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<SEC-DOCUMENT>0000947871-02-001626.txt : 20020812
<SEC-HEADER>0000947871-02-001626.hdr.sgml : 20020812
<ACCEPTANCE-DATETIME>20020812150725
ACCESSION NUMBER:		0000947871-02-001626
CONFORMED SUBMISSION TYPE:	SC 13D
PUBLIC DOCUMENT COUNT:		5
FILED AS OF DATE:		20020812
GROUP MEMBERS:		DR. LORENZO ROSSI DE MONTELERA
GROUP MEMBERS:		HENRY BIRKS &SONSHOLDINGS INC.
GROUP MEMBERS:		HENRY BIRKS &SONSINC.
GROUP MEMBERS:		REGALUXE INVESTMENTS SARL

SUBJECT COMPANY:	

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MAYORS JEWELERS INC/DE
		CENTRAL INDEX KEY:			0000817946
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-JEWELRY STORES [5944]
		IRS NUMBER:				592290953
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0131

	FILING VALUES:
		FORM TYPE:		SC 13D
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	005-39267
		FILM NUMBER:		02726695

	BUSINESS ADDRESS:	
		STREET 1:		14051 NW 14TH ST
		CITY:			SUNRISE
		STATE:			FL
		ZIP:			33323
		BUSINESS PHONE:		9548462719

	MAIL ADDRESS:	
		STREET 1:		13801 NW 14TH STREET
		CITY:			SUNRISE
		STATE:			FL
		ZIP:			33323

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	JAN BELL MARKETING INC
		DATE OF NAME CHANGE:	19920703

FILED BY:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HENRY BIRKS & SONS INC
		CENTRAL INDEX KEY:			0001179821
		IRS NUMBER:				000000000
		FISCAL YEAR END:			0331

	FILING VALUES:
		FORM TYPE:		SC 13D

	BUSINESS ADDRESS:	
		STREET 1:		1240 PLULLYS SQUARE
		CITY:			MONTREAL QUEBEC CANADA
		STATE:			E6
		ZIP:			J3B3H6
		BUSINESS PHONE:		5163972509

	MAIL ADDRESS:	
		STREET 1:		1240 PLULLYS SQUARE
		CITY:			MONTREAL QUEBEC CANADA
		STATE:			E6
		ZIP:			H3B3H66
</SEC-HEADER>
<DOCUMENT>
<TYPE>SC 13D
<SEQUENCE>1
<FILENAME>sch13d_080902.txt
<DESCRIPTION>SCHEDULE 13D
<TEXT>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  SCHEDULE 13D

                    UNDER THE SECURITIES EXCHANGE ACT OF 1934

                             Mayor's Jewelers, Inc.
                             ----------------------
                                (Name of Issuer)

                         Common Stock, $0.0001 Par Value
                         -------------------------------
                         (Title of Class of Securities)

                                    578462103
                                    ---------
                                 (CUSIP Number)


                              Sabine Bruckert, Esq.
                       Vice President and General Counsel
                             Henry Birks & Sons Inc.
                              1240 Square Phillips
                        Montreal, Quebec, Canada, H3B 3H4
                            Telephone: (514) 397-2511
                            -------------------------
                  (Name, Address and Telephone Number of Person
                Authorized to Receive Notices and Communications)

                               - With a copy to -

                              Brice T. Voran, Esq.
                               Shearman & Sterling
                               Commerce Court West
                           199 Bay Street, Suite 4405
                            Toronto, Ontario M5L 1E8
                            Telephone (416) 360-8484
                            -------------------------

                                  July 31, 2002
                                  -------------
             (Date of Event which Requires Filing of this Statement)

 [  ]  The information required on the remainder of this cover page shall not be
  deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
     Act of 1934 or otherwise subject to the liabilities of that section of
         the Act but shall be subject to all other provisions of the Act
                            (however, see the Notes).


1

<PAGE>


- --------------------------------------------------------------------------------
CUSIP No. 578462103                                            Page 2 of 5 Pages
- --------------------------------------------------------------------------------
(1)        Name of Reporting Person            HENRY BIRKS & SONS INC.

- --------------------------------------------------------------------------------
(2)        Check the Appropriate Box if a Member of a Group      (a)  |_|
                                                                 (b)  |X|

- --------------------------------------------------------------------------------
(3)        SEC Use Only

- --------------------------------------------------------------------------------
(4)        Source of Funds            AF, OO

- --------------------------------------------------------------------------------
(5)        Check box if Disclosure of Legal Proceedings is Required Pursuant to
           Item 2(d) or 2(e).  |_|

- --------------------------------------------------------------------------------
(6)        Citizenship or Place of Organization                 CANADA

- --------------------------------------------------------------------------------
                                         (7)    Sole Voting Power
                     Number of
                Shares Beneficially
                       Owned
                      By Each
                     Reporting
                    Person With

- --------------------------------------------------------------------------------
                                         (8)    Shared Voting Power   87,273,787

- --------------------------------------------------------------------------------
                                         (9)    Sole Dispositive Power

- --------------------------------------------------------------------------------
                                         (10)   Shared Dispositive Power
                                                      87,273,787

- --------------------------------------------------------------------------------
(11)       Aggregate Amount Beneficially Owned by Each Reporting Person
                87,273,787

- --------------------------------------------------------------------------------
(12)       Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
           (See Instructions)
                                              |_|

- --------------------------------------------------------------------------------
(13)       Percent of Class Represented by Amount in Row (11)
                81.1%

- --------------------------------------------------------------------------------
(14)       Type of Reporting Person (See Instructions)          CO

- --------------------------------------------------------------------------------


2

<PAGE>


- --------------------------------------------------------------------------------
CUSIP No. 578462103                                            Page 3 of 5 Pages
- --------------------------------------------------------------------------------
(1)        Name of Reporting Person            HENRY BIRKS & SONS HOLDINGS INC.

- --------------------------------------------------------------------------------
(2)        Check the Appropriate Box if a Member of a Group      (a)  |_|
                                                                 (b)  |X|

- --------------------------------------------------------------------------------
(3)        SEC Use Only

- --------------------------------------------------------------------------------
(4)        Source of Funds            AF, OO

- --------------------------------------------------------------------------------
(5)        Check box if Disclosure of Legal Proceedings is Required Pursuant to
           Item 2(d) or 2(e).  |_|

- --------------------------------------------------------------------------------
(6)        Citizenship or Place of Organization                 CANADA

- --------------------------------------------------------------------------------
                                         (7)    Sole Voting Power
                     Number of
                Shares Beneficially
                       Owned
                      By Each
                     Reporting
                    Person With

- --------------------------------------------------------------------------------
                                         (8)    Shared Voting Power   87,273,787

- --------------------------------------------------------------------------------
                                         (9)    Sole Dispositive Power

- --------------------------------------------------------------------------------
                                         (10)   Shared Dispositive Power
                                                      87,273,787

- --------------------------------------------------------------------------------
(11)       Aggregate Amount Beneficially Owned by Each Reporting Person
                87,273,787

- --------------------------------------------------------------------------------
(12)       Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
           (See Instructions)
                                              |_|

- --------------------------------------------------------------------------------
(13)       Percent of Class Represented by Amount in Row (11)
                81.1%

- --------------------------------------------------------------------------------
(14)       Type of Reporting Person (See Instructions)          HC

- --------------------------------------------------------------------------------


3

<PAGE>


- --------------------------------------------------------------------------------
CUSIP No. 578462103                                            Page 4 of 5 Pages
- --------------------------------------------------------------------------------
(1)        Name of Reporting Person            REGALUXE INVESTMENTS Sarl

- --------------------------------------------------------------------------------
(2)        Check the Appropriate Box if a Member of a Group      (a)  |_|
                                                                 (b)  |X|

- --------------------------------------------------------------------------------
(3)        SEC Use Only

- --------------------------------------------------------------------------------
(4)        Source of Funds                OO

- --------------------------------------------------------------------------------
(5)        Check box if Disclosure of Legal Proceedings is Required Pursuant to
           Item 2(d) or 2(e).  |_|

- --------------------------------------------------------------------------------
(6)        Citizenship or Place of Organization                 LUXEMBOURG

- --------------------------------------------------------------------------------
                                         (7)    Sole Voting Power
                     Number of
                Shares Beneficially
                       Owned
                      By Each
                     Reporting
                    Person With

- --------------------------------------------------------------------------------
                                         (8)    Shared Voting Power   87,273,787

- --------------------------------------------------------------------------------
                                         (9)    Sole Dispositive Power

- --------------------------------------------------------------------------------
                                         (10)   Shared Dispositive Power
                                                      87,273,787

- --------------------------------------------------------------------------------
(11)       Aggregate Amount Beneficially Owned by Each Reporting Person
                87,273,787

- --------------------------------------------------------------------------------
(12)       Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
           (See Instructions)
                                              |_|

- --------------------------------------------------------------------------------
(13)       Percent of Class Represented by Amount in Row (11)
                81.1%

- --------------------------------------------------------------------------------
(14)       Type of Reporting Person (See Instructions)          CO

- --------------------------------------------------------------------------------


4

<PAGE>


- --------------------------------------------------------------------------------
CUSIP No. 578462103                                            Page 5 of 5 Pages
- --------------------------------------------------------------------------------
(1)        Name of Reporting Person
           Dr. Lorenzo Rossi de Montelera

- --------------------------------------------------------------------------------
(2)        Check the Appropriate Box if a Member of a Group      (a)  |_|
                                                                 (b)  |X|

- --------------------------------------------------------------------------------
(3)        SEC Use Only

- --------------------------------------------------------------------------------
(4)        Source of Funds:         AF - OO

- --------------------------------------------------------------------------------
(5)        Check box if Disclosure of Legal Proceedings is Required Pursuant to
           Item 2(d) or 2(e).  |_|

- --------------------------------------------------------------------------------
(6)        Citizenship or Place of Organization                 ITALIAN

- --------------------------------------------------------------------------------
                                         (7)    Sole Voting Power
                     Number of
                Shares Beneficially
                       Owned
                      By Each
                     Reporting
                    Person With

- --------------------------------------------------------------------------------
                                         (8)    Shared Voting Power   87,273,787

- --------------------------------------------------------------------------------
                                         (9)    Sole Dispositive Power

- --------------------------------------------------------------------------------
                                         (10)   Shared Dispositive Power
                                                      87,273,787

- --------------------------------------------------------------------------------
(11)       Aggregate Amount Beneficially Owned by Each Reporting Person
                87,273,787

- --------------------------------------------------------------------------------
(12)       Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
           (See Instructions)
                                              |_|

- --------------------------------------------------------------------------------
(13)       Percent of Class Represented by Amount in Row (11)
                81.1%

- --------------------------------------------------------------------------------
(14)       Type of Reporting Person (See Instructions)          IN

- --------------------------------------------------------------------------------


5

<PAGE>


Item 1.           Security and Issuer

                  The class of securities to which this statement relates to is
the shares of common stock, $0.0001 par value (the "Shares") of Mayor's
Jewelers, Inc., a Delaware corporation ("Mayor's"). The Shares are listed on the
American Stock Exchange. The address of the principal executive office of
Mayor's is 14051 N.W. 14th Street, Sunrise, Florida, 33323.

Item 2.           Identity and Background

                  This statement is being jointly filed by the following persons
(collectively, the "Reporting Persons"):

                  1.            Henry Birks & Sons Inc. ("Birks"), a corporation
                           incorporated under the laws of Canada, is controlled
                           by Henry Birks & Sons Holdings Inc. ("Holdings"). The
                           principal business of Birks is retail jewelry,
                           timepieces and fine gifts operations in Canada. The
                           principal business address and principal office
                           address of Birks is 1240 Square Phillips, Montreal,
                           Quebec, Canada, H3B 3H4, Canada; and

                  2.            Holdings, a corporation incorporated under the
                           laws of Canada, is controlled by Regaluxe Investment
                           Sarl ("Regaluxe"). The principal business of Holdings
                           is as an investment holding company. The principal
                           office address of Holdings is care of Mendelsohn
                           Rosentzveig Schacter, Me Marc Cantin, 1000, rue
                           Sherbrooke Ouest, 27th floor, Montreal, Quebec H3A
                           3GA, Canada; and its business address is 1240 Square
                           Phillips, Montreal, Quebec, Canada, H3B 3H4, Canada
                           and

                  3.            Regaluxe is a Luxembourg corporation in which
                           Dr. Lorenzo Rossi di Montelera holds a controlling
                           interest. The principal business of Regaluxe is an
                           investment holding company. The principal office and
                           business address of Regaluxe is 25A boulevard Royal,
                           2449, Luxembourg;

                  4.            Dr. Lorenzo Rossi de Montelera, the Chairman of
                           Birks, is an Italian citizen whose business address
                           is 25 A boulevard Royal, 2449 Luxembourg.

                  Neither the filing of this Schedule 13D nor the information
contained herein shall be deemed to constitute an affirmation by Holdings,
Regaluxe or Dr. Rossi de Montelera that any of them is the beneficial owner of
the Shares referred to herein for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or for any other purpose,
and such beneficial ownership is expressly disclaimed.

                  The name, present principal occupation or employment and name,
principal business and address of any corporation or other organization in which
such employment is conducted and the citizenship of each director and executive
officer of each of the Reporting


<PAGE>


Persons is set forth in Annex A, B and C, as the case may be, and such Annexes
are incorporated herein by reference.

                  Pursuant to Rule 13d-1(k) under the Exchange Act, the
Reporting Persons have agreed to file jointly one statement with respect to
their ownership of the Shares.

                  During the last five years, none of the Reporting Persons,
and, to the best of each such Reporting Person's knowledge, none of the
executive officers or directors of such Reporting Person have been (a) convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or (b) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.

Item 3.           Source and Amount of Funds or Other Consideration

                  Pursuant to a Securities Purchase Agreements (the "Purchase
Agreement") to be entered into between Holdings, Birks and Prime Investments
S.A. ("Prime") substantially in a form of Exhibit 2, for aggregate consideration
of $15,000,000 Holdings and Prime will each purchase from Birks and Birks will
issue to each of Holdings and Prime: (i) $5,000,000 aggregate principal amount
of Preferred Shares of Birks (the "Preferred Sharers"); and (ii) $2,500,000
aggregate principal amount of Convertible Notes of Birks (the "Convertible
Notes"). Regaluxe will contribute $7,500,000 to Holdings which in return will
contribute to Birks to enable Birks to make its investment pursuant to the
Investment Agreement.

Item 4.           Purpose of Transaction

                  Pursuant to an Investment Agreement (the "Investment
Agreement"), dated July 31, 2002, between Mayor's and Birks, for aggregate
consideration of $15,000,000 Birks will purchase from Mayor's and Mayor's will
issue to Birks: (i) 15,000 shares of Series A Convertible Preferred Stock of
Mayor's, convertible into 50,000,000 Shares (the "Preferred Stock"); (ii)
Warrants exercisable for 12,424,596 Shares at an exercise price of $0.30 per
Share (the "A Warrants"); (iii) Warrants exercisable for 12,424,596 Shares at an
exercise price of $0.35 per Share (the "B Warrants"); and (iv) Warrants
exercisable for 12,424,595 Shares at an exercise price of $0.40 per Share (the
"C Warrants" and with the Preferred Stock, the A Warrants and the B Warrants,
hereinafter collectively referred to as the "Securities").

                  The Securities have been acquired by the Reporting Persons for
investment purposes and for the purpose of obtaining control of Mayor's. The
holders of the Preferred Stock will be entitled to vote as a class to elect a
percentage of the members of the board of directors of Mayor's equal to the
percentage of the outstanding Shares that would be represented by the Preferred
Stock if converted. There are now nine authorized members of the board of
directors of Mayor's. Upon completion of the transactions under the Investment
Agreement, the Reporting Persons will be entitled to elect six of the nine
authorized members of the board of directors of Mayor's and will thus acquire
control of the board of director's of Mayor's.

                  The Reporting Persons have the following plans and proposals:


<PAGE>


                  (a) The Reporting Persons currently do not intend to acquire
additional Shares of Mayor's nor to dispose of Shares of Mayor's, but may
formulate plans to do so in the future. The Reporting Persons intend to review,
on a continuous basis, various factors related to their direct or indirect
investment, as the case may be, in Mayor's, including the price and availability
of the Shares, subsequent developments affecting Mayor's business, other
investment and business opportunities available to the Reporting Persons and
general stock market and economic conditions. Based upon these and other
factors, the Reporting Persons may decide to purchase additional Shares or may
decide in the future to sell all or part of their investment in Mayor's;

                  (b) The Reporting Persons have no plans or proposals to cause
Mayor's to enter into any extraordinary corporate transaction, such as a merger,
reorganization or liquidation of Mayor's or any of its subsidiaries;

                  (c) The Reporting Persons have no plans or proposals to cause
Mayor's or any of its subsidiaries to sell or transfer a material amount of
assets;

                  (d) The completion of the transactions contemplated by the
Investment Agreement will result in the issuance of a new class of stock, the
Preferred Stock, which will be entitled vote as a class to elect a percentage of
the members of the Board of Directors of Mayor's equal to the percentage of the
outstanding Shares that would be represented by the Preferred Stock if
converted. As the beneficial owners of all of the Preferred Stock, the Reporting
Persons will be entitled to elect six of the nine authorized members of the
board of directors of Mayor's. The Reporting Persons anticipate that upon
completion of the Investment Agreement, six current members of the board of
directors of Mayor's will resign and each will be replaced by a person nominated
by the Reporting Persons. The Reporting Persons will thus acquire control of
Mayor's Board of Directors. The Reporting Persons also anticipate that upon
completion of the Investment Agreement, certain senior management positions will
be filled by persons appointed by the Reporting Persons;

                  (e) Other than the issuance of the Securities under the
Investment Agreement, the Reporting Persons have no plans to make any material
changes in the present capitalization or dividend policy of Mayor's;

                  (f) The Reporting Persons have no plans or proposals to cause
Mayor's to make any other material change in its business or corporate
structure;

                  (g) Other than an amendment to Mayor's certificate of
incorporation to increase the number of authorized Shares, the Reporting Persons
have no plans or proposals to cause Mayor's to change its certificate of
incorporation or bylaws or to take other actions which may impede the
acquisition of control of Mayor's by any person;

                  (h) The Reporting Persons have no plans or proposals to cause
the Shares to be delisted from any securities exchange or cease to be authorized
to be quoted in an inter-dealer quotation system; The Reporting Persons
understand that the American Stock Exchange may require a shareholder vote prior
to the insuance of Shares underlying the Securities . However, the right to
convert the Securities is not conditional upon shareholder approval and the
Reporting


<PAGE>


Persons reserve the right to convert the Preferred Securities and exercise the
Warrants without shareholder approval which may result in a delisting of the
Shares.

                  (i) The Reporting Persons have no plans or proposals to cause
the Shares to become eligible for termination of registration pursuant to
Section 12(g) of the Exchange Act; and

                  (j) The Reporting Persons have no plans or proposals to take
any actions similar to those enumerated above.

Item 5.           Interest in Securities of the Issuer

                  (a) Based on the most recent information available, the
aggregate number and percentage of the Shares (the securities identified
pursuant to Item 1 of this Schedule 13D) that are beneficially owned by each of
the Reporting Persons is set forth in boxes 11 and 13 of the second part of the
cover page to this Schedule 13D for each of the Reporting Persons, and such
information is incorporated herein by reference. Of the 87,273,787 Shares
beneficially owned by the Reporting Persons, 50,000,000 Shares are issuable upon
conversion of Preferred Stock, 12,424,596 Shares are issuable upon exercise of
the A Warrants, 12,424,596 Shares are issuable upon exercise of the B Warrants
and 12,424,595 Shares are issuable upon exercise of the C Warrants.

                  (b) The numbers of Securities as to which each of the
Reporting Persons has sole voting power, shared voting power, sole dispositive
power and shared dispositive power are set forth in boxes 7, 8, 9 and 10,
respectively, on the second part of the cover page to this Schedule 13D for each
of the Reporting Persons, and such information is incorporated herein by
reference.

                  (c) Except as described herein, none of the Reporting Persons,
nor, to the best knowledge of the Reporting Persons, any person listed in Annex
A, B, or C, as the case may be, beneficially owns, or has acquired or disposed
of, any Shares during the last 60 days.

                  (d) No person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale of,
Shares held by the Reporting Persons other than each of the Reporting Persons.

                  (e)      Not applicable.

Item 6.           Contracts, Arrangements, Understandings or Relationships with
                  respect to Securities of the Issuer

                  None of the persons named in Item 2 nor to the best knowledge
of each of the Reporting Persons any person listed in Annex A, B, or C as the
case may be, has any contracts, arrangements, understandings or relationships
(legal or otherwise) with any person with respect to any securities of Mayor's,
including, but not limited to, transfer or voting of any securities, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of proxies.


<PAGE>


                  Birks has entered into a registration rights agreement with
Mayor's. The registration rights agreement includes rights to require Mayor's to
register the offer and sale of Shares held by Birks on up to three different
occasions. Birks may also require Mayor's to file registration statements on
Form S-3, provided Mayor's remains eligible to use that form. These rights are
subject to various conditions and limitations.

                  Under the registration rights agreement, Mayor's will bear all
expenses incurred in connection with the registrations, other than any
underwriting discounts and commissions. Registration of Shares upon the exercise
of these registration rights would result in such Shares becoming freely
tradable without restriction under the Securities Act.

                  Pursuant to a Deed of Hypothec (the "Deed") to be entered into
between Birks, and National Bank Trust Inc., as trustee for Prime, Birks will
pledge 2250 shares of Preferred Stock (the "Pledged Stock") convertible into
7,500,000 Shares as security for the Convertible Notes to be issued to Prime
under the Purchase Agreement. The Deed contains standard default and similar
provisions. In an event of default, subject to an Intercreditor Agreement to be
entered into between Holdings and Prime, Holdings and Prime will have shared
voting and dispositive power over the Pledged Stock.

Item 7.           Material to be filed as Exhibits

                  Exhibit 1     Investment Agreement dated July 31, 2002.

                  Exhibit 2     Form of Purchase Agreement to be entered into
                                between Birks and Prime

                  Exhibit 3     Form of Registration Rights Agreement to be
                                entered into between Mayor's and Birks upon
                                completion of the Investment Agreement.

                  Exhibit 4     Joint Filing Agreement dated as of August 9,
                                2002 among Birks, Holdings, Regaluxe and
                                Dr. Rossi.


<PAGE>


                                    SIGNATURE
                                    ---------

                  After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.

Dated: August 9, 2002                 HENRY BIRKS & SONS INC.

                                      By:  /s/ Sabine Bruckert
                                           ----------------------------
                                           Name:   Sabine Bruckert
                                           Title:  General Counsel and
                                                   Corporate Secretary


<PAGE>


                                    SIGNATURE
                                    ---------

                  After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.

Dated: August 9, 2002               HENRY BIRKS & SONS HOLDINGS INC.


                                    By: /s/ Marc Cantin
                                        --------------------------------------
                                        Name:   Marc Cantin
                                        Title:  Director and Corporate Secretary


<PAGE>


                                    SIGNATURE
                                    ---------

                  After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.

Dated: August 9, 2002                 REGALUXE INVESTMENT Sarl


                                      By:  /s/ Gerald Berclaz
                                           -------------------------------------
                                           Name:   Gerald Berclaz
                                           Title:  Director


<PAGE>


                                    SIGNATURE
                                    ---------


                  After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.

Dated: August 9, 2002                 DR. LORENZO ROSSI DI MONTELERA



                                      /s/ Lorenzo Rossi Di Montelera
                                      ------------------------------------------


<PAGE>


                                   Annex Index
                                   -----------


Annex      Description
- -----      -----------

A          Directors and Executive Officers of Henry Birks & Sons Inc.

B          Directors and Executive Officers of Henry Birks & Sons Holdings Inc.

C          Directors and Executive Officers of Regaluxe Investment Sarl.


<PAGE>


                                                                         ANNEX A

                       DIRECTORS AND EXECUTIVE OFFICERS OF


                             HENRY BIRKS & SONS INC.

                  The following table sets forth certain information with
respect to the directors and executive officers of Henry Birks & Sons Inc.

<TABLE>
<CAPTION>

                                                   Present Principal Occupation or Employment
                                                   and the Name, Principal Business and Address
                                                   of any Corporation or other Organization in
                                                   which such employment is conducted
Name                                                                                               Citizenship
<S>                                                <C>                                             <C>
Dr. Lorenzo Rossi di Montelera                     Businessman                                     Italian
                                                   Regaluxe Investment Sarl
                                                   25 A boulevard Royal
                                                   2449 Luxembourg
Thomas A. Andruskevich                             President and Chief Executive Officer, Henry    American
                                                   Birks & Sons Inc.,
                                                   1240 Square Phillips, Montreal, Quebec,
                                                   Canada, H3B 3H4
Shirley A. Dawe                                    Consultant, President                           Canadian
                                                   Shirley Dawe Associates Inc.
                                                   119 Crescent Road, Toronto
                                                   Ontario, Canada,  M4W 1T8
Rosamond Ivey                                      Consultant                                      Canadian
                                                   JRS Groups
                                                   30 St. Clair Street West, Suite 1200
                                                   Toronto, Ontario,  M4V 3A1
Margherita Oberti                                  Professor, Corpus Christi College               Canadian
                                                   5935 Iona Drive,
                                                   Vancouver, B.C., V6T 1J7, Canada
Peter O'Brien                                      Lawyer, Stikeman, Elliott                       Canadian
                                                   1155, Blvd. Rene-Levesque W.
                                                   Montreal, Quebec  H3B 3V2
                                                   Canada
Filippo Recami                                     Chief Executive Officer and Managing Director   Italian
                                                   Regaluxe Investment Sarl
                                                   25 A boulevard Royal
                                                   2449 Luxembourg

</TABLE>


<PAGE>

                                                                         ANNEX B


                       DIRECTORS AND EXECUTIVE OFFICERS OF


                        HENRY BIRKS & SONS HOLDINGS INC.

                  The following table sets forth certain information with
respect to the directors and executive officers of Henry Birks & Sons Holdings
Inc.

