treasury Regulations,  or any subsequent versions thereof or successors thereto,
properly completed and duly executed by such Institution  establishing that with
respect to payments of any amounts hereunder  including  purchases in Dollars of
Consigned Precious Metal and amounts which may be considered principal, interest
or fees hereunder it is (i) not subject to United States federal withholding tax
under the Code because such payment is effectively connected with the conduct by
such  Institution  of a trade or business in the United  States or (ii)  totally
exempt or partially  exempt from United States federal  withholding  tax under a
provision of an applicable tax treaty.  Each  Institution  agrees that it shall,
promptly upon a change of its lending  office or the selection of any additional
lending office,  to the extent the forms previously  delivered by it pursuant to
this section are no longer  effective,  and promptly upon the Consignees' or the
Agent's  reasonable  request after the occurrence of any other event  (including
the passage of time)  requiring  the delivery of a Form W-8BEN or Form W-8ECI in
addition to or in replacement of the forms previously delivered,  deliver to the
Consignees  and the Agent,  as  applicable,  if and to the extent it is properly
entitled to do so, a properly  completed and executed Form W-8BEN or Form W-8ECI
(or any  successor  forms  thereto).  Unless the  Consignees  and the Agent have
received forms or other  documents  satisfactory  to them  indicating  that such
payments  hereunder or under the other Consignment  Documents are not subject to
the United States  federal  withholding  tax, the  Consignees or the Agent shall
withhold taxes from such payments at the applicable statutory rate, or a reduced
rate pursuant to an applicable  tax treaty if such  Institution  has delivered a
form evidencing such tax treaty benefit.

     (b)  Notwithstanding  anything  to the  contrary  set  forth in the  second
sentence of ss.5.2,  the Consignees  shall not be required to pay any additional
amounts to any Institution or the Agent for the account of the lending office of
such  Institution,  pursuant to the second  sentence of ss.5.2 above, if (i) the

<PAGE>

                                      -35-


obligation  to pay such  additional  amounts  would  not have  arisen  but for a
failure by such  Institution  to comply with the  provisions of paragraph (a) of
this ss.5.3 or (ii) the Institution is not eligible,  in respect of such lending
office, for complete  exemption from United States federal  withholding tax with
respect to payments of interest, principal or fees under this Agreement or under
any of the other  Consignment  Documents,  other  than by reason of any  change,
after the Initial  Date,  of any  applicable  law,  treaty or  regulation by any
governmental  authority  or other  agency  charged  with the  interpretation  or
administration  thereof.  For purposes of this subsection (d), the term "Initial
Date" shall mean, with respect to any Institution which is a party hereto on the
Closing Date,  the Closing Date, and with respect to each assignee or transferee
of any Institution,  the date of the grant of the  participation in, or transfer
or assignment of an interest hereunder to such assignee or transferee.

     5.4. Payment and Redelivery.  The Consignees may accomplish any purchase of
Consigned Precious Metal required or permitted by ss.ss.2.4,  2.6 or 4.5 hereof,
to the extent that such provision gives such Consignee an option to pay for such
purchase in Dollars or by Redelivery of Consigned Precious Metal and/or Precious
Metal  in  bullion  form,  by a  combination  of cash  payment  in  Dollars  and
Redelivery of Consigned  Precious  Metal and/or  Precious Metal in bullion form;
provided that (i) the aggregate  amount of Consigned  Precious Metal paid for in
Dollars  (calculated  in  accordance  with the  requirements  of the  applicable
provision of ss.ss.2.4, 2.6 or 4.5, including,  where applicable,  an additional
twenty-five  cents  ($.25)  per troy ounce for Dollar  purchases  calculated  by
reference to the Fair Market  Value) and/or paid for by Redelivery of additional
Consigned  Precious  Metal and/or paid for by  Redelivery  of Precious  Metal in
bullion form shall be equal to the aggregate amount of Consigned  Precious Metal
to be  purchased,  and (ii) such  Consignee  shall not have an option among such
methods of purchase  unless so  specified  in the  applicable  provision of this
Agreement pursuant to which such purchase is being made.

     5.5. Maximum Rate of Interest.  If for any reason it is determined that any
fees or other charges or amounts due to the Agent or any  Institution  hereunder
constitute   interest  under  applicable  law  and,  further,  if  such  amounts
determined to  constitute  interest  shall be deemed by any court,  governmental
agency or  tribunal of  competent  jurisdiction  to exceed the  maximum  rate of
interest  permitted  by  the  laws,  rules  or  regulations  of  the  applicable
jurisdiction,  then,  during such time as such rate of interest  would be deemed
excessive,  that  portion of such  interest  which  exceeds the maximum  rate of
interest so  permitted  shall be deemed to be a voluntary  purchase of Consigned
Precious Metal  undertaken  pursuant to ss.2.4(d) hereof at a price equal to the
Spot Value of such  Consigned  Precious  Metal  deemed to be purchased as of the
date of determination.

<PAGE>

                                      -36-


                       6. REPRESENTATIONS AND WARRANTIES.

     Each Consignee  represents and warrants to the Agent on the date hereof, on
the date of any Purchase and  Consignment  Request,  and on each  Drawdown  Date
that:

     6.1. Incorporation;  Good Standing;  Authorization.  Each Consignee and its
Subsidiaries is duly organized,  validly existing,  and in good standing, to the
extent that such entity's  jurisdiction of incorporation  recognizes the concept
of good standing,  under the laws of its  jurisdiction of  incorporation  and is
duly  qualified  and in good  standing in every other  jurisdiction  where it is
doing  business  (except  where the  failure  to so  qualify  in any such  other
jurisdiction  where it is doing business has or could  reasonably be expected to
have a Materially Adverse Effect),  and the execution,  delivery and performance
by each Consignee and each of its  Subsidiaries of the Consignment  Documents to
which it is a party (i) are within its corporate  authority,  and (ii) have been
duly authorized;

     6.2. Enforceability.  Upon execution and delivery thereof, each Consignment
Document  shall  constitute the legal,  valid and binding  obligation of each of
each Consignee and its  Subsidiaries  party  thereto,  enforceable in accordance
with its terms,  except as limited by  bankruptcy,  insolvency,  reorganization,
moratorium  or  other  laws  affecting  the  enforcement  of  creditors'  rights
generally;

     6.3.  Title to Properties;  Leases.  Subject to the provisions of ss.2.1(c)
hereof,  each  Consignee  has good  and  marketable  title  to all its  material
properties, subject only to Liens permitted hereunder, and possesses all assets,
including intellectual properties (if any), leasehold interests, license rights,
franchises  and  Consents,  adequate  for the  conduct  of its  business  as now
conducted,  without  known  conflict with any rights of others.  Each  Consignee
maintains insurance policies which comply in all respects with ss.3.1 hereof;

     6.4.  Financial  Statements.  The Consignees have provided to the Agent and
the Institutions (i) the audited  consolidated  Financials of the Parent and its
Subsidiaries as at January 29, 2000 and for the fiscal year then ended, (ii) the
audited consolidated Financials of Finlay and its Subsidiaries as at January 29,
2000 and for the  fiscal  year  then  ended,  (iii) the  unaudited  consolidated
Financials of the Parent and its  Subsidiaries  for the fiscal  quarter and nine
month  period  ended  on  October  28,  2000  and the  unaudited  unconsolidated
Financials of Finlay and its Subsidiaries for such quarter,  and such Financials
described  in  clauses  (i),  (ii) and (iii) are  complete  and  correct  in all
material  respects  and  fairly  present  the  position  of the  Parent  and its
Subsidiaries  and  Finlay and its  Subsidiaries,  as the case may be, as at such
date and for such  period in  accordance  with GAAP  consistently  applied.  The
Consignees have also provided to the Agent and the  Institutions  their forecast
of the consolidated operations of the Parent and its Subsidiaries for the period
commencing  February 4, 2001 and ending on or about  February 2, 2002,  and such
forecast has been prepared in good faith based upon assumptions believed by each
Consignee to be reasonable  at the time made,  it being  recognized by the Agent
and the

<PAGE>

                                      -37-


Institutions  that such  forecasts  as to future  events are not to be viewed as
facts and that actual results during the period covered  thereby may differ from
the forecasted results;

     6.5. No Material Changes.  Since October 28, 2000, there has been no change
of any kind in the financial  condition or business  operations of the Parent or
any of its  Subsidiaries  which has or could  reasonably  be  expected to have a
Materially Adverse Effect;

     6.6.  Litigation.  Except as set forth on Schedule IV hereto,  there are no
legal or other  proceedings  or  investigations  pending  or, to the best of any
Consignee's   knowledge,   threatened  against  any  Consignee  or  any  of  its
Subsidiaries  before any court,  tribunal or regulatory  authority which have or
could, if adversely  determined,  alone or together,  be reasonably  expected to
have a Materially Adverse Effect;

     6.7. No Conflict. The execution,  delivery, performance of its obligations,
and exercise of its rights under the  Consignment  Documents by each  Consignee,
including  Purchase and  Consignments  and borrowing under this Agreement (i) do
not require any Consents except those obtained on or prior to the first Drawdown
Date;  and  (ii)  are not and  will not be in  conflict  with or  prohibited  or
prevented  by (A) any  Requirement  of  Law,  in a  manner  which  has or  could
reasonably  be expected to have a  Materially  Adverse  Effect,  (B) any Charter
Document,  corporate minute or resolution,  or (C) any instrument,  agreement or
provision  thereof,  in each case binding on it or affecting its property,  in a
manner which has or could  reasonably  be expected to have a Materially  Adverse
Effect;

     6.8.  Compliance  with other  Instruments,  Laws,  etc. No  Consignee is in
violation of (i) any Charter Document,  corporate minute or resolution, (ii) any
instrument or  agreement,  in each case binding on it or affecting its property,
in a manner,  in the case of any violation in respect of this clause (ii), which
has or could  reasonably  be expected to have a Materially  Adverse  Effect,  or
(iii) any  Requirement of Law,  including,  without  limitation,  all applicable
federal and state tax laws, ERISA and  Environmental  Laws, in a manner,  in the
case of any  violation  in  respect  of this  clause  (iii),  which has or could
reasonably be expected to have a Materially Adverse Effect;

     6.9. Tax Status. The Parent and its Subsidiaries (i) have made or filed all
federal and state  income and all other tax  returns,  reports and  declarations
required by any  jurisdiction to which any of them is subject,  except where the
failure to do so does not have and could not  reasonably  be  expected to have a
Materially  Adverse  Effect,  (ii)  have  paid  all  material  taxes  and  other
governmental  assessments  and  charges  shown or  determined  to be due on such
returns, reports and declarations, prior to the date on which any fine, penalty,
interest, late charge or loss could be added thereto for non-payment thereof (or
any such fine,  penalty,  interest,  late  charge or loss has been paid)  except
those being  contested in good faith and by  appropriate  proceedings  for which
adequate

<PAGE>

                                      -38-


reserves have been taken and as to which no Lien (other than Liens which, in the
aggregate, are permitted under ss.8.2.2(ix) hereof) arising from the non-payment
thereof  when due has attached to any property or assets of the Parent or any of
its  Subsidiaries  in a manner  which could have  priority  over the Lien of the
Agent for the benefit of the  Institutions and the Agent thereon and there is no
imminent  risk of the sale of or  foreclosure  on any  property or assets of the
Parent or any of its  Subsidiaries  by the holder of any Liens  arising from the
non-payment thereof when due, and (iii) have set aside on their books provisions
reasonably  adequate for the payment of all taxes for periods  subsequent to the
periods  to which such  returns,  reports or  declarations  apply;  there are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any  jurisdiction,  and the officers of each Consignee and its Subsidiaries know
of no basis for any such claim;

     6.10.  Holding Company and Investment  Company Acts. No Consignee or any of
its Subsidiaries is a "holding company", or a "subsidiary company" of a "holding
company",  or an affiliate" of a "holding company", as such terms are defined in
the Public  Utility  Holding  Company Act of 1935;  nor is any  Consignee or its
Subsidiaries an "investment company", or an "affiliated company" or a "principal
underwriter"  of an  "investment  company",  as such  terms are  defined  in the
Investment Company Act of 1940.

     6.11. Use of Proceeds. The proceeds of the Purchases and Consignments shall
be used (i) initially to refinance or finance the purchase of the Precious Metal
content of Specified Gold Jewelry and (ii) on an on-going  basis,  for financing
and purchasing the Precious Metal content of Specified Gold Jewelry.  No portion
of the proceeds of any Purchase and Consignment is to be used for the purpose of
purchasing or carrying any "margin security" or "margin stock" as such terms are
used in  Regulations  U and X of the Board of Governors  of the Federal  Reserve
System, 12 C.F.R. Parts 221 and 224;

     6.12. No Event of Default.  No Default or Event of Default has occurred and
is continuing;

     6.13.  Locations of Specified  Gold Jewelry.  Schedule II hereto sets forth
all locations at which Specified Gold Jewelry is located;

     6.14.  Other  Credit.  Finlay  has in place not less than  $100,000,000  of
credit  facilities  in addition  to the credit  facilities  provided  under this
Agreement;

     6.15.  Perfection of Security Interest.  Upon execution and delivery of the
Security  Documents and the filing of documents thereby required  (including the
filing of such financing statements or other notices necessary or appropriate in
order to perfect and maintain the Agent's first priority Lien for the benefit of
the  Institutions  and the  Agent,  subject  to the  terms of the  Intercreditor
Agreement, on the Collateral), the Agent for the benefit of the Institutions and
the Agent shall have first-priority  perfected Liens on the Collateral,  subject
only to Liens permitted  hereunder and entitled to priority under applicable law
and

<PAGE>

                                      -39-


subject  to  the  terms  of  the  Intercreditor  Agreement,  with  no  financing
statements,  chattel  mortgages,  real estate  mortgages  or similar  filings on
record anywhere which conflict with such  first-priority  Liens of the Agent for
the benefit of the Institutions  and the Agent (other than financing  statements
filed against the Consignees (i) by the Dollar Agent, to the extent contemplated
by the  Intercreditor  Agreement,  and (ii) by  consignment  vendors  which have
executed a Vendor  Agreement  with respect to the  collateral  described in such
financing statements);

     6.16.  Subsidiaries.  No  Consignee  is party to any  partnership  or joint
venture; Schedule V hereto lists each of the Subsidiaries of each Consignee; and

                            7. CONDITIONS PRECEDENT.

     7.1.  Closing  Conditions.  In  addition  to the  making  of the  foregoing
representations and warranties and the delivery of the Consignment Documents and
such other  documents and the taking of such actions as the Agent may require at
or prior to the time of executing  this  Agreement,  the obligation of the Agent
and the Institutions to make the initial  Purchase and Consignment  hereunder is
subject to the satisfaction of the following further conditions precedent:

          7.1.1. Consignment Documents.  Each of the Consignment Documents shall
     have been duly executed and delivered by the  respective  parties  thereto,
     shall be in full  force  and  effect  and  shall  be in form and  substance
     satisfactory  to the  Agent and the  Institutions;  the  Agent  shall  have
     received a fully executed copy of each such document.

          7.1.2. Financial Statements. The Agent and the Institutions shall have
     received the most recent audited consolidated  Financials of the Parent and
     its   Subsidiaries,   the  most  recent  unaudited  monthly  and  quarterly
     consolidated Financials of the Parent and its Subsidiaries, the most recent
     audited consolidated Financials of Finlay and its Subsidiaries and the most
     recent unaudited  monthly and quarterly  consolidated  Financials of Finlay
     and its Subsidiaries.

          7.1.3.  Representations  True; No Material Adverse Change. There shall
     have been no material  misstatements  in or  omissions  from the  materials
     previously furnished to the Agent or any Institution for its review, and in
     the sole  judgment  of the Agent and the  Institutions  (i) the  Financials
     delivered  to the Agent shall fairly  present the  business  and  financial
     condition  of the  Parent and its  Subsidiaries  or, as the case may be, of
     Finlay and its  Subsidiaries,  for the periods  covered  thereby,  and (ii)
     there shall have been no material  adverse change in the business,  assets,
     financial  condition  or prospects  of the Parent and its  Subsidiaries  or
     Finlay and its Subsidiaries since the date of such Financials.

<PAGE>

                                      -40-


          7.1.4.  Opinion of Counsel.  The Agent and the Institutions shall have
     received a legal  opinion  satisfactory  in form and substance to the Agent
     from Blank Rome Tenzer Greenblatt LLP, counsel to the Consignees.

          7.1.5. Satisfaction with Systems. The Agent and the Institutions shall
     be satisfied in their sole discretion  with (i) the operations,  procedures
     and systems of the Consignees relating to gold tracking and valuation,  and
     (ii) the cash management systems of the Consignees.

          7.1.6. Perfection Certificates and UCC Search Results. The Agent shall
     have received from the Consignees a completed and fully executed Perfection
     Certificate and the results of UCC searches or other evidence  satisfactory
     to the Agent (in each case dated as of a date  reasonably  satisfactory  to
     the Agent)  indicating the absence of Liens on the assets of the Consignees
     except  for  Liens  permitted  by  ss.8.2.2  hereof  and  Liens  for  which
     termination  statements  and releases  satisfactory  to the Agent are being
     tendered prior to or concurrently  with the initial  extension of credit by
     the Agent.

          7.1.7.  UCC Filings and  Notices.  The Agent shall have filed all such
     financing  statements  and  given  all  such  notices  (including,  without
     limitation,  all notices and filings under  Sections 2-326 and 9-114 of the
     UCC) as may be  necessary  or  appropriate  for the Agent to  evidence  the
     consignment arrangements contemplated hereby (and its ownership interest in
     all  Consigned  Precious  Metal),  to perfect its security  interest in the
     Collateral, and to assure its first priority status Lien for the benefit of
     the  Institutions and the Agent (subject to the terms and conditions of the
     Intercreditor Agreement) in the Collateral.

          7.1.8.  Proceedings;  Copies of Documents.  All corporate and judicial
     proceedings  and all  instruments  and  agreements in  connection  with the
     transactions  between  the  Consignees,  the  Institutions  and  the  Agent
     contemplated by the Consignment Documents shall be reasonably  satisfactory
     in form and substance to the Agent and the  Institutions  and the Agent and
     the  Institutions  shall have  received all  information  and copies of all
     documents or papers reasonably requested by the Agent and the Institutions,
     including,   without  limitation,  the  Charter  Documents,  good  standing
     certificates  and  certificates of foreign  qualification of the Consignees
     and resolutions of the board of directors of the Consignees authorizing the
     transactions  contemplated  hereby  and by  each of the  other  Consignment
     Documents.