<TABLE>
<CAPTION>

                                                   Present Principal Occupation or Employment      Citizenship
Name                                               and the Name, Principal Business and Address
                                                   of any Corporation or other Organization in
                                                   which such employment is conducted
<S>                                                <C>                                             <C>

Dr. Lorenzo Rossi di Montelera                     Businessman                                     Italian
                                                   Regaluxe Investment Sarl.
                                                   25 A boulevard Royal
                                                   2449 Luxembourg

Me Marc Cantin                                     Lawyer, Mendelsohn Rosentzveig Schacter         Canadian
                                                   1000, rue Sherbrooke Ouest, 27floor
                                                   Montreal, Quebec H3A 3G4
                                                   Canada
Mrs. Margherita Oberti                             Professor, Corpus Christi College               Canadian
                                                   5935 Iona Drive,
                                                   Vancouver, B.C., V6T 1J7
                                                   Canada

</TABLE>


<PAGE>


                                                                         ANNEX C

                       DIRECTORS AND EXECUTIVE OFFICERS OF


                            REGALUXE INVESTMENT Sarl

The following table sets forth certain information with respect to the directors
and executive officers of Regaluxe Investments Sarl

<TABLE>
<CAPTION>

                                                   Present Principal Occupation or Employment
                                                   and the Name, Principal Business and Address
                                                   of any Corporation or other Organization in
                                                   which such employment is conducted
Name                                                                                               Citizenship
<S>                                                <C>                                             <C>
Davide Barberis-Canonico                           Businessman                                     Italian
                                                   Manifatture di Ponzone
                                                   Ponzone (Biella) Italia
Gerald Berclaz                                     Director                                        Swiss
                                                   Regaluxe Investment Sarl
                                                   25 A boulevard Royal
                                                   2449 Luxembourg
Filippo Recami                                     Chief Executive Officer and Managing Director   Italian
                                                   Regaluxe Investment Sarl
                                                   25 A boulevard Royal
                                                   2449 Luxembourg
Lorenzo Rossi di Montelera                         Businessman                                     Italian
                                                   Regaluxe Investment Sarl
                                                   25 A boulevard Royal
                                                   2449 Luxembourg
Carlo Schlesser                                    President                                       Luxembourg
                                                   Partner SGG Arthur Andersen
                                                   23 avenue Monterey,
                                                   1086 Luxembourg
Jean-Paul Reiland                                  Manager                                         Luxembourg
                                                   SGG Arthur Andersen
                                                   23 avenue Monterey,
                                                   1086 Luxembourg

</TABLE>


<PAGE>



                                  Exhibit Index
                                  -------------

Exhibit No.            Description
- -----------            -----------

1                      Investment Agreement dated July 31, 2002.

2                      Form of Purchase Agreement to be entered into Birks and
                       Prime

3                      Form of Registration Rights Agreement to be
                       entered into between Mayor's and Birks upon
                       completion of the Investment Agreement.

4                      Joint Filing Agreement dated as of August 9, 2002 among
                       Henry Birks & Sons Inc., Henry Birks & Sons Holdings Inc.
                       and Regaluxe Investment Sarl and Dr. Lorenzo Rossi di
                       Montelera.





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1
<SEQUENCE>3
<FILENAME>ex1_080902.txt
<DESCRIPTION>SCHEDULE 13D EXHIBIT 1
<TEXT>
                                                                       EXHIBIT 1




                              --------------------


                              INVESTMENT AGREEMENT

                              --------------------

                                     Between

                             MAYOR'S JEWELERS, INC.

                                       and

                             HENRY BIRKS & SONS INC.





                            Dated as of July 30, 2002



<PAGE>


                                TABLE OF CONTENTS

                                                                            Page

                              ARTICLE I DEFINITIONS

SECTION 1.01. Certain Defined Terms...........................................1

SECTION 1.02. Definitions.....................................................9

SECTION 1.03. Interpretation and Rules of Construction........................10

                          ARTICLE II PURCHASE AND SALE

SECTION 2.01. Purchase and Sale of the Shares and Warrants....................11

SECTION 2.02. Option Shares...................................................11

SECTION 2.03. Purchase Price..................................................11

SECTION 2.04. Closing.........................................................11

SECTION 2.05. Closing Deliveries by the Seller................................11

SECTION 2.06. Closing Deliveries by the Purchaser.............................13

            ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER

SECTION 3.01. Organization, Authority and Qualification of the Seller.........13

SECTION 3.02. Subsidiaries....................................................14

SECTION 3.03. Capitalization..................................................15

SECTION 3.04. Authorization and Issuance of Shares and Warrants...............15

SECTION 3.05. Corporate Books and Records.....................................16

SECTION 3.06. No Conflict.....................................................16

SECTION 3.07. Governmental Consents and Approvals.............................16

SECTION 3.08. Financial Information; Books and Records........................16

SECTION 3.09. Accounting System...............................................17

SECTION 3.10. Absence of Undisclosed Liabilities..............................17

SECTION 3.11. Receivables.....................................................17

                                       i

<PAGE>


SECTION 3.12. Inventories.....................................................18

SECTION 3.13. Purchase Orders.................................................18

SECTION 3.14. Conduct in the Ordinary Course; Absence of Certain Changes,
              Events and Conditions...........................................18

SECTION 3.15. Litigation......................................................21

SECTION 3.16. Compliance with Laws............................................21

SECTION 3.17. Environmental and Other Permits and Licenses; Related Matters...22

SECTION 3.18. Material Contracts..............................................22

SECTION 3.19. Intellectual Property...........................................24

SECTION 3.20. Real Property...................................................25

SECTION 3.21. Tangible Personal Property......................................26

SECTION 3.22. Assets..........................................................26

SECTION 3.23. Suppliers.......................................................27

SECTION 3.24. Employee Benefit Matters........................................27

SECTION 3.25. Labor Matters...................................................29

SECTION 3.26. Key Employees...................................................30

SECTION 3.27. Certain Interests...............................................30

SECTION 3.28. Taxes...........................................................31

SECTION 3.29. Insurance.......................................................32

SECTION 3.30. Full Disclosure.................................................32

SECTION 3.31. Brokers.........................................................32

SECTION 3.32. S-3 Eligibility.................................................32

SECTION 3.33. SEC Documents...................................................32

SECTION 3.34. Compliance with Cuba Act........................................33

SECTION 3.35. Investment Company Act..........................................33

SECTION 3.36. Registration Rights.............................................33

                                       ii

<PAGE>


SECTION 3.37. Officer's Certificates..........................................33

           ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

SECTION 4.01. Organization of the Purchaser...................................33

SECTION 4.02. Authority and Qualification of the Purchaser....................33

SECTION 4.03. Enforceability..................................................34

SECTION 4.04. No Conflict.....................................................34

SECTION 4.05. Litigation......................................................34

SECTION 4.06. Brokers.........................................................34

SECTION 4.07. Investment Intent...............................................34

SECTION 4.08. Disclosure......................................................34

SECTION 4.09. Financing.......................................................35

                         ARTICLE V ADDITIONAL AGREEMENTS

SECTION 5.01. Conduct of Business Prior to the Closing........................35

SECTION 5.02. Access to Information...........................................35

SECTION 5.03. Regulatory and Other Authorizations; Notices and Consents.......36

SECTION 5.04. Notice of Developments..........................................36

SECTION 5.05. No Solicitation or Negotiation..................................37

SECTION 5.06. Listing.........................................................37

SECTION 5.07. Use of Intellectual Property....................................37

SECTION 5.08. Payments on Behalf of Affiliates................................37

SECTION 5.09. Further Action..................................................38

                        ARTICLE VI CONDITIONS TO CLOSING

SECTION 6.01. Conditions to Obligations of the Purchaser......................38

SECTION 6.02. Conditions to Obligations of the Seller.........................39

                                      iii

<PAGE>


                           ARTICLE VII INDEMNIFICATION

SECTION 7.01. Survival of Representations and Warranties......................40

SECTION 7.02. Indemnification by the Seller...................................40

                 ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER

SECTION 8.01. Termination.....................................................42

SECTION 8.02. Effect of Termination...........................................43

SECTION 8.03. Termination Fee.................................................43

SECTION 8.04. Amendment.......................................................43

SECTION 8.05. Waiver..........................................................43

SECTION 8.06. Survival........................................................43

                          ARTICLE IX GENERAL PROVISIONS

SECTION 9.01. Expenses........................................................43

SECTION 9.02. Notices.........................................................44

SECTION 9.03. Public Announcements............................................45

SECTION 9.04. Severability....................................................45

SECTION 9.05. Entire Agreement................................................45

SECTION 9.06. Assignment......................................................45

SECTION 9.07. No Third Party Beneficiaries....................................45

SECTION 9.08. Currency........................................................46

SECTION 9.09. Governing Law...................................................46

SECTION 9.10. Waiver of Jury Trial............................................46

SECTION 9.11. Headings........................................................46

SECTION 9.12. Counterparts....................................................46

                                       iv


<PAGE>



                                    EXHIBITS

Exhibit A.........Form of Certificate of Designation of Series A Convertible
                  Preferred Stock

Exhibit B.........Form of Warrant Agreements

Exhibit C.........Form of Registration Rights Agreement

Exhibit D.........Form of Management Expense Reimbursement Agreement

Exhibit E.........Form of Manufacturing and Sales Agreement

Exhibit F.........Fiscal 2002 Plan

Exhibit G.........Term Sheet


                                       v


<PAGE>


                               DISCLOSURE SCHEDULE

The Disclosure Schedule shall include the following Sections:

3.01     Organization, Authority and Qualification of the Seller

3.02     Subsidiaries

3.03     Capitalization

3.05     Corporate Books and Records

3.10     Absence of Undisclosed Liabilities

3.11     Receivables

3.12     Inventories

3.13     Purchase Orders

3.14     Conduct in the Ordinary Course; Absence of Certain Changes, Events and
         Conditions

3.15     Litigation

3.16     Compliance with Laws

3.17     Environmental and Other Permits and Licenses; Related Matters

3.18     Material Contracts

3.19     Intellectual Property

3.20     Real Property

3.21     Tangible Personal Property

3.23     Suppliers and Customers

3.24     Employee Benefit Matters

3.25     Labor Matters

3.26     Key Employees

3.27     Certain Interests

3.28     Taxes

3.29     Insurance

                                       vi


<PAGE>

3.31     Brokers

5.01     Conduct of Business Prior to the Closing

6.01     Closure of Stores

<PAGE>


        INVESTMENT AGREEMENT (this "Agreement"), dated as of July 30, 2002,
between Mayor's Jewelers, Inc., a Delaware corporation (the "Seller") and Henry
Birks & Sons Inc., a Canadian corporation (the "Purchaser").

        WHEREAS, the Seller is engaged in the retail jewelry business at various
locations in the United States (the "Business"); and

        WHEREAS, upon the terms and subject to the conditions set forth herein,
the Purchaser wishes to subscribe for and purchase from the Seller, and the
Seller wishes to issue and sell to the Purchaser, 15,000 shares of Series A
Convertible Preferred Stock of the Seller (the "Shares") convertible into shares
of, and warrants exercisable to purchase shares of (the "Warrants"), the Common
Stock, par value $0.0001 (the "Common Stock"), of the Seller;

        NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the Seller and the Purchaser
hereby agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

SECTION 1.01.  Certain Defined Terms.  For purposes of this Agreement:

        "Action" means any claim, action, suit, arbitration, inquiry, proceeding
or investigation by or before any Governmental Authority.

        "Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.

        "Ancillary Agreements" means the Management Expense Reimbursement
Agreement, the Manufacturing and Sales Agreement, the Certificate of Designation
of Series A Convertible Preferred Stock, the Warrant Agreements and the
Registration Rights Agreement.

        "Assets" means the assets and properties of the Seller and the
Subsidiaries.

        "Business Combination" means, except with respect to the transactions
contemplated by this Agreement, (A) any acquisition or purchase of all or any
portion of the capital stock, or securities convertible into, or exchangeable or
exercisable for, or repayable with, capital stock of the Seller or assets of the
Seller or any Subsidiary (other than Inventory to be sold in the ordinary course
of business consistent with past practice), (B) other than with a wholly owned
Subsidiary, any merger, consolidation or other business combination with the
Seller or (C) any recapitalization or reorganization involving or otherwise
relating to the Seller.

        "Business Day" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by Law to be closed in New York,
NY.

        "CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended through the Closing Date.


<PAGE>

        "CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System, as amended through the Closing Date.

        "Claims" means any and all administrative, regulatory or judicial
actions, suits, petitions, appeals, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations, proceedings, consent
orders or consent agreements.

        "Code" means the Internal Revenue Code of 1986, as amended through the
date hereof.

        "control" (including the terms "controlled by" and "under common control
with"), with respect to the relationship between or among two or more Persons,
means the possession, directly or indirectly or as trustee, personal
representative or executor, of the power to direct or cause the direction of the
affairs or management of a Person, whether through the ownership of voting
securities, as trustee, personal representative or executor, by contract, credit
arrangement or otherwise.

        "Credit Agreement" means the Revolving Credit, Tranche B Loan and
Security Agreement entered into between Mayor's Jewelers, Inc.
and Fleet Retail Finance Inc. and Back Bay Capital Funding LLC, dated as of May
30, 2002.

        "Disclosure Schedule" means the Disclosure Schedule dated as of the date
hereof, delivered by the Seller to the Purchaser in connection with this
Agreement.

        "Encumbrance" means any security interest, pledge, hypothecation,
mortgage, lien (including, without limitation, environmental and tax liens),
violation, charge, lease, license, encumbrance, servient easement, adverse
claim, reversion, reverter, preferential arrangement, restrictive covenant,
condition or restriction of any kind, including, without limitation, any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership.

        "Environment" means surface waters, groundwaters, soil, subsurface
strata and ambient air.

        "Environmental Claims" means any Claims relating in any way to any
Environmental Law or any Environmental Permit, including, without limitation,
(a) any and all Claims by Governmental Authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (b) any and all Claims by any Person seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the Environment.

        "Environmental Laws" means all applicable Laws, now or hereafter in
effect and as amended, and any judicial or enforceable administrative
interpretation thereof, including, without limitation, any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety, natural resources or Hazardous Materials, excluding aesthetics
or land use but including, without limitation, CERCLA, 42 U.S.C.ss.ss. 9601 et
seq.; the Resource Conservation and Recovery Act, 42 U.S.C.ss.ss.6901 et seq.;
the Hazardous Materials


                                       2

<PAGE>


Transportation Act, 49 U.S.C.ss.ss.5101 et seq.; the Clean Water Act, 33
U.S.C.ss.ss.1251 et seq.; the Toxic Substances Control Act, 15 U.S.C.ss.ss.2601
et seq.; the Clean Air Act, 42 U.S.C.ss.ss.7401 et seq.; the Safe Drinking Water
Act, 42 U.S.C.ss.ss.300f et seq.; the Atomic Energy Act, 42 U.S.C.ss.ss.2011 et
seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.ss.ss.136
et seq.; and the Federal Food, Drug and Cosmetic Act, 21 U.S.C.ss.ss.301 et seq.

        "Environmental Permits" means all permits, approvals, identification
numbers, licenses and other authorizations required under or issued pursuant to
any applicable Environmental Law.

        "Exchange Act" means the United States Securities and Exchange Act of
1934, as amended.

        "Fiscal 2002 Plan" means the internal business plan of the Seller
provided to the Purchaser containing estimates of its financial performance for
fiscal 2002, attached hereto as Exhibit F.

        "Foreign Corrupt Practices Act" means the Foreign Corrupt Practices Act,
15 U.S.C.ss.ss.78 dd-1 et seq., as amended.

        "Foreign Official" means (a) an officer or employee of any non-United
States Governmental Authority or any political subdivision, department, agency
or instrumentality thereof; (b) a Person acting in an official capacity for or
on behalf of any such Governmental Authority; (c) a member or official of any
political party outside of the United States; and (d) any other meanings or
interpretation given to the term under the Foreign Corrupt Practices Act as it
applies to the Business.

        "Governmental Authority" means any United States or non-United States
federal, national, supranational, state, provincial, local, or similar
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body.

        "Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.

        "Hazardous Materials" means (a) petroleum and petroleum products,
radioactive materials, asbestos-containing materials, urea formaldehyde foam
insulation, transformers or other equipment that contain polychlorinated
biphenyls and radon gas, (b) any other chemicals, materials or substances
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes", "restricted
hazardous wastes", "toxic substances", "toxic pollutants", "contaminants" or
"pollutants", or words of similar import, under any applicable Environmental
Law, and (c) any other chemical, material or substance which is regulated by any
Environmental Law.

        "Indebtedness" means, with respect to any Person, (a) all indebtedness
of such Person, whether or not contingent, for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services, (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising


                                      3


<PAGE>


under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all obligations of such Person as
lessee under leases that have been or should be, in accordance with U.S. GAAP,
recorded as capital leases, (f) all obligations, contingent or otherwise, of
such Person under acceptance, letter of credit or similar facilities, (g) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any capital stock of such Person or any warrants, rights or
options to acquire such capital stock, valued, in the case of redeemable
preferred stock, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, (h) all Indebtedness of others
referred to in clauses (a) through (g) above guaranteed directly or indirectly
in any manner by such Person, or in effect guaranteed directly or indirectly by
such Person through an agreement (i) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such Indebtedness, (ii)
to purchase, sell or lease (as lessee or lessor) property, or to purchase or
sell services, primarily for the purpose of enabling the debtor to make payment
of such Indebtedness or to assure the holder of such Indebtedness against loss,
(iii) to supply funds to or in any other manner invest in the debtor (including,
without limitation, any agreement to pay for property or services irrespective
of whether such property is received or such services are rendered) or (iv)
otherwise to assure a creditor against loss, and (i) all Indebtedness referred
to in clauses (a) through (g) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Encumbrance on property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Indebtedness.

        "Indemnified Party" means a Purchaser Indemnified Party.

        "Indemnifying Party" means the Seller pursuant to Section 7.02.

        "Intellectual Property" means (i) patents, patent applications, and
statutory invention registrations, (ii) trademarks, service marks, domain names,
trade dress, logos, trade names, corporate names, and other identifiers of
source or goodwill, including, without limitation, registrations and
applications for registration thereof, (iii) mask works and copyrights,
including, without limitation, copyrights in computer software, and
registrations and applications for registration thereof, and (iv) confidential
and proprietary information, including, without limitation, trade secrets,
know-how and invention rights.

        "Inventories" means all inventory, merchandise, finished goods, raw
materials, packaging, labels, supplies and other personal property related to
the Business and maintained, held or stored by or for the Seller or any
Subsidiary on the Closing Date, and any prepaid deposits for any of the same.

        "Investment Documents" means this Agreement, the Ancillary Agreements,
and any certificate, Financial Statements, Interim Financial Statement, report
or other document delivered pursuant to this Agreement or the transactions
contemplated by this Agreement.

        "IRS" means the Internal Revenue Service of the United States.


                                       4


<PAGE>


        "knowledge" when used in reference to the "knowledge of the Seller" or
the "Seller's knowledge" means the actual knowledge of the Board of Directors or
senior management of the Seller as well as any notice or notification with
respect to any event or circumstance received by the Seller or any Subsidiary
from the time when it would have been brought to the attention of the senior
management of the Seller had the Seller maintained reasonable routines for
communicating significant information to the senior management of the Seller and
there was reasonable compliance with the routines by the Seller.

        "Law" means any United States or non-United States federal, national,
supranational, state, provincial, local or similar statute, law, ordinance,
regulation, rule, code, order, requirement or rule of law (including, without
limitation, common law).

        "Leased Real Property" means the real property leased by the Seller or
any Subsidiary, in each case, as tenant, together with, to the extent leased by
the Seller or any Subsidiary, all buildings and other structures, facilities or
improvements currently or hereafter located thereon, all fixtures, systems,
equipment and items of personal property of the Seller or any Subsidiary
attached or appurtenant thereto and all easements, licenses, rights and
appurtenances relating to the foregoing.

        "Liabilities" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law (including, without limitation, any Environmental Law), Action or
Governmental Order and those arising under any contract, agreement, arrangement,
commitment or undertaking.

        "Licensed Intellectual Property" means Intellectual Property licensed to
the Seller or any Subsidiary pursuant to the Seller IP Agreements.

        "Management Expense Reimbursement Agreement" means the agreement to be
entered into between the Seller and the Purchaser on the Closing Date
substantially in the form of Exhibit D hereto.

        "Manufacturing and Sales Agreement" means the agreement to be entered
into between the Seller and the Purchaser on the Closing Date substantially in
the form of Exhibit E hereto.

        "Material Adverse Effect" means any circumstance, change in or effect on
the Business or the Seller or any Subsidiary that, individually or in the
aggregate with all other circumstances, changes in or effects on the Business,
the Seller or any Subsidiary: (a) is or is reasonably likely to be materially
adverse to the business, operations, assets or liabilities (including, without
limitation, contingent liabilities), material supplier relationships, results of
operations or the condition (financial or otherwise) of the Business, the Seller
and the Subsidiaries taken as a whole or (b) is reasonably likely to materially
adversely effect the ability of the Purchaser to operate or conduct the Business
in the manner in which it is currently operated or conducted by the Seller or
its Subsidiaries taken as a whole; provided, however, the following shall not be
taken into account in determining whether a Material Adverse Effect has
occurred: (i) the announcement or pendency of this Agreement or the transactions
contemplated


                                       5


<PAGE>


hereby, (ii) the taking of any action approved or consented to by the Purchaser,
(iii) the effects of changes or developments not uniquely relating to the Seller
in the retail jewelry industry or the U.S. economy; and provided, further, that
any negative deviation in the Seller's financial performance in the items
indicated below for the period from May 31, 2002 to the Closing Date (including
any part month in such period, which shall be included based on the actual
number of days to the Closing Date in such month divided by the total number of
days in such month) from results indicated for such period (on a cumulative
basis) in the Fiscal 2002 Plan in excess of the percentages set forth next to
such item will be a Material Adverse Effect:

        Net Sales 10%

        Net Income (loss) 20%

        "Owned Real Property" means the real property owned by the Seller that
is related to the Business, together with all buildings and other structures,
facilities or improvements currently or hereafter located thereon, all fixtures,
systems, equipment and items of personal property of the Seller that are related
to the Business attached or appurtenant thereto and all easements, licenses,
rights and appurtenances relating to the foregoing.

        "Permitted Encumbrances" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced and as to which neither the Seller nor any Subsidiary is
otherwise subject to civil or criminal liability due to its existence: (a) liens
for Taxes, assessments and governmental charges or levies not yet due and
payable; (b) Encumbrances imposed by Law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's liens and other similar liens arising in
the ordinary course of business securing obligations that (i) are not overdue
for a period of more than 30 days and (ii) are not in excess of $2,500 in the
case of a single property or $5,000 in the aggregate at any time; (c) pledges or
deposits to secure obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations; (d) minor survey
exceptions, reciprocal easement agreements and other customary encumbrances on
title to real property that (i) were not incurred in connection with any
Indebtedness, (ii) do not render title to the property encumbered thereby
unmarketable and (iii) do not, individually or in the aggregate, materially
adversely affect the value of or the use of such property for its current and
anticipated purposes and (e) Encumbrances pursuant to the Credit Agreement.

        "Person" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

        "Proposing Party" means any party who makes an unsolicited bona fide
proposal with respect to a Business Combination.

        "Purchase Price Bank Account" means a bank account in the United States
to be designated by the Seller in a written notice to the Purchaser at least
five Business Days before the Closing.

        "Real Property" means the Leased Real Property and the Owned Real
Property.


                                       6


<PAGE>


        "Receivables" means any and all accounts receivable, notes and other
amounts receivable from third parties, including, without limitation, customers
and employees, arising from the conduct of the Business before the Closing Date,
whether or not in the ordinary course, together with any unpaid financing
charges accrued thereon.

        "Registration Rights Agreement" means the agreement to be entered into
between the Seller and the Purchaser on the Closing Date substantially in the
form of Exhibit C hereto.

        "Regulations" means the Treasury Regulations (including Temporary
Regulations) promulgated by the United States Department of Treasury with
respect to the Code or other federal tax statutes.

        "Release" means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing and the like
into or upon any land or water or air or otherwise entering into the
Environment.

        "Remedial Action" means all action to (a) clean up, remove, treat or
handle in any other way Hazardous Materials in the Environment; (b) prevent the
Release of Hazardous Materials so that they do not migrate, endanger or threaten
to endanger public health or the Environment; or (c) perform remedial
investigations, feasibility studies, corrective actions, closures and
post-remedial or post-closure studies, investigations, operations, maintenance
and monitoring.

        "SEC" means the Securities and Exchange Commission.

        "Securities Act" means the United States Securities Act of 1933, as
amended.

        "Seller Intellectual Property" means Intellectual Property owned by the
Seller or any Subsidiary.

        "Seller IP Agreements" means (a) licenses of Intellectual Property by
the Seller or any Subsidiary to any third party, (b) licenses of Intellectual
Property by any third party to the Seller or any Subsidiary, (c) agreements
between the Seller or any Subsidiary and any third party relating to the
development or use of Intellectual Property, the development or transmission of
data, or the use, modification, framing, linking, advertisement, or other
practices with respect to Internet web sites, and (d) consents, settlements,
decrees, orders, injunctions, judgments or rulings governing the use, validity
or enforceability of Seller Intellectual Property.

        "Seller Software" means all software material to the operation of the
Business.

        "Seller's Accountants" means Deloitte & Touche LLP, independent
accountants of the Seller.

        "Shares" means the shares of Series A Convertible Preferred Stock of the
Seller (including the Option Shares), which will be convertible subject to
adjustment, into Common Stock at a conversion price of $0.30 per share of Common
Stock and have a liquidation preference of $1,000 per share, to be issued by the
Seller substantially in the form provided for in Exhibit A hereto, entitled to
the benefit of the rights and preferences set out in the Certificate of


                                       7


<PAGE>


Designation of Series A Convertible Preferred Stock substantially in the form of
Exhibit A hereto, and delivered to the Purchaser or its nominee in connection
with the transactions herein contemplated, at a purchase price of $1000 per
share.