          7.1.9.  Copies of Agreements.  The Agent shall have received copies of
     (i) to the extent requested by the Agent, the Consignees'  standard license
     agreements  with  Federated  Department  Stores and May Company under which
     Finlay is the  licensee,  (ii) to the extent  requested by the Agent,  such
     other  license  agreements  with  host  department  stores

<PAGE>

                                      -41-


     under  which a  Consignee  is a  licensee  as the  Agent  shall  reasonably
     request, and (iii) all such other material agreements of a Consignee as the
     Agent shall  reasonably  request (it being  acknowledged  and agreed by the
     Agent  and the  Institutions  that  such  agreements  and  all  information
     contained  therein  shall remain  confidential  and shall not,  without the
     written  consent  of the  Consignees,  be  disclosed  by the  Agent and the
     Institutions to any third party other than any employee,  director,  agent,
     attorney,  accountant  or other  professional  advisor  of the  Agent or an
     Institution except (A) to actual or potential  assignees of or participants
     in the Purchases and Consignments and the Consignment  Documents,  provided
     that  any  such  Person  shall  agree  to  treat  in  confidence  all  such
     information  to the same  extent  that the Agent and the  Institutions  are
     required to treat such information, (B) in response to any request or order
     of  any  court  or  other  governmental  or  regulatory   authority  having
     jurisdiction over the Agent or as required by any other Requirement of Law,
     and (C) where such  information  has been publicly  disclosed other than in
     breach of this provision).

          7.1.10.  License  Arrangements.  The Agent shall be  satisfied  in all
     respects with the Consignees' license arrangements with its host department
     stores,  including  without  limitation,   that  the  Inventory  (including
     Specified Gold Jewelry) and Precious Metal  (including  Consigned  Precious
     Metal) of the  Consignees  located  at such host  department  stores is not
     subject to any prior Liens or claims of any such host  department  store or
     of any creditor of any such host department store.

          7.1.11.  Intercreditor  Agreement. An amendment and restatement of the
     Intercreditor Agreement shall have been duly executed and delivered by each
     of the Agent,  the Dollar Agent and the Consignees,  and such amendment and
     restatement of the  Intercreditor  Agreement  shall be satisfactory in form
     and substance to the Agent and the  Institutions and shall be in full force
     and effect.

          7.1.12.  Insurance.  The Agent shall have received evidence (including
     certificates of insurance and  endorsements,  if applicable) of all hazard,
     property,  liability and other  insurance  maintained by the  Consignees in
     accordance with the requirements of ss.3.1 hereof;  such insurance shall be
     in such amounts and of such types as shall be  reasonably  satisfactory  to
     the Agent;  and the Agent shall be named as either loss payee or additional
     insured with respect to all Specified  Gold Jewelry and Consigned  Precious
     Metal, as required by the Agent, on each such policy of insurance.

          7.1.13.  Fees.  The  Consignees  shall  have paid to the Agent and the
     Institutions  all fees then  payable  as set  forth  herein or in the other
     Consignment Documents.

<PAGE>

                                      -42-


          7.1.14.  Letter of Credit. The Letter of Credit, in form and substance
     satisfactory to the Agent, shall have been issued in favor of the Agent for
     the benefit of the Institutions and the Agent and shall have been delivered
     to the Agent.

          7.1.15.  Approvals.  There shall have been obtained, by all parties to
     the transaction,  any director or shareholder approvals required by law for
     this  Agreement  and  each  of the  other  Consignment  Documents  and  any
     necessary regulatory  approvals,  including without limitation,  compliance
     with all state and federal laws applicable to any party to the transaction.

          7.1.16.  Vendor Letters etc. The Consignees  shall have received,  (i)
     from each of the Approved  Vendors  listed on Schedule I hereto,  (A) UCC-3
     termination  statements  with respect to such  Approved  Vendor's  existing
     financing statements  previously filed against the Consignees,  if any, (B)
     an Approved Vendor Agreement, and (C) such other documentation as the Agent
     shall deem  necessary or  appropriate  in order to establish,  preserve and
     maintain its first  priority  perfected Lien in all Specified Gold Jewelry,
     and (ii) from  each of the  consignment  vendors  listed  on  Schedule  III
     hereto, a Vendor Agreement;

          7.1.17.  Consignment Limit Report.  The Agent shall have received from
     the Consignees the initial Consignment Limit Report

          7.1.18.  Other Documents.  The Agent and the  Institutions  shall have
     received such other closing documents, satisfactory, in form and substance,
     to the Agent and the Institutions,  as the Agent and the Institutions shall
     have requested.

     7.2.  Conditions to All Purchases and  Consignments.  The obligation of the
Agent and the Institutions to make any Purchase and  Consignment,  including the
initial Purchase and Consignment, hereunder shall be subject to the satisfaction
of the following further conditions precedent:

          7.2.1.   Representations   True.  Each  of  the   representations  and
     warranties  of each  Consignee  to the  Agent  herein,  in any of the other
     Consignment Documents or any document, certificate or other paper or notice
     in connection  herewith shall be true and correct in all material  respects
     as of the date of such  Purchase and  Consignment  (except to the extent of
     any changes resulting from  transactions  contemplated or permitted by this
     Agreement and changes  occurring in the ordinary course of business that do
     not result in a  Materially  Adverse  Effect and except to the extent  that
     such representations and warranties expressly relate to an earlier date, in
     which case they shall be true and  correct in all  material  respects as of
     such earlier date) and as of the time made or claimed to have been made;

<PAGE>

                                      -43-


          7.2.2.  No Event of Default.  No Default or Event of Default  shall be
     continuing.

          7.2.3. Government Regulation. No change shall have occurred in any law
     or  regulation  or in the  interpretation  thereof  that in the  reasonable
     opinion  of the Agent  would  make it  unlawful  for the Agent to make such
     Purchase and Consignment.

          7.2.4.  Consignment  Requests.  The Consignees shall have given to the
     Agent  a  Purchase  and   Consignment   Request  in  accordance   with  the
     requirements  of ss.2.2  hereof,  such  Purchase  and  Consignment  Request
     constituting  a  representation  and  warranty by each  Consignee  that the
     conditions set forth in this ss.7.2 shall have been satisfied.

          7.2.5.  Proceedings and Documents.  All proceedings in connection with
     the  transactions  contemplated  by this Agreement,  the other  Consignment
     Documents and all other documents incident thereto shall be satisfactory in
     substance and in form to the Agent and the Institutions,  and the Agent and
     the  Institutions  shall have received all information and such counterpart
     originals or  certified  or other copies of such  documents as the Agent or
     any  Institution may reasonably  request or as may be required  pursuant to
     the terms hereof, including without limitation, the most recent Consignment
     Limit Report  required to be delivered  by the  Consignees  pursuant to the
     terms hereof and the most recent monthly,  quarterly and annual  Financials
     required to be delivered by the Consignees pursuant to the terms hereof.

          7.2.6.  Fees. The  Consignees  shall have paid the balance of all fees
     then due and payable  pursuant to the terms of this Agreement or any of the
     other Consignment Documents.

                                  8. COVENANTS.

     8.1.   Affirmative   Covenants.   Each  Consignee  agrees  that  until  the
termination of the Total  Commitment and the payment and satisfaction in full of
all of the Obligations:

          8.1.1.  Financial  Statements,   Certificates  and  Information.  Each
     Consignee  will,  and will cause each of its  Subsidiaries  to furnish  the
     Agent and the Institutions:

               (i) within  ninety (90) days after the close of each fiscal year,
          (A)  the  audited  consolidated  Financials  of  the  Parent  and  its
          Subsidiaries  for  such  fiscal  year,  certified  by the  Consignees'
          accountants  and  containing an audit of the Precious Metal content of
          the  Consignees'  Inventory,  and  (B)  the  unaudited  unconsolidated
          Financials of Finlay for such fiscal year, certified by Finlay's chief
          financial officer or treasurer;

<PAGE>

                                      -44-


               (ii)  within  forty-five  (45) days  after the end of each of the
          first  three  fiscal  quarters  of each  fiscal  year,  the  unaudited
          consolidated  Financials of the Parent and its  Subsidiaries  for such
          quarter and the unaudited unconsolidated Financials of Finlay for such
          quarter, each containing the certification by the Parent's or Finlay's
          (as  applicable)  chief  financial  officer  or  treasurer  that  such
          Financials  fairly present the financial  position in accordance  with
          GAAP of the Parent and its Subsidiaries or, as the case may be, Finlay
          and  its  Subsidiaries  on  the  date  thereof  (subject  to  year-end
          adjustments);

               (iii)  within  forty-five  (45) days after the end of each fiscal
          month the  unaudited  consolidated  Financials  of the  Parent and its
          Subsidiaries  for such  month,  containing  the  certification  by the
          Parent's chief  financial  officer or treasurer  that such  Financials
          fairly present the financial  position in accordance  with GAAP of the
          Parent and its  Subsidiaries on the date thereof  (subject to year-end
          adjustments and without footnotes); provided that notwithstanding such
          time  periods   within  which  Finlay  is  required  to  deliver  such
          Financials  pursuant to the foregoing  clauses (i), (ii) or (iii), the
          Consignees agree to notify the Agent promptly, but in any event within
          ten (10) Business Days,  following the incurrence by the Parent or any
          of its  Subsidiaries  of any expense which has or could  reasonably be
          expected to have a Materially Adverse Effect;

               (iv) together with the quarterly and annual Financials  described
          in clauses (i) and (ii) above, a certificate of the Consignees'  chief
          financial   officer(s)  or  treasurer(s)  setting  forth  computations
          demonstrating  compliance with the Consignees' financial covenants set
          forth herein and  demonstrating  compliance by the Consignees with the
          covenant  contained in ss.8.1.8  hereof,  and certifying  that, to the
          best of such officer's  knowledge,  no Default or Event of Default has
          occurred,  or if it has,  the  actions  taken by the  Consignees  with
          respect thereto;

               (v) within five (5) days after Saturday of each calendar week, or
          at such other time or times as the Agent may  request,  a  Consignment
          Limit  Report,  in form and  detail  satisfactory  to the  Agent  (but
          including, without limitation, information as to what portion, if any,
          of the  Consigned  Precious  Metal is  subject to Liens  permitted  by
          ss.8.2.2 hereof (other than the junior Lien,  subject to the terms and
          provisions  of the  Intercreditor  Agreement,  in favor of the  Dollar
          Agent)),  certified by the chief financial  officer(s) or treasurer(s)
          of the Consignees,  and  demonstrating the Consignment Limit as at the
          end of such week or other applicable date requested;

<PAGE>

                                      -45-


               (vi) within five (5) days after  Saturday of each calendar  week,
          the  unaudited  consolidated  sales  figures  of the  Parent  and  its
          Subsidiaries and the unaudited  unconsolidated  gross sales figures of
          the Consignees;

               (vii)  contemporaneously  with the delivery thereof to the Dollar
          Agent, copies of all monthly borrowing base reports provided by Finlay
          to the Dollar Agent in connection with, and as required by, the Dollar
          Facility;

               (viii) as soon as available  but in any event within  ninety (90)
          days  after  the  close  of  each  fiscal  year,  a  forecast  of  the
          consolidated  operations  of the Parent and its  Subsidiaries  for the
          next fiscal year  updating  the  forecast  delivered  to the Agent and
          referred  to in ss.6.4,  or, if  applicable,  updating  any later such
          forecasts delivered pursuant to this ss.8.1.1;

               (ix) promptly upon the filing  thereof,  copies of all reports or
          other  documents filed by the Parent or any of its  Subsidiaries  with
          the  Securities  and  Exchange   Commission   (including  the  audited
          consolidated financials of Finlay and its Subsidiaries for each fiscal
          year and the  unaudited  consolidated  financials  of  Finlay  and its
          Subsidiaries  for each of the  first  three  fiscal  quarters  of each
          fiscal  year)  or  sent  or  received  by  the  Parent  or  any of its
          Subsidiaries  to or from the  holders of any equity  interests  of the
          Parent or such Subsidiary or of any Indebtedness for Borrowed Money of
          the Parent or any such Subsidiary  registered under the Securities Act
          of 1933 or to or from the trustee under any indenture  under which the
          same is issued; and

               (x) such other financial  information or reports as the Agent may
          from time to time reasonably request.

          8.1.2. Records and Accounts.  Each Consignee will, and will cause each
     of its  Subsidiaries  to (i) keep true and  accurate  books of  account  in
     accordance  with GAAP;  (ii)  maintain its current  fiscal year;  and (iii)
     permit the Agent or its designated  representatives  and agents  (including
     consultants,  commercial finance examiners or other professional advisors),
     without any unreasonable  interference with the Consignees' business (A) to
     inspect the Consignees'  premises during normal business hours,  including,
     without  limitation  leased store locations,  insofar as the Consignees can
     give authority therefor,  (B) to examine and be advised as to such or other
     business  records (to the extent not  privileged,  and if any materials are
     privileged,  the Agent and the  Institutions  shall be permitted to discuss
     with the Consignees and its officers and professional  advisors the matters
     covered by such privileged materials) upon the request of the Agent, (C) to
     conduct examinations and verifications of the

<PAGE>

                                      -46-


     systems and procedures of the  Consignees,  including those related to gold
     tracking and  valuation  and to cash  management;  (D) to conduct  periodic
     commercial finance  examinations,  to conduct Specified Gold Jewelry counts
     and audits and to obtain  periodic  collateral  reports or appraisals  from
     independent  collateral  auditors or appraisers  satisfactory  to the Agent
     with  respect  to,  among  other  things,  the  location,  amount and value
     (including  the  current  fair  market,   orderly  liquidation  and  forced
     liquidation  values) of Inventory,  Specified Gold Jewelry,  Precious Metal
     and Consigned  Precious  Metal held by the  Consignees and set forth in the
     Consignment  Limit  Reports  of the  Consignees),  and  (E) to  communicate
     directly with the  Consignees'  independent  certified  public  accountants
     concerning  the  business,  financial  condition  and other  affairs of the
     Consignees,  all during regular  business hours (with respect to any visits
     to the Consignees' premises).

          8.1.3. Corporate Existence;  Maintenance of Properties. Each Consignee
     will, and will cause each of its Subsidiaries to (i) maintain its corporate
     existence,   rights  and   franchises   (except  for  the   abandonment  of
     intellectual property rights of the Consignees or such Subsidiary permitted
     by  ss.8.2.5(iii)(E)  and  for  the  dissolution  of  Sonab  following  the
     consummation  of  the  transactions  contemplated  by  the  Sonab  Purchase
     Agreement  and the  liquidation  of any  remaining  assets of Sonab),  (ii)
     except as  otherwise  permitted  in  ss.8.2.5,  cause  all of its  material
     properties  used or useful in the conduct of its business to be  maintained
     and kept in good condition,  repair and working order  (reasonable wear and
     tear  excepted) and supplied with all necessary  equipment,  (iii) keep its
     business and assets adequately insured in accordance with the provisions of
     ss.3.1  hereof  and of the  Security  Agreement,  (iv)  maintain  its chief
     executive  office  in the  United  States,  (v)  continue  to engage in the
     business of retail jewelry sales (including in host-store departments or in
     stand-alone  locations);  provided  that  nothing  in this  ss.8.1.3  shall
     prevent any Consignee or its Subsidiaries from  discontinuing the operation
     and maintenance of any of its properties if such  discontinuance  is in the
     judgment of such Consignee or such Subsidiary,  desirable in the conduct of
     its business and that does not have or could not be reasonably  expected to
     have a Materially  Adverse Effect, and (vi) comply with all Requirements of
     Law, including ERISA and Environmental Laws except where any non-compliance
     does not have or could not  reasonably  be  expected  to have a  Materially
     Adverse Effect.

          8.1.4.  Notices.  Each  Consignee  will,  and will  cause  each of its
     Subsidiaries to notify the Agent and each of the  Institutions  promptly in
     writing of (i) the  occurrence  of any Default or Event of Default of which
     such Consignee or such Subsidiary has, or should have, knowledge,  (ii) any
     noncompliance  with ERISA or any Environmental Law or proceeding in respect
     thereof or any other  Requirement  of Law of which such  Consignee  or such
     Subsidiary has, or should have, knowledge, which noncompliance has or could
     reasonably  be  expected to have a  Materially

<PAGE>

                                      -47-


     Adverse Effect, (iii) any change of address, (iv) any threatened or pending
     litigation or similar proceeding  affecting any Consignee or any Subsidiary
     of which such Consignee or such Subsidiary has, or should have,  knowledge,
     or any material  change in any such  litigation  or  proceeding  previously
     reported,  which threatened or pending litigation or proceeding or material
     change  therein has or could  reasonably  be expected to have a  Materially
     Adverse  Effect,  and (v) claims  against any assets or  properties  of any
     Consignee  or any  Subsidiary  encumbered  in  favor of the  Agent  for the
     benefit of the  Institutions  and the Agent of which such Consignee or such
     Subsidiary has, or should have, knowledge.

          8.1.5.  Use of Proceeds.  Each Consignee  will, and will cause each of
     its  Subsidiaries  to use the proceeds of the  Purchases  and  Consignments
     solely (i)  initially  to refinance or finance the purchase of the Precious
     Metal content of Specified Gold Jewelry and (ii) on an on-going basis,  for
     financing  and  purchasing  the Precious  Metal  content of Specified  Gold
     Jewelry,  and not for the carrying of "margin  security" or "margin  stock"
     within the meaning of  Regulations U and X of the Board of Governors of the
     Federal Reserve System, 12 C.F.R. Parts 221 and 224.

          8.1.6.  Payment of Claims. Each Consignee will, and will cause each of
     its  Subsidiaries to pay, before the same shall become overdue,  all claims
     for labor,  materials or supplies that if unpaid might by law become a Lien
     or charge upon any of its  property or assets,  unless,  in each case,  the
     validity or amount thereof is being  contested in good faith by appropriate
     proceedings, such Consignee or any such Subsidiary has established adequate
     reserves in accordance  with GAAP with respect  thereto,  Liens (other than
     Liens which,  in the aggregate,  are permitted under  ss.8.2.2(ix)  hereof)
     arising from the  non-payment  thereof when due have not attached to any of
     the property or assets of such  Consignee or any of its  Subsidiaries  in a
     manner  which could have  priority  over the Lien of the Agent  thereon and
     there is no imminent risk of the sale of or  foreclosure on any property or
     assets of such  Consignee or any of its  Subsidiaries  by the holder of any
     Liens arising from the non-payment thereof when due.

          8.1.7.  Systems.  Each  Consignee  will,  and will  cause  each of its
     Subsidiaries  to maintain in effect such systems and procedures  (including
     without  limitation those relating to cash management and gold tracking and
     valuation),  satisfactory  in all respects to the Agent, in order to assure
     and  maintain the Agent's and the  Institutions'  first  priority  security
     interest,  subject to the provisions of the Intercreditor Agreement, in the
     Collateral.

          8.1.8. Other Credit. Finlay shall, at all times have in place not less
     than  $100,000,000  of credit  facilities  (including  the Dollar  Facility
     and/or other credit  facilities  satisfactory  in all respects to the Agent
     but other than this Agreement).

<PAGE>

                                      -48-


          8.1.9.  Location of Specified  Jewelry.  Each Consignee will, and will
     cause each of its  Subsidiaries  to (A) keep all Specified  Gold Jewelry at
     Permitted  Inventory Locations at all times; and (B) thirty (30) days prior
     (or, to the extent that the giving of such prior  Notice is  impracticable,
     as soon as practicable, but in any event not less than ten (10) days prior)
     to any Consignee's establishing any new licensed or leased locations or any
     other  location at which any  Specified  Gold  Jewelry  shall be kept,  the
     Consignees shall give Notice thereof to the Agent and to its counsel at the
     address  specified in the definition of Principal Office and shall promptly
     take all such  actions  required  by the  Agent  in order to  evidence  the
     Agent's  ownership  interest in all Consigned  Precious Metal to be located
     thereat  and in  order  to  preserve  and  maintain  the  Agent's  and  the
     Institutions'  security  interest  in the  Collateral,  including,  without
     limitation,  the execution and delivery of such UCC financing statements or
     other filings reasonably required by the Agent (upon the completion of such
     actions  reasonably  required  by the Agent,  Schedule  II hereto  shall be
     deemed to be revised to include  any such new  locations,  which  locations
     shall thereupon become Permitted  Inventory Locations  hereunder,  provided
     that notwithstanding the foregoing,  no Specified Gold Jewelry shall in any
     event  be  located  at,  and  Schedule  II  and  the  "Permitted  Inventory
     Locations"  shall not include  (whether or not  included in any such Notice
     given by the  Consignees to the Agent),  any factory outlet stores or other
     stand-alone locations of any Consignee).

          8.1.10.  Further Assurances.  Each Consignee will, and will cause each
     of its Subsidiaries to cooperate with the Agent, take such action,  execute
     such documents,  and provide such information as the Agent may from time to
     time  reasonably  request  in order  further  to  effect  the  transactions
     contemplated  by and the purposes of the Consignment  Documents,  including
     without  limitation,  the  delivery  at the  Consignees'  joint and several
     expense of additional  security documents and appraisals and the agreements
     described in ss.ss.7.1.9 and 7.1.10.

          8.1.11. Certain Payments.  Each Consignee will, and will cause each of
     its  Subsidiaries  to cause (i) all payments (net of amounts (which amounts
     may be paid in cash) equal to the  reasonable,  ordinary  course  operating
     expenses  of Finlay  Merchandising  for the then  current  and  immediately
     succeeding fiscal months, including,  without limitation,  payroll expenses
     for  employees  of  Finlay  Merchandising)  from any  Consignee  to  Finlay
     Merchandising  in respect of  amounts  owed under the Finlay  Merchandising
     License  Agreement and the Finlay  Merchandising  Services  Agreement to be
     made by  means  of  appropriate  intercompany  book  entries,  (ii)  Finlay
     Merchandising  to declare and  distribute  to Finlay as a dividend,  within
     thirty (30) days  following  the end of each fiscal  quarter  during  which
     payments  described  in clause  (i) of this  ss.8.1.11  or in clause (i) of
     ss.8.1.12 are made to Finlay Merchandising, an amount equal to the sum (net
     of amounts  (which  amounts may be paid in cash)  equal to the  reasonable,
     ordinary course  operating  expenses of Finlay

<PAGE>

                                      -49-


     Merchandising for the then current fiscal month and immediately  succeeding
     fiscal month, including, without limitation, payroll expenses for employees
     of  Finlay  Merchandising),  of  such  payments  under  clause  (i) of this
     ss.8.1.11 plus such payments to Finlay  Merchandising,  under  ss.8.1.12(i)
     and (iii) all  obligations of any Consignee to Finlay  Merchandising  under
     and in respect of the Finlay  Merchandising  License  Agreement  and/or the
     Finlay Merchandising  Services Agreement to be subordinated (subject to the
     Intercreditor Agreement) to the Obligations upon terms and conditions,  and
     pursuant to documentation, in each case satisfactory to the Agent.

          8.1.12.  eFinlay.  Each  Consignee  will,  and will  cause each of its
     Subsidiaries to cause (i) all amounts owed to any Consignee or, as the case
     may be, Finlay  Merchandising  under any purchase  orders or other requests
     for  merchandise  or  inventory  issued by eFinlay to Finlay,  the  eFinlay
     Services Agreement,  the eFinlay FM Services  Agreement,  the eFinlay Lease
     Agreement or any other agreement between eFinlay and Finlay or, as the case
     may be, Finlay  Merchandising  to be paid to Finlay or, as the case may be,
     Finlay Merchandising at least quarterly, commencing with the quarter ending
     December 31, 2000, either by means of appropriate intercompany book entries
     or by payment in cash, and (ii) eFinlay to declare and distribute to Finlay
     as a dividend,  within  thirty (30) days  following  the end of each fiscal
     quarter,  an amount  equal to all  amounts  retained  by eFinlay  following
     payment  to Finlay  or,  as the case may be,  Finlay  Merchandising  of the
     amounts required by clause (i) of this subsection (n) (which amounts may be
     net of amounts  equal to the  reasonable,  ordinary  operating  expenses of
     eFinlay for the then current  fiscal month and the  immediately  succeeding
     fiscal month, including, without limitation, payroll expenses for employees
     of eFinlay).

     8.2. Negative  Covenants.  Each Consignee agrees that until the termination
of the Total  Commitment  and the  payment and  satisfaction  in full of all the
Obligations:

          8.2.1. Indebtedness. The Consignees will not and where applicable will
     not  permit  any of their  Subsidiaries  to  create,  incur or  assume  any
     Indebtedness other than:

               (i)  Indebtedness  to the Agent and the  Institutions  under this
          Agreement;

               (ii)  Indebtedness  of any  Consignee or any  Subsidiary  thereof
          secured by Liens permitted by ss.8.2.2(vii) hereof;

               (iii)  unsecured  Current  Liabilities  of  a  Consignee  or  any
          Subsidiaries  incurred in the ordinary course of business,  other than
          unsecured Current Liabilities for Indebtedness for Borrowed Money;

<PAGE>

                                      -50-


               (iv)  Indebtedness  in  respect  of  taxes,  assessments,   other
          governmental  charges,  or levies and claims for labor,  materials and
          supplies,  in each case to the extent that payment  therefor shall not
          at the time be required by ss.3.2 or ss.8.1.6 hereof;

               (v) Indebtedness in respect of the Dollar Facility;

               (vi)  Indebtedness  of a Consignee  (A)  evidenced  by the Senior
          Notes in an aggregate principal amount not to exceed $150,000,000;

               (vii) with  respect to leases of real or  personal  property  (A)
          obligations  in any  amount in  respect of  percentage  rentals  under
          license  agreements  or  arrangements  entered  into with  lessors  or
          licensors  of  store  locations,   (B)  rental  obligations  or  other
          commitments   thereunder   (other  than   obligations  in  respect  of
          Capitalized Leases permitted hereunder) to make any direct or indirect
          payment,  whether as rent or otherwise,  for fixed or minimum  rentals
          (including minimum payments,  but excluding all other payments,  under
          license  agreements  or  arrangements  entered  into with  lessors  or
          licensors of store  locations) not in excess of (1) $15,000,000 in the
          aggregate  for the Parent and its  Subsidiaries  for any fiscal  year;
          provided,  however,  that the amount set forth in this  clause  (B)(1)
          shall  not  include  (y)  rental   obligations   resulting   from  the
          acquisition  of  the  Diamond  Park  Fine  Jewelry  division  of  Zale
          Delaware,  Inc.  pursuant  to the  terms of a certain  Asset  Purchase
          Agreement  dated  September  3, 1997 among the  Parent,  Finlay,  Zale
          Delaware,  Inc.  and  Zale  Corporation,  or  (z)  rental  obligations
          incurred by the  Consignee  under leases  referred to in the JBR Asset
          Purchase Agreement;

               (viii)  obligations  of a Consignee  and its  Subsidiaries  under
          Capitalized  Leases not  exceeding  $5,000,000  in aggregate  notional
          principal amount at any time outstanding;

               (ix) Indebtedness in respect of the Tax Allocation Agreement;

               (x)  Indebtedness  in respect of (A) any Hedge Agreement which is
          not  speculative in nature and which is entered into by a Consignee in
          the ordinary course of its business  consistent with past practices in
          order to hedge against  fluctuations in the price of gold, and (B) any
          Hedge  Agreement  which is designed to hedge against  fluctuations  in
          interest  rates;  provided,  however,  that in the  case of any  Hedge
          Agreement  constituting an interest rate swap for which a Consignee or
          any  Subsidiary  has swapped  exposure on a fixed rate in exchange for
          taking on exposure on a

<PAGE>

                                      -51-


          floating rate, such hedging  transaction  covers a notional  principal
          amount of not more than $50,000,000;

               (xi) Indebtedness in respect of judgments,  attachments, seizures
          or levies not to exceed  $500,000 in the aggregate  outstanding at any
          time;

               (xii)  to the  extent  such  expenses  have  not  been  paid by a
          Consignee   through  a  dividend   permitted  under  ss.8.2.4  hereof,
          Indebtedness  of a Consignee  to the Parent for expenses of the Parent
          incurred  in the  ordinary  course  of  business  not to exceed in the
          aggregate   during  any  fiscal  year  of  the  Parent  0.25%  of  the
          Consignees' net sales as indicated in the  Consignees'  audited annual
          Financials  for  the  immediately  preceding  fiscal  year  (it  being
          understood  that  such  Indebtedness  shall  not  be  evidenced  by  a
          promissory note, bond, debenture or other instrument);

               (xiii) Indebtedness to lessors or licensors of store locations in
          respect of (A) equipment and fixtures and (B) Inventory purchased from
          such lessors or licensors not in excess of $3,000,000 in the aggregate
          at any time outstanding;

               (xiv)  endorsements  for  collection,  deposit or negotiation and
          warranties  of  products  or  services,  in each case  incurred in the
          ordinary course of business;

               (xv) guaranties in respect of Indebtedness otherwise permitted by
          clauses (v) and (vi) of this ss.8.2.1 and guaranties in respect of the
          Senior Debentures;

               (xvi)  Indebtedness of Sonab (A) consisting of the liquidation of
          the balance of the net assets of Sonab,  (B) to Finlay pursuant to and
          evidenced by the Sonab  Intercompany  Notes,  and (C) to Histoire d'Or
          consisting of indemnification obligations,  purchase price adjustments
          and other similar  obligations  incurred or assumed in connection with
          the Sonab Transfer in accordance  with the terms and conditions of the
          Sonab Purchase Agreement;

               (xvii)    Indebtedness    secured   by   Liens    permitted    by
          ss.ss.8.2.2(iv),  (v),  (vi) and  (viii)  hereof,  in each case to the
          extent that payment therefor shall not at the time be required by such
          sections;

               (xviii) Indebtedness not included above and listed on Schedule VI
          hereto (but not any increase  thereof or any  refinancings,  renewals,
          extensions,   replacements   or  exchanges   of  any  thereof   except
          refinancings, renewals, extensions, replacements or exchanges on terms
          no less favorable to the

<PAGE>

                                      -52-


          Consignees  or any  Subsidiary  than that being  refinanced,  renewed,
          extended, replaced or exchanged);

               (xix)   Indebtedness  of  Finlay  consisting  of  indemnification
          obligations  to the  Sellers  (as  defined  in the JBR Asset  Purchase
          Agreement)   incurred  in  connection  with  the  JBR  Acquisition  in
          accordance  with the terms and  conditions  of the JBR Asset  Purchase
          Agreement; and

               (xx)  Indebtedness of the Consignees and their  Subsidiaries  not
          included  in  subsections  (i) -  (xix)  above  and not in  excess  of
          $15,000,000 in aggregate principal amount at any time outstanding;

          8.2.2.  Liens.  The Consignees will not and where  applicable will not
     permit any of their Subsidiaries to create or incur any Liens on any of the
     property or assets of any Consignee or any of its  Subsidiaries  (including
     without  limitation  all  Inventory,   Specified  Gold  Jewelry,  Consigned
     Precious Metal and Collateral) except:

               (i) Liens  (described in ss.2.1(c)  hereof) in favor of the Agent
          and the Institutions securing the Obligations;

               (ii)  Liens in favor of the Dollar  Agent for the  benefit of the
          lenders  under the Dollar  Facility  subject to the  provisions of the
          Intercreditor Agreement;

               (iii) Liens securing  taxes,  assessments  or other  governmental
          charges  or levies  and  claims  for  labor,  materials  and  supplies
          provided  the  payment  thereof  shall not at the time be  required by
          ss.3.2 or ss.8.1.6 hereof;

               (iv)  deposits,  Liens or pledges to secure  payments of workers'
          compensation  and other payments,  unemployment  and other  insurance,
          old-age pensions or other social security obligations;

               (v)  Liens  of  workmen,   repairmen,   carriers,   warehousemen,
          mechanics, vendors, suppliers and materialmen, and other similar Liens
          arising in the ordinary course of business and securing sums which are
          not past due or which are being  contested  in good  faith  (and there
          shall be no material  risk of  forfeiture  of the property  subject to
          such Lien or  foreclosure  of such  Lien),  or  deposits or pledges to
          obtain the release of any such Liens;

               (vi) easements,  rights-of-way, zoning restrictions, licenses and
          restrictions  on the use of real property or minor  irregularities  in
          title thereto, which do not materially impair the use of such

<PAGE>

                                      -53-


          property in the normal  operation of the business of the Consignees or
          any of  their  Subsidiaries  or the  value  of such  property  for the
          purpose of such business;

               (vii) purchase money  mortgages or other purchase money Liens, or
          any  refinancing  of any  thereof,  upon any fixed or  capital  assets
          (other than Inventory) constituting real property interests or related
          machinery  and  equipment,  or purchase  money  mortgages  on any such
          assets  hereafter  acquired or existing at the time of  acquisition of
          such  assets by such  Consignee  or such  Subsidiary,  whether  or not
          assumed,  so long as (A) any such Lien does not extend to or cover any
          other asset of any Consignee or any of its Subsidiaries, (B) such Lien
          secures  the  obligation  to pay the  purchase  price  of such  asset,
          interest thereon and other customary  incidental  obligations relating
          thereto  only,  and  (C)  the  outstanding  principal  amount  of  the
          aggregate  Indebtedness secured by all such purchase money Liens shall
          not exceed $4,000,000 at any time;

               (viii)  deposits,  Liens or pledges to secure the  performance of
          tenders,  bids,  leases and other contracts  (other than contracts for
          the payment of money),  or public or  statutory  obligations,  surety,
          stay or  appeal  bonds,  or other  similar  obligations,  in each case
          arising in the ordinary course of business;

               (ix) Liens on assets (other than  Specified  Gold Jewelry) not to
          exceed $200,000 in the aggregate outstanding at any time;

               (x) Liens on  consigned  Inventory  (other  than  Specified  Gold
          Jewelry)  pursuant to consignment  arrangements  permitted by ss.8.2.7
          below in favor of any person or entity which retains title thereto;

               (xi) Liens  granted to lessors or  licensors  of store  locations
          with respect to fixtures and  equipment at store  locations  leased or
          licensed from such lessors or licensors;

               (xii) Liens for judgments, attachments, seizures or levies not to
          exceed $500,000 in the aggregate outstanding at any time;

               (xiii) Liens on assets of Subsidiaries of a Consignee  granted by
          such Subsidiaries in favor of such Consignee;

               (xiv)   Liens  in  respect   of   Capitalized   Leases   securing
          Indebtedness  permitted by  ss.8.2.1(viii),  covering  only the assets
          subject to such permitted Capitalized Leases;

               (xv)  other  Liens  existing  on the date  hereof  and  listed on
          Schedule VII hereto and any renewals  thereof (but not any

<PAGE>

                                      -54-


          increase in amount thereof and not any extension  thereof to any other
          property); and

               (xvi) such other Liens as the Agent may from time to time approve
          in advance in writing;

          8.2.3. Investments.  The Consignees will not and where applicable will
     not permit any of their  Subsidiaries  to make any  investments  other than
     investments:

               (i) in  securities  issued  by,  or that are  directly  and fully
          guaranteed or insured by, the United  States  government or any agency
          or  instrumentality  thereof having maturities of not more than twelve
          months from the date of acquisition;

               (ii) in  certificates of deposit,  bankers'  acceptances and time
          and  demand  deposits  of  United  States  banks  or  other  financial
          institutions having capital and surplus in excess of $500,000,000, the
          holding company of which has outstanding  commercial paper meeting the
          requirements specified in clause 8.2(c)(iii) below;

               (iii) in  commercial  paper rated (as of the date of  acquisition
          thereof) at least A-1 or the  equivalent  thereof by Standard & Poor's
          Corporation  and P-1 or the  equivalent  thereof by Moody's  Investors
          Service,  Inc. and in either case maturing within six (6) months after
          the date of its acquisition;

               (iv)  in  mutual  funds  holding  solely  investments   otherwise
          permitted by the foregoing clauses (i) - (iii);

               (v) representing  Indebtedness of any Person owing as a result of
          the sale by a  Consignee  or any of its  Subsidiaries  of  products or
          services in the ordinary course of business on customary trade terms;

               (vi) in the capital stock of Subsidiaries existing on the Closing
          Date or any other Subsidiary created with the prior written consent of
          the  Agent,  (B) in the case of Finlay  Merchandising,  consisting  of
          those items set forth and described on Schedule I to the  Contribution
          Agreement  and (C) in the case of eFinlay,  consisting  of those items
          set forth and  described  on  Schedule A to the  eFinlay  Contribution
          Agreement,  as in effect on the Closing Date; provided,  however, that
          for each of the foregoing clauses (A), (B) and (C), no Consignee shall
          make  any  additional   investments   therein  other  than  additional
          investments approved in advance in writing by the Agent and other than
          increases in such investments arising solely by reason of increases in
          the retained earnings of any such Subsidiary".