        "Subsidiaries" means Mayor's Jewelers, Inc., a Florida corporation,
American Horological Corporation, a Florida corporation, JBM Retail Company,
Inc., a Delaware corporation, JBM Venture Co. Inc., a Delaware corporation, Club
Duty Free, a Delaware corporation, Designer Timepieces, Inc., a Delaware
corporation, Ultimate Fine Jewelry and Watches, Inc., a Delaware corporation,
Ultimate Fine Jewelry International, Inc., a Delaware corporation, UPKE, Inc., a
Delaware corporation, JBM International, Inc., a Delaware corporation, Jewelry
Depot, Inc., a Delaware corporation, Mayor's Jewelers Intellectual Property
Holding Company, a Delaware corporation, Exclusive Diamonds International, Ltd.,
an Israeli corporation, Regal Diamonds International (T.A.) Ltd., a Delaware
corporation, Jan Bell Marketing/Puerto Rico, Inc., a Puerto Rico corporation,
Mayor's Jewelers Receivables Holding Company, a Nevada corporation, Maier &
Berkele, Inc. a Georgia corporation, Maier's Jewelers, Inc., a Georgia
Corporation, and any and all corporations, partnerships, limited liability
companies, joint ventures, associations and other entities controlled by the
Seller directly or indirectly through one or more intermediaries.

        "Superior Proposal" means any proposal made by a Proposing Party to
enter into a Business Combination, which the Board of Directors of the Seller
determines in its good faith judgment to be more favorable to the Seller's
stockholders than the transactions contemplated by this Agreement.

        "Tax" or "Taxes" means any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any government or taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes; license, registration and
documentation fees; and customs' duties, tariffs, and similar charges.

        "Trade Secrets" means trade secrets, know-how and other confidential or
proprietary technical, business and other information, including, without
limitation, manufacturing and production processes and techniques, research and
development information, technology, drawings, specifications, designs, plans,
proposals, technical data, financial, marketing and business data, pricing and
cost information, business and marketing plans, customer and supplier lists and
information, and all rights in any jurisdiction to limit the use or disclosure
thereof.

        "U.S. GAAP" means United States generally accepted accounting principles
and practices in effect from time to time applied consistently throughout the
periods involved.

        "USTs" means underground storage tanks, as such term is defined in the
Resource Conservation and Recovery Act, as amended, and the regulations
promulgated thereunder.


                                       8


<PAGE>


        "Vendors" means any and all vendors who are unaffiliated with the Seller
or any Subsidiary and who supply raw materials, components, spare parts,
supplies, goods, merchandise or services to the Seller or any Subsidiary.

        "Warrant Agreements" means the agreements with respect to the Warrants
to be entered into between the Seller and the Purchaser on the Closing Date
substantially in the form of Exhibits B-I, B-II and B-III hereto.

        "Warrants" means the warrants exercisable to purchase, subject to
adjustment, (i) 12,424,596 shares of Common Stock at an exercise price of $0.30
per share of Common Stock, (ii) 12,424,596 shares of Common Stock at an exercise
price of $0.35 per share of Common Stock and (iii) 12,424,595 shares of Common
Stock at an exercise price of $0.40 per share of Common Stock, to be issued by
the Seller under the Warrant Agreements and delivered to the Purchaser or its
nominee in connection with the transactions herein contemplated.

        SECTION 1.02. Definitions. The following terms have the meanings set
forth in the Sections set forth below:

          Definition                                                 Location

          "Agreement"..........................................      Preamble
          "Ancillary Lease Documents"..........................      3.20(d)
          "Business"...........................................      Recitals
          "Closing"............................................      2.04
          "Closing Date".......................................      2.04
          "Closing Date Payment"...............................      2.03
          "Closing Date Note"                                        2.03
          "Common Stock".......................................      Recitals
          "ERISA"..............................................      3.24(a)
          "Financial Statements"...............................      3.08(a)(i)
          "Interim Financial Statements".......................      3.08(a)(ii)
          "Interim Financial Statements Date"..................      3.08(a)(ii)
          "lease"..............................................      3.17(a)
          "Loss"...............................................      7.02(a)
          "Material Contracts".................................      3.17(a)
          "Multiemployer Plan".................................      3.24(b)
          "Multiple Employer Plan".............................      3.24(b)
          "Option Shares"......................................      2.02
          "Options"............................................      3.19(d)
          "Plans"..............................................      3.24(a)
          "Purchaser"..........................................      Preamble
          "Purchase Price".....................................      2.02
          "Purchaser Indemnified Party"........................      7.02(a)
          "Return".............................................      3.28(a)
          "SEC Documents"......................................      3.23
          "Seller".............................................      Preamble
          "Seller Indemnified Party"...........................      7.03(a)


                                       9


<PAGE>


          Definition                                                 Location

          "Seller Marks".......................................      5.07
          "Shares".............................................      Recitals
          "Surviving Representations and Warranties"...........      7.01
          "Tangible Personal Property".........................      3.21(a)
          "Termination Agreements"                                   6.01(k)
          "Termination Fee Event"..............................      8.03
          "Third Party Claims".................................      7.02(b)
          "WARN"...............................................      3.24(g)
          "Warrants"...........................................      Recitals

        SECTION 1.03. Interpretation and Rules of Construction. In this
Agreement, except to the extent that the context otherwise requires:

        (a)   when a reference is made in this Agreement to an Article, Section,
Exhibit or Schedule, such reference is to an Article or Section of, or a
Schedule to, this Agreement unless otherwise indicated;

        (b)   the table of contents and headings for this Agreement are for
reference purposes only and do not affect in any way the meaning or
interpretation of this Agreement;

        (c)   the words "hereof," "herein" and "hereunder" and words of similar
import, when used in this Agreement, refer to this Agreement as a whole and not
to any particular provision of this Agreement;

        (d)   all terms defined in this Agreement have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto,
unless otherwise defined therein;

        (e)   the definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms;

        (f)   any Law defined or referred to herein or in any agreement or
instrument that is referred to herein means such Law or statute as from time to
time amended, modified or supplemented, including, without limitation, by
succession of comparable successor Laws;

        (g)   references to a Person are also to its permitted successors and
assigns; and

        (h)   the use of "or" is not intended to be exclusive unless expressly
indicated otherwise.

                                       10

<PAGE>

                                   ARTICLE II

                                PURCHASE AND SALE

        SECTION 2.01. Purchase and Sale of the Shares and Warrants. Upon the
terms and subject to the conditions of this Agreement, at the Closing, the
Seller shall issue and deliver to the Purchaser, the Shares and Warrants, and
the Purchaser shall purchase the Shares and Warrants.

        SECTION 2.02. Option Shares. Upon the terms and subject to the
conditions of this Agreement, the Seller grants to the Purchaser an option to
purchase up to an additional 250 shares of Series A Convertible Preferred Stock
(the "Option Shares"), which may be exercised, in whole or in part, at the
Purchaser's sole discretion; provided, the Purchaser shall notify the Seller in
writing 72 hours prior to the Closing of its intent to exercise the Option
Shares and setting forth the number of Option Shares to be exercised. At the
Closing, the Seller shall issue and deliver to the Purchaser, the Options Shares
and the Purchaser shall purchase the Option Shares. The Purchaser's right to
exercise the Option Shares shall expire on the earlier of the termination of
this Agreement and the Closing Date.

        SECTION 2.03. Purchase Price. The aggregate purchase price for the
Shares and Warrants shall be $15,000,000, payable to the Seller as follows: (a)
$10,000,000 in cash on the Closing Date (the "Closing Date Payment") and (b) an
unconditional promissory note of the Purchaser in a principal amount of
$5,000,000 payable on September 30, 2002 without interest (the "Closing Date
Note"); provided, however, to the extent that any Option Shares are exercised,
the principal amount of the Closing Date Note shall be increased by the
aggregate purchase price of the Option Shares to be purchased at a purchase
price of $1000 per share.

        SECTION 2.04. Closing. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Shares and the Warrants contemplated by
this Agreement shall take place at a closing (the "Closing") to be held at the
offices of Holland & Knight LLP, One East Broward Boulevard, Suite 1300, Ft.
Lauderdale, Florida at 10:00 A.M. Eastern Standard Time on the first Business
Day following the satisfaction or waiver of all conditions to the obligations of
the parties set forth in Section 6.01 and Section 6.02 or at such other place or
at such other time or on such other date as the Seller and the Purchaser may
mutually agree upon in writing (the day on which the Closing takes place being
the "Closing Date").

        SECTION 2.05. Closing Deliveries by the Seller. At the Closing, the
Seller shall deliver or cause to be delivered to the Purchaser:

        (a)   one or more stock certificates evidencing the Shares, in
substantially the form provided in Exhibit A hereto, registered in the name of
the Purchaser or a nominee of the Purchaser that is an entity owned or
controlled by the Purchaser as designated in an instruction to the Seller
provided not less than two days prior to the Closing Date;

        (b)   the Warrant Agreements executed by Seller evidencing the Warrants,
in substantially the form of Exhibits B-I, B-II and B-III hereto;


                                       11


<PAGE>


        (c)   a Registration Rights Agreement executed by the Seller in
substantially the form of Exhibit C hereto;

        (d)   a Management Expense Reimbursement Agreement executed by the
Seller in substantially the form of Exhibit D hereto;

        (e)   a Manufacturing and Sales Agreement executed by the Seller in
substantially the form of Exhibit E hereto;

        (f)   a receipt for the Closing Date Payment and Closing Date Note;

        (g)   evidence of the filing of the Certificate of Designation of Series
A Convertible Preferred Stock with the Secretary of State of the State of
Delaware;

        (h)   a true and complete copy, certified by the Secretary of the
Seller, of the resolutions adopted by the Board of Directors of the Seller
evidencing its authorization of the execution and delivery of this Agreement and
the Ancillary Agreements and the consummation of the transactions contemplated
by this Agreement and thereby;

        (i)   a certificate of the Secretary of the Seller certifying the names
and signatures of the officers of the Seller authorized to sign this Agreement
and the Ancillary Agreements and the other documents to be delivered hereunder
and thereunder;

        (j)   a copy of (i) the Certificates of Incorporation, as amended (or
similar organizational documents), of the Seller and of each Subsidiary,
certified by the Secretary of State of the jurisdiction in which each such
entity is incorporated or organized, as of a date not earlier than 15 Business
Days prior to the Closing Date and accompanied by a certificate of the Secretary
of each such entity, dated as of the Closing Date, stating that no amendments
have been made to such Certificate of Incorporation (or similar organizational
documents) since such date, and (ii) the By-laws (or similar organizational
documents) of the Seller and of each Subsidiary, certified by the Secretary of
each such entity;

        (k)   a certificate of the Seller (which complies with Section 1445 of
the Code) of non-foreign status executed in accordance with the provisions of
the Foreign Investment in Real Property Tax Act;

        (l)   good standing certificates for the Seller and for each Subsidiary
from the Secretary of State of the jurisdiction in which each such entity is
incorporated or organized and from the Secretary of State in each other
jurisdiction in which the properties owned or leased by any of the Seller or any
Subsidiary, or the operation of its business in such jurisdiction, requires the
Seller or any Subsidiary to qualify to do business as a foreign corporation, in
each case dated as of a date not earlier than 15 Business Days prior to the
Closing Date and accompanied by bring-down telegrams dated the Closing Date;

        (m)   the Seller's notification pursuant to Section 5.04(a); and

        (n)   the certificates and other documents required to be delivered
pursuant to Section 6.01.


                                       12


<PAGE>


        SECTION 2.06. Closing Deliveries by the Purchaser. At the Closing, the
Purchaser shall deliver to the Seller;

        (a)   the Closing Date Payment by wire transfer in immediately available
funds to the Purchase Price Bank Account;

        (b)   the Closing Date Note;

        (c)   the Warrant Agreements executed by the Purchaser evidencing the
Warrants, in substantially the form of Exhibits B-I, B-II and B-III hereto;

        (d)   a Registration Rights Agreement executed by the Purchaser in
substantially the form of Exhibit C hereto;

        (e)   a Management Expense Reimbursement Agreement executed by the
Purchaser in substantially the form of Exhibit D hereto;

        (f)   a Manufacturing and Sales Agreement executed by the Purchaser in
substantially the form of Exhibit E hereto;

        (g)   a true and complete copy, certified by the Secretary of the
Purchaser, of the resolutions duly and validly adopted by the Board of Directors
of the Purchaser evidencing its authorization of the execution and delivery of
this Agreement and the consummation of the transactions contemplated by this
Agreement; and

        (h)   the certificates required to be delivered pursuant to Section
6.02.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES
                                  OF THE SELLER

        As an inducement to the Purchaser to enter into this Agreement, the
Seller hereby represents and warrants to the Purchaser as follows, except as
otherwise disclosed in the Disclosure Schedule with the disclosure of a specific
item in any one section of the Disclosure Schedule being deemed a disclosure as
to all other appropriate sections of the Disclosure Schedules if there is an
explicit cross-reference to another section or sections of the Disclosure
Schedule:

        SECTION 3.01. Organization, Authority and Qualification of the
Seller. (a) The Seller is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all necessary power and authority to enter into this Agreement and the Ancillary
Agreements, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated by this Agreement and thereby. This
Agreement has been, and upon their execution the Ancillary Agreements shall have
been, duly executed and delivered by the Seller, and (assuming due
authorization, execution and delivery by the Purchaser) this Agreement
constitutes, and upon their execution the Ancillary Agreements shall constitute,
legal, valid and binding obligations of the Seller, enforceable against the
Seller


                                       13


<PAGE>


in accordance with their respective terms, except to the extent that their
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.

        (b)   The execution and delivery of this Agreement and the Ancillary
Agreements by the Seller has been duly authorized by the Board of Directors of
the Seller and no other corporate action will be required by the Seller to
authorize the consummation of the transactions and the performance by the Seller
contemplated in this Agreement and the Ancillary Agreements.

        (c)   The Seller is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the properties owned or leased by it
or the operation of its business makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified would not
reasonably be expected to have a Material Adverse Effect, and all such
jurisdictions are set forth in Section 3.01(c) of the Disclosure Schedule. All
corporate actions taken by the Seller have been duly authorized, and the Seller
has not taken any action that in any respect conflicts with, constitutes a
default under or results in a violation of any provision of its Certificate of
Incorporation or By-laws. True and correct copies of the Certificate of
Incorporation and By-laws of the Seller, each as in effect on the date hereof,
have been delivered by the Seller to the Purchaser.

        SECTION 3.02. Subsidiaries. (a) Section 3.02(a) of the Disclosure
Schedule sets forth a true and complete list of all Subsidiaries, listing for
each Subsidiary its name, type of entity, the jurisdiction and date of its
incorporation or organization, its authorized capital stock, partnership capital
or equivalent, the number and type of its issued and outstanding shares of
capital stock, partnership interests or similar ownership interests and the
current ownership of such shares, partnership interests or similar ownership
interests.

        (b)   Other than the Subsidiaries, there are no other corporations,
partnerships, joint ventures, associations or other entities in which the Seller
or any Subsidiary controls or owns, of record or beneficially, any direct or
indirect equity or other interest or any right (contingent or otherwise) to
acquire the same. Other than the Subsidiaries, neither the Seller nor any
Subsidiary is a member of (nor is any part of the Business conducted through)
any partnership nor is the Seller or any Subsidiary a participant in any joint
venture or similar arrangement.

        (c)   Each Subsidiary that is a corporation: (i) is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (ii) has all necessary power and authority to
own, operate or lease the properties and assets owned, operated or leased by
such Subsidiary and to carry on its business as it has been and is currently
conducted by such Subsidiary and (iii) is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the properties
owned or leased by it or the operation of its business makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not reasonably be expected to have a Material Adverse Effect. Each
Subsidiary that is not a corporation: (i) is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization, (ii)
has all necessary power and authority to own, operate or lease the properties
and assets owned, operated or leased by such Subsidiary and


                                       14


<PAGE>


to carry on its business as it has been and is currently conducted by such
Subsidiary and (iii) is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the properties owned or leased by it or
the operation of its business makes such licensing or qualification necessary,
except where the failure to do so would not reasonably be expected to have a
Material Adverse Effect.

        SECTION 3.03. Capitalization. (a) The authorized capital stock of the
Seller consists of 50,000,000 shares of Common Stock, par value $0.0001 per
share, (b) 1,000 shares of Non-Voting Common Stock, par value $0.0001 per share,
and (c) 5,000,000 shares of Preferred Stock, par value $0.0001 per share. As of
the date hereof, (i) 19,525,749 shares of Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable, (ii)
6,575,053 shares of Common Stock are reserved for issuance pursuant to employee
stock options granted pursuant to the Stock Option Plan, no shares of Non-Voting
Common Stock are outstanding and (iv) no shares of Preferred Stock are
outstanding. None of the issued and outstanding shares of Common Stock was
issued in violation of any preemptive rights. Except as set forth in Section
3.03(a) of the Disclosure Schedule and the Stock Option Plan and the stock
options issued thereunder, the Shares and the Warrants, there are no options,
warrants, convertible securities or other rights, agreements, arrangements or
commitments of any character relating to any shares of Common Stock or
obligating the Seller to issue or sell any shares of Common Stock, or any other
interest in, the Seller. There are no outstanding contractual obligations of the
Seller to repurchase, redeem or otherwise acquire any shares of Common Stock or
to provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other Person. There are no voting trusts,
stockholder agreements, proxies or other agreements or understandings in effect
with respect to the voting or transfer of any of the Common Stock to which the
Seller, any Subsidiary or, to the Seller's knowledge, any other Person is a
party.

        (b)   All the outstanding shares of capital stock of each Subsidiary
that is a corporation are validly issued, fully paid, nonassessable and free of
preemptive rights and are owned by the Seller, whether directly or indirectly,
free and clear of all Encumbrances. There are no options, warrants, convertible
securities or other rights, agreements, arrangements or commitments of any
character relating to the capital stock of any Subsidiary or obligating the
Seller or any Subsidiary to issue or sell any shares of capital stock of, or any
other interest in, any Subsidiary. There are no voting trusts, stockholder
agreements, proxies or other agreements or understandings in effect with respect
to the voting or transfer of any shares of capital stock of or any other
interests in any Subsidiary to which the Seller, any Subsidiary or, to the
Seller's knowledge, any other Person is a party.

        (c)   Except as set forth in Section 3.03(c) of the Disclosure Schedule,
the stock register of each Subsidiary accurately records: (i) the name and
address of each Person owning shares of capital stock of such Subsidiary and
(ii) the certificate number of each certificate evidencing shares of capital
stock issued by such Subsidiary, the number of shares evidenced by each such
certificate, the date of issuance thereof and, in the case of cancellation, the
date of cancellation.

        SECTION 3.04. Authorization and Issuance of Shares and Warrants. The
Shares and Warrants have been duly authorized by the Seller for issuance and
sale to the Purchaser


                                       15


<PAGE>


pursuant to this Agreement and when issued and delivered by the Seller pursuant
to this Agreement against payment of the consideration therefor, will be validly
issued, fully paid and non-assessable and will not be subject to preemptive or
other similar rights of any securityholder of the Seller.

        SECTION 3.05. Corporate Books and Records. Except as set forth in
Section 3.05 of the Disclosure Schedule, the minute books of the Seller and the
Subsidiaries contain in all material respects accurate records of all meetings
and accurately reflect in all material respects all other actions taken by the
stockholders, Boards of Directors and all committees of the Boards of Directors
of the Seller and the Subsidiaries. Complete and accurate copies of all such
minute books and of the stock register of the Seller and each Subsidiary have
been provided by the Seller to the Purchaser.

        SECTION 3.06. No Conflict. The execution, delivery and performance of
this Agreement and the Ancillary Agreements by the Seller do not and will not
(a) violate, conflict with or result in the breach of any provision of the
certificate of incorporation or by-laws (or similar organizational documents) of
the Seller or any Subsidiary, or (b) conflict with or violate (or cause an event
which could have a Material Adverse Effect as a result of) any Law or
Governmental Order applicable to the Seller, any Subsidiary or any of their
respective assets, properties or businesses including, without limitation, the
Business, or (c) in any material respect, conflict with, result in any breach
of, constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, require any consent under, or give
to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any Encumbrance on
any property or asset of the Seller or any Subsidiary or any of the Shares or
Warrants pursuant to, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other instrument or
arrangement to which the Seller or any Subsidiary is a party or by which any of
the Shares, Warrants or any of such assets or properties is bound or affected.

        SECTION 3.07. Governmental Consents and Approvals.

        The execution, delivery and performance of this Agreement and each
Ancillary Agreement by the Seller do not and will not require any consent,
approval, authorization or other order of, action by, filing with or
notification to, any Governmental Authority, except those which have already
been obtained.

        SECTION 3.08. Financial Information; Books and Records. (a) True and
complete copies of (i) the audited consolidated balance sheet of the Seller for
each of the two fiscal years ended as of February 2, 2002 and February 3, 2001,
and the related audited consolidated statements of operations and cash flows of
the Seller for each of the two fiscal years ended February 2, 2002 and February
3, 2001, together with all related notes and schedules thereto, accompanied by
the reports thereon of the Seller's Accountants (collectively referred to herein
as the "Financial Statements") and (ii) the unaudited consolidated condensed
balance sheet of the Seller as of May 4, 2002 (the "Interim Financial Statements
Date") and the related unaudited consolidated condensed statements of operations
and cash flows of the Seller for the thirteen weeks ended the Interim Financial
Statements Date, together with all related notes thereto (collectively referred
to herein as the "Interim Financial Statements") have been


                                       16


<PAGE>


delivered by the Seller to the Purchaser. The Financial Statements (i) were
prepared in accordance with the books of account and other financial records of
the Seller and the Subsidiaries, (ii) present fairly the consolidated financial
condition and results of operations of the Seller and the Subsidiaries as of the
dates thereof or for the periods covered thereby in all material respects, and
(iii) have been prepared in accordance with U.S. GAAP applied on a basis
consistent with the past practices of the Seller and the Subsidiaries and (iv)
include all adjustments (consisting only of normal recurring accruals) that are
necessary for a fair presentation of the consolidated financial condition of the
Seller and the Subsidiaries and the results of the operations of the Seller and
the Subsidiaries as of the dates thereof or for the periods covered thereby. The
Interim Financial Statements (i) present fairly the consolidated financial
condition and results of operations of the Seller and (ii) have been prepared in
accordance with U.S. GAAP in a manner consistent with the preparation of the
Financial Statements, except that the Interim Financial Statements do not
contain complete footnotes that would be required by U.S. GAAP and are subject
to normal year-end audit adjustments.

        (b) The books of account and other financial records of the Seller and
the Subsidiaries: (i) reflect all items of income and expense and all assets and
Liabilities required to be reflected therein in accordance with U.S. GAAP
applied on a basis consistent with the past practices of the Seller and the
Subsidiaries, respectively and (ii) are in all material respects complete and
correct, and do not contain or reflect any material inaccuracies or
discrepancies.

        SECTION 3.09. Accounting System. The Seller and its Subsidiaries
maintain a system of accounting controls sufficient to provide reasonable
assurances that: (A) transactions are executed in accordance with management's
general or specific authorizations, (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with U.S. GAAP and
to maintain accountability for assets, (C) access to assets is permitted only in
accordance with management's general or specific authorization, and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

        SECTION 3.10. Absence of Undisclosed Liabilities. There are no
Liabilities of the Seller or any Subsidiary other than (i) the Liabilities set
forth in the Interim Financial Statements, (ii) Liabilities disclosed in the
Disclosure Schedule and (iii) any Liabilities incurred subsequent to the Interim
Financial Statements Date in the ordinary course of business, which individually
are in an amount not in excess of $100,000.

        SECTION 3.11. Receivables. Section 3.11 of the Disclosure Schedule is
an aged list of the Receivables as of the Interim Financial Statements Date
showing separately those Receivables that as of such date had been outstanding
for (a) 29 days or less, (b) 30 to 59 days, (c) 60 to 89 days, (d) 90 to 119
days and (e) more than 119 days. All Receivables reflected on the Interim
Financial Statements arose from, and the Receivables existing on the Closing
Date will have arisen from, the sale of Inventory or services in the ordinary
course of business consistent with past practice and, to the knowledge of the
Seller, constitute, as the case may be, only valid, undisputed claims of the
Seller or a Subsidiary not subject to valid claims of setoff or other defenses
or counterclaims other than normal cash discounts accrued in the ordinary course
of business consistent with past practice. In management's judgment, the reserve
for bad debts reflected in the Interim Financial Statements is adequate.


                                       17


<PAGE>


        SECTION 3.12. Inventories. Subject to amounts reserved therefor on
the Interim Financial Statements, the values at which all Inventories are
carried on the Interim Financial Statements reflect the historical inventory
valuation policy of the Seller and the Subsidiaries of stating such Inventories
at the lower of cost (determined in a manner consistent with the valuation of
Inventories in the Financial Statements) or market value. Except as set forth in
Section 3.12 of the Disclosure Schedule:

        (a)   The Seller or a Subsidiary, as the case may be, has good and
marketable title to the Inventories free and clear of all Encumbrances, except
for those existing under the Credit Agreement.

        (b)   The Seller has adequately provided for obsolescence and the
provision for obsolescence is accurately reflected in the Interim Financial
Statements. The Inventories do not consist of any items held on consignment or
subject to any other similar lien or encumbrance. Neither the Seller nor any
Subsidiary is under any obligation or liability with respect to accepting
returns of items of Inventory or merchandise in the possession of their
customers other than in the ordinary course of business consistent with past
practice.

        (c)   Neither the Seller nor any Subsidiary has acquired or committed to
acquire or manufacture Inventory for sale which is not of a quality and quantity
usable in the ordinary course of business within a reasonable period of time and
consistent with past practice. The Inventories are in good and merchantable
condition in all material respects, are suitable and usable for the purposes for
which they are intended and are in a condition such that they can be sold in the
ordinary course of the Business consistent with past practice.

        SECTION 3.13. Purchase Orders. As of July 30, 2002 open purchase orders
issued by the Seller or any Subsidiary totaled $8,335,341 at cost. Section 3.13
of the Disclosure Schedule lists all purchase orders which have been issued by
the Seller or any Subsidiary and which were open as of July 30, 2002.

        SECTION 3.14. Conduct in the Ordinary Course; Absence of Certain
Changes, Events and Conditions. Since the Interim Financial Statements Date, the
Business has been conducted in the ordinary course and consistent with past
practice. As amplification and not limitation of the foregoing, since the
Interim Financial Statements Date, neither the Seller nor any Subsidiary has:

        (a)   except as set forth in Section 3.14 of the Disclosure Schedule,
permitted or allowed any of the Assets to be subjected to any Encumbrance, other
than Permitted Encumbrances and Encumbrances that will be released at or prior
to the Closing;

        (b)   except as set forth in Section 3.14 of the Disclosure Schedule and
except in the ordinary course of business consistent with past practice,
discharged or otherwise obtained the release of any Encumbrance related to the
Business, the Seller or the Subsidiaries or paid or otherwise discharged any
Liability related to the Business, the Seller or the Subsidiaries, other than
current liabilities reflected on the Interim Financial Statements and current
liabilities incurred in the ordinary course of business consistent with past
practice since the Interim Financial Statements Date;


                                       18


<PAGE>


        (c)   written down (or failed to write down in accordance with U.S. GAAP
consistent with past practice) the value of any Inventories or Receivables or
revalued any of the Assets other than in the ordinary course of business
consistent with past practice and in accordance with U.S. GAAP;

        (d)   except as set forth in Section 3.14 of the Disclosure Schedule,
amended, terminated, cancelled or compromised any material claims of the Seller
or any Subsidiary or waived any other rights of substantial value to the Seller
or any Subsidiary;

        (e)   except as set forth in Section 3.14 of the Disclosure Schedule,
sold, transferred, leased, subleased, licensed or otherwise disposed of any
properties or assets, real, personal or mixed (including, without limitation,
leasehold interests and intangible property), other than the sale of Inventories
in the ordinary course of business consistent with past practice;

        (f)   issued or sold any capital stock, notes, bonds or other
securities, or any option, warrant or other right to acquire the same, of the
Seller or any Subsidiary;

        (g)   redeemed any of the capital stock or declared, made or paid any
dividends or distributions (whether in cash, securities or other property) to
the holders of capital stock of the Seller or any Subsidiary or otherwise, other
than dividends, distributions and redemptions declared, made or paid by the
Seller solely to the Seller or by any Subsidiary solely to the Seller or another
Subsidiary;

        (h)   merged with, entered into a consolidation with or acquired an
interest of 5% or more in any Person or acquired a substantial portion of the
assets or business of any Person or any division or line of business thereof, or
otherwise acquired any material assets other than in the ordinary course of
business consistent with past practice;

        (i)   made any capital expenditure or commitment for any capital
expenditure in excess of $5,000 individually or $50,000 in the aggregate;

        (j)   made any express or deemed election or settled or compromised any
liability with respect to Taxes of the Seller or any Subsidiary;

        (k)   made any loan to, guaranteed any Indebtedness of or otherwise
incurred any Indebtedness on behalf of any Person;

        (l)   except in the ordinary course consistent with past practice,
failed to pay any creditor any amount in excess of $5,000 individually or
$100,000 in the aggregate owed to such creditor when due or to make any payment
when due as required pursuant to any contract, agreement or other obligation,
including, without limitation, any compensation owed to employees or
consultants, and any payment or tax owed to any government body and is not in
default with respect to any of the foregoing;

        (m)   (i) except as set forth in Section 3.14 of the Disclosure
Schedule, which amount may be disclosed in the aggregate, granted any increase,
or announced any increase, in the wages, salaries, compensation, bonuses,
incentives, pension or other benefits payable by the Seller or any Subsidiary to
any of its employees, including, without limitation, any increase or


                                       19


<PAGE>


change pursuant to any Plan, (ii) except as set forth in Section 3.14 of the
Disclosure Schedule, which amount may be disclosed in the aggregate, established
or increased or promised to increase any benefits under any Plan; or (iii)
except as set forth in Section 3.14 of the Disclosure Schedule, which amounts
shall be disclosed per individual employee, granted any increase, or announced
any increase, in the wages, salaries, compensation, bonuses, incentives, pension
or other benefits payable by the Seller or any Subsidiary to any employee of the
Seller of any Subsidiary whose total compensation in the 12 months ended May 3,
2002 exceeded $100,000;

        (n)   except for merchandise sold to employees in accordance with the
Seller's policy for sales to employees and consistent with past practice,
entered into any agreement, arrangement or transaction with any of its
directors, officers, employees or stockholders (or with any relative,
beneficiary, spouse or Affiliate of such Persons);

        (o)   except as set forth in Section 3.14 of the Disclosure Schedule,
terminated, discontinued, closed or disposed of any plant, facility or other
business operation, or laid off any employees or implemented any early
retirement, separation or program providing early retirement window benefits
within the meaning of Section 1.401(a)-4 of the Regulations or announced or
planned any such action or program for the future;

        (p)   allowed any Permit or Environmental Permit that was issued or
relates to the Seller or any Subsidiary or otherwise relates to the Business to
lapse or terminate or failed to renew any insurance policy, Permit or
Environmental Permit that is scheduled to terminate or expire within 45 calendar
days of the Closing Date;

        (q)   except as set forth in Section 3.14 of the Disclosure Schedule,
suffered any casualty loss or damage with respect to any of the Assets which in
the aggregate have a replacement cost of more than $100,000, whether or not such
loss or damage shall have been covered by insurance;

        (r)   amended, modified or consented to the termination of any Material
Contract or the Seller's or any Subsidiary's rights thereunder;

        (s)   amended or restated the certificate of incorporation or By-laws
(or other organizational documents) of the Seller or any Subsidiary;

        (t)   (i) abandoned, sold, assigned, or granted any security interest in
or to any item of the Owned Intellectual Property, Licensed Intellectual
Property, Seller IP Agreements, including, without limitation, failing to
perform or cause to be performed all applicable filings, recordings and other
acts, and pay or caused to be paid all required fees and taxes, to maintain and
protect its interest in such Intellectual Property, (ii) granted to any third
party any license with respect to any Owned Intellectual Property or Licensed
Intellectual Property, other than licenses of Seller Software to the customers
of the Seller or Subsidiaries in the ordinary course of its business, (iii)
developed, created or invented any Intellectual Property jointly with any third
party (other than such joint development, creation or invention with a third
party that is in progress prior to Interim Financial Statements Date), or (iv)
disclosed, or allow to be disclosed, any confidential Intellectual Property,
unless such Intellectual Property is subject to a confidentiality or
non-disclosure covenant protecting against disclosure thereof;


                                       20


<PAGE>


        (u)   agreed, whether in writing or otherwise, to take any of the
actions specified in this Section 3.14 or granted any options to purchase,
rights of first refusal, rights of first offer or any other similar rights or
commitments with respect to any of the actions specified in this Section 3.14,
except as expressly contemplated by this Agreement and the Ancillary Agreements.

        SECTION 3.15. Litigation. Except as set forth in Section 3.15 of the
Disclosure Schedule (which, with respect to each Action set forth therein, sets
forth the parties, nature of the proceeding, date and method commenced, amount
of charges or other relief sought and, if applicable, paid or granted), there
are no Actions by or against the Seller or any Subsidiary (or by or against the
Seller or any Affiliate thereof and relating to the Business, the Seller or any
Subsidiary) or affecting any of the Assets or the Business pending before any
Governmental Authority (or, to the knowledge of the Seller, threatened to be
brought by or before any Governmental Authority). None of the matters set forth
in Section 3.15 of the Disclosure Schedule has or has had or would be reasonably
expected to have a Material Adverse Effect on the Seller or could affect the
legality, validity or enforceability of this Agreement, any Ancillary Agreement
or the consummation of the transactions contemplated by this Agreement or
thereby. Except as set forth in Section 3.15 of the Disclosure Schedule, none of
the Seller, the Subsidiaries or any of the Assets, is subject to any
Governmental Order (nor, to the knowledge of the Seller, are there any such
Governmental Orders threatened to be imposed by any Governmental Authority) on
the Seller or any Subsidiary which has or has had a Material Adverse Effect or
could affect the legality, validity or enforceability of this Agreement, any
Ancillary Agreement or the consummation of the transactions contemplated by this
Agreement or thereby.

        SECTION 3.16. Compliance with Laws. (a) The Seller and the Subsidiaries
have each conducted and continue to conduct the Business substantially in
accordance with all Laws and Governmental Orders applicable to the Seller or any
Subsidiary or any of the Assets, or the Business, and neither the Seller nor any
Subsidiary is in violation of any such Law or Governmental Order the violation
of which would reasonably be expected to have a Material Adverse Effect.

        (b)   Section 3.16(b) of the Disclosure Schedule sets forth a brief
description of each Governmental Order naming the Seller or any Subsidiary or
any of their properties or assets, including, without limitation, the Assets, or
the Business, and no Governmental Order has, has had or would reasonably be
expected to have a Material Adverse Effect or would reasonably be expected to
affect the legality, validity or enforceability of this Agreement, any Ancillary
Agreement or the consummation of the transactions contemplated by this Agreement
or thereby.

        (c)   The Seller has received a copy of the Foreign Corrupt Practices
Act and understands its requirements. None of the Seller, any Subsidiary or any
officer, director, employee, agent or representative of the Seller or any
Subsidiary (i) has taken any action which is or could be deemed to be a
violation of the Foreign Corrupt Practices Act in respect of the Business; (ii)
is aware of any action or conduct which could be deemed to be a violation of the
Foreign Corrupt Practices Act in respect of the Business or (iii) has offered,
given, paid, authorized the payment of, or promised, directly or indirectly, any
money, gift, promise or other


                                       21


<PAGE>


thing of value to any Foreign Official (or to any Person while knowing it will
be offered, given or promised to a Foreign Official) for any purpose including,
by way of example, influencing any act or decision of such Person acting in
their official capacity, inducing such Person to do or omit to do any action in
violation of their lawful duty, inducing such Person to use their influence with
any Governmental Authority to affect or influence any act or decision of such
Governmental Authority, in order to assist the Seller or any Subsidiary to
obtain or retain business for or with, or in directing business to, any Person.

        (d)   None of the Seller, any Subsidiary or any officer, director,
employee, agent or representative of the Seller or any Subsidiary has furthered
or supported any foreign boycott in violation of the Anti-Boycott laws and
regulations of the United States promulgated pursuant to the Export
Administration Act of 1979 (50 U.S.C.A. App. ss. 2407, and regulations
promulgated thereunder).

        SECTION 3.17. Environmental and Other Permits and Licenses; Related
Matters. (a)

          (i)   The Seller and each Subsidiary is in substantial compliance with
     all applicable Environmental Laws and as such Environmental Laws are
     currently applied or interpreted by the applicable Governmental Authority
     and as they might affect the Real Property, and, in all material respects,
     all Environmental Permits.

          (ii)  There has been no Release of any Hazardous Material on any of
     the Real Property or, during the period of the Seller's or any Subsidiary's
     ownership, lease, use or occupancy thereof, on any property formerly owned,
     leased, used or occupied by the Seller or any Subsidiary, except as have
     occurred in the ordinary course of business and in conformity with all
     applicable Environmental Laws.

          (iii) There are no Environmental Claims pending or threatened against
     the Seller, any Subsidiary or the Real Property, and there are no
     circumstances that can reasonably be expected to form the basis of any such
     Environmental Claim.

          (iv)  Neither the Seller nor any Subsidiary has any actual or alleged
     liability, whether fixed or contingent, under any Environmental Law.

        Neither the Execution of this Agreement or the Ancillary Agreements nor
the consummation of the transactions contemplated by this Agreement or thereby
will require any Remedial Action or notice to or consent of Governmental
Authorities or third parties pursuant to any applicable Environmental Law or
Environmental Permit.

        SECTION 3.18. Material Contracts. (a) Section 3.18(a) of the Disclosure
Schedule lists each of the following contracts and agreements (including oral
agreements) of the Seller and the Subsidiaries (such contracts and agreements,
together with all contracts, agreements, leases and subleases concerning the
use, occupancy, management or operation of any Real Property (including all
contracts, agreements,


                                       22


<PAGE>


leases and subleases listed or otherwise set forth in Section 3.20(d) of the
Disclosure Schedule, all Seller IP Agreements listed or otherwise set forth in
Section 3.19(a) of the Disclosure Schedule, and all contracts, agreements,
leases and subleases relating to Tangible Personal Property listed or otherwise
set forth in Section 3.21(b) of the Disclosure Schedule), being "Material
Contracts"):

          (i)   each contract, agreement, invoice, purchase order and other
     arrangement, for the purchase of Inventory, spare parts, other materials or
     personal property, with any supplier or for the furnishing of services to
     the Seller, any Subsidiary or otherwise related to the Business under the
     terms of which the Seller or any Subsidiary: (A) is likely to pay or
     otherwise give consideration of more than $100,000 in the aggregate during
     the fiscal year ended February 1, 2003, (B) is likely to pay or otherwise
     give consideration of more than $100,000 in the aggregate over the
     remaining term of such contract or (C) cannot be cancelled by the Seller or
     such Subsidiary without penalty or further payment and without more than 30
     days' notice;

          (ii)  each contract, agreement, invoice, sales order and other
     arrangement, for the sale of Inventory or other personal property, or for
     the furnishing of services by the Seller or any Subsidiary which: (A) is
     likely to involve consideration of more than $100,000 in the aggregate
     during the fiscal year ended February 1, 2003, (B) is likely to involve
     consideration of more than $100,000 in the aggregate over the remaining
     term of the contract or (C) cannot be cancelled by the Seller or such
     Subsidiary without penalty or further payment and without more than 30
     days' notice;

          (iii) all broker, distributor, dealer, manufacturer's representative,
     franchise, agency, sales promotion, market research, marketing, consulting
     and advertising contracts and agreements to which the Seller or any
     Subsidiary is a party;

          (iv)  all management contracts and contracts with independent
     contractors or consultants (or similar arrangements) to which the Seller or
     any Subsidiary is a party and which are not cancellable without penalty or
     further payment and without more than 30 days' notice;

          (v)   all contracts and agreements relating to Indebtedness of the
     Seller or any Subsidiary of greater than $100,000 in the aggregate;

          (vi)  all contracts and agreements with any Governmental Authority to
     which the Seller or any Subsidiary is a party;

          (vii) all contracts and agreements that limit or purport to limit the
     ability of the Seller or any Subsidiary to compete in any line of business
     or with any Person or in any geographic area or during any period of time;

          (viii) all contracts and agreements between or among the Seller or any
     Subsidiary, on one hand, and any Affiliate of the Seller (other than the
     Seller or any Subsidiary), on the other hand;

          (ix)  all contracts and agreements providing for benefits under any
     Plan; and


                                       23

<PAGE>


          (x)   all other contracts and agreements, whether or not made in the
     ordinary course of business, which are material to the Seller, any
     Subsidiary or the conduct of the Business, or the absence of which would
     have a Material Adverse Effect.

For purposes of this Section 3.18 and Sections 3.20, 3.21 and 3.22, the term
"lease" shall include, without limitation, any and all leases, subleases,
sale/leaseback agreements or similar arrangements.

        (b)   Each Material Contract: (i) is valid and binding on the parties
thereto and is in full force and effect and (ii) upon consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements, except
to the extent that any consents set forth in Section 3.07 of the Disclosure
Schedule are not obtained, shall continue in full force and effect without
penalty or other adverse consequence. None of the Seller nor any Subsidiary is
in material breach of, or default under, any Material Contract.

        (c)   No other party to any Material Contract is in breach thereof or
default thereunder and none of the Seller or any Subsidiary has received any
notice of termination, cancellation, breach or default under any Material
Contract.

        (d)   The Seller has made available to the Purchaser true and complete
copies of all Material Contracts.

        (e)   There is no contract, agreement or other arrangement granting any
Person any preferential right to purchase, other than in the ordinary course of
business consistent with past practice, any of the Assets or any of the Shares.

        SECTION 3.19. Intellectual Property. (a) Section 3.19(a) of the
Disclosure Schedule sets forth a true and complete list of (i) all patents and
patent applications, registered trademarks and trademark applications,
registered copyrights and copyright applications, and domain names included in
the Owned Intellectual Property, (ii) all Seller IP Agreements, and (iii) other
Owned Intellectual Property material to the Business.

        (b)   The Seller or a Subsidiary is the exclusive owner of the entire
right, title and interest in and to the Owned Intellectual Property, and has a
valid license to use the Licensed Intellectual Property in connection with the
Business. The Seller or a Subsidiary is entitled to use all Owned Intellectual
Property and Licensed Intellectual Property in the continued operation of the
Business without limitation, subject only to the terms of the Seller IP
Agreements. The Owned Intellectual Property and the Licensed Intellectual
Property have not been adjudged invalid or unenforceable in whole or in part,
and are valid and enforceable.

        (c)   The conduct of the Business as currently conducted does not
infringe or misappropriate the Intellectual Property of any third party, and no
Action alleging any of the foregoing are pending, and no Claim has been
threatened or asserted against the Seller or any Subsidiary alleging any of the
foregoing. To the Seller's knowledge, no person is engaging in any activity that
infringes the Owned Intellectual Property.

        (d) No Owned Intellectual Property is subject to any Governmental Order
restricting the use of such Intellectual Property or that would impair the
validity or enforceability


                                       24


<PAGE>


of such Intellectual Property in a manner that would reasonably be expected to
have a Material Adverse Effect.

        SECTION 3.20. Real Property. (a) Section 3.20(a) of the Disclosure
Schedule lists: (i) the street address of each parcel of Owned Real Property and
(ii) the date on which each parcel of Owned Real Property was acquired.

        (b)   Section 3.20(b) of the Disclosure Schedule lists: (i) the street
address of each parcel of Leased Real Property, (ii) the identity of the lessor,
lessee and current occupant (if different from lessee) of each such parcel of
Leased Real Property, (iii) the terms (referencing applicable renewal periods)
and rental payment amounts (including all escalations) pertaining to each such
parcel of Leased Real Property, and (iv) the current use of each such parcel of
Leased Real Property.

        (c)   Except as described in Section 3.20(c) or 3.16(a) of the
Disclosure Schedule, there is no material violation of any Law (including,
without limitation, any building, planning or zoning law) relating to any of the
Real Property. The Seller has made available to the Purchaser true, legible and
complete copies of each deed for each parcel of Owned Real Property and, to the
extent available, for each parcel of Leased Real Property and all the title
insurance policies, title reports, surveys, certificates of occupancy,
environmental reports and audits, appraisals, permits, other Encumbrances, title
documents and other documents relating to or otherwise affecting the Real
Property, the operations of the Seller or any Subsidiary thereon or any other
uses thereof. Either the Seller or a Subsidiary, as the case may be, is in
peaceful and undisturbed possession of each parcel of Real Property, and there
are no contractual or legal restrictions that preclude or restrict the ability
to use the Real Property for the purposes for which it is currently being used.
All existing water, sewer, steam, gas, electricity, telephone, cable, fiber
optic cable, Internet access and other utilities required for the construction,
use, occupancy, operation and maintenance of the Real Property are adequate for
the conduct of the Business as it has been and currently is conducted. There are
no material latent defects or material adverse physical conditions affecting the
Real Property or any of the facilities, buildings, structures, erections,
improvements, fixtures, fixed assets and personalty of a permanent nature
annexed, affixed or attached to, located on or forming part of the Real
Property. Neither the Seller nor any Subsidiary has leased or subleased any
parcel or any portion of any parcel of Real Property to any other Person and no
other Person has any rights to the use, occupancy or enjoyment thereof pursuant
to any lease, sublease, license, occupancy or other agreement, nor has the
Seller or any Subsidiary assigned its interest under any lease or sublease
listed in Section 3.20(b) of the Disclosure Schedule to any third party.

        (d)   Section 3.20(d) of the Disclosure Schedule sets forth a true and
complete list of all leases and subleases relating to the Real Property and any
and all ancillary documents (the "Ancillary Lease Documents") pertaining thereto
(including, but not limited to, all amendments, modifications, supplements,
exhibits, schedules, addenda and restatements thereto and thereof and all
consents, including, without limitation, consents for alterations, assignments
and sublets, documents recording variations, memoranda of lease, options, rights
of expansion, extension, first refusal and first offer and evidence of
commencement dates and expiration dates). With respect to each of such leases
and subleases, none of the Seller nor any Subsidiary has exercised or given any
notice of exercise, nor has any lessor or landlord exercised or


                                       25


<PAGE>


received any notice of exercise by a lessor or landlord of, any option, right of
first offer or right of first refusal contained in any such lease or sublease,
including, without limitation, any such option or right pertaining to purchase,
expansion, renewal, extension or relocation (collectively, "Options").

        (e)   There are no condemnation proceedings or eminent domain
proceedings of any kind pending or, to the knowledge of the Seller, threatened
against the Real Property.

        (f)   Except as set forth in Section 3.20(f) of the Disclosure Schedule,
to the knowledge of the Seller, all the Real Property is occupied under a valid
and current certificate of occupancy or similar permit, the transactions
contemplated by this Agreement and the Ancillary Agreements will not require the
issuance of any new or amended certificate of occupancy and there are no facts
that would prevent the Real Property from being occupied by the Seller or any
Subsidiary, as the case may be, after the Closing substantially in the same
manner as occupied by the Seller or such Subsidiary immediately prior to the
Closing.

        (g)   The rental set forth in each lease or sublease of the Leased Real
Property is the actual rental being paid, and there are no separate agreements
or understandings with respect to the same.

        (h)   Each of the Seller or a Subsidiary, as the case may be, has the
full right to exercise any Options contained in the leases and subleases
pertaining to the Leased Real Property on the terms and conditions contained
therein and upon due exercise would be entitled to enjoy the full benefit of
such Options with respect thereto.

        (i)   All waivers or amendments with respect to the Leased Real Property
that are, or will be, required as a result of the transactions herein
contemplated have been obtained or will be obtained by Closing.

        SECTION 3.21. Tangible Personal Property. (a) Section 3.21(a) of the
Disclosure Schedule lists each item or distinct group of machinery, equipment,
tools, supplies, furniture, fixtures, personalty, vehicles, rolling stock and
other tangible personal property (the "Tangible Personal Property") used in the
Business or owned or leased by the Seller or any Subsidiary.

        (b)   Section 3.21(b) of the Disclosure Schedule sets forth a true and
complete list of all leases and subleases for Tangible Personal Property and any
and all material ancillary documents pertaining thereto (including, but not
limited to, all amendments, consents and evidence of commencement dates and
expiration dates).

        SECTION 3.22. Assets. (a) Each of the Seller or a Subsidiary, as the
case may be, owns, leases or has the legal right to use all the properties and
assets, including, without limitation, the Owned Intellectual Property, the
Licensed Intellectual Property, Seller IP Agreements, the Real Property and the
Tangible Personal Property, used or intended to be used in the conduct of the
Business or otherwise owned, leased or used by the Seller or any Subsidiary,
and, with respect to contract rights, is a party to and enjoys the right to the
benefits of all contracts, agreements and other arrangements used or intended to
be used by the Seller or any


                                       26


<PAGE>


Subsidiary or in or relating to the conduct of the Business, all of which
properties, assets and rights constitute Assets.

        (b)   The Assets constitute all the properties, assets and rights
forming a part of, used, held or intended to be used in, and all such
properties, assets and rights as are necessary in the conduct of, the Business.
At all times since the Interim Financial Statements Date, the Seller has caused
the Assets to be maintained in accordance with good business practice, and all
the Assets are in good operating condition and repair and are suitable for the
purposes for which they are used and intended.

        SECTION 3.23. Suppliers. Listed in Section 3.23 of the Disclosure
Schedule are the names and addresses of all the suppliers from which the Seller
and the Subsidiaries ordered supplies, merchandise and other goods for the
Business having an aggregate purchase price of $100,000 or more during the
twelve-month period ended the Interim Financial Statements Date and the amount
for which each such supplier invoiced the Seller and the Subsidiaries during
such period. Except as set forth in Section 3.23 of the Disclosure Schedule,
neither of the Seller nor any Subsidiary has received any notice or has any
reason to believe that any such supplier will not sell supplies, merchandise and
other goods to the Seller or any Subsidiary at any time after the Closing Date
on terms and conditions substantially similar to those used in its current sales
to the Business, subject only to general and customary price increases.

        SECTION 3.24. Employee Benefit Matters. (a) Plans and Material
Documents. Section 3.24(a) of the Disclosure Schedule lists (i) all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) and all bonus, stock option, stock
purchase, restricted stock, incentive, deferred compensation, retiree medical or
life insurance, supplemental retirement, severance or other benefit plans,
programs or arrangements, and all employment, termination, severance or other
contracts or agreements, whether legally enforceable or not, to which the Seller
or any Subsidiary is a party, with respect to which the Seller or any Subsidiary
has any obligation or which are maintained, contributed to or sponsored by the
Seller or any Subsidiary for the benefit of any current or former employee,
officer or director of the Seller or any Subsidiary, (ii) each employee benefit
plan for which the Seller or any Subsidiary could incur liability under Section
4069 of ERISA in the event such plan has been or were to be terminated, (iii)
any plan in respect of which the Seller or any Subsidiary could incur liability
under Section 4212(c) of ERISA, and (iv) any contracts, arrangements or
understandings between the Seller or any of its Affiliates and any employee of
the Seller or of any Subsidiary, including, without limitation, any contracts,
arrangements or understandings relating to the sale of the Seller (collectively,
the "Plans"). Each Plan is in writing and the Seller has furnished to the
Purchaser a complete and accurate copy of each Plan and a complete and accurate
copy of each material document prepared in connection with each such Plan,
including, without limitation, a copy of (i) each trust or other funding
arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the most recently filed IRS Form 5500, if applicable, (iv)
if such Plan is intended to be qualified under Section 401(a) of the Code, the
most recently received IRS determination letter for each such Plan, and (v) the
most recently prepared actuarial report and financial statement in connection
with such Plan if applicable. There are no other employee benefit plans,
programs, arrangements or agreements, whether formal or informal, whether in
writing or not, to which the Seller or any Subsidiary is a party, with respect
to which the Seller or any Subsidiary has any


                                       27


<PAGE>


obligation or which are maintained, contributed to or sponsored by the Seller or
any Subsidiary for the benefit of any current or former employee, officer or
director of the Seller or any Subsidiary. Neither the Seller nor any Subsidiary
has any express or implied commitment, whether legally enforceable or not, to
(i) create, incur liability with respect to or cause to exist any other employee
benefit plan, program or arrangement, (ii) to enter into any contract or
agreement to provide compensation or benefits to any individual, or (iii) to
modify, change or terminate any Plan, other than with respect to a modification,
change or termination required by ERISA or the Code.

        (b)   Absence of Certain Types of Plans. None of the Plans is a
multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA)
(a "Multiemployer Plan") or a single employer pension plan (within the meaning
of Section 4001(a)(15) of ERISA) for which the Seller or any Subsidiary could
incur liability under Section 4063 or 4064 of ERISA (a "Multiple Employer
Plan"). None of the Plans provides for the payment of separation, severance,
termination or similar-type benefits to any Person or obligates the Seller or
any Subsidiary to pay separation, severance, termination or similar-type
benefits solely as a result of any transaction contemplated by this Agreement or
as a result of a "change in control", within the meaning of such term under
Section 280G of the Code. None of the Plans provides for or promises retiree
medical, disability or life insurance benefits to any current or former
employee, officer or director of the Seller or any Subsidiary. Each of the Plans
is subject only to the laws of the United States or a political subdivision
thereof.