<PAGE>

                                      -55-


               (vii)  outstanding on the date hereof and listed on Schedule VIII
          hereto but not any additional investments therein;

               (viii) (i)  represented by lockbox or other accounts  established
          in connection  with, or as permitted by, the Dollar Facility  (subject
          to the  provisions of the  Intercreditor  Agreement) and (ii) by SONAB
          represented by bank accounts listed on Schedule IX hereto;

               (ix) consisting of (A) loans and advances to officers,  directors
          or  employees  not to exceed at any time  outstanding  $20,000  in the
          aggregate to any one individual or at any time outstanding $150,000 in
          the  aggregate  to all such  individuals,  (B) loans and  advances  to
          employees for entertainment,  travel and other similar expenses in the
          ordinary course of business,  (C) advances to employees for relocation
          expenses  in an  aggregate  amount  not to exceed  $50,000  to any one
          individual  at any time  outstanding  and $200,000 to all employees at
          any  time  outstanding,  and (D)  advances  to  employees  of  bonuses
          actually  earned  and as to which  the  treasurer  or chief  financial
          officer of the  Consignees  has certified in writing to the Agent that
          such bonus was  actually  earned and that at the time of such  advance
          under this clause (D), no Default or Event of Default was continuing;

               (x)  consisting  of  payments   required   pursuant  to  the  Tax
          Allocation Agreement;

               (xi)  consisting  of franchise or other fees or expenses  paid in
          cash by a Consignee  as  consideration  for the initial  granting of a
          license from a host store licensee,  which fees and expenses shall not
          exceed  $2,500,000  in  the  aggregate  in  any  fiscal  year  of  the
          Consignees;

               (xii) in  respect  of hedging  transactions  which are  otherwise
          permitted by ss.8.2.1(x) hereof;

               (xiii) consisting of advances made to consignment  vendors in the
          ordinary  course of the Consignees'  business  pursuant to consignment
          arrangements otherwise permitted by ss.8.2.7 hereof;

               (xiv)  representing stock or obligations issued to such Consignee
          or such Subsidiary in settlement of claims against any other Person by
          reason of a composition or readjustment of debt or a reorganization of
          any debtor of such Consignee or such Subsidiary;

<PAGE>

                                      -56-


               (xv) consisting of guaranties of  Indebtedness  entered into by a
          Consignee or any Subsidiary and otherwise  permitted by ss.ss.8.2.1(v)
          and (vi) hereof and guaranties in respect of the Senior Debentures;

               (xvi) resulting from transactions  permitted pursuant to ss.8.2.4
          or ss.8.2.8 hereof;

               (xvii) consisting of promissory notes received in connection with
          any sale or  transfer  of  property  to the  extent  that such sale or
          transfer is  permitted  by  ss.8.2.5(iii)  hereof;  provided  that the
          aggregate amount of such promissory notes outstanding shall not exceed
          $10,000,000 at any time;

               (xviii)  in  repurchase  agreements  with a term of not more than
          thirty-one  days for  underlying  securities of the type  described in
          clauses   8.2.3(i)  and  (ii)  above  (provided  that  the  underlying
          securities  of the type  described  in  clause  8.2.3(i)  may not have
          maturities  of more than six (6) months from the date of  acquisition)
          entered into with any financial institution meeting the qualifications
          specified  in clause  8.2.3(ii)  above or with  securities  dealers of
          recognized  national  standing,   provided  that  the  terms  of  such
          agreements  comply  with  the  guidelines  set  forth  in the  Federal
          Financial   Institutions   Examination   Council   Supervisory  Policy
          Repurchase  Agreements  of  Depository  Institutions  With  Securities
          Dealers and Others as adopted by the  Comptroller  of the  Currency on
          October 31, 1985 (the  "Supervisory  Policy"),  and provided  further,
          that possession or control of the underlying securities is established
          as provided in the Supervisory Policy;

               (xix)  consisting of endorsements  of negotiable  instruments for
          deposit or collection in the ordinary course of business;

               (xx) (A) in the form of  intercompany  Indebtedness  for Borrowed
          Money  in  amounts  up to  $12,000,000  in the  aggregate  at any time
          outstanding (1) in the form of intercompany  Indebtedness for Borrowed
          Money  evidenced by the First Sonab  Intercompany  Note, or (2) in the
          form of  common  equity  existing  on or after  February  1, 1996 as a
          result  of  the  conversion   and/or   exchange  of  the  First  Sonab
          Intercompany  Note into or for common equity of Sonab,  and (B) in the
          form of intercompany  Indebtedness for Borrowed Money evidenced by the
          Second Sonab  Intercompany  Note (provided  that the aggregate  unpaid
          principal amount of such  Indebtedness for Borrowed Money evidenced by
          the  Second  Sonab  Intercompany  Note  shall  not at any time  exceed
          $33,000,000);

<PAGE>

                                      -57-


               (xxi)  consisting  of the  Cash  Collateral  Account  or the Time
          Deposits  (as each of such  terms is  defined  in the Cash  Collateral
          Agreement);

               (xxii) such other  investments as the Agent may from time to time
          approve  in  writing  (which   approval  shall  not  be   unreasonably
          withheld);

               (xxiii) in addition to those set forth above in this ss.8.2.3, in
          an aggregate amount not to exceed  $5,000,000 at any time outstanding;
          and

               (xxiv)  investments  by Sonab  consisting  of that portion of the
          aggregate  purchase price of the Sonab Transfer to be paid to Sonab on
          a deferred basis or to be held in escrow, in each case pursuant to the
          terms and conditions of the Sonab Purchase Agreement;

          provided,  however,  that  in  each  such  case  referred  to in  this
     ss.8.2.3,  to the  extent  applicable,  arrangements  have been made to the
     satisfaction of the Agent for the perfection,  protection and  preservation
     of the Agent's  Lien for the benefit of the  Institutions  and the Agent on
     all proceeds of the Collateral and on the Cash  Collateral  Account and the
     Time  Deposits  (as each of such terms is  defined  in the Cash  Collateral
     Agreement);

          8.2.4.  Distributions.  The Consignees  will not and where  applicable
     will not permit any of their Subsidiaries to make any Distribution except:

               (A) such Consignee or such Subsidiary may make dividends  payable
          solely in shares of common stock of such Consignee or such Subsidiary;

               (B) any wholly-owned Subsidiary of a Consignee may declare or pay
          cash  dividends  to  such  Consignee  or  to  any  other  wholly-owned
          Subsidiary of such Consignee which is its shareholder;

               (C) so long as no Default or Event of Default shall have occurred
          and be continuing or would result therefrom, (1) Finlay may declare or
          pay  dividends to the Parent on an annual basis to pay expenses of the
          Parent  incurred in the ordinary  course of business of the Parent not
          to exceed in the  aggregate  in any fiscal year of the Parent 0.25% of
          Finlay's net sales as indicated in Finlay's audited annual  Financials
          for the  immediately  preceding  fiscal year, (2) Finlay may purchase,
          repurchase,  redeem,  retire or acquire Equity Interests of the Parent
          from  former  employees,   officers  and  directors  pursuant  to  the
          agreements,  plans or

<PAGE>

                                      -58-


          arrangements  entered into by the Parent  and/or  Finlay and listed on
          Schedule X hereto, or other written  agreements  permitted hereby, and
          may make payments in respect of promissory notes or other Indebtedness
          or evidence  thereof  issued or incurred in  connection  with any such
          purchase,  repurchase,  redemption,  retirement  or  acquisition,  and
          Finlay may pay dividends to the Parent in an amount sufficient for the
          Parent to make such purchases, repurchases,  redemptions,  retirements
          and acquisitions so long as the amount of such purchases, repurchases,
          redemptions,   retirements  and   acquisitions   (including,   without
          limitation,  amounts paid  directly by Finlay to make, or amounts paid
          by  dividend  to the Parent to enable the Parent to make,  payments in
          respect of promissory notes or other  Indebtedness or evidence thereof
          issued or incurred in connection  with any such purchase,  repurchase,
          redemption,  retirement  or  acquisition)  does  not  exceed,  in  the
          aggregate in any fiscal year, $5,000,000;  provided, however, that the
          portion,  if  any,  of  such  amount  which  is not  applied  to  such
          purchases, repurchases,  redemptions,  retirements or acquisitions (or
          to the payment of dividends  by Finlay to the Parent  therefor) in any
          fiscal  year may be applied to  purchases,  repurchases,  redemptions,
          retirements or acquisitions of Equity  Interests from former employees
          of the Parent or Finlay whose employment was terminated in such fiscal
          year (and for the  payments  of  dividends  by  Finlay  to the  Parent
          therefor) so long as such  application  (and  payments) is made during
          the first three months of the immediately  succeeding fiscal year, and
          any such  portion so paid during such first three  months as permitted
          by this proviso shall not be included in calculating  the sum for such
          succeeding fiscal year; and (3) Finlay may declare or pay dividends to
          the Parent in an aggregate  amount not to exceed  $20,000,000 in order
          to enable the Parent to repurchase up to $20,000,000 of its own Equity
          Interests in open market transactions"; and

               (D) so long as no Default or Event of Default is  continuing,  on
          any date on which any tax  payments  are made or  required to be made,
          the Consignees may make payments to the Parent of amounts  required to
          be paid on such tax payment date under  sections 4(c) and 5 of the Tax
          Allocation  Agreement;  provided,  however, that (1) no payment on any
          tax payment date made by the  Consignees to the Parent shall exceed in
          the aggregate the amount payable by the Parent to any taxing authority
          on  such  payment  date,  and  (2) in any  taxable  year  (or  portion
          thereof),  the aggregate  amount  payable by a Consignee to the Parent
          under this  ss.8.2.4(D) in respect of federal,  state and local income
          taxes shall not exceed the lesser of (x) the federal,  state and local
          income tax  liability  that would have been payable by such  Consignee
          for such  taxable  year (or  portion  thereof)  determined  as if such
          Consignee  had filed  separate  federal,  state and local  income  tax
          returns  for

<PAGE>

                                      -59-


          such  taxable year (or portion  thereof) and for all previous  taxable
          years  beginning  after October 31, 1992,  computed in accordance with
          actual elections, conventions and other determinations with respect to
          such Consignee  reflected in the  consolidated or combined  returns of
          the Parent and including any  carryforwards of tax attributes from all
          prior  taxable  years (as limited  under the Internal  Revenue Code of
          1986,  as the  same  shall  be in  effect  at such  date)  and (y) the
          consolidated or combined federal, state and local income tax liability
          of the consolidated or combined group that includes such Consignee and
          the Parent.  For  purposes of  subsection  (2) above,  the  provisions
          relating  to state and local  income  taxes shall only apply if and to
          the extent that the  Consignees  and the Parent file  consolidated  or
          combined income tax returns in such jurisdictions;

               (E) so long as no Default or Event of Default has occurred and is
          continuing or would occur after giving effect thereto, Finlay may make
          payments to the Parent in such amounts as are  necessary to enable the
          Parent to make interest payments on the Senior Debentures; and

               (F) The Consignees may purchase all, but not less than all of the
          capital  stock  of  each  of  Finlay   Merchandising  and  eFinlay  in
          connection with the creation thereof by the Consignees.

          8.2.5. Merger, Consolidation and Disposition of Assets. The Consignees
     will not and where applicable will not permit any of their Subsidiaries to

               (i) become a party to any transaction of merger or  consolidation
          or acquire  all or a  substantial  portion of the assets of any Person
          except the merger or  consolidation of one or more of the Subsidiaries
          of a  Consignee  with  and  into  such  Consignee,  or the  merger  or
          consolidation of two or more Subsidiaries of a Consignee;

               (ii) except for Purchases and  Consignments  made pursuant to the
          terms hereof,  sell or transfer any property owned by it in order then
          or thereafter to lease such property or lease other  property that any
          Consignee  or any  Subsidiary  of any  Consignee  intends  to use  for
          substantially   the  same  purpose  as  the  property  being  sold  or
          transferred;  provided,  however,  that notwithstanding the foregoing,
          Finlay  may  transfer,  sell or assign  its trade  name  "Finlay  Fine
          Jewelry  Corporation," as well as certain of its marketing operations,
          to Finlay Merchandising and such of its assets to Finlay Merchandising
          as are set forth on Schedule I to the Contribution Agreement,  and may
          lease such trade name from Finlay Merchandising pursuant to the Finlay
          Merchandising

<PAGE>

                                      -60-


          License  Agreement  and may enter  into the  Services  Agreement  with
          Finlay Merchandising; or

               (iii)  become  a  party  to or  agree  to  or  effect  any  other
          disposition of assets,  other than (A) the disposition of Inventory of
          such Consignee or such  Subsidiary in the ordinary course of business,
          consistent  with past  practices,  (B) the  disposition of worn out or
          obsolete personal property of such Consignee or such Subsidiary (other
          than obsolete jewelry, watches or other Inventory which such Consignee
          believes  cannot  be  advantageously  sold in the  ordinary  course of
          business)  having a book  value,  together  with the book value of all
          other such property of the Consignees and their  Subsidiaries  so sold
          in the same fiscal year, of not greater than  $300,000,  plus sales of
          obsolete  jewelry,  watches or other  Inventory  (other than Specified
          Gold Jewelry) which such Consignee  believes cannot be  advantageously
          sold in the ordinary course of business, (C) sales or transfers in the
          ordinary course of business of assets and properties of such Consignee
          or such  Subsidiary  which are no longer  necessary  or useful for the
          proper conduct of its business, having a book value, together with the
          book  value of all other such  property  of the  Consignees  and their
          Subsidiaries  so sold in the same fiscal  year,  of not  greater  than
          $250,000,  (D) the  sale  of  Inventory,  fixtures  and  equipment  in
          connection with the termination of any lease or license  agreement (or
          similar arrangement regarding the operation of Sonab) as to any one or
          more  locations,  to the extent  that such  Inventory,  equipment  and
          fixtures  were used or  retained  at such  locations  in the  ordinary
          course of business,  (E) the  abandonment of any assets and properties
          of the such Consignee or such  Subsidiary  which are no longer used or
          useful in its business  and cannot be sold,  (F) sales or transfers of
          assets  of any  Consignee  or any  Subsidiary  of a  Consignee  to any
          Consignee or  Subsidiary  of a Consignee,  provided  that such sale or
          transfer  is  on an  arm's  length  basis  for a  purchase  price  not
          exceeding  the fair market value of the assets  being so  transferred,
          (G)  in  connection   with  the  transfer  of  Finlay's   "buying  and
          merchandising  functions"  to  Finlay  Merchandising  pursuant  to the
          Contribution  Agreement,  transfer from Finlay to Finlay Merchandising
          of the assets described on Schedule I to the  Contribution  Agreement,
          (H) the Sonab Transfer pursuant to the Sonab Transfer  Agreement,  (I)
          in  connection  with  the  transactions  contemplated  by the  eFinlay
          Contribution  Agreement  and  eFinlay's  sale  from  time  to  time to
          800-Flowers.com,  Inc., a New York corporation,  of inventory pursuant
          to the  eFinlay  Marketing  Agreement,  the  transfer  from  Finlay to
          eFinlay of the assets  described on Exhibit A to the  Amendment No. 11
          and Limited  Consent  dated as of  September  29, 2000 to the Original
          Consignment Agreement and inventory pursuant to purchase orders issued
          from time to time by eFinlay to Finlay for the

<PAGE>

                                      -61-


          purchase of inventory for a purchase  price at least equal to the cost
          thereof to Finlay,  or (J) sales or other  transfers  of assets  other
          than the  foregoing,  having a value,  together  with the value of all
          other such property of the Consignees and their  Subsidiaries  so sold
          since June 15, 1995, of not greater than $5,000,000;  provided that in
          connection with all  dispositions of Consigned  Precious Metal entered
          into pursuant to this ss.8.2.5(iii) or otherwise, the Consignees shall
          comply with the provisions of ss.2.4(c).

          8.2.6. Joint Ventures;  Nature of Business;  Accounting Practices. The
     Consignees  will not and  where  applicable  will not  permit  any of their
     Subsidiaries  to (i) enter  into any  joint  ventures  or (other  than with
     respect to Sonab as it exists on the date  hereof) any  partnerships;  (ii)
     alter  the  nature  of its  business  in any  material  respect;  provided,
     however,  that Sonab may  provide  transition  services  as required by the
     Sonab  Purchase  Agreement,  liquidate its  remaining  assets and close its
     operations;  or (iii) effect any significant change in accounting practices
     or treatment except as may be permitted or required by GAAP.

          8.2.7.  Other   Consignments.   The  Consignees  will  not  and  where
     applicable will not permit any of their  Subsidiaries to except pursuant to
     this Agreement, enter into any consignment transactions, including Precious
     Metal  consignments,  other than  consignments  of  Inventory  (other  than
     Specified Gold Jewelry) in the ordinary course of business  consistent with
     past practices,  provided,  that no Consignee shall allow the filing of any
     financing statements in respect of its gold jewelry Inventory to be made by
     (i) any  Approved  Vendors or (ii) any other  consignment  vendors,  to the
     extent  that  any  such  financing   statement   would  conflict  with  the
     first-priority  Liens of the Agent and the  Institutions in the Collateral,
     unless and until such consignment  vendor shall have executed and delivered
     to the Agent a Vendor Agreement and Schedule III shall have been amended to
     the  extent  necessary  to add such  consignment  vendor to such  schedule;
     provided,  however,  that the Consignees shall have a period of thirty (30)
     days  following  the  date  of  filing  of  any  financing  statement  by a
     consignment vendor other than an Approved Vendor to cure any breach of this
     clause (ii)  arising  from the filing of one or more  financing  statements
     covering or giving  notice as to an interest in gold  jewelry  Inventory of
     the Consignees having an aggregate value less than or equal to $250,000.

          8.2.8. Payments in Respect of Other Indebtedness.  The Consignees will
     not and where applicable will not permit any of their  Subsidiaries to make
     any  prepayments  or other payments of principal or interest on account of,
     or purchase,  defease,  acquire or redeem,  any  Indebtedness  for Borrowed
     Money of any Consignee or any of its  Subsidiaries  (or give notice thereof
     or  establish a sinking  fund,  reserve or like set aside of funds or other
     property therefor) other than (i) payments of Indebtedness under the Dollar
     Facility and (ii)  regular,  scheduled

<PAGE>

                                      -62-


     payments by such Consignee or such  Subsidiary of interest on, and required
     payments of principal of (in each case to the extent due and payable),  the
     Senior Notes and other  Indebtedness  for Borrowed  Money  permitted  under
     ss.8.2.1 hereof,  provided that Sonab may at any time and from time to time
     make  payments  and  prepayments  in whole  and in part to  Finlay  in cash
     without discount under either or both of the First Sonab  Intercompany Note
     or the Second Sonab Intercompany Note.

          8.2.9.  Certain  Transactions.  Except for the transactions  listed on
     Schedule XI hereto,  the Consignees will not and where  applicable will not
     permit any of their  Subsidiaries  to conduct  transactions  with any other
     Consignee  or any other  Subsidiaries  of a Consignee  or other  Affiliates
     except for any  transaction  which is in the ordinary course of business of
     such  Consignee or such  Subsidiary,  and which  transaction is on fair and
     reasonable  terms no less  favorable to such  Consignee or such  Subsidiary
     than each party to such  transaction  could  obtain in a  comparable  arm's
     length  transaction with a Person not an Affiliate of such Consignee (in no
     event shall any such  transaction  involve loans or extensions of credit to
     or other investments in such Subsidiaries or Affiliates except as expressly
     permitted by the terms of this Agreement).

          8.2.10. Commitments to Open Factory Outlet Stores. The Consignees will
     not and  where  applicable  will not  permit  any of its  Subsidiaries  to,
     notwithstanding  anything  to the  contrary  contained  elsewhere  in  this
     Agreement  or in  any  other  Consignment  Document,  open  or  enter  into
     commitments  to  open  any  factory  outlet  stores  to  be  operated  by a
     Consignee.  Notwithstanding  anything to the contrary  contained herein the
     Consignees  may  continue to operate the two factory  outlet  stores  being
     operated as of the date hereof.

     8.3. Financial Covenants.  Each Consignee agrees that until the termination
of the  Commitment  and  the  payment  and  satisfaction  in  full  of  all  the
Obligations:

          8.3.1. EBITDA to Financial  Obligations.  No Consignee will, and where
     applicable, will not permit its Subsidiaries to permit the ratio of (i) the
     difference of (A)  Consolidated  EBITDA of the Parent and its  Subsidiaries
     for any  period of four  consecutive  fiscal  quarters  minus  (B)  Capital
     Expenditures  of the Parent and its  Subsidiaries  on a consolidated  basis
     made  during  such  period  minus (C) the amount of cash paid in respect of
     income taxes of the Parent and its Subsidiaries on a consolidated basis for
     such period,  whether directly or pursuant to the Tax Allocation Agreement,
     plus (D) the amount of the tax credit to the Parent and its Subsidiaries as
     a  result  of  the  write-off  associated  with  the  Sonab  Transfer,  the
     subsequent  liquidation  of the  balance of the net assets of Sonab and the
     closure of the Sonab operation to (ii) the amount of Consolidated  Periodic
     Financial  Obligations of the Parent and its Subsidiaries on a consolidated
     basis during such period,  to be less than

<PAGE>

                                      -63-


     the ratio set forth  opposite  the date set forth in the table  below  upon
     which such period shall have ended:

                     Period Ending                    Ratio
                     -------------                    -----
                        01/31/01                      1.35:1
                    and thereafter

          8.3.2.   Indebtedness   to  EBITDA.   No  Consignee  will,  and  where
     applicable, will not permit its Subsidiaries to permit the ratio of (i) the
     aggregate  principal  amount of all  Indebtedness for Borrowed Money of the
     Parent  and its  Subsidiaries  on a  consolidated  basis  as of any  fiscal
     quarter  ending  date set  forth in the  table  below to (ii)  Consolidated
     EBITDA  of  the  Parent  and  its  Subsidiaries  for  the  period  of  four
     consecutive  fiscal  quarters  ending on such fiscal quarter ending date in
     such table, to exceed the ratio set forth opposite such date in such table:

                    Fiscal Quarter
                     Ending Date:                  Ratio:
                     -----------                   ------
                       1/31/01                     3.85:1
                       4/30/01                     4.95:1
                       7/31/01                     4.95:1
                       10/31/01                    4.73:1
                       1/31/02                     3.52:1

          8.3.3.  Minimum EBITDA. No Consignee will, and where applicable,  will
     not permit its Subsidiaries to permit Consolidated EBITDA of the Parent and
     its Subsidiaries for any period of four consecutive  fiscal quarters ending
     on any date set forth in the table  below to be less  than the  amount  set
     forth opposite such date in such table:

                        Date:                      Amount:
                        ----                       ------
                       1/31/01                     $72,000,000
                       4/30/01                     $73,800,000
                       7/31/01                     $73,800,000
                       10/31/01                    $73,800,000
                       1/31/02                     $78,300,000

                       9. EVENTS OF DEFAULT; ACCELERATION.

     9.1.  Events of Default and  Acceleration.  If any of the following  events
("Events of Default") shall occur:

          (a) any  Consignee  shall  fail to  purchase  or pay for  (whether  by
     payment  of  cash or by  Redelivery)  any  Consigned  Precious  Metal  when
     required to do so pursuant to the terms of this Agreement;

<PAGE>

                                      -64-


          (b) any Consignee shall fail to pay Daily Consignment Fees, commitment
     fees  or any  other  sum  due  under  this  Agreement  or any of the  other
     Consignment  Documents  within  three (3)  Business  Days after the date on
     which the same shall have first become due and payable;

          (c) any Consignee or any of its Subsidiaries shall fail to perform any
     term,  covenant or agreement  contained in ss.ss.3.1,  3.2, 8.1 (other than
     8.1.2(i) and 8.1.3(ii)), 8.2 and 8.3;

          (d) any Consignee or any of its Subsidiaries shall fail to perform (i)
     any term, covenant or agreement contained in ss.8.1.2(i) or ss.8.1.3(ii) or
     any  other  term,  covenant  or  agreement  contained  in  the  Consignment
     Documents  (other than those terms,  covenants and agreements  contained in
     ss.4 of the Security Agreement), and such failure shall continue unremedied
     for a period of thirty (30) days after Notice thereof shall have been given
     by the  Agent to a  Consignee,  or (ii) any  term,  covenant  or  agreement
     contained  in  ss.4 of the  Security  Agreement,  and  such  failure  shall
     continue unremedied for a period of thirty (30) days;

          (e) any  representation  or  warranty of any  Consignee  or any of its
     Subsidiaries in the  Consignment  Documents or in any certificate or notice
     given in  connection  therewith  shall have been false or misleading in any
     material respect at the time made or deemed to have been made;

          (f) any  Consignee  or any of its  Subsidiaries  shall  fail to pay at
     maturity,  or within any applicable period of grace, any obligation owed by
     it under the Senior Notes or any other  obligation  for  borrowed  money or
     credit received or in respect of Capitalized  Leases (other than in respect
     of the Dollar Facility and the Senior  Debentures)  which other  obligation
     shall be in excess of $1,000,000 in aggregate  principal amount, or fail to
     observe or perform any material  term,  covenant or agreement  contained in
     the Senior Notes or the documents  executed in connection  therewith or any
     material term,  covenant or agreement contained in any other obligation for
     borrowed  money or credit  received  or in  respect of  Capitalized  Leases
     (other than in respect of the Dollar  Facility  and the Senior  Debentures)
     which other  obligation shall be in excess of $1,000,000 for such period of
     time as  would  permit  (assuming  the  giving  of  appropriate  notice  if
     required)  the  holder or  holders  thereof  or of any  obligations  issued
     thereunder to accelerate the maturity thereof;

          (g) the Parent shall fail to pay at maturity, or within any applicable
     period of grace,  any obligation owed by it under the Senior  Debentures or
     any other obligation for borrowed money or credit received or in respect of
     Capitalized  Leases  (other than in respect of the Dollar  Facility and the
     Senior  Notes) which other  obligation  shall be in excess of $1,000,000 in
     aggregate  principal  amount,  or fail to observe or perform  any  material
     term,  covenant or  agreement  contained  in the Senior  Debentures  or the
     documents executed in connection  therewith or any

<PAGE>

                                      -65-


     material term,  covenant or agreement contained in any other obligation for
     borrowed  money or credit  received  or in  respect of  Capitalized  Leases
     (other than in respect of the Dollar  Facility and the Senior  Notes) which
     other  obligation  shall be in excess of $1,000,000 for such period of time
     as would permit (assuming the giving of appropriate notice if required) the
     holder or  holders  thereof  or of any  obligations  issued  thereunder  to
     accelerate the maturity thereof;

          (h) any  Consignee  or the Parent  shall fail to pay at  maturity,  or
     within any applicable  period of grace, any obligation owed by it under the
     Dollar  Facility,  or shall fail to observe or perform any  material  term,
     covenant or agreement contained in the Dollar Facility,  for such period of
     time as  would  permit  (assuming  the  giving  of  appropriate  notice  if
     required)  the  Dollar  Agent or the  Lenders  (as  defined  in the  Dollar
     Facility) to accelerate the maturity thereof;

          (i) except in  accordance  with the terms  thereof or with the express
     prior written  agreement,  consent or approval of the Agent, (i) (A) any of
     the  Consignment  Documents  shall be  cancelled,  terminated,  revoked  or
     rescinded,  (B) the Agent's Liens for the benefit of the  Institutions  and
     the Agent in all or any portion of the Collateral having an aggregate value
     in excess of the  lesser of two and  one-half  percent (2 1/2%) of the Fair
     Market Value of all Consigned Precious Metal then outstanding and $500,000,
     shall  cease  to  be   perfected  or  shall  cease  to  have  the  priority
     contemplated by the Security Documents and the Intercreditor  Agreement, or
     (C) the Agent's Liens for the benefit of the  Institutions and the Agent in
     any portion of the Collateral  having an aggregate value less than or equal
     to the lesser of two and one-half percent (2 1/2%) of the Fair Market Value
     of all Consigned  Precious Metal then  outstanding and $500,000 shall cease
     to be  perfected or shall cease to have the  priority  contemplated  by the
     Security Documents and the Intercreditor  Agreement,  and such cessation of
     perfection or priority  shall  continue  unremedied  for a period of thirty
     (30)  days,  or (ii) any  action at law,  suit or in equity or other  legal
     proceeding to cancel,  revoke or rescind any of the  Consignment  Documents
     shall  be  commenced  by or on  behalf  of  any  Consignee  or  any  of its
     Subsidiaries  party  thereto or any of their  respective  stockholders,  or
     (iii) any court or any other governmental or regulatory authority or agency
     of  competent  jurisdiction  shall make a  determination  that,  or issue a
     judgment,  order,  decree or ruling to the effect that,  any one or more of
     the  Consignment   Documents  is  illegal,   invalid  or  unenforceable  in
     accordance with the terms thereof;

          (j) any of the Parent,  any Consignee or any of its  Subsidiaries  (i)
     shall  make an  assignment  for the  benefit  of  creditors,  (ii) shall be
     adjudicated bankrupt or insolvent,  (iii) shall seek the appointment of, or
     be the subject of an order appointing, a trustee, liquidator or receiver as
     to all or a substantial part of its assets, (iv) shall commence, approve or
     consent to, any case or proceeding under any bankruptcy,  reorganization

<PAGE>

                                      -66-


     or similar law and, in the case of an involuntary case or proceeding,  such
     case or proceeding is not  dismissed  within sixty (60) days  following the
     commencement thereof, or (v) shall be the subject of an order for relief in
     an involuntary case under federal bankruptcy law;

          (k) any of the Parent,  any Consignee or any of its Subsidiaries shall
     be unable to pay its debts generally as they mature;

          (l) there shall remain  undischarged and unstayed for more than thirty
     (30) days any final judgment or execution action against any of the Parent,
     any  Consignee  or  any of  its  Subsidiaries  that,  together  with  other
     outstanding claims and execution actions against the Parent, the Consignees
     and their Subsidiaries exceeds $1,000,000 in the aggregate;

          (m)  any  Consignee  or any of its  Subsidiaries  shall  be  enjoined,
     restrained  or in any  way  prevented  by the  order  of any  court  or any
     administrative  or regulatory  agency from  conducting any material part of
     its domestic business and such order shall continue in effect for more than
     thirty (30) days;

          (n)  there  shall  occur any  material  damage  to, or loss,  theft or
     destruction  of, any Consigned  Precious Metal, or any products or property
     which includes  Consigned  Precious Metal,  for which  additional  Eligible
     Specified Gold Jewelry in replacement thereof is not immediately  delivered
     or as to which immediate  payment  therefor (equal to the Fair Market Value
     thereof at the time of such loss,  theft or  destruction  plus  twenty-five
     cents ($0.25) per troy ounce  thereof) has not been made by the  Consignees
     to the Agent;

          (o) there shall occur any strike,  lockout,  labor  dispute,  embargo,
     condemnation,  act of God or public enemy, or other casualty,  which in any
     such case causes, for more than thirty (30) consecutive days, the cessation
     or substantial  curtailment of revenue producing activities at any facility
     of any Consignee or any of its  Subsidiaries  if such event or circumstance
     is not covered by business interruption insurance satisfactory to the Agent
     and has or  could  reasonably  be  expected  to have a  Materially  Adverse
     Effect;

          (p) there  shall  occur  the loss,  suspension  or  revocation  of, or
     failure to renew,  any license or permit now held or hereafter  acquired by
     any  Consignee  or  any of  its  Subsidiaries  if  such  loss,  suspension,
     revocation or failure to renew has or could  reasonably be expected to have
     a Materially Adverse Effect;

          (q) the Parent shall at any time,  legally or  beneficially,  own less
     than 100% of the outstanding capital stock of Finlay or Finlay shall at any
     time,  legally  or  beneficially,  own less  than  100% of the  outstanding
     capital stock of any Consignee Subsidiary, including eFinlay;

<PAGE>

                                      -67-


          (r) (i) any "person" or "group"  (within the meaning of Section  13(d)
     or 14(d)(2) of the Securities Exchange Act of 1934, as amended), other than
     the Principals and their Related  Parties,  or an entity  controlled by the
     Principals  and their  Related  Parties,  becomes  the  "beneficial  owner"
     (within  the  meaning  of Rule  13d-3  promulgated  by the  Securities  and
     Exchange Commission under said Act) of more than 50% of the total aggregate
     voting  power of all classes of the voting  stock of any  Consignee  or the
     Parent and/or warrants or options to acquire such voting stock,  calculated
     on a fully  diluted  basis;  or (ii)  during any period of two  consecutive
     calendar years, individuals who at the beginning of such period constituted
     any Consignee's  board of directors  (together with any new directors whose
     election by such  Consignee's  board of directors or whose  nomination  for
     election  by such  Consignee's  stockholders  was  approved by a vote of at
     least  two-thirds  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 of such Consignee  then in office,  unless such
     majority of the directors  then in office has been elected or nominated for
     election by the Principals or their Related Parties or an entity controlled
     by the Principals or their Related Parties;

          (s) the Parent shall engage in any activities other than the ownership
     of the stock of Finlay, compliance with the terms of the Senior Debentures,
     and such other activities which are incidental to either of the foregoing;

          (t) there shall be less than thirty (30) days until the  expiration of
     the Letter of Credit and such Letter of Credit shall not have been extended
     or renewed by the issuer thereof; or

          (u) the credit rating of the issuer of the Letter of Credit shall fall
     below a "B" LACE rating,  and the Consignees  shall not, within thirty (30)
     days following such change in rating,  have obtained a substitute Letter of
     Credit in form and substance  acceptable to the  Institutions and the Agent
     and issued by an issuer  having at least a "B" LACE  rating  and  otherwise
     acceptable to the Institutions and the Agent;

     THEN, or at any time thereafter:

          (1) If any Event of Default  under clause (j) or (k) shall occur,  (A)
     the  Commitments  shall  automatically  terminate  and  the  Agent  and the
     Institutions shall be relieved of all further obligations to make Purchases
     and Consignments to any Consignee,  (B) the Consignees shall be immediately
     jointly and  severally  obligated  to (i)  Redeliver an amount of Consigned
     Precious  Metal  and/or  (ii) pay to the Agent an amount  equal to the Spot
     Value of any Consigned  Precious Metal on the date of such payment  divided
     by the Second London Fixing for such date, such that the combined amount of
     Consigned Precious Metal Redelivered and/or paid

<PAGE>

                                      -68-


     for pursuant to  subclauses  (i) and (ii) of this clause (B) shall be equal
     to the aggregate number of ounces of Consigned  Precious Metal outstanding,
     and (C) all accrued and unpaid Daily  Consignment Fees and commitment fees,
     and all other amounts  payable  hereunder  and under the other  Consignment
     Documents shall  automatically  become  forthwith due and payable,  without
     presentment, demand, protest or notice of any kind, all of which are hereby
     expressly waived by each Consignee;

          (2) If any Event of Default  other than an Event of Default under (h),
     (j) and (k) shall  occur and be  continuing,  the Agent  may,  and upon the
     request of the Required  Institutions  shall,  by Notice to the Consignees,
     (A) terminate the  Commitment and the Agent and the  Institutions  shall be
     relieved of all further  obligations to make Purchases and  Consignments to
     any Consignee, (B) require that the Consignees immediately (such obligation
     of the  Consignees  to be joint and  several)  (i)  Redeliver  an amount of
     Consigned  Precious  Metal  and/or (ii) pay to the Agent an amount equal to
     the Spot Value of any Consigned  Precious Metal on the date of such payment
     divided  by the Second  London  Gold  Fixing  for such date,  such that the
     combined  amount of Consigned  Precious Metal  Redelivered  and/or paid for
     pursuant  to  subclauses  (i) and (ii) of this clause (B) shall be equal to
     the aggregate  number of ounces of Consigned  Precious  Metal  outstanding,
     and/or (C)  declare  all  accrued  and unpaid  Daily  Consignment  Fees and
     commitment  fees,  and all other  amounts  payable  hereunder and under the
     other  Consignment  Documents  to be  forthwith  due and  payable,  without
     presentment,  demand,  protest or further  notice of any kind, all of which
     are hereby expressly waived by each Consignee; and

          (3) If any Event of Default  under clause (h) shall have  occurred and
     be  continuing,  the  Agent  may,  and upon  the  request  of the  Required
     Institutions shall, by Notice to the Consignees no earlier than ninety (90)
     days  following  the  occurrence of such Event of Default (A) terminate the
     Commitments  and the Agent and the  Institutions  shall be  relieved of all
     further  obligations to make Purchases and  Consignments  to any Consignee,
     (B)  require  that  the  Consignees  immediately  (such  obligation  of the
     Consignees  to be joint and several)  (i)  Redeliver an amount of Consigned
     Precious  Metal  and/or  (ii) pay to the Agent an amount  equal to the Spot
     Value of any Consigned  Precious Metal on the date of such payment  divided
     by the Second  London  Gold  Fixing for such date,  such that the  combined
     number of ounces of Consigned  Precious Metal  Redelivered  and/or paid for
     pursuant  to  subclauses  (i) and (ii) of this clause (B) shall be equal to
     the aggregate amount of Consigned  Precious Metal  outstanding,  and/or (C)
     declare all accrued and unpaid Daily  Consignment Fees and commitment fees,
     and all other amounts  payable  hereunder  and under the other  Consignment
     Documents to be forthwith  due and payable,  without  presentment,  demand,
     protest or further  notice of any kind,  all of which are hereby  expressly
     waived by each Consignee.