        (c)   Compliance with Applicable Law. Each Plan is now and always has
been operated in all respects in accordance with the requirements of all
applicable Law, including, without limitation, ERISA and the Code, and all
persons who participate in the operation of such Plans and all Plan
"fiduciaries" (within the meaning of Section 3(21) of ERISA) have always acted
in accordance with the provisions of all applicable Law, including, without
limitation, ERISA and the Code. The Seller (and each Subsidiary) has performed
all obligations required to be performed by it under, is not in any respect in
default under or in violation of, and has no knowledge of any default or
violation by any party to, any Plan. No legal action, suit or claim is pending
or, to the knowledge of the Seller, threatened with respect to any Plan (other
than claims for benefits in the ordinary course) and no fact or event exists
that could give rise to any such action, suit or claim.

        (d)   Qualification of Certain Plans. Each Plan which is intended to be
qualified under Section 401(a) of the Code or Section 401(k) of the Code has
received a favorable determination letter from the IRS that it is so qualified,
and each trust established in connection with any Plan which is intended to be
exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and, to the
best of the Seller's knowledge, no fact or event has occurred since the date of
such determination letter from the IRS to adversely affect the qualified status
of any such Plan or the exempt status of any such trust. Each trust maintained
or contributed to by the Seller or any Subsidiary which is intended to be
qualified as a voluntary employees' beneficiary association and which is
intended to be exempt from federal income taxation under Section 501(c)(9) of
the Code has received a favorable determination letter from the IRS that it is
so qualified and so exempt, and, to the best of the Seller's knowledge, no fact
or event has occurred since the date of such determination by the IRS to
adversely affect such qualified or exempt status.


                                       28


<PAGE>


        (e)   Absence of Certain Liabilities and Events. There has been no
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Plan. Neither the Seller nor any
Subsidiary has incurred any liability for any penalty or tax arising under
Section 4971, 4972, 4980, 4980B or 6652 of the Code or any liability under
Section 502 of ERISA, and no fact or event exists which could give rise to any
such liability. Neither the Seller nor any Subsidiary has incurred any liability
under, arising out of or by operation of Title IV of ERISA (other than liability
for premiums to the Pension Benefit Guaranty Corporation arising in the ordinary
course), including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee benefit plan subject to Title IV
of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer
Plan, and no fact or event exists which could give rise to any such liability.
No complete or partial termination has occurred within the five years preceding
the date hereof with respect to any Plan. No reportable event (within the
meaning of Section 4043 of ERISA) has occurred or is expected to occur with
respect to any Plan subject to Title IV of ERISA. No Plan had an accumulated
funding deficiency (within the meaning of Section 302 of ERISA or Section 412 of
the Code), whether or not waived, as of the most recently ended plan year of
such Plan. None of the assets of the Seller or any Subsidiary is the subject of
any lien arising under Section 302(f) of ERISA or Section 412(n) of the Code;
neither the Seller nor any Subsidiary has been required to post any security
under Section 307 of ERISA or Section 401(a)(29) of the Code; and no fact or
event exists which could give rise to any such lien or requirement to post any
such security.

        (f)   Plan Contributions and Funding. All contributions, premiums or
payments required to be made with respect to any Plan have been made on or
before their due dates. All such contributions have been fully deducted for
income tax purposes and no such deduction has been challenged or disallowed by
any Governmental Authority, and no fact or event exists which could give rise to
any such challenge or disallowance. As of the Closing Date, no Plan which is
subject to Title IV of ERISA will have an "unfunded benefit liability" (within
the meaning of Section 4001(a)(18) of ERISA).

        (g)   WARN Act. The Seller and the Subsidiaries are in compliance with
the requirements of the Workers Adjustment and Retraining Notification Act
("WARN") and have no liabilities pursuant to WARN.

        SECTION 3.25. Labor Matters. (a) Neither the Seller nor any Subsidiary
is a party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Seller or any Subsidiary, and currently
there are no organizational campaigns, petitions or other unionization
activities seeking recognition of a collective bargaining unit which could
affect the Seller or any Subsidiary; (b) there are no controversies, strikes,
slowdowns or work stoppages pending or, to knowledge of the Seller, threatened
between the Seller or any Subsidiary and any of their respective employees, and
neither the Seller nor any Subsidiary has experienced any such controversy,
strike, slowdown or work stoppage within the past three years; (c) neither the
Seller nor any Subsidiary has breached or otherwise failed to comply with the
provisions of any collective bargaining or union contract, and there are no
grievances outstanding against the Seller or any Subsidiary under any such
agreement or contract which could have a Material Adverse Effect; (d) there are
no unfair labor practice complaints pending against the Seller or any Subsidiary
before the National Labor Relations Board or any other Governmental Authority or
any current union representation questions involving employees of


                                       29


<PAGE>


the Seller or any Subsidiary which could have a Material Adverse Effect; (e) the
Seller and each Subsidiary are currently in compliance in all material respects
with all applicable Laws relating to the employment of labor, including, without
limitation, those related to wages, hours, collective bargaining and the payment
and withholding of taxes and other sums as required by the appropriate
Governmental Authority and has withheld and paid to the appropriate Governmental
Authority or is holding for payment not yet due to such Governmental Authority
all amounts required to be withheld from employees of the Seller or any
Subsidiary and is not liable for any arrears of wages, taxes, penalties or other
sums for failure to comply with any of the foregoing; (f) the Seller and each
Subsidiary has paid in full to all their respective employees or adequately
accrued for in accordance with U.S. GAAP all wages, salaries, commissions,
bonuses, benefits and other compensation due to or on behalf of such employees;
(g) there is no claim with respect to payment of wages, salary or overtime pay
that has been asserted or is now pending or threatened before any Governmental
Authority with respect to any Persons currently or formerly employed by the
Seller or any Subsidiary; (h) neither the Seller nor any Subsidiary is a party
to, or otherwise bound by, any consent decree with, or citation by, any
Governmental Authority relating to employees or employment practices; (i) there
is no charge or proceeding with respect to a violation of any occupational
safety or health standard that has been asserted or is now pending or threatened
with respect to the Seller or any Subsidiary; and (j) there is no charge of
discrimination in employment or employment practices, for any reason, including,
without limitation, age, gender, race, religion or other legally protected
category, which has been asserted or is now pending or, to the Seller's
knowledge, threatened before the United States Equal Employment Opportunity
Commission, or any other Governmental Authority in any jurisdiction in which the
Seller or any Subsidiary has employed or currently employs any Person.

        SECTION 3.26. Key Employees. Section 3.26 of the Disclosure Schedule
lists the name, place of employment, the current annual salary rates, bonuses,
deferred or contingent compensation, pension, accrued vacation, "golden
parachute" and other like benefits paid or payable (in cash or otherwise) in
fiscal 2001 and 2002, the date of employment and a description of the position
and job function of each current salaried employee, officer, director,
consultant or agent of the Seller or any Subsidiary whose annual compensation
exceeded (or, in the fiscal year ended 2002, is expected to exceed) $100,000.

        SECTION 3.27. Certain Interests. (a) Except as set forth in Section 3.27
of the Disclosure Schedule, no officer or director of the Seller or any
Subsidiary and, to the Seller's knowledge, no stockholder of the Seller required
to file a Schedule 13D or 13G with the SEC under the Exchange Act, and no
relative or spouse (or relative of such spouse) who resides with, or is a
dependent of, any such officer, director or stockholder:

          (i)   has any direct or indirect financial interest in any competitor,
     supplier or customer of the Seller or any Subsidiary or the Business;

          (ii)  owns, directly or indirectly, in whole or in part, or has any
     other interest in any tangible or intangible property which the Seller or
     any Subsidiary uses or has used in the conduct of the Business or
     otherwise; or

          (iii) has outstanding any Indebtedness to the Seller or any
     Subsidiary.


                                       30


<PAGE>


        (b)   Neither the Seller nor any Subsidiary has any Liability or any
other obligation of any nature whatsoever to any officer, director or
stockholder of the Seller or any Subsidiary or to any relative or spouse (or
relative of such spouse) who resides with, or is a dependent of, any such
officer, director or stockholder.

        SECTION 3.28. Taxes. Except as set forth in Section 3.28 of the
Disclosure Schedule, (a) (i) All returns and reports in respect of Taxes
required to be filed with respect to the Seller and each Subsidiary (each a
"Return") (including, without limitation, the consolidated federal income tax
return of the Seller and any state, local or other Return that includes the
Seller or any Subsidiary on a consolidated, combined or unitary basis) have been
timely filed; (ii) all Taxes required to be shown on such returns and reports or
otherwise due have been timely paid; (iii) all such returns and reports (insofar
as they relate to the activities or income of the Seller or any Subsidiary) are
true, correct and complete in all material respects; (iv) there are no tax liens
on any assets of the Seller or any Subsidiary; (v) neither Seller nor any
Affiliate is a party to any agreement or arrangement that would result,
separately or in the aggregate, in the actual or deemed payment by the Seller or
a Subsidiary of any "excess parachute payments" within the meaning of section
280G of the Code (without regard to Section 280G(b)(4) of the Code); (vi) from
the date hereof and after the Closing Date, the Seller or any Subsidiary, except
any Subsidiary not incorporated in the United States, has been and continues to
be a member of the affiliated group (within the meaning of Section 1504(a)(1) of
the Code) for which the Seller files a consolidated return as the common parent,
and has not been includible in any other consolidated return for any taxable
period for which the statute of limitations has not expired; and (vii) none of
the Seller or Subsidiaries is doing business in or engaged in a trade or
business in any jurisdiction in which it has not filed all required income or
franchise tax return.

        (b) (i) Section 3.28 of the Disclosure Schedule contains a description
of all adjustments relating to returns of the Seller and any Subsidiary that
have been proposed formally or informally by any Tax authority (insofar as
either relates to the activities or income of the Seller or any Subsidiary or
could result in liability of the Seller or any Subsidiary on the basis of joint
and/or several liability), along with a summary of the status of such audit or
examination. No other adjustment has been proposed and, to the knowledge of the
Seller, no basis exists for any such adjustment; and (ii) there are no pending
or, to the knowledge of the Seller, threatened actions or proceedings for the
assessment or collection of Taxes against the Seller or any Subsidiary.

        (c) (i) There are no outstanding waivers or agreements extending the
statute of limitations for any period with respect to any Tax to which the
Seller or any Subsidiary may be subject; (ii) there are no requests for
information from a Tax Authority currently outstanding that could affect the
Taxes of the Seller or any Subsidiary; (iii) there are no proposed reassessments
of any property owned by the Seller or any Subsidiary or other proposals that
could increase the amount of any Tax to which the Seller or any Subsidiary would
be subject; (iv) no power of attorney that is currently in force has been
granted with respect to any matter relating to Taxes that could affect the
Seller or any Subsidiary; and (v) none of the Seller or Subsidiaries (A) has or
is projected to have an amount includible in its income for the current taxable
year under Section 951 of the Code, (B) has been a passive foreign investment
company within the meaning of Section 1296 of the Code, (C) has an unrecaptured
overall foreign loss within the meaning of


                                       31


<PAGE>


Section 904(f) of the Code or (D) has participated in or cooperated with an
international boycott within the meaning of section 999 of the Code.

        (d)   On the Interim Financial Statements, reserves and allowances have
been provided, and on the Closing Statement of Net Assets, reserves and
allowances will be provided, in each case adequate to satisfy all Liabilities
for Taxes relating to the Seller, the Subsidiaries and the Business for periods
through the Closing Date.

        SECTION 3.29. Insurance. All material assets, properties and risks of
the Seller and each Subsidiary are, and for the past five years have been,
covered by valid and, except for insurance policies that have expired under
their terms in the ordinary course, currently effective insurance policies or
binders of insurance (including, without limitation, general liability
insurance, property insurance and workers' compensation insurance) issued in
favor of the Seller or a Subsidiary, as the case may be, in each case with
responsible insurance companies, in such types and amounts and covering such
risks as are consistent with customary practices and standards of companies
engaged in businesses and operations similar to those of the Seller or such
Subsidiary, as the case may be. The Seller carries and has maintained in full
force and effect errors and omissions insurance coving its officers and
directors in amounts deemed adequate by its Board of Directors. Section 3.29 of
the Disclosure Schedule sets forth all insurance policies of the Seller and the
Subsidiaries in effect as of the date hereof, providing the following details
with respect to each such policy: name of insured, name of carrier, cost of
policy, risks covered by policy, amount of coverage under policy, amount of
deductible under policy and expiry date of policy.

        SECTION 3.30. Full Disclosure. The Seller has no actual knowledge of any
facts pertaining to the Seller, any Subsidiary or the Business which would
reasonably be expected to have a Material Adverse Effect which have not been
disclosed in this Agreement, the Disclosure Schedule, the Financial Statements
or the Interim Financial Statements or otherwise disclosed to the Purchaser by
the Seller in writing.

        SECTION 3.31. Brokers. Except as set forth in Section 3.31 of the
Disclosure Schedule, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement or the Ancillary Agreements based
upon arrangements made by or on behalf of the Seller.

        SECTION 3.32. S-3 Eligibility. The Seller reasonably believes it is
eligible to register secondary offerings of its securities on Form S-3 under the
Securities Act.

        SECTION 3.33. SEC Documents. The Seller has timely filed with the SEC
all reports, schedules, forms, proxy statements, registration statements and
other documents required to be filed by the Seller under the Securities Act and
the Exchange Act, as the case may be, (collectively, all such reports,
schedules, forms, proxy statements, registration statements and documents, the
"SEC Documents"). As of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents. As of their respective
filing dates, none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact


                                       32


<PAGE>


required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent such statements have been modified or
superseded by a later SEC Document filed and publicly available prior to the
Closing, the circumstances or bases for which modifications or supersessions
have not and will not individually or in the aggregate result in any material
liability or obligation of the Seller under the Securities Act or the Exchange
Act.

        SECTION 3.34. Compliance with Cuba Act. The Seller has complied with,
and is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder, or is
exempt therefrom.

        SECTION 3.35. Investment Company Act. The Seller is not, and upon the
issuance and sale of the Shares and Warrants as herein contemplated and the
application of the net proceeds therefrom will not be, an "investment company"
or an entity "controlled" by an "investment company" as such terms are defined
in the Investment Company Act of 1940, as amended (the "Investment Company
Act").

        SECTION 3.36. Registration Rights. There are no persons with
registration rights or other similar rights to have any securities registered by
the Seller under the Securities Act.

        SECTION 3.37. Officer's Certificates. Any certificate signed by any
officer of the Seller or any of its subsidiaries delivered to the Purchaser or
to counsel for the Purchaser shall be deemed a representation and warranty by
the Seller to the Purchaser as to the matters covered thereby.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES
                                OF THE PURCHASER

        As an inducement to the Seller to enter into this Agreement, the
Purchaser hereby represents and warrants to the Seller as follows:

        SECTION 4.01. Organization of the Purchaser. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation.

        SECTION 4.02. Authority and Qualification of the Purchaser. The
Purchaser has all necessary power and authority to enter into this Agreement and
the Ancillary Agreements, to carry out its obligations hereunder and thereunder
and to consummate the transactions contemplated by this Agreement and thereby.
The execution and delivery of this Agreement and the Ancillary Agreements by the
Purchaser, the performance by the Purchaser of its obligations hereunder and
thereunder and the consummation by the Purchaser of the transactions
contemplated by this Agreement and thereby have been duly authorized by all
requisite action on the part of the Purchaser and no other action need be taken.


                                       33


<PAGE>


        SECTION 4.03. Enforceability. This Agreement has been, and upon their
execution the Ancillary Agreements shall have been, duly executed and delivered
by the Purchaser, and (assuming due authorization, execution and delivery by the
Seller) this Agreement constitutes, and upon their execution the Ancillary
Agreements shall constitute, legal, valid and binding obligations of the
Purchaser, enforceable against the Purchaser in accordance with their respective
terms, except to the extent that their enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.

        SECTION 4.04. No Conflict. The execution, delivery and performance of
this Agreement and the Ancillary Agreements by the Purchaser do not and will not
(a) violate, conflict with or result in the breach of any provision of the
articles of incorporation or by-laws (or similar organizational documents) of
the Purchaser, or (b) conflict with or violate any Law or Governmental Order
applicable to the Purchaser or its assets, properties or businesses, or (c) in
any material respect, conflict with, result in any breach of, constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance on any property or
asset of the Purchaser pursuant to, any note, bond, mortgage or indenture,
contract, agreement, lease, sublease, license, permit, franchise or other
instrument or arrangement to which the Purchaser is a party or by which any of
such assets or properties is bound or affected.

        SECTION 4.05. Litigation. There are no material Actions by or against
the Purchaser (or by or against the Purchaser or any Affiliate thereof and
relating to its business) or affecting any of the Purchaser's assets pending
before any Governmental Authority (or, to the knowledge of the Purchaser,
threatened to be brought by or before any Governmental Authority) that would
reasonably be expected to have a materially adverse affect on the Purchaser, the
legality, validity or enforceability of this Agreement, any Ancillary Agreement
or the consummation of the transactions contemplated by this Agreement or
thereby. The Purchaser is not subject to any Governmental Order (nor, to the
knowledge of the Purchaser, are there any such Governmental Orders threatened to
be imposed by any Governmental Authority) on the Purchaser which has or has had
or could have a materially adverse affect on the legality, validity or
enforceability of this Agreement, any Ancillary Agreement or the consummation of
the transactions contemplated by this Agreement or thereby.

        SECTION 4.06. Brokers. Except for Bear, Stearns & Co. Inc., no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
or the Ancillary Agreements based upon arrangements made by or on behalf of the
Purchaser.

        SECTION 4.07. Investment Intent. The Purchaser is not acquiring the
Shares with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act.

        SECTION 4.08. Disclosure. Information, including financial information,
with respect to the Purchaser provided by the Purchaser in writing to the Seller
is accurate in all


                                       34


<PAGE>


material respects and does not omit to state a material fact necessary to make
such written information, in light of the circumstances in which it was provided
to the Seller, not misleading.

        SECTION 4.09. Financing. The Purchaser has received commitments from
third parties to invest sufficient funds in the Purchaser to allow the Purchaser
to meet its obligations hereunder.

                                   ARTICLE V

                              ADDITIONAL AGREEMENTS

        SECTION 5.01. Conduct of Business Prior to the Closing. (a) The Seller
covenants and agrees that, except as described in Section 5.01(a) of the
Disclosure Schedule and pursuant to Section 6.01(g), between the date hereof and
the time of the Closing, neither the Seller nor any Subsidiary shall conduct its
business other than in the ordinary course and consistent with the Seller's and
such Subsidiary's prior practice. Without limiting the generality of the
foregoing, except as described in Section 5.01(a) of the Disclosure Schedule and
pursuant to Section 6.01(g), between the date hereof and the Closing Date, the
Seller shall cause each Subsidiary to (i) continue their advertising and
promotional activities, and pricing and purchasing policies, in accordance with
past practice; (ii) not shorten or lengthen the customary payment cycles for any
of their payables or receivables; (iii) use their best efforts to (A) preserve
intact their business organizations and the business organization of the
Business, (B) keep available to the Purchaser the services of the employees of
the Seller and each Subsidiary, (C) continue in full force and effect without
material modification all existing policies or binders of insurance currently
maintained in respect of the Seller, each Subsidiary and the Business and (D)
preserve their current relationships with their customers, suppliers and other
persons with which they have had significant business relationships; and (iv)
exercise, but only after notice to the Purchaser and receipt of the Purchaser's
prior written approval, any rights of renewal pursuant to the terms of any of
the leases or subleases set forth in Section 3.20(b) of the Disclosure Schedule
which by their terms would otherwise expire.

        (b)   Except as described in Section 6.01(b) of the Disclosure Schedule,
the Seller covenants and agrees that, between the date hereof and the time of
the Closing, without the prior written consent of the Purchaser, neither the
Seller nor any Subsidiary will do any of the things enumerated in the second
sentence of Section 3.14 (including, without limitation, clauses (a) through (u)
thereof).

        (c)   For the period from the date hereof through the Closing Date, the
Seller covenants and agrees to and to cause each Subsidiary to maintain the
level, mix and quality of the Inventories consistent with past practice.

        (d)   Notwithstanding anything to the contrary in this Section 5.01, the
Purchaser acknowledges that the Seller and the Business shall at all times be
controlled by the Board of Directors of the Seller.

        SECTION 5.02. Access to Information. From the date hereof until the
Closing, upon reasonable notice, the Seller shall cause its officers, directors,
employees, agents,


                                       35


<PAGE>


representatives, accountants and counsel and shall cause the Subsidiaries and
each of the Subsidiaries' officers, directors, employees, agents,
representatives, accountants and counsel to: (i) afford the officers, employees,
agents, accountants, counsel, financing sources and representatives of the
Purchaser reasonable access, during normal business hours, to the offices,
properties, plants, other facilities, books and records of the Seller and each
Subsidiary and to those officers, directors, employees, agents, accountants and
counsel of the Seller and of each Subsidiary who have any knowledge relating to
the Seller, any Subsidiary or the Business and (ii) furnish to the officers,
employees, agents, accountants, counsel, financing sources and representatives
of the Purchaser such additional financial and operating data and other
information regarding the assets, properties, liabilities and goodwill of the
Seller, the Subsidiaries and the Business (or legible copies thereof) as the
Purchaser may from time to time reasonably request.

        SECTION 5.03. Regulatory and Other Authorizations; Notices and Consents.
(a) The Seller shall use its reasonable efforts to obtain (or cause the
Subsidiaries to obtain) all authorizations, consents, orders and approvals of
all Governmental Authorities and officials that may be or become necessary for
its execution and delivery of, and the performance of its obligations pursuant
to, this Agreement and the Ancillary Agreements and will cooperate fully with
the Purchaser in promptly seeking to obtain all such authorizations, consents,
orders and approvals.

        (b)   The Seller shall or shall cause the Subsidiaries to give promptly
such notices to third parties and use its or their reasonable efforts to obtain
such third party consents and estoppel certificates as the Purchaser may in its
sole discretion deem necessary or desirable in connection with the transactions
contemplated by this Agreement.

        (c)   The Purchaser shall cooperate and use all reasonable efforts to
assist the Seller in giving such notices and obtaining such consents and
estoppel certificates; provided, however, that the Purchaser shall have no
obligation to give any guarantee or other consideration of any nature in
connection with any such notice, consent or estoppel certificate or to consent
to any change in the terms of any agreement or arrangement which the Purchaser
in its sole discretion may deem adverse to the interests of the Purchaser, the
Seller, any Subsidiary or the Business.

        SECTION 5.04. Notice of Developments. (a) Prior to the Closing, the
Seller shall promptly notify the Purchaser in writing of (i) all events,
circumstances, facts and occurrences arising subsequent to the date of this
Agreement which could result in any breach of a representation or warranty or
covenant of the Seller in this Agreement or which could have the effect of
making any representation or warranty of the Seller in this Agreement untrue or
incorrect in any respect, (ii) any purchase from or purchase order to any
Vendor, except Rolex, in excess of $50,000 and (iii) all other material
developments affecting the assets, Liabilities, business, financial condition,
operations, results of operations, customer or supplier relations, employee
relations, projections or prospects of the Seller, any Subsidiary or the
Business.

        (b)   Prior to the Closing, the Purchaser shall promptly notify the
Seller in writing of (i) all events, circumstances, facts and occurrences
arising subsequent to the date of this Agreement which could result in any
breach of a representation or warranty or covenant of


                                       36


<PAGE>


the Purchaser in this Agreement or which could have the effect of making any
representation or warranty of the Purchaser in this Agreement untrue or
incorrect in any respect.

        SECTION 5.05. No Solicitation or Negotiation. The Seller immediately
shall cease and cause to be terminated all existing discussions, conversations,
negotiations and other communications with any Persons conducted prior to the
date of this Agreement concerning any investment in the Seller. From and after
the date hereof, the Seller shall not, nor shall it permit any of its
Subsidiaries to, nor shall they authorize or instruct any of their respective
officers, directors or employees to, and shall use their best efforts to cause
any advisor retained by them, not to, directly or indirectly through another
Person, (i) solicit, initiate or knowingly encourage (including by way of
furnishing information, or knowingly take any other action designed to
facilitate, any Business Combination, or (ii) participate in any substantive
discussions or negotiations regarding any Business Combination; provided, that
if, at any time prior to the Closing, the Board of Directors of the Seller (A)
receives an unsolicited bona fide proposal from a Proposing Party, (B)
determines in its good faith judgment that providing information to the
Proposing Party or participating in negotiations or discussions with the
Proposing Party could reasonably be expected to result in a Superior Proposal
and (C) receives specific legal advice from its outside attorneys that the Board
of Director's of the Seller could be in violation of its fiduciary duties to the
Seller's stockholders if it refused to consider such proposal, furnish
information, engage in discussions and negotiations or enter into a Business
Combination, as the case may be, provided that the Seller is not otherwise in
breach of its obligations under this Section 5.05, then the Seller may (X) after
giving the Purchaser 24 hours prior written notice, furnish information with
respect to the Seller pursuant to a confidentiality agreement with such
Proposing Party substantially similar to the Confidentiality Agreement between
the Seller and Birks, dated April 19, 2002, (Y) after giving the Purchaser 24
hours prior written notice, engage in discussions and negotiations with the
Proposing Party (Z) after giving the Purchaser 72 hours prior written notice,
which indicates the identity of the Proposing Party and the terms and conditions
of the Superior Proposal, enter into an agreement with respect to a Business
Combination with the Proposing Party, subject to Section 8.03; provided,
further, if the Seller receives a Superior Proposal, the Purchaser shall have
the right to submit an alternative offer from the Purchaser, which is at least
equal to the Superior Proposal.

        SECTION 5.06. Listing. The Seller shall use its reasonable efforts to
list the Common Stock, which the Shares are convertible into and the Warrants
exercisable into, on the American Stock Exchange and will use its reasonable
efforts to maintain the listing of its Common Stock on the American Stock
Exchange without stockholder approval of the transactions contemplated herein.