<PAGE>

                                      -69-


     9.2.  Agent's  Rights with respect to  Consigned  Precious  Metal.  Without
limiting the  foregoing,  upon the occurrence of any Default or Event of Default
and at any time thereafter during the continuance  thereof, the Agent shall have
the right to (a) enter and/or  remain upon the premises of any  Consignee or any
other place or places  where any  Consigned  Precious  Metal is located and kept
(without any obligation to pay rent to any  Consignee) and (i) remove  Consigned
Precious  Metals or Specified Gold Jewelry  containing the same therefrom to the
premises of the Agent or any agent of the Agent,  for such time as the Agent may
desire,  in order to maintain,  collect,  sell and/or  liquidate  said Consigned
Precious Metal or (ii) use such premises,  together with  equipment,  materials,
supplies, books and records of any Consignee, to maintain possession, refine and
prepare said Consigned Precious Metal for sale, liquidation,  or collection, (b)
require  each  Consignee to assemble the  Consigned  Precious  Metal and make it
available to the Agent at a place or places to be  designated by the Agent which
is reasonably  convenient  for the parties,  or (c) at any time and from time to
time employ and maintain in any premises of any Consignee or any place where any
of the Consigned Precious Metal is located a custodian selected by the Agent who
shall have full  authority  to do all acts  necessary to protect the Agent's and
the Institutions'  interests and to report to the Agent thereon.  Each Consignee
agrees to  cooperate  with any such  custodian  and to do whatever the Agent may
reasonably  require to preserve the Consigned  Precious  Metal.  All  reasonable
expenses  incurred by reason of the employment of the custodian shall be paid by
the  Consignees  upon  demand by the Agent (such  obligation  to be borne by the
Consignees jointly and severally).

     9.3. Remedies.  In case any one or more of the Events of Default shall have
occurred  and be  continuing,  and  whether or not the  Institutions  shall have
accelerated the Obligations  pursuant to ss.9.1,  each Institution,  if owed any
amount with respect to the Consigned  Precious  Metal,  may, with the consent of
the Required Institutions but not otherwise,  proceed to protect and enforce its
rights by suit in equity, action at law or other appropriate proceeding, whether
for the specific  performance  of any  covenant or  agreement  contained in this
Agreement  and the other  Consignment  Documents or any  instrument  pursuant to
which the Obligations to such Institution are evidenced,  including as permitted
by applicable law the obtaining of the ex parte appointment of a receiver,  and,
if such amount shall have become due, by  declaration  or otherwise,  proceed to
enforce  the  payment  thereof  or any other  legal or  equitable  right of such
Institution.  No remedy herein  conferred  upon any  Institution or the Agent or
purchaser of any  Consignment  Participation  is intended to be exclusive of any
other  remedy  and each and every  remedy  shall be  cumulative  and shall be in
addition to every other remedy given  hereunder or now or hereafter  existing at
law or in equity or by statute or any other  provision of law. No remedy  herein
conferred upon the Agent or the  Institutions is intended to be exclusive of any
other remedy and each and every remedy  shall be  cumulative  and in addition to
every other remedy hereunder,  now or hereafter  existing at law or in equity or
otherwise.

<PAGE>

                                      -70-


     9.4.  Distribution of Proceeds. In the event that, following the occurrence
or during the  continuance of any Default or Event of Default,  the Agent or any
Institution,  as the case may be,  receives any monies pursuant to in connection
with  the  enforcement  of  this  Agreement  or  any of  the  other  Consignment
Documents,  or  otherwise  with  respect  to  the  realization  upon  any of the
Collateral, such monies shall, except as otherwise provided in the Intercreditor
Agreement, be distributed for application as follows:

          (a)  First,   to  the  payment  of,  or  (as  the  case  may  be)  the
     reimbursement  of the  Agent for or in  respect  of all  reasonable  costs,
     expenses,  disbursements  and  losses  which  shall have been  incurred  or
     sustained by the Agent in connection  with the collection of such monies by
     the Agent, for the exercise,  protection or enforcement by the Agent of all
     or any of the rights,  remedies,  powers and  privileges of the Agent under
     this Agreement or any of the other  Consignment  Documents or in respect of
     the Collateral or in support of any provision of adequate  indemnity to the
     Agent  against  any taxes or liens  which by law shall  have,  or may have,
     priority over the rights of the Agent to such monies;

          (b) Second,  to all other  Obligations  in such order or preference as
     the  Required  Institutions  may  determine;  provided,  however,  that (i)
     distributions  shall be made (A) pari passu among  Obligations with respect
     to the Agent's fee payable pursuant to ss.5.1 and all other Obligations and
     (B) with respect to each type of Obligation owing to the Institutions, such
     as interest, principal, fees and expenses, among the Institutions pro rata,
     and (ii) the Agent may in its discretion make proper allowance to take into
     account any Obligations not then due and payable;

          (c) Third,  upon payment and  satisfaction in full or other provisions
     for payment in full  satisfactory to the  Institutions and the Agent of all
     of the Obligations,  to the payment of any obligations  required to be paid
     pursuant  to  ss.9-504(1)(c)   of  the  Uniform   Commercial  Code  of  the
     Commonwealth of Massachusetts; and

          (d) Fourth, the excess, if any, shall be returned to the Consignees or
     to such other Persons as are entitled thereto.

                                   10. SETOFF.

     Regardless  of the  adequacy of any  collateral  for the  Obligations,  any
deposits or other sums  credited by or due from any of the  Institutions  to any
Consignee may be applied to or set off by such  Institution  against the payment
of Obligations and any and all other liabilities,  direct, or indirect, absolute
or contingent,  due or to become due, now existing or hereafter arising,  of any
Consignee to such  Institution at any time without  notice to any Consignee,  or
compliance with any other procedure  imposed by statute other otherwise,  all of
which  are  hereby  expressly  waived  by  each of the  Consignees.  Each of the
Institutions  agrees with each other Institution that (a) if an amount to be set
off

<PAGE>

                                      -71-


is to be applied to  Indebtedness  of any Consignee to such  Institution,  other
than  Indebtedness  constituting  obligations  in respect of Consigned  Precious
Metal owed to such  Institution,  such amount  shall be applied  ratably to such
other  Indebtedness  constituting  obligations in respect of Consigned  Precious
Metal owed to such  Institution,  and (b) if such Institution shall receive from
any Consignee,  whether by voluntary  payment,  exercise of the right of setoff,
counterclaim, cross action, enforcement of the claim constituting obligations in
respect of Consigned  Precious  Metal owed to such  Institution  by  proceedings
against any  Consignee  at law or in equity or by proof  thereof in  bankruptcy,
reorganization,  liquidation, receivership or similar proceedings, or otherwise,
and shall retain and apply to the payment of obligations in respect of Consigned
Precious  Metal owed to such  Institution  any  amount in excess of its  ratable
portion of the payments  received by all of the Institutions with respect to the
obligations  in  respect  of  Consigned  Precious  Metal  owed  to,  all  of the
Institutions,  such Institution will make such disposition and arrangements with
the  other  Institutions  with  respect  to  such  excess,   either  by  way  of
distribution,  pro tanto assignment of claims, subrogation or otherwise as shall
result in each Institution receiving in respect of the obligations in respect of
Consigned  Precious Metal owed to it, its proportionate  payment as contemplated
by this  Agreement;  provided that if all or any part of such excess  payment is
thereafter  recovered from such  Institution,  such disposition and arrangements
shall be rescinded and the amount  restored to the extent of such recovery,  but
without interest.

                                  11. EXPENSES.

     The Consignees  jointly and severally agree to pay (i) the reasonable costs
of producing and reproducing this Agreement, the other Consignment Documents and
the other agreements and instruments mentioned herein, (ii) any taxes (including
any interest and  penalties in respect  thereto)  payable by the Agent or any of
the Institutions  (other than taxes based upon the Agent's or any  Institution's
net  income,  whether  or not  incurred  in  connection  with  the  consignment,
purchase, delivery or redelivery of Consigned Precious Metal) on or with respect
to the transactions  contemplated by this Agreement (the Consignees  jointly and
severally  agreeing to  indemnify  the Agent and each  Institution  with respect
thereto),  (iii) the reasonable fees,  expenses and disbursements of the Agent's
counsel  or any local  counsel  to the Agent  incurred  in  connection  with the
preparation,  administration or interpretation of the Consignment  Documents and
other  instruments  mentioned  herein,  the closing  hereunder,  and amendments,
modifications,  approvals,  consents or waivers  hereto or  hereunder,  (iv) the
reasonable fees,  expenses and  disbursements of the Agent incurred by the Agent
in connection with the  preparation,  administration  or  interpretation  of the
Consignment Documents and other instruments mentioned herein, (v) all reasonable
out-of-pocket  expenses  or fees  incurred by the Agent in  connection  with the
performance  of any commercial  finance  examinations  or collateral  reports or
appraisals  (including  all  fees  of any  independent  collateral  auditors  or
appraisers or other  professional  advisors  employed by the Agent)  pursuant to
ss.8.1.2 hereof, (vi) all reasonable  out-of-

<PAGE>

                                      -72-


pocket expenses  (including  without limitation  reasonable  attorneys' fees and
costs,  which  attorneys may be employees of the Agent or any  Institution,  and
reasonable  consulting,  accounting,  appraisal,  investment banking and similar
professional  fees and  charges)  incurred  by the Agent or any  Institution  in
connection  with (A) the  enforcement of or  preservation of rights under any of
the Consignment  Documents  against any Consignee or any of its  Subsidiaries or
the administration thereof after the occurrence of a Default or Event of Default
and (B) any  litigation,  proceeding  or dispute  whether  arising  hereunder or
otherwise,  in any way related to the Agent's or any Institution's  relationship
with any Consignee or any of its  Subsidiaries,  and (vii) all reasonable  fees,
expenses  and  disbursements  of  the  Agent  or  any  Institution  incurred  in
connection with UCC searches or UCC filings (including,  without limitation, all
filings made pursuant to Section 9-184 of the UCC).  The covenants  contained in
this  ss.11  shall  survive  payment  of  satisfaction  in  full  of  all  other
Obligations.

                              12. INDEMNIFICATION.

     The Consignees  jointly and severally  agree to indemnify and hold harmless
the Agent and the Institutions from and against any and all claims,  actions and
suits  whether  groundless  or  otherwise,  and  from  and  against  any and all
liabilities,  losses, damages and expenses of every nature and character arising
out  of  this  Agreement  or  any  of the  other  Consignment  Documents  or the
transactions contemplated hereby including,  without limitation,  (i) any actual
or proposed use by any Consignee or any of its  Subsidiaries  of the proceeds of
the Purchases and  Consignments,  (ii) any Consignee or any of its  Subsidiaries
entering  into or  performing  this  Agreement  or any of the other  Consignment
Documents or (iii) with respect to any Consignee and its  Subsidiaries and their
respective  properties and assets,  the violation of any  Environmental  Law, in
each case including,  without limitation,  the reasonable fees and disbursements
of counsel and allocated costs of internal  counsel  incurred in connection with
any such  investigation,  litigation  or  other  proceeding;  provided  that the
foregoing  indemnity will not, as to any  indemnified  person,  apply to losses,
claims,  damages,  liabilities or related expenses to the extent that they arise
from the bad faith,  willful  misconduct or gross negligence of such indemnified
person; and provided further that such indemnity shall not apply to the portion,
if any, of any losses, claims,  damages,  liabilities or related expenses of any
indemnified  person  resulting  solely  and  directly  from any  breach  by such
indemnified  person of its obligations under this Agreement.  In litigation,  or
the preparation  therefor,  the  Institutions and the Agent shall be entitled to
select  its own  counsel  and,  in  addition  to the  foregoing  indemnity,  the
Consignees  jointly and severally  agree to pay promptly the reasonable fees and
expenses  of such  counsel.  If, and to the extent that the  obligations  of any
Consignee  under this ss.12 are  unenforceable  for any reason,  the  Consignees
hereby  jointly  and  severally  agree to make the maximum  contribution  to the
payment  in  satisfaction  of  such  obligations   which  is  permissible  under
applicable  law. The covenants  contained in this ss.12 shall survive payment of
satisfaction in full of all other Obligations.

<PAGE>

                                      -73-


                                 13. THE AGENT.

     13.1. Authorization.

          (a) The Agent is  authorized  to take such action on behalf of each of
     the Institutions and to exercise all such powers as are hereunder and under
     any of the other Consignment  Documents and any related documents delegated
     to the Agent, together with such powers as are reasonably incident thereto,
     provided that no duties or responsibilities not expressly assumed herein or
     therein shall be implied to have been assumed by the Agent.

          (b) The relationship between the Agent and each of the Institutions is
     that of an  independent  contractor.  The use of the  term  "Agent"  is for
     convenience  only and is used to  describe,  as a form of  convention,  the
     independent  contractual  relationship  between  the  Agent and each of the
     Institutions. Nothing contained in this Agreement nor the other Consignment
     Documents shall be construed to create an agency,  trust or other fiduciary
     relationship between the Agent and any of the Institutions.

          (c)  As  independent  contractors  empowered  by the  Institutions  to
     exercise  certain rights and perform  certain  duties and  responsibilities
     hereunder  and  under  the  other  Consignment  Documents,   the  Agent  is
     nevertheless  a  "representative"  of the  Institutions,  as  that  term is
     defined  in Article 1 of the  Uniform  Commercial  Code,  for  purposes  of
     actions for the benefit of the  Institutions  and the Agent with respect to
     all collateral  security and  guaranties  contemplated  by the  Consignment
     Documents.  Such actions  include the  designation of the Agent as "secured
     party",  "mortgagee"  or the like on all  financing  statements  and  other
     documents and instruments,  whether recorded or otherwise,  relating to the
     attachment,  perfection, priority or enforcement of any security interests,
     mortgages or deeds of trust in collateral  security  intended to secure the
     payment or  performance of any of the  Obligations,  all for the benefit of
     the Institutions and the Agent.

     13.2.  Employees and Agents.  The Agent may exercise its powers and execute
its duties by or through  employees or agents and shall be entitled to take, and
to rely on, advice of counsel  concerning  all matters  pertaining to its rights
and duties under this Agreement and the other Consignment  Documents.  The Agent
may utilize the services of such Persons as the Agent in its sole discretion may
reasonably  determine,  and all reasonable fees and expenses of any such Persons
shall be paid by the Consignees.

     13.3.  No  Liability.  Neither  the  Agent  nor  any of  its  shareholders,
directors,  officers or employees nor any other Person  assisting  them in their
duties  nor any  agent or  employee  thereof,  shall be liable  for any  waiver,
consent or approval given or any action taken,  or omitted to be taken,  in good
faith by

<PAGE>

                                      -74-


them hereunder or under any of the other Consignment Documents, or in connection
herewith or therewith,  or be responsible for the  consequences of any oversight
or error of judgment whatsoever,  except that the Agent or such other Person, as
the case may be, may be liable for losses due to its willful misconduct or gross
negligence.

     13.4.  No  Representations.  The  Agent  shall not be  responsible  for the
execution or validity or  enforceability  of this  Agreement or any of the other
Consignment Documents or any instrument at any time constituting, or intended to
constitute,  collateral  security for the  Obligations,  or for the value of any
such collateral  security or for the validity,  enforceability or collectability
of any such amounts owing with respect to the  Obligations,  or for any recitals
or statements,  warranties or representations made herein or in any of the other
Consignment Documents or in any certificate or instrument hereafter furnished to
it by or on behalf of any Consignee or any of its  Subsidiaries,  or be bound to
ascertain or inquire as to the  performance  or  observance of any of the terms,
conditions,  covenants or  agreements  herein or in any  instrument  at any time
constituting,  or intended to constitute,  collateral  security for the Notes or
the obligations in respect of Consigned  Precious Metal or to inspect any of the
properties,  books or records of any Consignee or any of its  Subsidiaries.  The
Agent shall not be bound to  ascertain  whether any notice,  consent,  waiver or
request  delivered to it by any  Consignee or any holder of any right in respect
of Consigned Precious Metal shall have been duly authorized or is true, accurate
and complete. The Agent has not made nor does it now make any representations or
warranties,  express  or  implied,  nor do  they  assume  any  liability  to the
Institutions,  with respect to the  credit-worthiness or financial conditions of
any Consignee or any of its Subsidiaries.  Each Institution acknowledges that it
has, independently and without reliance upon the Agent or any other Institution,
and based upon such information and documents as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement.

     13.5. Payments.

          13.5.1.  Payments to Agent.  A payment by any  Consignee  to the Agent
     hereunder or any of the other Consignment  Documents for the account of any
     Institution  shall  constitute  a payment  to such  Institution.  The Agent
     agrees promptly to distribute to each  Institution such  Institution's  pro
     rata share of  payments  received  by the Agent for the account of the such
     Institutions except as otherwise expressly provided herein or in any of the
     other Consignment Documents.

          13.5.2.  Distribution  by Agent.  If in the  opinion  of the Agent the
     distribution  of any amount  received by it in such  capacity  hereunder or
     under any of the other Consignment Documents might involve it in liability,
     it  may  refrain  from  making   distribution   until  its  right  to  make
     distribution   shall  have  been   adjudicated  by  a  court  of  competent
     jurisdiction.  If a court of competent  jurisdiction shall adjudge that any

<PAGE>

                                      -75-


     amount received and  distributed by the Agent is to be repaid,  each Person
     to whom any such  distribution  shall have been made shall  either repay to
     the Agent its proportionate share of the amount so adjudged to be repaid or
     shall  pay over the same in such  manner  and to such  Persons  as shall be
     determined by such court.

          13.5.3.  Delinquent  Institutions.  Notwithstanding  anything  to  the
     contrary  contained  in  this  Agreement  or any of the  other  Consignment
     Documents,  any  Institution  that fails (i) to make available to the Agent
     its pro rata share of any Purchase and  Consignment  or (ii) to comply with
     the   provisions  of  ss.10  with  respect  to  making   dispositions   and
     arrangements with the other Institutions, where such Institution's share of
     any payment received,  whether by setoff or otherwise,  is in excess of its
     pro rata share of such payments due and payable to all of the Institutions,
     in each case as, when and to the full extent  required by the provisions of
     this Agreement, shall be deemed delinquent (a "Delinquent Institution") and
     shall  be  deemed  a  Delinquent   Institution  until  such  time  as  such
     delinquency is satisfied.  A Delinquent Institution shall be deemed to have
     assigned  any and all payments  due to it from each  Consignee,  whether on
     account of Consigned  Precious Metal, Daily Consignment Fees, other fees or
     otherwise,  to  the  remaining   nondelinquent   Institutions  or  Fronting
     Institutions,  as applicable,  for  application to, and reduction of, their
     respective pro rata shares of all Consigned  Precious Metal. The Delinquent
     Institution  hereby authorizes the Agent to distribute such payments to the
     nondelinquent  Institutions  or Fronting  Institutions,  as applicable,  in
     proportion to their respective pro rata shares of all outstanding Consigned
     Precious Metal. A Delinquent  Institution shall be deemed to have satisfied
     in full a  delinquency  when and if,  as a  result  of  application  of the
     assigned  payments to all  outstanding  Consigned  Precious  Metal,  of the
     nondelinquent Institutions, the Institutions' respective pro rata shares of
     all outstanding  Consigned Precious Metal, have returned to those in effect
     immediately  prior to such  delinquency  and without  giving  effect to the
     nonpayment causing such delinquency.

     13.6.  Holders of Notes.  The Agent may deem and treat the purchaser of any
Consignment  Participation  as the absolute  owner or purchaser  thereof for all
purposes  hereof until it shall have been  furnished in writing with a different
name by such payee or by a subsequent holder, assignee or transferee.

     13.7.  Indemnity.  The  Institutions  ratably agree hereby to indemnify and
hold  harmless the Agent from and against any and all claims,  actions and suits
(whether groundless or otherwise),  losses,  damages, costs, expenses (including
any expenses for which the Agent has not been  reimbursed  by the  Consignees as
required by ss.11), and liabilities of every nature and character arising out of
or related to this  Agreement or any of the other  Consignment  Documents or the
transactions contemplated or evidenced hereby or thereby, or the Agent's actions
taken  hereunder or thereunder,  except to the extent that any

<PAGE>

                                      -76-


of the same shall be directly caused by the Agent's willful  misconduct or gross
negligence.

     13.8.  Agent as Institution.  In its individual  capacity,  Sovereign shall
have the same obligations and the same rights,  powers and privileges in respect
to its  Commitment,  as the  holder  of any of any  obligations  in  respect  of
Consigned Precious Metal and as the purchaser Consignment Participations,  as it
would have were it not also the Agent.

     13.9.  Resignation.  The Agent may resign at any time by giving  sixty (60)
days' prior written notice thereof to the Institutions and the Consignees.  Upon
any such resignation,  the Required Institutions shall have the right to appoint
a successor  Agent.  Unless a Default or an Event of Default shall have occurred
and be continuing,  such successor  Agent shall be reasonably  acceptable to the
Consignees.  If no successor  Agent shall have been so appointed by the Required
Institutions  and shall have accepted such  appointment  within thirty (30) days
after the retiring  Agent's giving of notice of  resignation,  then the retiring
Agent may, on behalf of the Institutions, appoint a successor Agent, which shall
be a financial  institution having a rating of not less than A or its equivalent
by Standard & Poor's  Corporation.  Upon the acceptance of any appointment as an
Agent  hereunder by a successor  Agent,  such  successor  Agent shall  thereupon
succeed to and become vested with all the rights, powers,  privileges and duties
of the retiring  Agent,  and the  retiring  Agent shall be  discharged  from its
duties and obligations  hereunder.  After any retiring Agent's resignation,  the
provisions of this Agreement and the other Consignment  Documents shall continue
in effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as Agent.

     13.10.  Notification  of Defaults and Events of Default.  Each  Institution
hereby  agrees that,  upon learning of the existence of a Default or an Event of
Default,  it shall promptly  notify the Agent  thereof.  The Agent hereby agrees
that upon receipt of any notice under this ss.13.10 it shall promptly notify the
other Institutions of the existence of such Default or Event of Default.

     13.11.  Duties in the Case of  Enforcement.  In case one or more  Events of
Default have occurred and shall be continuing,  and whether or not  acceleration
of the Obligations shall have occurred,  the Agent shall, if (a) so requested by
the Required  Institutions and (b) the  Institutions  have provided to the Agent
such additional  indemnities and assurances  against expenses and liabilities as
the Agent may  reasonably  request,  proceed to enforce  the  provisions  of the
Security Documents  authorizing the sale or other disposition of all or any part
of the  Collateral  and exercise all or any such other legal and  equitable  and
other  rights or  remedies  as it may have in  respect of such  Collateral.  The
Required  Institutions  may direct the Agent in writing as to the method and the
extent of any such sale or other disposition,  the Institutions  hereby agreeing
to  indemnify  and hold the Agent,  harmless  from all  liabilities  incurred in
respect of all  actions  taken or omitted in  accordance  with such  directions,
provided  that the Agent need not comply with any such  direction  to

<PAGE>

                                      -77-


the extent that the Agent reasonably  believes the Agent's  compliance with such
direction  to  be  unlawful  or  commercially  unreasonable  in  any  applicable
jurisdiction.

                        14. ASSIGNMENT AND PARTICIPATION.

     14.1. Conditions to Assignments.

          14.1.1.  Assignment by Institutions.  Except as provided herein,  each
     Institution  may assign to one or more Eligible  Assignees all or a portion
     of its interests,  rights and obligations  under this Agreement  (including
     all or a portion  of its  Commitment  Percentage,  Commitment  and the same
     portion of the Fair Market  Value of Consigned  Precious  Metal at the time
     owing to it and its  participating  interest  in the risk  relating  to any
     Purchases  and  Consignments);  provided  that (a) the Agent and,  unless a
     Default or an Event of Default shall have occurred and be  continuing,  the
     Consignees shall have given their prior written consent to such assignment,
     which consent will not be unreasonably  withheld,  (b) each such assignment
     shall be of a constant, and not a varying,  percentage of all the assigning
     Institution's  rights  and  obligations  under  this  Agreement,  (c)  each
     assignment  shall be in an amount that is at least equal to  $5,000,000  or
     such lesser  amount  equal to all of the  Assignor's  remaining  interests,
     rights and obligations  under this  Agreement,  and (d) the parties to such
     assignment  shall  execute and deliver to the Agent,  for  recording in the
     Register  (as   hereinafter   defined),   an  Assignment  and   Acceptance,
     substantially  in  the  form  of  Exhibit  C  hereto  (an  "Assignment  and
     Acceptance"). Upon such execution, delivery, acceptance and recording, from
     and after the effective date specified in each  Assignment and  Acceptance,
     which  effective  date shall be at least five (5)  Business  Days after the
     execution thereof, (i) the assignee thereunder shall be a party hereto and,
     to the extent provided in such  Assignment and Acceptance,  have the rights
     and  obligations  of an  Institution  hereunder,  and  (ii)  the  assigning
     Institution  shall,  to the extent  provided  in such  assignment  and upon
     payment to the Agent of the  registration  fee  referred to in ss.14.3,  be
     released from its obligations under this Agreement.

     14.2. Certain  Representations and Warranties;  Limitations;  Covenants. By
executing  and  delivering  an  Assignment  and  Acceptance,  the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:

          (a) other than the  representation  and warranty  that it is the legal
     and beneficial  owner of the interest being assigned thereby free and clear
     of any adverse claim, the assigning  Institution makes no representation or
     warranty, express or implied, and assumes no responsibility with respect to
     any statements, warranties or representations made in or in connection with
     this  Agreement  or  the  execution,  legality,  validity,

<PAGE>

                                      -78-


     enforceability,  genuineness,  sufficiency or value of this Agreement,  the
     other Consignment  Documents or any other instrument or document  furnished
     pursuant hereto or the  attachment,  perfection or priority of any security
     interest or mortgage;

          (b) the assigning  Institution makes no representation or warranty and
     assumes no  responsibility  with respect to the financial  condition of any
     Consignee and its Subsidiaries or any other Person primarily or secondarily
     liable  in  respect  of any  of the  Obligations,  or  the  performance  or
     observance  by any  Consignee  and its  Subsidiaries  or any  other  Person
     primarily or secondarily liable in respect of any of the Obligations of any
     of their  obligations  under this Agreement or any of the other Consignment
     Documents or any other instrument or document  furnished pursuant hereto or
     thereto;

          (c)  such  assignee  confirms  that  it has  received  a copy  of this
     Agreement,  together  with copies of the most recent  financial  statements
     referred to in ss.6.4 and ss.8.1.1 and such other documents and information
     as it has deemed  appropriate to make its own credit  analysis and decision
     to enter into such Assignment and Acceptance;

          (d) such assignee will,  independently  and without  reliance upon the
     assigning Institution, the Agent or any other Institution and based on such
     documents  and  information  as it  shall  deem  appropriate  at the  time,
     continue to make its own credit  decisions  in taking or not taking  action
     under this Agreement;

          (e) such  assignee  represents  and  warrants  that it is an  Eligible
     Assignee;

          (f) such  assignee  appoints  and  authorizes  the  Agent to take such
     action as agent on its  behalf  and to  exercise  such  powers  under  this
     Agreement and the other Consignment Documents as are delegated to the Agent
     by the terms hereof or thereof, together with such powers as are reasonably
     incidental thereto;

          (g) such assignee agrees that it will perform in accordance with their
     terms  all of the  obligations  that by the  terms  of this  Agreement  are
     required to be performed by it as an Institution; and

          (h)  such  assignee   represents  and  warrants  that  it  is  legally
     authorized to enter into such Assignment and Acceptance.

     14.3.  Register.  The Agent shall  maintain a copy of each  Assignment  and
Acceptance  delivered to it and a register or similar list (the  "Register") for
the  recordation  of the  names  and  addresses  of  the  Institutions  and  the
Commitment  Percentage of,  Purchases and  Consignments  made by and Consignment
Participations  purchased by, the Institutions from time to time.

<PAGE>

                                      -79-


The  entries in the  Register  shall be  conclusive,  in the absence of manifest
error,  and the Borrower,  the Agent and the  Institutions may treat each Person
whose name is  recorded  in the  Register as an  Institution  hereunder  for all
purposes of this  Agreement.  The Register  shall be available for inspection by
the Consignees and the Institutions at any reasonable time and from time to time
upon  reasonable  prior  notice.  Upon  each  such  recordation,   the  assignee
Institution agrees to pay to the Agent a registration fee in the sum of $3,500.

     14.4.  Participations.  Each Institution may sell  participations to one or
more banks or other  entities in all or a portion of such  Institution's  rights
and  obligations  under  this  Agreement  and the other  Consignment  Documents;
provided that (a) each such participation shall be in an amount of not less than
$5,000,000,  (b) any such sale or participation  shall not affect the rights and
duties of the selling  Institution  hereunder to the Consignees and (c) the only
rights granted to the participant  pursuant to such  participation  arrangements
with  respect  to  waivers,  amendments  or  modifications  of  the  Consignment
Documents shall be the rights to approve  waivers,  amendments or  modifications
that would  reduce the Fair Market Value of  Consigned  Precious  Metal or Daily
Consignment  Fees,  extend the term or increase the amount of the  Commitment of
such  Institution  as it relates  to such  participant  or extend any  regularly
scheduled  payment date for  principal or interest or any  scheduled  payment or
redelivery date for Consigned Precious Metal or Daily Consignment Fees.

     14.5.  Disclosure.  Each Consignee  agrees that, in addition to disclosures
made  in  accordance  with  standard  and  customary  banking   practices,   any
Institution may disclose  information  obtained by such Institution  pursuant to
this  Agreement  to  assignees  or  participants  and  potential   assignees  or
participants  hereunder;   provided  that  such  assignees  or  participants  or
potential  assignees or participants shall agree (a) to treat in confidence such
information  unless it otherwise becomes public  knowledge,  (b) not to disclose
such  information to a third party,  except as required by law or legal process,
and  (c) not to  make  use of such  information  for  purposes  of  transactions
unrelated to such contemplated assignment or participation.

     14.6. Assignee or Participant  Affiliated with Consignees.  If any assignee
Institution is an Affiliate of any Consignee, then any such assignee Institution
shall  have no right to vote as an  Institution  hereunder  or under  any of the
other Consignment  Documents for purposes of granting consents or waivers or for
purposes  of  agreeing  to  amendments  or  other  modifications  to  any of the
Consignment  Documents or for purposes of making  requests to the Agent pursuant
to ss.9,  and the  determination  of the  Required  Institutions  shall  for all
purposes of this Agreement and the other  Consignment  Documents be made without
regard to such assignee Institution's interest in any of the Obligations. If any
Institution  sells a  participating  interest in Consigned  Precious  Metal to a
participant, and such participant is a Consignee or an Affiliate of a Consignee,
then such transferor  Institution shall promptly notify the Agent of the sale of
such participation.  A transferor  Institution shall have no right to vote as an
Institution  hereunder  or under  any of the  other  Consignment  Documents  for

<PAGE>

                                      -80-


purposes  of  granting  consents  or  waivers or for  purposes  of  agreeing  to
amendments or modifications to any of the Consignment  Documents or for purposes
of  making  requests  to the  Agent  pursuant  to ss.9 to the  extent  that such
participation  is  beneficially  owned  by a  Consignee  or any  Affiliate  of a
Consignee,  and the  determination  of the Required  Institutions  shall for all
purposes of this Agreement and the other  Consignment  Documents be made without
regard to the interest of such transferor  Institution in the Obligations to the
extent of such participation.

     14.7. Miscellaneous Assignment Provisions.  Any assigning Institution shall
retain its rights to be indemnified pursuant to ss.12 with respect to any claims
or  actions  arising  prior  to the  date of such  assignment.  If any  assignee
Institution is not  incorporated  under the laws of the United States of America
or any state thereof,  it shall, prior to the date on which any interest or fees
are payable  hereunder or under any of the other  Consignment  Documents for its
account,  deliver to Finlay and the Agent certification as to its exemption from
deduction or withholding  of any United States  federal  income taxes.  Anything
contained in this ss.14 to the contrary notwithstanding,  any Institution may at
any time  pledge  all or any  portion  of its  interest  and  rights  under this
Agreement to any of the twelve Banks organized under ss.4 of the Federal Reserve
Act, 12 U.S.C.  ss.341. No such pledge or the enforcement  thereof shall release
the pledgor Institution from its obligations hereunder or under any of the other
Consignment Documents.

     14.8.  Assignment by Consignees.  No Consignee shall assign or transfer any
of its rights or obligations under any of the Consignment  Documents without the
prior written consent of each of the Institutions.

                     15. CONSENTS, AMENDMENTS, WAIVERS, ETC.

     Any consent or approval required or permitted by this Agreement to be given
by all of the  Institutions  may be given,  and any term of this Agreement,  the
other Consignment  Documents or any other instrument related hereto or mentioned
herein may be amended, and the performance or observance by any Consignee or any
of its  Subsidiaries  of any  terms of this  Agreement,  the  other  Consignment
Documents or such other instrument or the continuance of any Default or Event of
Default may be waived (either  generally or in a particular  instance and either
retroactively or prospectively)  with, but only with, the written consent of the
Consignees and the written consent of the Required Institutions. Notwithstanding
the foregoing (a) without the written  consent of the Consignees and the written
consent of each Institution  affected  thereby,  the definition of Maturity Date
may not be changed,  the basis for calculation of Daily Consignment Fees may not
be decreased,  the amounts of the Commitments  may not be increased,  and all or
any  substantial  portion  of the  Collateral  may  not  be  released;  (b)  the
definition  of  Required  Institutions  may not be amended  without  the written
consent of all of the Institutions; and (c) ss.13 may not be amended without the
written consent of the Agent. No waiver shall extend to or affect any obligation
not  expressly  waived or  impair  any right

<PAGE>

                                      -81-


consequent thereon. No course of dealing or delay or omission on the part of the
Agent or any  Institution  in  exercising  any right  shall  operate as a waiver
thereof or otherwise  be  prejudicial  thereto.  No notice to or demand upon any
Consignee  shall entitle any  Consignee to other or further  notice or demand in
similar or other circumstances.

                               16. NEW CONSIGNEES.

     Finlay may request that any  Subsidiary of Finlay  become a Consignee,  and
such Subsidiary  shall become a Consignee if the Agent, in its sole  discretion,
consents thereto and such Subsidiary (i) executes and delivers a joinder to this
Agreement  in form and  substance  satisfactory  to the Agent  and the  Required
Institutions,  (ii) executes and delivers a joinder to the Security Documents in
form and substance  satisfactory  to the Agent and the Required  Institutions or
such additional  Security  Documents in substantially  the same form as those to
which the existing Consignees are party and otherwise  satisfactory to the Agent
and the Required  Institutions  as the Agent shall request,  and (iii) providing
such other documentation as the Agent may reasonably request, including, without
limitation,  Uniform  Commercial  Code searches and filings,  legal opinions and
corporate or other appropriate authorization  documentation with respect to such
new Subsidiary and other documentation with respect to the conditions  specified
in ss.7 hereof.  In such event,  the Agent is hereby  authorized  by the parties
hereto  to  amend  Schedule  XIII to  include  each  such  new  Subsidiary  as a
Consignee.