        SECTION 5.07. Use of Intellectual Property. The Seller acknowledges that
from and after the Closing, the name "Mayor's Jewelers" and all similar or
related names, marks and logos (all of such names, marks and logos being the
"Seller Marks") shall be owned by the Seller or a Subsidiary, that no other
person shall have any rights in the Seller Marks.

        SECTION 5.08. Payments on Behalf of Affiliates. Payments made or
received by the Purchaser pursuant to Article VII hereof shall, in appropriate
circumstances, be made on behalf of, or received in trust for the benefit of,
the relevant Affiliate of the Purchaser. The Purchaser may direct in writing any
such payment to be made by or to the appropriate Affiliate,


                                       37


<PAGE>


and the other party shall comply with any such direction received at least two
Business Days prior to the date such payment is due.

        SECTION 5.09. Further Action. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things necessary, proper or advisable under applicable Law,
and to execute and deliver such documents and other papers, as may be required
to carry out the provisions of this Agreement and consummate and make effective
the transactions contemplated by this Agreement.

                                   ARTICLE VI

                              CONDITIONS TO CLOSING

        SECTION 6.01. Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or written waiver, at or prior to
the Closing, of each of the following conditions:

        (a) Representations, Warranties and Covenants. (i) The representations
and warranties of the Seller contained in this Agreement that are subject to a
materiality qualifier shall have been true and correct when made and shall be
true and correct as of the Closing Date with the same force and effect as if
made as of the Closing Date and the representations and warranties of the Seller
contained in this Agreement that are not subject to a materiality qualifier
shall have been true and correct when made and shall be true and correct in all
material respects as of the Closing Date with the same force and effect as if
made as of the Closing Date; (ii) the covenants and agreements contained in this
Agreement to be complied with by the Seller on or before the Closing Date shall
have been complied with in all material respects; and (iii) there shall not have
been since the date hereof, any change in the capital stock of the Seller (other
than as a result of the exercise of stock options) or any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Seller and the Subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business; the
Purchaser shall receive a certificate to such effect as specified in clauses
(i), (ii) and (iii) of this paragraph 6.01(a) signed by the Chief Operating
Officer and one other officer of the Seller dated the Closing Date;

        (b)   No Proceeding or Litigation. No Action shall have been commenced
or threatened by or before any Governmental Authority against either the Seller
or the Purchaser, seeking to restrain or materially and adversely alter the
transactions contemplated by this Agreement which, in the sole and absolute
discretion of the Purchaser, is likely to render it impractical to consummate
such transactions or which could have a Material Adverse Effect or otherwise
render inadvisable, in the reasonable discretion of the Purchaser, the
consummation of the transactions contemplated by this Agreement;

        (c)   Consents and Approvals. The Purchaser and the Seller shall have
received, each in form and substance satisfactory to the Purchaser, all
authorizations, consents, orders and approvals of all Governmental Authorities
and officials and all third party consents and estoppel certificates, listed in
Schedule I hereto;


                                       38


<PAGE>


        (d)   Board Approval. The Investment Documents and the transactions
contemplated thereunder shall be approved by the Board of Directors of the
Seller, including unanimous approval by the independent members of such Board of
Directors of the Seller; true copies of the resolutions of the Board of
Directors of the Seller shall be provided to the Purchaser at closing along with
an attestation as to authenticity signed by the Secretary of the Seller;

        (e)   Senior Financing. Upon Closing, the terms of the Credit Agreement
shall be amended substantially in accordance with the terms, conditions and
covenants set forth in Exhibit G hereto;

        (f)   Rolex. The Purchaser in its reasonable discretion shall be
satisfied that the business terms under which the Seller has the right to
purchase and sell Rolex products are substantially the same on the Closing Date
as they were on the date hereof;

        (g)   Lease Termination. The Seller shall have executed agreements to
terminate leases in accordance with Schedule II hereto;

        (h)   Ancillary Agreements. The Seller shall have executed and delivered
to the Purchaser each of the Ancillary Agreements to which it is a party; and

        (i)   Market Disruptions. On or after the date hereof there shall not
have occurred any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange, the American
Stock Exchange, the NASDAQ National Market or the Toronto Stock Exchange; (ii) a
general moratorium on commercial banking activities in New York or within Canada
or the European Union declared by the relevant authorities or a material
disruption in commercial banking services in the United States, Canada or the
European Union; (iii) the outbreak or escalation of hostilities involving the
United States or Canada or the declaration by the United States or Canada of a
national emergency or war involving the United States or Canada, if the effect
of any such event specified in this clause (iii) in the reasonable judgment of
the Purchaser makes it impracticable or inadvisable to proceed with the
transactions contemplated hereby on the terms and in the manner contemplated
hereunder.

        SECTION 6.02. Conditions to Obligations of the Seller. The obligations
of the Seller to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment or written waiver, at or prior to the
Closing, of each of the following conditions:

        (a)   Representations, Warranties and Covenants. (i) The representations
and warranties of the Purchaser contained in this Agreement shall have been true
and correct in all material respects when made and shall be true and correct in
all material respects as of the Closing Date with the same force and effect as
if made as of the Closing Date; (ii) the covenants and agreements contained in
this Agreement to be complied with by the Purchaser on or before the Closing
Date shall have been complied with in all material respects; and (iii) there
shall not have been since the date hereof any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs of the
Purchaser, whether or not arising in the ordinary course of business; the Seller
shall receive a certificate to such effect as specified in


                                       39


<PAGE>


clauses (i), (ii) and (iii) of this paragraph 6.02(a) signed by an officer of
the Purchaser dated the Closing Date;

        (b)   Board Approval. The transactions contemplated by the Investment
Documents shall be approved by the Board of Directors of the Purchaser; true
copies of the resolutions of the Board of Directors of the Purchaser shall be
provided to the Seller at closing along with an attestation as to authenticity
signed by the Secretary of the Purchaser; and

        (c)   Ancillary Agreements. The Purchaser shall have executed and
delivered to the Seller each of the Ancillary Agreements to which it is a party.

                                  ARTICLE VII

                                 INDEMNIFICATION

        SECTION 7.01. Survival of Representations and Warranties. The
representations and warranties of the Seller contained in Sections 3.04, 3.06,
3.08, 3.10 and 3.30 (the "Surviving Representations and Warranties") of this
Agreement shall survive the Closing until the first anniversary of the Closing
Date. All other representations and warranties of the Seller contained in this
Agreement shall not survive the Closing. Neither the period of survival nor the
liability of the Seller with respect to the Surviving Representations and
Warranties shall be reduced by any investigation made at any time by or on
behalf of the Purchaser. If written notice of a claim has been given prior to
the expiration of the applicable Surviving Representations and Warranties by the
Purchaser to the Seller, then the relevant Surviving Representations and
Warranties shall survive as to such claim, until such claim has been finally
resolved. The representations and warranties of the Purchaser contained in this
Agreement shall not survive the Closing.

        SECTION 7.02. Indemnification by the Seller. (a) The Purchaser and its
Affiliates, officers, directors, employees, agents, successors and assigns (each
a "Purchaser Indemnified Party") shall be indemnified and held harmless by the
Seller for and against any and all Liabilities, losses, diminution in value,
damages, claims, costs and expenses, interest, awards, judgments and penalties
(including, without limitation, attorneys' and consultants' fees and expenses)
actually suffered or incurred by them (including, without limitation, any Action
brought or otherwise initiated by any of them) (hereinafter a "Loss"), arising
out of or resulting from:

          (i)   the breach of any Surviving Representation or Warranty made by
     the Seller contained in the Investment Documents;

          (ii)  the breach of any covenant or agreement by the Seller contained
     in the Investment Documents;

          (iii) Claims against the Purchaser arising out of, resulting from, or
     in connection with, any claim against any member of the Board of Directors
     of the Seller that alleges that any member of the Board of Directors of the
     Seller breached his fiduciary duties to the Seller or the Stockholders of
     the Seller, which may arise out of, or result from or in connection with
     the transactions contemplated herein.


                                       40


<PAGE>


To the extent that the Seller's undertakings set forth in this Section 7.02 may
be unenforceable, the Seller shall contribute the maximum amount that it is
permitted to contribute under applicable Law to the payment and satisfaction of
all Losses incurred by any Purchaser Indemnified Party. No amounts of indemnity
shall be payable as a result of claims arising under Section 7.02(a) unless and
until Losses for which indemnification has been claimed pursuant to such Section
exceed $250,000 in the aggregate.

        (b)   A Purchaser Indemnified Party shall give the Seller notice of any
matter which a Purchaser Indemnified Party has determined has given or could
give rise to a right of indemnification under this Agreement, within 60 days of
such determination, stating the amount of the Loss, if known, and method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises. The obligations and Liabilities of the Seller under this Article VII
with respect to Losses arising from claims of any third party which are subject
to the indemnification provided for in this Article VII ("Third Party Claims")
shall be governed by and be contingent upon the following additional terms and
conditions: if a Purchaser Indemnified Party shall receive notice of any Third
Party Claim, the Purchaser Indemnified Party shall give the Seller notice of
such Third Party Claim within 30 days of the receipt by the Purchaser
Indemnified Party of such notice; provided, however, that the failure to provide
such notice shall not release the Seller from any of its obligations under this
Article VII except to the extent that the Seller is materially prejudiced by
such failure and shall not relieve the Seller from any other obligation or
Liability that it may have to any Purchaser Indemnified Party otherwise than
under this Article VII. If the Seller acknowledges in writing its obligation to
indemnify the Purchaser Indemnified Party hereunder against any Losses that may
result from such Third Party Claim, then the Seller shall be entitled to assume
and control the defense of such Third Party Claim at its expense and through
counsel of its choice if it gives notice of its intention to do so to the
Purchaser Indemnified Party within five days of the receipt of such notice from
the Purchaser Indemnified Party; provided, however, that if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the Purchaser Indemnified Party in its sole and
absolute discretion for the same counsel to represent both the Purchaser
Indemnified Party and the Seller, then the Purchaser Indemnified Party shall be
entitled to retain its own counsel in each jurisdiction for which the Purchaser
Indemnified Party determines counsel is required, at the expense of the Seller.
In the event that the Seller exercises the right to undertake any such defense
against any such Third Party Claim as provided above, the Purchaser Indemnified
Party shall cooperate with the Seller in such defense and make available to the
Seller, at the Seller's expense, all witnesses, pertinent records, materials and
information in the Purchaser Indemnified Party's possession or under the
Purchaser Indemnified Party's control relating thereto as is reasonably required
by the Seller. Similarly, in the event the Purchaser Indemnified Party is,
directly or indirectly, conducting the defense against any such Third Party
Claim, the Seller shall cooperate with the Purchaser Indemnified Party in such
defense and make available to the Purchaser Indemnified Party, at the Seller's
expense, all such witnesses, records, materials and information in the Seller's
possession or under the Seller's control relating thereto as is reasonably
required by the Purchaser Indemnified Party. No such Third Party Claim may be
settled by the Seller without the prior written consent of the Purchaser
Indemnified Party.


                                       41


<PAGE>


                                  ARTICLE VIII

                        TERMINATION, AMENDMENT AND WAIVER

        SECTION 8.01. Termination. This Agreement may be terminated at any time
prior to the Closing:

        (a)   by the Purchaser if, between the date hereof and the Closing: (i)
an event or condition occurs that has resulted in a Material Adverse Effect,
(ii) the representations and warranties of the Seller contained in this
Agreement that are subject to a materiality qualifier shall not have been true
and correct when made and the representations and warranties of the Seller
contained in this Agreement that are not subject to a materiality qualifier
shall not have been true and correct when made in all material respects , (iii)
the Seller shall not have complied with the covenants or agreements contained in
this Agreement to be complied with by it in all material respects, (iv) the
Board of Directors of the Seller has amended, modified or revoked its
recommendation, authorization or approval of this Agreement, the Ancillary
Agreements and the performance by the Seller of its obligations hereunder and
thereunder, (v) the Seller enters into an agreement with respect to a Business
Combination with a Person other than the Purchaser or (vi) the Seller or any
Subsidiary makes a general assignment for the benefit of creditors, or any
proceeding shall be instituted by or against the Seller or any Subsidiary
seeking to adjudicate any of them a bankrupt or insolvent, or seeking
liquidation, winding up or reorganization, arrangement, adjustment, protection,
relief or composition of its debts under any Law relating to bankruptcy,
insolvency or reorganization;

        (b)   by the Seller if, between the date hereof and the Closing: (i)
there has been a material adverse change in the condition, financial or
otherwise, or in the earnings or business affairs of the Purchaser, whether or
not arising in the ordinary course of business, (ii) the representations and
warranties of the Purchaser contained in this Agreement shall not have been true
and correct when made in all material respects, (iii) the Purchaser shall not
have complied with the covenants or agreements contained in this Agreement to be
complied with by it in all material respects, (iv) the Purchaser makes a general
assignment for the benefit of creditors, or any proceeding shall be instituted
by or against the Purchaser seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up or reorganization, arrangement, adjustment,
protection, relief or composition of its debts under any Law relating to
bankruptcy, insolvency or reorganization or (v) the Board of Director's of the
Seller determines in its good faith judgment that it has received a Superior
Proposal from a Proposing Party and the Seller will enter into an agreement with
respect to a Business Combination with such Proposing Party in accordance with
Section 5.05; termination of this Agreement pursuant to clause (v) of this
Section 8.01(b) is subject to the Seller giving the Purchaser 72 hours prior
written notice of its intent to terminate in accordance with Section 5.05;

        (c)   by either the Seller or the Purchaser if the Closing shall not
have occurred by August 31, 2002; provided, however, that the right to terminate
this Agreement under this Section 8.01(c) shall not be available to any party
whose failure to fulfill any obligation under this Agreement shall have been the
cause of, or shall have resulted in, the failure of the Closing to occur on or
prior to such date;


                                       42


<PAGE>


        (d)   by either the Purchaser or the Seller in the event that any
Governmental Authority shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and nonappealable; or

        (e)   by the mutual written consent of the Seller and the Purchaser.

        SECTION 8.02. Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.01, this Agreement shall forthwith become
void and there shall be no liability on the part of either party hereto except
(a) as set forth in Section 8.03 and Section 9.01 and (b) that nothing herein
shall relieve either party from liability for any breach of this Agreement.

        SECTION 8.03. Termination Fee. The Seller will pay to the Purchaser
within five days after any Termination Fee Event a termination fee in the amount
of US$750,000. For the purposes of this Agreement, "Termination Fee Event" shall
mean (x) the Purchaser terminates this Agreement pursuant to clauses (i), (ii),
(iii), (iv) or (v) of Section 8.01(a), (y) the Seller terminates this Agreement
pursuant to clause (v) of Section 8.01(b) or (z) the Seller consummates a
Business Combination or enters into an agreement with respect to a Business
Combination with any Person other than the Purchaser within six months from the
date of this Agreement.

        SECTION 8.04. Amendment. This Agreement may not be amended or modified
except (a) by an instrument in writing signed by, or on behalf of, the Seller
and the Purchaser or (b) by a waiver in accordance with Section 8.05.

        SECTION 8.05. Waiver. Either party to this Agreement may (a) extend the
time for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered by the other party
pursuant hereto or (c) waive compliance with any of the agreements of the other
party or conditions to such party's obligations contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party to be bound thereby. Any waiver of any term or condition
shall not be construed as a waiver of any subsequent breach or a subsequent
waiver of the same term or condition, or a waiver of any other term or condition
of this Agreement. The failure of any party to assert any of its rights
hereunder shall not constitute a waiver of any of such rights. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive of,
any rights or remedies otherwise available.

        SECTION 8.06. Survival. This Article VIII shall survive for the benefit
of the Purchaser for a period of six months from the date hereof.

                                   ARTICLE IX

                               GENERAL PROVISIONS

        SECTION 9.01. Expenses. (a) Upon Closing, the Seller shall promptly pay
to the Purchaser all of its out-of-pocket costs and expenses (including, without
limitation, all legal,


                                       43


<PAGE>


accounting, tax, audit, commercial banking fees, commitment fees and investment
banking fees, as well as any travel, lodging or other incidental expenses)
incurred by the Purchaser and its Affiliates or on their behalf in connection
with or related to this Agreement and the Ancillary Agreements and the
transactions contemplated hereunder and thereunder.

        (b)   If this Agreement is terminated for any reason, the Seller shall
promptly pay to the Purchaser (i) all out-of-pocket costs and expenses
(including, without limitation, all legal, accounting, tax, audit and investment
banking fees, as well as any travel, lodging or other incidental expenses)
required to be paid by the Purchaser and its Affiliates or on their behalf in
connection with or related to this Agreement and the Ancillary Agreements and
the transactions contemplated hereunder and thereunder to a maximum of
US$200,000 and in addition (ii) all other out-of-pocket costs and expenses
incurred by the Purchaser and its Affiliates in efforts to obtain third-party
financing in connection with this Agreement and the Ancillary Documents
(including but not limited to commercial banking fees, commitment fees, due
diligence expenses and legal fees).

        (c)   All costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred by the
Seller in connection with this Agreement and the Ancillary Agreements and the
transactions contemplated hereunder and thereunder shall be paid by the Seller,
whether or not the Closing shall have occurred.

        SECTION 9.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by an internationally recognized overnight courier service, by telecopy
or registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address for
a party as shall be specified in a notice given in accordance with this Section
10.02):

        (a)   if to the Seller:

              Mayor's Jewelers, Inc.
              14051 N.W. 14th Street
              Sunrise, Florida 33323
              Attention:  Mark Weinstein

              with a copy to:

              Holland & Knight LLP
              701 Brickell Avenue
              Suite 3000
              Miami, Florida 33131
              Attention:  Harvey Goldman, Esq.

        (b)   if to the Purchaser:

              Henry Birks & Sons Inc.


                                       44


<PAGE>


              1240 Square Phillips
              Montreal, Quebec
              H3B 3H4
              Attention:  Sabine Bruckert, Esq.

              with a copy to:

              Shearman & Sterling
              199 Bay Street
              Commerce Court West
              Suite 4405, P.O. Box 247
              Toronto, Ontario
              M5L 1E8
              Attention: Brice T. Voran, Esq.

        SECTION 9.03. Public Announcements. No party to this Agreement shall
make, or cause to be made, any press release or public announcement in respect
of this Agreement or the transactions contemplated by this Agreement or
otherwise communicate with any news media without the prior written consent of
the other party, and the parties shall cooperate as to the timing and contents
of any such press release or public announcement.

        SECTION 9.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated by
this Agreement are consummated as originally contemplated to the greatest extent
possible.

        SECTION 9.05. Entire Agreement. This Agreement and the Ancillary
Agreements constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, between the Seller and the Purchaser with
respect to the subject matter hereof and thereof.

        SECTION 9.06. Assignment. This Agreement may not be assigned by
operation of law or otherwise without the express written consent of the Seller
and the Purchaser (which consent may be granted or withheld in the sole
discretion of the Seller or the Purchaser); provided, however, that the
Purchaser may assign this Agreement or any of its rights and obligations
hereunder to one or more Affiliates of the Purchaser without the consent of the
Seller.

        SECTION 9.07. No Third Party Beneficiaries. Except for the provisions of
Article VII relating to indemnified parties, this Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person, including, without limitation, any


                                       45

<PAGE>


union or any employee or former employee of the Seller, any legal or equitable
right, benefit or remedy of any nature whatsoever, including, without
limitation, any rights of employment for any specified period, under or by
reason of this Agreement.

        SECTION 9.08. Currency. Unless otherwise specified in this Agreement,
all references to currency, monetary values and dollars set forth herein shall
mean United States (U.S.) dollars and all payments hereunder shall be made in
United States dollars.

        SECTION 9.09. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined exclusively in any New York state or federal court sitting in the
Borough of Manhattan of The City of New York. The parties hereto hereby (a)
submit to the exclusive jurisdiction of any state or federal court sitting in
the Borough of Manhattan of The City of New York for the purpose of any Action
arising out of or relating to this Agreement brought by any party hereto, and
(b) irrevocably waive, and agree not to assert by way of motion, defense, or
otherwise, in any such Action, any claim that it is not subject personally to
the jurisdiction of the above-named courts, that its property is exempt or
immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the transactions contemplated by this Agreement may not be enforced
in or by any of the above-named courts.

        SECTION 9.10. Waiver of Jury Trial. Each of the parties hereto hereby
waives to the fullest extent permitted by applicable law any right it may have
to a trial by jury with respect to any litigation directly or indirectly arising
out of, under or in connection with this Agreement or the transactions
contemplated by this Agreement. Each of the parties hereto (a) certifies that no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce that foregoing waiver and (b) acknowledges that it and the other
party hereto have been induced to enter into this Agreement and the transactions
contemplated by this Agreement, as applicable, by, among other things, the
mutual waivers and certifications in this Section 11.09.

        SECTION 9.11. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.

        SECTION 9.12. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.


                                       46


<PAGE>


        IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.

                              MAYOR'S JEWELERS, INC.


                              By:           /s/ David Boudreau
                                     -----------------------------------------
                                     Name:    David Boudreau
                                     Title:   Senior Vice President,
                                              Chief Financial Officer



                              HENRY BIRKS & SONS INC.


                              By:           /s/ Thomas A. Andruskevich
                                 ---------------------------------------------
                                     Name:    Thomas A. Andruskevich
                                     Title:   President and
                                              Chief Executive Officer


                                       47



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>4
<FILENAME>ex2_080902.txt
<DESCRIPTION>SCHEDULE 13 D EXHIBIT 2
<TEXT>
                                                                       EXHIBIT 2

                                                                           DRAFT

                            HENRY BIRKS & SONS, INC.
                          SECURITIES PURCHASE AGREEMENT
                                   July_, 2002




<PAGE>






                                TABLE OF CONTENTS

                                                                            Page


1.   PURCHASE AND SALE OF PREFERRED SHARES AND NOTES...........................2

     1.1      Sale and Issuance of Preferred Shares and Notes..................2

     1.2      Closings.........................................................2

2.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................2

     2.1      Organization, Good Standing and Qualification....................3

     2.2      Capitalization and Voting Rights.................................3

     2.3      Subsidiaries.....................................................4

     2.4      Authorization....................................................4

     2.5      Valid Issuance of Preferred Shares, Notes and Conversion
              Shares...........................................................5

     2.6      Consents.........................................................5

     2.7      Offering.........................................................5

     2.8      Securities Laws..................................................6

     2.9      Litigation.......................................................6

     2.10     Intellectual Property............................................6

     2.11     Compliance with Other Instruments................................7

     2.12     Agreements, Action...............................................7

     2.13     Related-Party Transactions.......................................9

     2.14     Financial Statements.............................................9

     2.15     Recent Changes..................................................10

     2.16     Tax Returns.....................................................12

     2.17     Compliance with Laws: Permits...................................13

     2.18     Environmental and Safety Laws...................................13

     2.19     Disclosure......................................................14

     2.20     Registration Rights.............................................14

     2.21     Corporate Documents; Minute Books...............................14

     2.22     Title to Property and Assets....................................14

     2.23     Insurance.......................................................15

     2.24     Employee Benefit Plans..........................................15


<PAGE>


     2.25     Labor Agreements and Actions; Employee Compensation.............16

     2.26     Obligations of Management.......................................17

     2.27     Voting Agreements...............................................17

     2.28     Acknowledgment Regarding Prime Investments SA Purchase of
              Preferred Shares and Notes......................................17

     2.29     No Integrated Offering..........................................17

     2.30     No Brokers......................................................18

     2.31     Inventory.......................................................18

     2.32     MJI and the Investment Agreement................................18

3.   REPRESENTATIONS AND WARRANTIES OF THE INVESTORS..........................18

     3.1      Authorization...................................................18

     3.2      Purchase Entirely for Own Account...............................18

     3.3      No Conflict.....................................................19

     3.4      Litigation......................................................19

     3.5      Legends.........................................................19

4.   COVENANTS................................................................19

     4.1      Best Efforts....................................................19

     4.2      Use of Proceeds.................................................19

     4.3      Reservation of Shares...........................................19

     4.4      Legal Compliance................................................19

     4.5      Material Transactions...........................................19

     4.6      Ratable Treatment of Holders of Preferred Shares and Holders
              of Notes........................................................20

     4.7      Transferability.................................................20

5.   CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING..........................20

     5.1      Representations and Warranties..................................20

     5.2      Performance.....................................................20

     5.3      Compliance Certificate..........................................20

     5.4      Qualifications; Consents........................................20

     5.5      Proceedings and Documents.......................................21

     5.6      Shareholders' Agreement, Security Agreement, Senior Lenders'
              Priority Agreement, Pari Passu Creditors' Priority Agreement,

                                      -ii-


<PAGE>


              Intercreditor Agreement, Diamond Supply Agreement and Diamond
              Consignment Agreement...........................................21

     5.7      Filing of Articles of Amendment.................................21

     5.8      Reservation of Conversion Shares................................21

     5.9      Secretary's Certificate.........................................21

     5.10     Board of Directors..............................................21

     5.11     Opinion of Company Counsel......................................21

     5.12     Acquisition Transaction.........................................21

     5.13     No Material Adverse Change or Development.......................22

6.   CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.......................22

     6.1      Representations and Warranties..................................22

     6.2      Performance.....................................................22

     6.3      Qualifications; Consents........................................22

     6.4      Shareholders' Agreement, Intercreditor Agreement, Senior Lenders'
              Priority Agreement, Pari Passu Creditor's Priority Agreement,
              Security Agreement, Diamond Supply Agreement and Diamond
              Consignment Agreement...........................................22

     6.5      Filing of Articles of Amendment.................................22

7.   MISCELLANEOUS............................................................23

     7.1      Survival........................................................23

     7.2      Successors and Assigns..........................................23

     7.3      Governing Law and Jurisdiction..................................23

     7.4      Titles and Subtitles............................................23

     7.5      Notices.........................................................23

     7.6      Finder's Fee....................................................24

     7.7      Expenses........................................................24

     7.8      Amendments and Waivers..........................................24

     7.9      Delays or Omissions.............................................24

     7.10     Severability....................................................24

     7.11     Entire Agreement................................................25

     7.12     Pronouns........................................................25

     7.13     Counterparts....................................................25

     7.14     Jury Trial......................................................25


                                     -iii-


<PAGE>


     7.15     Publicity and Confidentiality...................................25

     7.16     Further Assurances..............................................26

     7.17     Language........................................................26

     7.18     Termination.....................................................26

     7.19     Joint Participation in Drafting.................................26


     SCHEDULE A         Schedule of Investors
     SCHEDULE B         Schedule of Exceptions
     SCHEDULE C         Use of Proceeds

                                      -iv-


<PAGE>


                          SECURITIES PURCHASE AGREEMENT

        THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made on the
____day of July, 2002, by and among HENRY BIRKS & SONS INC., a corporation
governed by the laws of Canada (the "Company") and the investors listed on
Schedule A, each, an "Investor" and collectively, the "Investors").

        WHEREAS:

        A.   The Company desires to sell, and the Investors desire to purchase
upon the terms and conditions stated in this Agreement, (i) ______________1 of
the Company's Series A Convertible Preferred Shares, without par value (the
"Preferred Shares"), which are convertible into the Company's voting common
shares, without par value (the "Voting Common Stock") (the rights, preferences,
privileges, restrictions and conditions of the Preferred Shares, are set forth
in the articles of amendment in the form attached hereto as Exhibit A (the
"Articles of Amendment") and (ii) the Company's convertible notes in the
aggregate principal amount of US$5,000,000 which are convertible into shares of
Voting Common Stock, in the form attached hereto as Exhibit B (the "Notes"). The
Notes are secured by, among other things, the collateral described in that
certain Deed of Hypothec between the Company and National Bank Trust Inc., as
trustee for the Investors (the "Trustee") in the form attached hereto as Exhibit
C (the "Security Agreement"). The shares of Voting Common Stock issuable upon
conversion of the Notes in accordance with its terms and upon conversion of the
Preferred Shares in accordance with the terms of the Articles of Amendment are
referred to herein as the "Conversion Shares".

         C.  At the First Closing (as defined below), the parties hereto shall
execute and deliver a Shareholders' Agreement, in the form attached hereto as
Exhibit D (the "Shareholders' Agreement"), the Company and one of the Investors
shall execute and deliver a Diamond Supply Agreement, in the form attached
hereto as Exhibit E (the "Diamond Supply Agreement") and a Diamond Consignment
Agreement in the form attached hereto as Exhibit F (the "Diamond Consignment
Agreement"), the Investors and the Trustee shall execute and deliver an
Intercreditor Agreement in the form as attached as Exhibit G (the "Intercreditor
Agreement"), the Trustee and two creditors of the Company shall execute and
deliver a Priority and Cession of Rank Agreement in the form as attached as
Exhibit H (the "Senior Lenders' Priority Agreement") the Trustee and a creditor
of the Company shall execute and deliver a Priority and Cession of Rank
Agreement in the form attached as Exhibit I (the "Pari Passu Creditor's Priority
Agreement") and the parties thereto will execute and deliver the Security
Agreement. This Agreement, the Articles of Amendment, the Notes, the
Shareholders' Agreement, Diamond Supply Agreement, Diamond Consignment
Agreement, Intercreditor Agreement, Senior Lenders' Priority Agreement, and Pari
Passu Creditor's Priority Agreement shall be collectively referred to as the
"Transaction Documents."

        NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:

- --------

1 Insert a number of shares which is the quotient of (a) US $10,000,000 divided
by (b) the US dollar equivalent of CDN$7.73 using the noon rate of exchange of
the Bank of Canada on the Closing Date.


<PAGE>


1.  PURCHASE AND SALE OF PREFERRED SHARES AND NOTES.

    1.1   Sale and Issuance of Preferred Shares and Notes.

        (a)   The Company's board of directors shall duly approve and file the
Articles of Amendment with the Director appointed under the Canada Business
Corporations Act on or before the First Closing.

        (b)   Subject to the terms and conditions of this Agreement, each
Investor agrees, jointly and not solidarily, to purchase at the First Closing
for cash, and the Company agrees to sell and issue to each Investor at the First
Closing, that number of Preferred Shares set forth opposite such Investor's name
in column 2 on Schedule A for the purchase price set forth opposite such
Investor's name in column 3 on Schedule A. The purchase price for each Preferred
Share shall be [US $] per share2 and shall be paid in US Dollars. Subject to
terms and conditions of this Agreement, each Investor agrees, jointly and not
solidarily to purchase at the Second Closing (as defined below) for cash, Notes
in the aggregate principal U.S. dollar amount set forth opposite such Investor's
name in column 4 on Schedule A for the aggregate amount set forth opposite such
Investors name in column 5 on Schedule A. The Purchase Price for the Notes shall
be paid in U.S. Dollars.

   1.2   Closings.

        (a)   The purchase and sale of the Preferred Shares shall take place at
the Montreal offices of Stikeman Elliot at 10:00 A.M. (Montreal time), on August
15, 2002, or at such other time and place as the Company and the Investors may
mutually agree upon in writing (which time and place are designated as the
"First Closing"). The purchase and sale of the Notes shall take place at the
Montreal offices of Stikeman Elliot at 10:00 A.M. (Montreal time), on September
30, 2002, or at such other time and place as the Company and the Investors may
mutually agree upon in writing (which time and place are designated as the
"Second Closing". The First Closing and the Second Closing shall sometimes be
collectively referred to herein as the "Closing".

        (b)   At the First Closing, the Company shall deliver to each Investor a
certificate representing the number of Preferred Shares such Investor is
purchasing hereunder against payment of the purchase price therefor by check or
wire transfer, which payment shall be made by each Investor at the First
Closing. At the Second Closing, the Company shall deliver to each Investor a
duly executed Note in the aggregate principal amount set forth opposite such
Investor's name in column 4 on Schedule A against payment of the purchase price
therefor by check or wire transfer, which payment shall be made by each Investor
at the Second Closing.

2.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

    The Company makes the representations and warranties to each Investor that
are set forth in this Article 2; provided that such representations and
warranties shall be modified by the

- --------

2 Insert an amount which is equal to the US dollar equivalent of CND$7.73 using
the Bank of Canada noon rate of exchange on the business day immediately
preceding the Closing Date.


                                       -2-


<PAGE>


information set forth on the Schedule of Exceptions (the "Schedule of
Exceptions") attached hereto as Schedule B beneath the applicable Section
heading and any reference to subsidiaries in any representation and warranty of
the Company shall exclude Mayor's Jewelers Inc., a Delaware corporation ("MJI"),
unless such company is specifically referred to in such representation or
warrant:

    2.1   Organization, Good Standing and Qualification. The Company and each
of its subsidiaries is a corporation duly incorporated and existing under the
laws of the jurisdiction in which it is incorporated. The Company and each of
its subsidiaries is duly qualified as an extra-provincial or foreign corporation
to do business in each jurisdiction in which the nature of the business
conducted by it makes such qualification necessary and where the failure to be
so qualified could reasonably be expected to have a material adverse effect on
the business, assets, liabilities, properties, condition (financial or
otherwise), prospects or operations of the Company and its subsidiaries, taken
as a whole (an "MAE"). The Company and each of its subsidiaries has all
requisite corporate power to own and operate its properties and assets as now
conducted and as presently proposed to be conducted.

    2.2   Capitalization and Voting Rights. The authorized capital of the
Company consists, or will consist immediately prior to the First Closing, of:

          (i)   Preferred Shares. ________ 3Series A Convertible Preferred
     Shares without par value. The rights, privileges and preferences of the
     Preferred Shares are as stated in the Articles of Amendment. The Company
     has not authorized or agreed to issue any Preferred Shares other than the
     Preferred Shares to be sold hereunder.

          (ii)  Common Stock. An unlimited number of shares of Voting Common
     Stock, of which _________________ shares were issued and outstanding on
     _________, 2002 and an unlimited number of shares of Non-Voting Common
     Stock, without par value of which ___ shares were issued and outstanding as
     of ________, 2002.

        (b)   The outstanding shares of Voting Common Stock and Non-Voting
Common Stock are owned by the stockholders and in the numbers specified on the
Schedule of Exceptions attached hereto.

        (c)   The outstanding shares of Voting Common Stock and Non-Voting
Common Stock are all duly authorized and validly issued, are fully paid and
non-assessable, and were issued in compliance with all applicable laws
concerning the issuance of securities.

        (d)   Except for (i) the conversion privileges of the Preferred Shares
to be sold pursuant to this Agreement as such privileges are set forth in the
Articles of Amendment and the conversion privileges of the Notes to be sold
pursuant to this Agreement, (ii) the rights provided in Article IV of that
certain Shareholders' Rights Agreement and (iii) currently outstanding

- --------

3 Insert a number equal to the quotient of (i) $5,000,000 divided by (ii) the US
Dollar equivalent of CND$7.73 using the Bank of Canada's noon rate of exchange
on the Business Day immediately preceding the Closing Date.


                                      -3-


<PAGE>


options to purchase up to _________ shares of Voting Common Stock and _________
shares of Non-Voting Common Stock granted to employees pursuant to the Company's
Stock Option Plan (the "Option Plan"), there are not outstanding any options,
warrants, rights (including conversion, preemptive rights or rights to exchange)
or agreements of any kind for the purchase or acquisition from the Company of
any shares of its capital stock or other securities of the Company. The Option
Plan reserves a total of _______ shares of Voting Common Stock and __________
shares of Non-Voting Common Stock (including the shares issuable upon exercise
of the aforementioned outstanding options) for issuance upon exercise of options
granted thereunder to officers, directors, employees and consultants of the
Company or any of its subsidiaries and as _______. 2002, options to purchase up
to _______ shares of Voting Common Stock and _____________ shares of Non-Voting
Common Stock upon exercise thereof remain eligible for future grants under the
Option Plan. The Schedule of Exceptions sets forth with respect to all
outstanding options (and other rights to acquire any shares of the Company's
capital stock or other security of the Company, if any), the holder, number and
type of shares or security covered, exercise price and expiration or termination
date. Options granted under the Option Plan contain vesting and buy back
provisions as described in the Schedule of Exceptions and no acceleration or
changes in the vesting provisions of any outstanding options or lapse of a
repurchase right will occur in connection with or upon the occurrence of any
event (e.g., termination, change in control, etc.) or otherwise for any reason
except as specifically described in Schedule of Exceptions.

    2.3   Subsidiaries. Except as set forth in the Schedule of Exceptions or
as contemplated by the Investment Agreement referred to on Schedule C, the
Company (i) does not presently own or control, directly or indirectly, any
interest in any other corporation, association, or other business entity, (ii)
is not a participant in any joint venture, partnership, or similar arrangement
and (iii) is not, directly or indirectly, subject to any obligation or
requirement to provide funds to, or invest in any corporation, limited liability
company or general partnership, association, joint venture or other entity or
enterprise. For each of the Company's direct or indirect subsidiaries, the
Schedule of Exceptions sets forth the name of such subsidiary, its jurisdiction
of incorporation, its authorized and outstanding capital stock and its
stockholders. The Schedule of Exceptions describes in reasonable detail all
applicable joint venture, partnership or similar arrangement or obligation to
provide funds to or invest in any corporation, limited liability company,
general or limited partnership, association or joint venture or other entity or
enterprise.

    2.4   Authorization. The Company has all necessary corporate power and
authority to enter into this Agreement and to carry out its obligations under
this Agreement. All corporate action on the part of the Company, its officers,
directors and stockholders necessary for the authorization, execution and filing
of the Articles of Amendment and for the authorization, execution and delivery
of the other Transaction Documents to which the Company is a party and the
performance of all obligations of the Company hereunder and thereunder, and the
authorization, sale and issuance of the Preferred Shares and the Notes being
sold hereunder and the reservation for issuance of the Conversion Shares upon
conversion of the Preferred Shares in accordance with the terms of the Articles
of Amendment and upon conversion of the Notes in accordance with the terms
hereof and thereof and the registration of the hypothec and other rights created
by the Security Agreement in all relevant jurisdictions, has been taken or will
be


                                      -4-


<PAGE>


taken prior to the First Closing.4 This Agreement and the other Transaction
Documents to which the Company is a party, when executed and delivered, will
constitute valid and legally binding obligations of the Company, enforceable
against it in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.

    2.5   Valid Issuance of Preferred Shares, Notes and Conversion Shares. The
Preferred Shares and the Notes that are being purchased by the Investors
hereunder, when issued, sold and delivered in accordance with the terms of this
Agreement for the consideration expressed herein will be duly and validly
issued, fully paid and non-assessable and will be free and clear of any and all
liens, claims or other encumbrances and of restrictions on transfer, other than
restrictions on transfer under the Articles of Amendment, this Agreement, the
Shareholders' Agreement and under applicable securities laws. The Conversion
Shares issuable upon conversion of the Preferred Shares and the Notes have been
duly and validly reserved for issuance and, upon issuance in accordance with the
terms of the Articles of Amendment and the Notes, respectively will be duly and
validly issued, fully paid and non-assessable and will be free and clear of any
and all liens, claims or other encumbrances and of restrictions on transfer
other than restrictions on transfer under the Company's Articles, the Notes, the
Shareholders' Agreement and under applicable securities laws. The issuance of
the Preferred Shares and the Notes pursuant to this Agreement and the subsequent
conversion of the Preferred Shares and the Notes into the Conversion Shares in
accordance with the terms of the Articles of Amendment and the Notes,
respectively, are not and will not be subject to any preemptive rights or rights
of first refusal that have not been properly waived or complied with.

    2.6   Consents. No consent, approval, order, permission or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, provincial, state, municipal or local Governmental Authority (as
defined below) or any natural person, sole proprietorship, firm, corporation,
partnership, trust, limited liability company, joint venture, association, body
corporate or other entity of any kind and a natural person in such person's
capacity as trustee, executor, administrator or other legal representative
(each, a "Person") is required in connection with the consummation of the
transactions contemplated by this Agreement and the Transaction Documents which
have not been obtained or made prior to the First Closing, except for such
filings as are required pursuant to applicable securities laws, which filings,
if any, will be effected within the required statutory period [and filings
registering the hypothec and the Senior Lenders' Priority Agreement and the Pari
Passu Creditor's Agreement which shall be filed for registration by the Company
immediately following the Second Closing].

    2.7   Offering. Subject in part to the truth and accuracy of each Investor's
representation set forth in Section 3 of this Agreement, the offer, sale and
issuance of the Preferred Shares and Notes as contemplated by this Agreement and
the issuance of the Conversion Shares upon conversion of the Preferred Shares
and Notes in accordance with the terms of the Articles of Amendment and the
Notes respectively will be exempt from the

- --------

4 We expect the Company to do whatever is required to register the Deed of
Hypothec.


                                      -5-


<PAGE>


registration requirements of applicable securities laws, and will have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
provincial securities laws. Neither the Company nor any authorized agent acting
on its behalf will take any action hereafter that would bring the sale of such
shares by the Company within the registration provisions of any applicable
securities laws, or otherwise cause the loss of such exemptions.

    2.8   Securities Laws. The Company is a "closed company," as such term is
defined in Section 5 of the Securities Act (Quebec).

    2.9   Litigation. Except as set forth in the Schedule of Exceptions, there
is no action, suit, proceeding or investigation, claim, complaint or grievance,
including appeals and applications for review, in progress, or to the Company's
knowledge, currently threatened, against or relating to the Company or any of
its subsidiaries before any court, Governmental Authority, commission, board,
bureau, agency or arbitration panel that questions, the validity of this
Agreement or the other Transaction Documents or the right of the Company to
enter into such agreements or to consummate the transactions contemplated hereby
or thereby, or that might result, either individually or in the aggregate, in an
MAE, or any change in the current equity ownership of the Company (except as
contemplated hereby) or any of its subsidiaries, nor is the Company aware that
there is any basis for any of the foregoing. The foregoing includes, without
limitation, actions, suits, proceedings, or investigations, claims, complaints
or grievances pending or threatened involving the prior employment of any of the
Company's or any subsidiary's employees, their use in connection with the
Company's or such subsidiary's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. Neither the Company nor any of its
subsidiaries is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or Governmental Authority,
commission, board, bureau, agency, arbitrator or instrumentality. There is no
action, suit, proceeding, investigation claim, complaint or grievance by the
Company or any of its subsidiaries currently pending.

    2.10   Intellectual Property.

        (a)   To the best of the Company's knowledge, the Company or one of its
subsidiaries owns or possesses sufficient legal rights to all patents,
trademarks, service marks, trade names, copyrights, industrial designs,
patterns, drawings, trade secrets, licenses, information and other proprietary
rights and processes necessary for its business as now conducted and as
presently proposed to be conducted, without any infringement of or conflict with
the valid rights of others and the lack of which could reasonably be expected to
have an MAE, and neither the Company nor any of its subsidiaries has received
any notice of alleged infringement upon or conflict with the asserted rights of
others, nor is it aware of any basis to the best of the Company's knowledge
therefor. Without limiting the foregoing, to the best of the Company's knowledge
each of the Company and its subsidiaries has the right to use all of its trade
secrets (including without limitation all know how, concepts, computer programs,
domain names, websites, databases and technical data) free and clear of any
rights, liens, encumbrances or claims of others, other than as contemplated by
the liens in favor the Investors provided in the Security Agreement and liens of
the senior lenders and pari passu creditor identified in the Senior Lenders'
Priority Agreements and the Pari Passu Creditor's Priority Agreement. There are


                                      -6-


<PAGE>


no outstanding options, licenses or agreements of any kind relating to any of
the foregoing, nor is the Company or any of its subsidiaries bound by or a party
to any options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, industrial designs, trade
secrets, licenses, information and other proprietary rights and processes of any
other person or entity other than such licenses arising from the purchase of
commercially available software legally in the possession of the Company or its
subsidiaries. Except for "off the shelf" software used in the ordinary course of
its business, neither the Company nor any of its subsidiaries is obligated to
make any payments by way of royalties, fees or otherwise to any owner or
licensor of any patent, trademark, trade name, copyright, industrial design or
other intangible asset, with respect to the use thereof or in connection with
the conduct of its business, or otherwise. The Company is not aware of any
violation by a third party of any of the Company's or any of its subsidiaries'
patents, trademarks, service marks, trade names, copyrights, trade secrets,
industrial designs, information or other proprietary rights and processes.

        (b)   The Company is not aware that any of its or its subsidiaries
employees, officers or consultants is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement of any
kind, or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with their ability to use their best efforts to
fulfill their duties to the Company and its subsidiaries or that would conflict
with the Company's and its subsidiaries' business as now conducted or as
presently proposed to be conducted or that would prevent such individual from
assigning inventions to the Company or one of its subsidiaries, as applicable.

    2.11   Compliance with Other Instruments. Neither the Company nor any of
its subsidiaries is in violation or default of (i) any provision of its
governing documents (which in the case of the Company consist of its Articles
and By-laws), or (ii) any material instrument, judgment, order, writ, decree,
mortgage, lease, contract, statute, rule, or regulation applicable to the
Company or any of its subsidiaries. To the Company's knowledge, neither the
Company nor any of its subsidiaries has taken any action or failed to take any
action (nor has any other event or condition occurred), which would result in
the loss of any right of the Company or any of its subsidiaries granted under
any license, distribution agreement or other agreements which may be material to
the Company's or such subsidiary's business. The execution, delivery and
performance of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby will not result
in any such violation, or conflict with or constitute, with or without the
passage of time and giving of notice, either a default thereunder or an event
that results in the creation of any lien, charge, or encumbrance upon any
property or assets of the Company or any of its subsidiaries other than as
contemplated by the Security Agreement or the suspension, revocation,
impairment, forfeiture or non-renewal of any material permit, license,
authorization or approval applicable to the Company, its business or operations,
or any of its assets or properties or applicable to any subsidiary of the
Company, its business operations or its assets or properties.

    2.12   Agreements, Action.

        (a)   Except for agreements contemplated by the Transaction Documents,
there are no agreements, understandings or proposed transactions between the
Company and any of its officers, directors, affiliates, stockholders or any
affiliate thereof.


                                      -7-


<PAGE>


        (b)   Except as set forth on the Schedule of Exceptions, there are no
agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which the Company or any of its
subsidiaries is a party or by which it or any asset of the Company or any of its
subsidiaries is bound that involve (i) obligations (contingent or otherwise) of
the Company and any of its subsidiaries, in excess of [$__________] or any
commitment to or by the Company or any of its subsidiaries that may reasonably
extend beyond ______ years and which does not or cannot be terminated without
penalty on less than ____ months notice or which is outside the ordinary course
of business, (ii) the license of the trade name and trademark Birks, (iii)
provisions restricting or affecting the development, manufacture, sale or
distribution of the Company's or its subsidiaries' products or services, (iv) a
warranty with respect to services rendered or products sold or leased, other
than the standard warranty terms (which terms are described in the Schedule of
Exceptions) granted by the Company or its subsidiaries in the ordinary course of
business, (v) indemnification by the Company or any of its subsidiaries for any
obligations or (vi) any agreement, whether oral or written, which is or would be
material to the Company and its subsidiaries, taken as a whole (collectively,
the "Contracts"). All of the Contracts are valid and binding obligations of the
parties thereto and in full force and effect and enforceable by the Company or
its subsidiary (as the case may be) in accordance with their respective terms,
except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar federal or provincial
laws affecting the rights of creditors, (ii) rules of law governing specific
performance, injunctive relief or other equitable remedies (whether considered
in a proceeding at law or in equity) or (iii) indemnification provisions to the
extent limited by statutes, judicial decisions or public policy considerations.
The Company or the Company's applicable subsidiary has performed in all
materials respects all obligations required to be performed by it and is not in
default under or in breach of nor in receipt of any claim of default or breach
under any Contract and neither the Company nor any of its subsidiaries has any
present expectation or intention of not fully performing all such obligations.
No event has occurred which with the passage of time or the giving of notice or
both would result in a default, breach or event of noncompliance by the Company
or any of its subsidiaries under any Contract. The Company has no knowledge of
any material default or anticipated material breach or termination by any other
parties to any Contract.

        (c)   Except as set forth on the Schedule of Exceptions, since March 31,
2002, neither the Company nor any of its subsidiaries has (i) declared or paid
any dividends or authorized or made any distribution upon or with respect to any
class or series of its capital stock (except for dividends by the subsidiaries
to the Company or other subsidiaries), (ii) incurred any indebtedness for money
borrowed or any other liabilities individually in excess of [$_______], or, in
the case of indebtedness or liabilities individually less than [$_______] in
excess of [$_______] in the aggregate, (iii) made any loans or advances to any
person, other than ordinary advances for travel expenses, (iv) discharged or
satisfied any lien or encumbrance, or paid any obligation other than liabilities
incurred in the ordinary course of business, (v) sold, exchanged or otherwise
disposed of any of its assets or rights or cancelled any debts or entitlements,
other than the sale of its inventory in the ordinary course of business or (vi)
mortgaged, pledged, subjected to lien, granted a security interest in or
otherwise encumbered any of its assets or property (except for security
interests created pursuant to the Security Agreement).


                                      -8-


<PAGE>


        (d)   For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same Person (including Persons or
entities the Company has reason to believe are affiliated with each other) shall
be aggregated for the purpose of meeting the individual minimum dollar amounts
of such sections.

        (e)   Except as disclosed on the Schedule of Exceptions, the Company has
not engaged in the past three (3) months in any discussion (i) with any
representative of any corporation or corporations regarding the consolidation or
merger of the Company with or into any such corporation or corporations, (ii)
with any corporation, partnership, association or other business entity or any
individual regarding the sale, conveyance or disposition of all or substantially
all of the assets of the Company or a transaction or series of related
transactions in which more than fifty percent (50%) of the voting power of the
Company is disposed of, or (iii) regarding any other form of acquisition,
liquidation, dissolution, or winding up of the Company.

        (f)   Neither the Company nor any of its subsidiaries is a party to or
bound or affected by any contract, agreement, commitment or instrument, or
subject to any restriction under its governing documents (the Articles and
By-laws in the case of the Company), containing any covenant expressly limiting
the freedom of the Company or any of its subsidiaries to compete in any line of
business, transfer or move any of its assets or operations and which adversely
affects its business as now conducted or as proposed to be conducted, its
properties, or its financial condition.

    2.13   Related-Party Transactions. There are no obligations of the Company
or any of its subsidiaries to or on behalf of (including by way of guarantee,
commitments to extend credit or otherwise) any officers, directors, stockholders
or employees of the Company or any of its subsidiaries (collectively, the
"Insiders") other than (a) for payment of compensation for services rendered,
(b) reimbursement for reasonable expenses incurred on behalf of the Company or
any of its subsidiaries consistent with the Company's or such subsidiary's past
practice and (c) for other standard employee benefits made generally available
to all employees (including stock option agreements outstanding under the Option
Plan). None of the Insiders nor any members of their immediate families, are
indebted to the Company. None of the officers or directors or, to the best of
the Company's knowledge, employees or stockholders of the Company or its
subsidiaries, or any members of their immediate families, have any direct or
indirect ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company or any of its subsidiaries has a material
business relationship, or any firm or corporation which competes with the
Company or any of its subsidiaries, other than passive investments in publicly
traded companies (representing less than 1% of such company). Except as set
forth on the Schedule of Exceptions, no Insider or any member of any Insider's
immediate family, is, directly or indirectly, interested in any material
Contract with the Company or any of its subsidiaries.

    2.14   Financial Statements. The Company has delivered to each Investor
the audited consolidated financial statements (consolidated balance sheet and
consolidated statements of operations, stockholders' equity and cash flows,
including notes thereto) of the Company and its subsidiaries at March 31, 2002
and for the fiscal year then ended (the "Financial Statements"). The Financial
Statements are accurate and complete in all material respects and is consistent
with


                                       -9-


<PAGE>


the books and records of the Company and its subsidiaries. The Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent throughout the periods indicated and with
each other, and fairly present the assets, liabilities, financial condition and
operating results of the Company and its subsidiaries as of the date, and for
the period, indicated therein. Except as set forth in the Financial Statements,
the Company and its subsidiaries, taken as a whole, do not have any material
liabilities or obligations, contingent or otherwise, other than (i) liabilities
or obligations that have arisen after March 31, 2002 in the ordinary course of
business and consistent with the Company's and such subsidiaries past practice,
and (ii) obligations under contracts and commitments incurred in the ordinary
course of business that would not be required to be reflected in financial
statements prepared in accordance with generally accepted accounting principles,
which in both cases, individually or in the aggregate, are not material to the
financial condition or operating results of the Company and its subsidiaries,
taken as a whole. Except as disclosed in the Financial Statements, neither the
Company nor any of its subsidiaries is a guarantor or indemnitor of any
indebtedness of (or otherwise obligated to make any loans or extend any credit
to) any other Person. The Company maintains and will continue to maintain a
standard system of accounting established and administered in accordance with
generally accepted accounting principles.