          17. CONCERNING JOINT AND SEVERAL LIABILITY OF THE CONSIGNEES.

     (a)  Each of the  Consignees  is  accepting  joint  and  several  liability
hereunder  and under the other  Consignment  Documents in  consideration  of the
financial  accommodations to be provided by the Institutions and the Agent under
this Agreement, for the mutual benefit,  directly and indirectly, of each of the
Consignees  and in  consideration  of the  undertakings  of  each  of the  other
Consignees to accept joint and several liability for the Obligations.

     (b) Each of the Consignees,  jointly and severally,  hereby irrevocably and
unconditionally  accepts, not merely as a surety but also as a co-debtor,  joint
and several liability with the other Consignees, with respect to the payment and
performance  of all of  the  Obligations  (including,  without  limitation,  any
Obligations  arising  under this ss.17),  it being the  intention of the parties
hereto that all the  Obligations  shall be the joint and several  obligations of
each of the Consignees without preferences or distinction among them.

     (c) If and to the extent that any of the Consignees  shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other  Consignees  will make such payment with respect to, or perform,  such
Obligation.

<PAGE>

                                      -82-


     (d) The Obligations of each of the Consignees  under the provisions of this
ss.17  constitute  the  full  recourse  Obligations  of each  of the  Consignees
enforceable  against each such Person to the full extent of its  properties  and
assets,  irrespective  of the  validity,  regularity or  enforceability  of this
Agreement  or  the  other  Consignment   Documents  or  any  other  circumstance
whatsoever as to any other Consignee.

     (e) Except as otherwise  expressly  provided herein,  each Consignee hereby
waives promptness, diligence, presentment, demand, protest, notice of acceptance
of its  joint  and  several  liability,  notice  of any  and  all  Purchase  and
Consignments made under this Agreement and the Consignment Documents,  notice of
occurrence  of any Default or Event of Default  (except to the extent  notice is
expressly required to be given pursuant to the terms of this Agreement or any of
the other  Consignment  Documents),  or of any demand for any payment under this
Agreement, notice of any action at any time taken or omitted by the Agent or the
Institutions  under  or in  respect  of any of the  Obligations  hereunder,  any
requirement  of  diligence  and,  generally,  all  demands,  notices  and  other
formalities  of every  kind in  connection  with  this  Agreement  and the other
Consignment  Documents.  Each Consignee  hereby waives all defenses which may be
available by virtue of any valuation,  stay, moratorium law or other similar law
now or hereafter in effect, any right to require the marshaling of assets of the
Consignees and any other entity or Person  primarily or secondarily  liable with
respect to any of the Obligations,  and all suretyship defenses generally.  Each
Consignee hereby assents to, and waives notice of, any extension or postponement
of the  time  for the  payment,  or place or  manner  for  payment,  compromise,
refinancing,  consolidation or renewals of any of the Obligations hereunder, the
acceptance of any partial payment thereon,  any waiver,  consent or other action
or  acquiescence  by the  Agent  and the  Institutions  at any  time or times in
respect of any default by any Consignee in the  performance or  satisfaction  of
any term,  covenant,  condition  or provision  of this  Agreement  and the other
Consignment Documents, any and all other indulgences whatsoever by the Agent and
the Institutions in respect of any of the Obligations hereunder, and the taking,
addition, substitution or release, in whole or in part, at any time or times, of
any  security  for any of such  Obligations  or the  addition,  substitution  or
release,  in whole or in part,  of any  Consignee  or any other entity or Person
primarily or  secondarily  liable for any  Obligation.  Such  Consignee  further
agrees that its Obligations shall not be released or discharged,  in whole or in
part, or otherwise affected by the adequacy of any rights which the Agent or any
Institution may have against any collateral security or other means of obtaining
repayment of any of the Obligations,  the impairment of any collateral  security
securing the Obligations,  including, without limitation, the failure to protect
or  preserve  any  rights  which the Agent or any  Institution  may have in such
collateral security or the substitution,  exchange,  surrender, release, loss or
destruction  of any such  collateral  security,  any other act or omission which
might  in any  manner  or to any  extent  vary the  risk of such  Consignee,  or
otherwise operate as a release or discharge of such Consignee,  all of which may
be done without notice to such Consignee;  provided, however, that the foregoing
shall in no way be deemed to create  commercially  unreasonable  standards as to
the Agent's  duties as secured  party under the  Consignment  Documents (as such
rights  and duties  are set forth  therein).  If for any reason any of the other

<PAGE>

                                      -83-


Consignees has no legal  existence or is under no legal  obligation to discharge
any of the Obligations,  or if any of the Obligations have become  irrecoverable
from any of the other Consignees by reason of such other Consignee's insolvency,
bankruptcy  or  reorganization  or by other  operation of law or for any reason,
this Agreement and the other Consignment  Documents to which it is a party shall
nevertheless  be  binding  on  such  Consignee  to the  same  extent  as if such
Consignee  at all times had been the sole obligor on such  Obligations.  Without
limiting the  generality of the foregoing,  each Consignee  assents to any other
action  or delay in acting  or  failure  to act on the part of the Agent and the
Institutions,  including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply  fully with  applicable
laws or  regulations  thereunder  which might,  but for the  provisions  of this
ss.17, afford grounds for terminating,  discharging or relieving such Consignee,
in whole or in part, from any of its obligations  under this ss.17, it being the
intention of each Consignee  that, so long as any of the  Obligations  hereunder
remain unsatisfied, the obligations of such Consignee under this ss.17 shall not
be  discharged  except  by  performance  and  then  only to the  extent  of such
performance.  The  Obligations of each  Consignee  under this ss.17 shall not be
diminished  or  rendered   unenforceable  by  any  winding  up,  reorganization,
arrangement,  liquidation,  reconstruction or similar proceeding with respect to
any reconstruction or similar proceeding with respect to any other Consignee, or
any of the  Institutions.  The joint and  several  liability  of the  Consignees
hereunder  shall  continue  in  full  force  and  effect   notwithstanding   any
absorption,  merger,  amalgamation  or any other change  whatsoever in the name,
ownership,  membership,  constitution  or place of formation of any Consignee or
the Institutions.  Each of the Consignees  acknowledges and confirms that it has
itself  established  its own adequate  means of obtaining from each of the other
Consignees  on a  continuing  basis all  information  desired by such  Consignee
concerning the financial condition of each of the other Consignees and that each
such Consignee will look to each of the other Consignees and not to the Agent or
any  Institution  in order for such  Consignee  to keep  adequately  informed of
changes in each of the other Consignees' respective financial conditions.

     (f)  The  provisions  of  this  ss.17  are  made  for  the  benefit  of the
Institutions  and the  Agent  and  their  respective  permitted  successors  and
assigns,  and may be enforced by it or them from time to time against any or all
of  the  Consignees  as  often  as  occasion  therefor  may  arise  and  without
requirement  on the part of the  Institutions  or the Agent or such successor or
assign first to marshall any of its or their claims or to exercise any of its or
their  rights  against any of the other  Consignees  or to exhaust any  remedies
available to it or them against any of the other  Consignees or to resort to any
other source or means of obtaining  payment of any of the Obligations  hereunder
or to elect any other  remedy.  The  provisions  of this ss.17  shall  remain in
effect  until all of the  Obligations  shall have been paid in full or otherwise
fully  satisfied.  If at any time,  any payment,  or any part  thereof,  made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by any  Institution  or the Agent upon the  insolvency,  bankruptcy  or
reorganization  of any of the Consignees,  or otherwise,  the provisions of this
ss.17 will  forthwith be  reinstated  in effect,  as though such payment had not
been made.

<PAGE>

                                      -84-


     (g) Each of the  Consignees  hereby  agrees that it will not enforce any of
its rights of reimbursement,  contribution,  subrogation or the like against the
other Consignees with respect to any liability incurred by it hereunder or under
any of the other  Consignment  Documents,  any payments made by it to any of the
Institutions  or the  Agent  with  respect  to any  of  the  Obligations  or any
collateral security therefor until such time as all of the Obligations have been
irrevocably paid in full in cash. Any claim which any Consignee may have against
any other  Consignee  with  respect to any payments to the  Institutions  or the
Agent hereunder or under any other  Consignment  Documents are hereby  expressly
made  subordinate and junior in right of payment,  without  limitation as to any
increases  in the  Obligations  arising  hereunder or  thereunder,  to the prior
payment  in  full  of the  Obligations  and,  in the  event  of any  insolvency,
bankruptcy,   receivership,   liquidation,   reorganization   or  other  similar
proceeding  under the laws of any  jurisdiction  relating to any Consignee,  its
debts or its assets,  whether  voluntary or  involuntary,  all such  Obligations
shall be paid in full  before any  payment  or  distribution  of any  character,
whether  in cash,  securities  or  other  property,  shall be made to any  other
Consignee therefor.

     (h) Each of the  Consignees  hereby  agrees that the payment of any amounts
due with  respect  to the  indebtedness  owing  by any  Consignee  to any  other
Consignees  is hereby  subordinated  to the prior payment in full in cash of the
Obligations.  Each Consignee  hereby agrees that after the occurrence and during
the  continuance  of any Default or Event of Default,  such  Consignee  will not
demand,  sue for or otherwise  attempt to collect any  indebtedness of any other
Consignee owing to such Consignee until the Obligations  shall have been paid in
full in cash. If,  notwithstanding the foregoing sentence,  such Consignee shall
collect,  enforce or receive any amounts in respect of such  indebtedness,  such
amounts shall be collected,  enforced and received by such  Consignee as trustee
for the Agent and be paid  over to the  Agent for the pro rata  accounts  of the
Institutions to be applied to repay the Obligations.

                                18. NOTICES, ETC.

     Except as otherwise  expressly provided in this Agreement,  all notices and
other  communications  made or required to be given  pursuant to this  Agreement
shall be in writing  and shall be  delivered  in hand,  mailed by United  States
registered or certified  first class mail,  postage  prepaid,  sent by overnight
courier,  or sent by  telegraph,  telecopy,  facsimile or telex and confirmed by
delivery via courier or postal service, addressed as follows:

          (a) if to the  Consignees,  at 529 Fifth  Avenue,  New York,  New York
     10017, Attention:  Bruce Zurlnick,  Chief Financial Officer, with a copy to
     Bonni Davis,  Esq., or at such other  address for notice as the  Consignees
     shall last have  furnished  in writing to the Person  giving the notice and
     with a copy to Blank Rome Tenzer Greenblatt LLP, the Chrysler Building, 405
     Lexington  Avenue,  New York, New York 10174,  Attention:  James M. Kaplan,
     Esq.

<PAGE>

                                      -85-


          (b) if to the  Agent,  at 1 West  Mezzanine,  15  Westminster  Street,
     Providence,  Rhode Island 02903, Attention,  Albert L. Brown, or such other
     address for notice as the Agent shall last have furnished in writing to the
     Person giving the notice; and

          (c) if to any Institution,  at such Institution's address set forth on
     Schedule XII hereto,  or such other address for notice as such  Institution
     shall have last furnished in writing to the Person giving the notice.

     Any such  notice or demand  shall be deemed to have been duly given or made
and to have become  effective  (i) if  delivered by hand,  overnight  courier or
facsimile to a responsible officer of the party to which it is directed,  at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified  first-class mail,  postage prepaid,  on
the third Business Day following the mailing thereof.

                               19. GOVERNING LAW.

     THIS AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, EACH
OF  THE  OTHER  CONSIGNMENT  DOCUMENTS  ARE  CONTRACTS  UNDER  THE  LAWS  OF THE
COMMONWEALTH  OF  MASSACHUSETTS  AND  SHALL FOR ALL  PURPOSES  BE  CONSTRUED  IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID  COMMONWEALTH OF  MASSACHUSETTS
(EXCLUDING  THE LAWS  APPLICABLE TO CONFLICTS OR CHOICE OF LAW).  EACH CONSIGNEE
AGREES THAT ANY SUIT FOR THE  ENFORCEMENT  OF THIS AGREEMENT OR ANY OF THE OTHER
CONSIGNMENT  DOCUMENTS  MAY BE  BROUGHT  IN THE  COURTS OF THE  COMMONWEALTH  OF
MASSACHUSETTS  OR  ANY  FEDERAL  COURT  SITTING  THEREIN  AND  CONSENTS  TO  THE
NONEXCLUSIVE  JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON EACH CONSIGNEE BY MAIL AT THE ADDRESS  SPECIFIED IN ss.18.  EACH
CONSIGNEE  HEREBY WAIVES ANY OBJECTION  THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH  SUIT OR ANY SUCH  COURT OR THAT SUCH  SUIT IS  BROUGHT  IN AN
INCONVENIENT COURT.

                                  20. HEADINGS.

     The captions in this  Agreement are for  convenience  of reference only and
shall not define or limit the provisions hereof.

                                21. COUNTERPARTS.

     This  Agreement  and  any  amendment  hereof  may be  executed  in  several
counterparts  and by each  party on a separate  counterpart,  each of which when

<PAGE>

                                      -86-


executed and delivered  shall be an original,  and all of which  together  shall
constitute one  instrument.  In proving this Agreement it shall not be necessary
to  produce or account  for more than one such  counterpart  signed by the party
against whom enforcement is sought.

                           22. ENTIRE AGREEMENT, ETC.

     The Consignment  Documents and any other  documents  executed in connection
herewith or  therewith  express  the entire  understanding  of the parties  with
respect to the transactions  contemplated hereby. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated, except as provided
in ss.15.

                            23. WAIVER OF JURY TRIAL.

     Each Consignee  hereby waives its right to a jury trial with respect to any
action or claim arising out of any dispute in connection  with this Agreement or
any of the other Consignment  Documents,  any rights or obligations hereunder or
thereunder  or the  performance  of  such  rights  and  obligations.  Except  as
prohibited by law, each  Consignee  hereby waives any right it may have to claim
or recover in any litigation  referred to in the preceding sentence any special,
exemplary,  punitive or  consequential  damages or any damages other than, or in
addition  to,  actual   damages.   Each   Consignee   (i)   certifies   that  no
representative,   agent  or  attorney  of  any  Institution  or  the  Agent  has
represented,  expressly or otherwise,  that such  Institution or the Agent would
not, in the event of litigation,  seek to enforce the foregoing waivers and (ii)
acknowledges that the Agent and the Institutions have been induced to enter into
this Agreement, the other Consignment Documents to which it is a party by, among
other things, the waivers and certifications contained herein.

                          24. TRANSITIONAL ARRANGEMENTS

     24.1.  Original  Consignment  Agreement  Superseded.  This Agreement  shall
supersede the Original Consignment Agreement in its entirety, except as provided
in this ss.24.  On the Closing Date,  the rights and  obligations of the parties
under the Original  Consignment  Agreement  (other than any rights  available to
Sovereign  under  Section 12 of the Original  Consignment  Agreement),  shall be
subsumed  within and be governed  by this  Agreement  and the other  Consignment
Documents,  provided,  however,  that all of the  Consigned  Precious  Metal (as
defined in the Original  Consignment  Agreement)  outstanding under the Original
Consignment Agreement on the Closing Date shall, for purposes of this Agreement,
be Consigned  Precious  Metal,  with each Consignee being  responsible  for, and
hereby  confirming its obligation to pay, any breakage costs associated with the
payment of the  purchase of any  Consigned  Precious  Metal  under the  Original
Consignment  Agreement  on a date  which is not the  last day of the  applicable
Interest Period (as defined in the Original Consignment  Agreement) with respect
thereto.

<PAGE>

                                      -87-


     24.2. Fees Under Original Consignment Agreement. All Daily Consignment Fees
and  other  fees and  expenses  owing or  accruing  under or in  respect  of the
Original  Consignment  Agreement through the Closing Date shall be calculated as
of the Closing Date (prorated in the case of any fractional periods),  and shall
be paid in  accordance  with the  method,  and on the  dates,  specified  in the
Original Consignment Agreement, as if the Original were still in effect.

                               25. MISCELLANEOUS.

     This Agreement shall be binding upon and inure to the benefit of each party
hereto and its  successors  and assigns.  The  provisions of this  Agreement are
severable  and if any one clause or  provision  hereof  shall be held invalid or
unenforceable in whole or in part in any  jurisdiction,  then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such  jurisdiction,  and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this Agreement in
any jurisdiction.


                  [Remainder of page intentionally left blank]

<PAGE>

                                      -88-


     IN WITNESS WHEREOF,  the undersigned have duly executed this Agreement as a
sealed instrument as of the date first above written.


                                    FINLAY FINE JEWELRY CORPORATION


                                    By:  /s/ Bruce Zurlnick
                                       -----------------------------------
                                         Name:  Bruce Zurlnick
                                         Title: Senior Vice President, Treasurer
                                                  and Chief Financial Officer


                                    EFINLAY, INC.


                                    By:  /s/ Bruce Zurlnick
                                       -----------------------------------
                                         Name:  Bruce Zurlnick
                                         Title: Senior Vice President, Treasurer
                                                  and Chief Financial Officer

                                    SOVEREIGN BANK (as successor to
                                    Fleet National Bank, f/k/a BankBoston,
                                    N.A., f/k/a The First National Bank of
                                    Boston, as successor to Rhode Island
                                    Hospital Trust National Bank),
                                    individually and as Agent


                                    By:  /s/ Patricia Malerba
                                       -----------------------------------
                                         Name:   Patricia Malerba
                                         Title:  V.P.


                                    COMMERZBANK INTERNATIONAL
                                    S.A.


                                    By:  /s/ Ralf Kreikenbaum
                                       -----------------------------------
                                         Name:  Ralf Kreikenbaum
                                         Title: Senior Vice President

                                    By:  /s/ E. Winter
                                       -----------------------------------
                                         Name:  E. Winter
                                         Title: Legal Advisor

</TEXT>
</DOCUMENT>