    2.15   Recent Changes. Since March 31, 2002, there has not been:

        (a)   any change in the business, assets, liabilities, properties,
condition (financial or otherwise), prospects or operations of the Company or
its subsidiaries, taken as a whole, from that reflected in the Financial
Statements, other than changes in the ordinary course of business consistent
with past practice, none of which, individually or in the aggregate, could
reasonably be expected to have an MAE;

        (b)   any damage, destruction or loss, whether or not covered by
insurance, that could reasonably be expected to have an MAE;

        (c)   any waiver or compromise by the Company or its subsidiaries of a
valuable right or of a material debt owed to it;

        (d)   any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by the Company or its subsidiaries, except for
immaterial items in the ordinary course of business consistent with past
practice;

        (e)   any change or amendment to a contract or arrangement by which the
Company or any of its subsidiaries or any of their assets or properties is bound
or subject which could reasonably be expected to have an MAE;

        (f)   any material change in any compensation arrangement or agreement
with any Insider;

        (g)   any sale, assignment or transfer of any material intellectual
proprietary information or material assets of the Company or any subsidiary, or
disclosure of any confidential information to any person or entity;


                                      -10-


<PAGE>


        (h)   any resignation or termination (including any threat or
expectation thereof) of any officer or key employee of the Company or any
subsidiary which could reasonably be expected to have a MAE;

        (i)   any declaration or payment of any dividend or other distribution
of any assets of the Company;

        (j)   any mortgage, pledge, transfer of a security interest in, or lien,
or other encumbrance created by the Company or any of its subsidiaries, with
respect to any of its properties or assets, except liens for taxes not yet due
or payable;

        (k)   receipt of notice that there has been a loss of, or order
cancellation by, any major customer of the Company or any of its subsidiaries;

        (l)   any labor organization activity related to the Company or any of
its subsidiaries;

        (m)   any material change in the contingent obligations of the Company
or any of its subsidiaries, whether by way of guaranty, endorsement, indemnity
or otherwise;

        (n)   capital expenditures or commitments therefor that aggregate in
excess of [$__________];

        (o)   any loans or advances to, or any investments in, any Person other
than a subsidiary of the Company), other than advances for travel expenses made
in the ordinary course of business consistent with past practice;

        (p)   any loan to the Company or any subsidiary or other debt,
obligation or liability incurred or assumed by the Company or any of its
subsidiaries, other than current liabilities incurred in the ordinary course of
business consistent with past practice;

        (q)   any material transaction to which the Company or any of its
subsidiaries is a party that is not in the ordinary course of business
consistent with past practice;

        (r)   any material tax election or change in tax or accounting

        (s)   any material suits, actions, claims, audits, investigations, or
the settlement of any of the foregoing;

        (t)   except for the issuance of the Preferred Shares hereunder, the
Conversion Shares upon the exercise of the Preferred Shares and Notes, shares of
Non-Voting Common Stock or Voting Common Stock upon exercise of options issued
pursuant to the Option Plan, or the issuance of options pursuant to the Option
Plan, any issuance of stocks, bonds or other securities of the Company or any of
subsidiary;

        (u)   any other event or condition of any character that, either
individually or in the aggregate, could reasonably be expected to have an MAE;
or


                                      -11-


<PAGE>


        (v)   any agreement or commitment by the Company or any of its
subsidiaries take any of the actions described in subsections (a) through (u)
above.

    2.16   Tax Returns.

        (a)   The Company and each of its subsidiaries have timely filed all its
Tax Returns (as defined below) required to be filed by it with the appropriate
Governmental Authority and has duly, completely and correctly reported all
income and all other amounts and information required to be reported thereon.
The Company and each of its subsidiaries have duly and timely paid all Taxes (as
defined below) including all installments on account of Taxes for the current
year, that are due and payable by it and the Company and each of its
subsidiaries have established reserves that are reflected on the Financial
Statements that are adequate for the payment by the Company of all Taxes , if
any, that are not yet due and payable and that related to periods ending on or
prior to the Closing Date.

        (b)   The Company and each of its subsidiaries have not requested, or
entered into any agreement or other arrangement or executed any waiver providing
for, any extension of time within which (i) to file any Tax Return covering any
Taxes for which the Company or any of its subsidiaries is or may by liable, (ii)
to file any elections, designations or similar things relating to Taxes for
which the Company or any of its subsidiaries; is or may be liable, (iii) the
Company or any of its subsidiaries is required to pay or remit any Taxes or
amounts on account of Taxes, or (iv) any Governmental Authority may assess or
collect Taxes for which the Company or any of its subsidiaries is or may be
liable.

        (c)   The Canadian federal and provincial income and capital tax
liabilities of the Company and each of its subsidiaries has been assessed by the
relevant taxing authorities and notices of assessment have been issued to each
such entity by the relevant taxing authorities for all taxation years prior to
and including the taxation year ended December 31, 2001.

        (d)   There are no actions, suits, proceedings, investigations, audits
or claims now pending or, to the knowledge of the Company, threatened, against
the Company or any of its subsidiaries in respect of any Taxes and there are no
matters under discussion, audit or appeal with any Governmental Authority
relating to Taxes.

        (e)   The Company has duly and timely withheld from any amount paid or
credited by it to or for the account or benefit of any Person, including,
without limitation, any of its employees, officers and directors and any
non-resident Person, the amount of all Taxes and other deductions required by
any applicable law, rule or regulation to be withheld from any such amount and
has duly and timely remitted the same to the appropriate Governmental Authority.

        (f)   Except as disclosed in the Schedule of Exceptions, for purposes of
the Income Tax Act (Canada) or any applicable provincial or municipal taxing
statute, no Person of group of Persons has ever acquired or had the right to
acquire control of the Company.

        (g)   There are no actual or proposed Tax deficiencies, assessments,
charges or adjustments with respect to the Company or any of its subsidiaries or
any assets or operations of the Company or any of its subsidiaries.


                                      -12-


<PAGE>


        (h)   Neither the Company nor any of its subsidiaries have ever been
party to a Tax sharing agreement or any other agreement to indemnify any person
for any Tax liability.

        "Tax" or "Taxes" includes, without limitation, all taxes, duties, fees,
premiums, assessments, imposts, levies and other charges of any kind whatsoever
imposed by any Governmental Authority, together with all interest, penalties,
fines, additions to tax or other additional amounts imposed in respect thereof,
including, without limitation, those levied on, or measured by, or referred to
as income, gross receipts, profits, real property, personal property, land
transfer, franchise, capital, capital stock, transfer, excise, stamp, license,
business, payroll, employment, unemployment, disability, severance, occupation,
windfall, sales, goods and services, use, value-added, health, social services,
education and social security taxes, all surtaxes, all customs duties and impost
and export taxes, premium, environmental, employees' income withholding, foreign
or domestic withholding, alternative or add-on minimum or other similar taxes,
all licenses, franchise and registration fees and all unemployment insurance,
health insurance and Canada, Quebec and other government pension plan premiums.

    "Tax Returns" includes, without limitation, all returns, reports,
declarations, elections, notices, filings, information returns and statements
filed in respect of Taxes.

    "Governmental Authorities" means any government, regulatory authority,
governmental department, agency, commission, board, tribunal, crown corporation,
or court or other law, rule or regulation-making entity having or purporting to
have jurisdiction on behalf of any nation, or province or state or other
subdivision thereof or any municipality, district or other subdivision thereof.

    2.17   Compliance with Laws: Permits. Neither the Company nor any of its
subsidiaries is in violation of any Laws (as defined below) or restriction of
any Governmental Authority, in respect of the conduct of its business or the
ownership of its properties which violation would reasonably be expected to have
a MAE and the Company or any of its subsidiaries have not received any notice of
any alleged breach thereof. The Company and each of its subsidiaries has all
(and is not in default under any) franchises, permits, licenses and any similar
authority necessary for the conduct of its business as now being conducted by it
or as may be presently proposed, the lack of which (or default under) could
reasonably be expected to have an MAE. Such authorizations are in full force and
effect in accordance with their terms, and there have been no violations thereof
and no proceedings are pending or, to the knowledge of the Company, threatened,
which could result in their revocation or limitation.

    "Laws" means all applicable laws, by-laws, rules, regulations, orders,
directives, ordinances, protocols, codes, guidelines, policies, notices,
directions and judgments or other requirements of any Governmental Authority. In
connection with the representations set forth in this Section 2.17, the term
Laws shall exclude Environmental Laws (as defined below) which are covered by
Section 2.18.

    2.18   Environmental and Safety Laws. The Company, each of its subsidiaries,
the operation of their respective businesses and any real property that the
Company or any of its subsidiaries owns or has owned, leases or has leased or
otherwise occupies or uses or has occupied or used (the "Premises") are, to the
best of the Company's knowledge after due inquiry,


                                      -13-


<PAGE>


in compliance with all applicable Environmental Laws (as defined below). Any
release by the Company or any of its subsidiaries of any hazardous substance
into the environment complied and complies with all Environmental Laws. The
Company has not received any citation, directive, letter or other communication,
written or oral, or any notice of any proceeding, claim or lawsuit, from any
Person arising out of the ownership or occupation of the Premises (including, to
the best of its knowledge, as may relate to any previous occupants), or the
conduct of its operations, and the Company is not aware of any basis therefor,
and no material expenditures are or will be required in order to comply with any
such Environmental Laws.

    "Environmental Laws" means all Laws relating in full or in part to the
protection of the environment, product liability and employee and public health
and safety, and includes, without limitation, those Environmental Laws relating
to the storage, generation, use, handling, manufacture, processing, labeling,
advertising, sale, display, transportation, treatment, release and disposal of
hazardous substances.

    2.19   Disclosure.  The Company has provided each Investor with all the
information that such Investor has requested for deciding whether to purchase
the Preferred Shares and Notes. To the best of the Company's knowledge, neither
this Agreement (including all the exhibits and schedules hereto) nor any other
Transaction Documents nor any other certificates made or delivered in connection
herewith or therewith contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements herein or therein not
misleading in light of the circumstances under which they were made. The
financial projections of the Company and its subsidiaries provided to the
Investors were prepared by the Company in good faith based upon the Company's
and such subsidiaries' past experience in their respective businesses and the
Company believes that there is a reasonable basis for such projections.

    2.20   Registration Rights. Except as provided in the Shareholders'
Agreement, [and that certain Management Investors Shareholders Agreement dated
as of April 5, 2002 between the Company and the Management Investors named
therein], the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any Person.

    2.21   Corporate Documents; Minute Books. The Articles and By-laws of the
Company, including any and all amendments have been delivered or made available
to the Investors and such Articles and By-laws as so amended are in full force
and effect and no amendments are being made to the same. The minute books of the
Company and its subsidiaries contain a complete summary of all meetings of
directors and stockholders of the Company and each of its subsidiaries or
resolutions passed by the directors or shareholders thereof on consent since the
time of incorporation and reflect all transactions referred to in such minutes
accurately in all material aspects. The share certificate book, register of
shareholders, register of transfers and register of directors of the Company,
are complete and accurate.

    2.22   Title to Property and Assets. The Company or its subsidiaries have
good title to or valid leasehold interests in all property and assets disclosed
in the Financial Statements as being owned or leased, as applicable, by the
Company and its subsidiaries. The property and assets the Company owns, and the
property and assets the Company's subsidiaries own, are owned by the Company or
such subsidiaries free and clear of all mortgages, liens, claims, loans


                                      -14-


<PAGE>


and encumbrances, except for (i) statutory liens for the payment of current
taxes that are not yet delinquent, (ii) liens, encumbrances and security
interests set forth in the Financial Statements or in the Schedule of Exceptions
and (iii) liens, encumbrances and security interests that arise in the ordinary
course of business and minor defects in title, none of which, individually or in
the aggregate, materially impair the Company's ownership or use of such property
or assets. With respect to the property and assets leased by the Company or any
of its subsidiaries, the Company or such subsidiary is in material compliance
with such leases and holds its leasehold interest free of any liens, claims or
encumbrances, subject to clauses (i), (ii) and (iii). All material facilities,
machinery, equipment, fixtures, vehicles and other properties owned, leased or
used by the Company or its subsidiaries are in good operating condition and
repair and are reasonably fit and usable for the purposes for which they are
being used.

    2.23   Insurance. The Company has in force fire, casualty, product
liability and other insurance policies, with extended coverage, sufficient in
amount to allow it to replace any of its or its subsidiaries' material
properties or assets which might be damaged or destroyed or sufficient to cover
liabilities to which the Company or its subsidiaries may reasonably become
subject, and which types and amounts of other insurance with respect to the
business and properties, on both a per occurrence and an aggregate basis, are as
customarily carried by Persons engaged in the same or similar business as the
Company and its subsidiaries. No default or event has occurred that could give
rise to a default under any such policy.

    2.24   Employee Benefit Plans.

        (a)   A complete list of all Pension/Benefit Plans (as defined) of the
Company and of its subsidiaries is set forth in the Schedule of Exceptions.

        (b)   Each Pension/Benefit Plan of the Company or of its subsidiaries
is, and has been, established, registered, qualified, administered and invested,
in compliance with the terms thereof and all applicable Laws and the Company has
not received, in the last three years, any notice from any Person questioning or
challenging such compliance.

        (c)   All obligations under the Pension/Benefit Plans (whether pursuant
to the terms thereof or applicable Law) have been satisfied, and there are no
outstanding defaults or violations thereunder by the Company or any of its
subsidiaries nor does the Company have any knowledge of any default or violation
by any other party to any Pension/Benefit Plan.

        (d)   All contributions or premiums required to be made under the terms
of any of Pension/Benefit Plans of the Company and its subsidiaries as of the
date of this Agreement have been timely made in accordance with the terms
thereof and all applicable Law, or, if not yet due, have been properly reflected
in the Financial Statements and no Taxes, penalties or fees are owing or
exigible under any Pension/Benefit Plan.

        (e)   No suit, administrative proceeding, action or other adverse
proceeding or claim has been brought or threatened against or with respect to
any Pension/Benefit Plan of the Company or of its subsidiaries (other than
routine benefits claims) and there is no pending audit or inquiry by any
Governmental Authority with respect to any Pension/Benefit Plan of the Company
or of any of its subsidiaries which if adversely determined could reasonably be


                                      -15-


<PAGE>


expected to have a MAE. No event has occurred and, to the knowledge of Company,
there exists no condition or set of circumstances that could subject the Company
or any subsidiary of the Company to any material liability (other than for
routine benefit liabilities) relating in any way to any Pension/Benefit Plan.

        (f)   There are no going concern unfunded actuarial liabilities, past
service unfunded liabilities or solvency deficiencies respecting any of the
Pension/Benefit Plans of the Company or any of its subsidiaries.

    "Pension/Benefit Plans" means all plans, arrangements, agreements, programs,
policies or practices, whether oral or written, formal or informal, funded or
unfunded, to which the Company is a party to or bound by or under which the
Company has any liability or contingent liability, relating to (i) retirement
savings or pensions, including, without limitation, any defined benefit pension
plan, defined contribution pension plan, group registered retirement savings
plan, or supplemental pension or retirement plan, or (ii) any bonus, profit
sharing, deferred compensation, incentive compensation, hospitalization, health,
dental, disability, unemployment insurance, vacation pay, severance pay or other
benefit plan with respect to any of its employees or former employees,
individuals working on contract with it or other individuals providing services
to it of a kind normally provided to employees, and all statutory plans which
the Company is required to comply with, including, without limitation, the
Canada or Quebec Pension Plans and plans administered pursuant to applicable
provincial health tax, workers compensation and unemployment insurance
legislation.

    2.25   Labor Agreements and Actions; Employee Compensation. Neither the
Company nor any of its subsidiaries is bound by or subject to (and none of their
assets or properties is bound by or subject to) any written or oral, express or
implied, collective bargaining agreement, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the best of the
Company's knowledge, has sought to represent any of the employees,
representatives or agents of the Company or any of its subsidiaries. There is no
strike or other labor dispute involving the Company or any of its subsidiaries
pending, or to the best of the Company's knowledge, threatened, that could have
a MAE on the assets, properties, financial condition, operating results, or
business of the Company or any of its subsidiaries (as presently conducted and
presently proposed to be conducted), nor is the Company aware of any labor
organization activity involving its employees. The Company is not aware that any
officer or key employee, or any group of key employees, intends to terminate
their employment with the Company or any of its subsidiaries, nor does the
Company have a present intention to terminate the employment of any of the
foregoing. Neither the Company nor any of its subsidiaries is party to a written
contract of employment entered into with any employees or any oral contracts of
employment which are not terminable on the giving of reasonable notice in
accordance with applicable Law. Except as set forth on the Schedule of
Exceptions, neither the Company nor any of its subsidiaries is a party to or
bound by any currently effective deferred compensation agreement, bonus plan,
incentive plan, profit sharing plan, retirement agreement, or other employee
compensation agreement. To the best of its knowledge, the Company has complied
in all material respects with all Laws relating to employees, including
employment standards, occupational health and safety, pay equity and employment
equity and neither the Company nor any of its subsidiaries has received any
notice alleging otherwise. There are no outstanding decision or settlements or
pending settlements under the employment standards legislation which


                                      -16-


<PAGE>


place any obligation upon the Company or any of its subsidiaries, to do or
refrain from doing any act. All current assessments under workplace safety and
insurance legislation in relation to the Company or any of its subsidiaries have
been paid or accrued and the Company or any of its subsidiaries have note been
subject to any special or penalty assessment under such legislation which has
not been paid.

    2.26   Obligations of Management. Except as set forth on the Schedule of
Exceptions, each officer and key employee of the Company and each of its
subsidiaries is currently devoting substantially all of his or her business time
to the conduct of the business of the Company or such subsidiary. The Company is
not aware that any officer or key employee of the Company or any subsidiary is
planning to work less than full time at the Company or its subsidiaries in the
future. No officer or key employee of the Company or any subsidiary is currently
working or, to the Company's knowledge, plans to work for a competitive
enterprise, whether or not such officer or key employee is or will be
compensated by such enterprise, except that upon the consummation of the
transaction contemplated by the Investment Agreement referred to on Schedule C,
certain employees of the Company may become employees of or consultants to MJI.

    2.27   Voting Agreements. Except as set forth on the Schedule of Exceptions,
or as provided in the Shareholders Agreement, the Company is not a party or
subject to any agreement or understanding, and, to the Company's knowledge,
there is no agreement or understanding between any Persons, that affects or
relates to the voting or giving of written consents with respect to any security
of the Company or by a director of the Company. Without limiting the foregoing,
except as set forth herein and in the Shareholders' Agreement, the Company has
no agreement, obligation or commitment with respect to the election of any
individual or individuals to the Board of Directors, and to the best of the
Company's knowledge, there is no voting agreement or other arrangement among its
stockholders with respect to the election of any individual or individuals to
the Board of Directors.

    2.28   Acknowledgment Regarding Prime Investments SA Purchase of Preferred
Shares and Notes. The Company acknowledges and agrees that Prime Investments SA
("PI") is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement or any of the other
Transaction Documents or the transactions contemplated hereby or thereby, the
relationship between the Company and PI is "arms-length" and any statement made
by PI or any of its representatives or agents in connection with this Agreement
and the other Transactions Documents and the transactions contemplated hereby
and thereby (other than the representations and warranties of PI herein and in
the other Transaction Documents) has not been relied upon by the Company, its
officers or directors in any way. The Company further acknowledges that the
Company's decision to enter into this Agreement and the other Transactions
Documents has been based solely on an independent evaluation by the Company and
its representatives.

    2.29   No Integrated Offering. Neither the Company, nor any of its
Affiliates (as defined), nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales of any security or solicited any
offers to buy any security under circumstances that would require registration
of the Preferred Shares or Notes being issued hereby under applicable securities
laws or cause this offering of Preferred Shares, Notes and Conversion Shares to
be integrated with any prior offering of securities of the Company for purposes
such securities laws.


                                      -17-


<PAGE>


    2.30   No Brokers. The Company has taken no action which would give rise
to any claim by any Person for brokerage commissions, finder's fees or similar
payments by any Investor relating to this Agreement or the transactions
contemplated hereby.

    2.31   Inventory. All inventory of the Company and its subsidiaries is
valued on the Company's consolidated books and records at the lower of cost and
net realizable value. Inventories of work-in-progress and the Company's
manufactured finished goods are valued at the lower of the average cost and net
realizable value. Average cost includes material, labour and overhead costs.
Except, to the extent of the Company's reserves for obsolete or unmerchantable
inventory reflected in the Company's Financial Statements, all such inventory,
after consideration of reserves consisting of finished goods is of merchantable
quality and is saleable in the ordinary course of business consistent with past
practice.

    2.32   MJI and the Investment Agreement. The Company and its counsel have
participated in the drafting and negotiating of the Investment Agreement
referred to on Schedule C. The Company has completed its due diligence of MJI
and is satisfied with the results of such due diligence review. In the course of
the Company's negotiations with MJI nothing has come to the Company's attention
that would cause it to believe on the date hereof and on each Closing Date that
the representations and warranties of MJI set forth in the Investment Agreement
are true and correct in all material respects. As of each Closing Date, MJI
shall have performed, satisfied and complied in all material respects with all
agreements, obligations and conditions contained in the Investment Agreement
that are required to be performed, satisfied or complied with by MJI on or
before the Closing (as defined in the Investment Agreement).

3.  REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.

    Each Investor hereby represents, warrants and covenants to the Company
that:

    3.1   Authorization. Such Investor has full power and authority to enter
into this Agreement and the other Transaction Documents to which it is a party,
and each such agreement constitutes its valid and legally binding obligation,
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies. Such Investor is a corporation duly
incorporated and existing under the laws of the jurisdiction in which it is
incorporated.

    3.2   Purchase Entirely for Own Account. Such Investor understands that
this Agreement is made with such Investor in reliance upon such Investor's
representation to the Company that the Preferred Shares, Notes and Conversion
Shares thereof (collectively the "Securities") will be acquired for investment
for such Investor's own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in or otherwise
distributing the same. Such Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.


                                      -18-


<PAGE>


    3.3   No Conflict. The execution, delivery and performance by each Investor
of this Agreement and the other Transaction Documents to which such Investor is
a party do not and will not (a) violate, conflict with or result in the breach
of any provision of the organizational documents of the Investor, or (b)
conflict with or violate any Law or governmental order applicable to the
Investor or its assets, properties or business, or (c) in any material respect,
conflict with, result in any breach of, constitute a default or (event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any encumbrance or any property or asset of the Investor
pursuant to, any note, bond mortgage or indenture, contract, agreement, lease,
sublease, license, permit franchise or other instrument or arrangement to which
the Investor is a party or by which any of such assets or properties is bound or
affected.

    3.4   Litigation. There are no material actions, suits or proceedings
pending before any Governmental Authority by or against the Investor (or by or
against the Investor or any affiliate thereof and relating to its business) or
affecting any of the Investor's assets pending before any Governmental Authority
(or, to the knowledge of the Investor, threatened to be brought by or before any
Governmental Authority) that would reasonably be expected to effect the
legality, validity or enforceability of this Agreement, any Transaction Document
or the consummation of the transactions contemplated by this Agreement or
thereby.

    3.5   Legends. It is understood that the certificates evidencing the
Securities may bear one or more restrictive legends as may be required by the
Shareholders' Agreement or applicable legislation.

4.  COVENANTS.

    4.1   Best Efforts. The parties shall use their commercially reasonable
best efforts timely to satisfy each of the conditions described in Sections 5
and 6 of this Agreement.

    4.2   Use of Proceeds. The Company shall use the proceeds from the sale of
the Preferred Shares and Notes as set forth on Schedule C.

    4.3   Reservation of Shares. The Company shall at all times have
authorized and reserved for the purpose of issuance a sufficient number of
shares of Voting Common Stock to provide for the full conversion of the
outstanding Preferred Shares and outstanding Notes and issuance of the
Conversion Shares in connection therewith.

    4.4   Legal Compliance. The Company shall conduct its business and the
business of its subsidiaries in compliance with all laws, ordinances or
regulations of governmental entities applicable to such businesses, except where
the failure to do so would not have a MAE.

    4.5   Material Transactions. So long as the Investors shall hold any Notes
and Preferred Shares, the written consent of the Required Investors shall be
required for the Company or any of its subsidiaries to enter into any material
transaction with any Insider or any Affiliate of any Insider, other than
transactions in the ordinary course of the Company's or such subsidiaries
business on terms not less favorable to the Company than it could obtain in an
arms-length transaction. For purposes of this Agreement, the term "Required
Investors" means (i)


                                      -19-


<PAGE>


for the period commencing the First Closing and ending on the fifth anniversary
of the First Closing, Investors holding Preferred Shares and Notes (determined
on an as converted basis) and (ii) at any time after the fifth anniversary of
the First Closing, (a) Investors owning sixty-seven percent (67%) of the
outstanding Preferred Shares and (b) Investors owning sixty-seven percent (67%)
of the outstanding Notes.

    4.6   Ratable Treatment of Holders of Preferred Shares and Holders of
Notes. So long as the Preferred Shares are outstanding, the Corporation agrees
to deal ratably with the holders thereof in any and all matters, other than the
conversion thereof at the election of a holder of Preferred Shares. So long as
the Notes are outstanding, the Company agrees to deal ratably with the holders
thereof in all matters other than the conversion thereof at the election of the
holder of the Notes.

    4.7   Transferability. Without the consent of the Corporation, which shall
not be unreasonably withheld, neither Investor will transfer its Preferred
Shares or Notes to any Person who is not directly or indirectly through one or
more intermediaries controlled by or under common control with the applicable
Investor.

5.  CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING.

    The obligations of each Investor under Section 1.1(b) of this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions, the waiver of which shall not be effective against any Investor who
does not consent in writing thereto:

    5.1   Representations and Warranties. The representations and warranties of
the Company contained in Section 2 shall be true and correct on and as of the
Closing with the same force and effect as though such representations and
warranties had been made on and as of the date of such Closing (except for
representations and warranties that speak as of a specific date, which
representations and warranties shall be true and correct as of such date).

    5.2   Performance. The Company shall have performed, satisfied and complied
in all material respects, with all agreements, obligations and conditions
contained in this Agreement that are required to be performed, satisfied or
complied with by the Company on or before the Closing.

    5.3   Compliance Certificate. The President of the Company shall deliver
to each Investor at the Closing a certificate stating that the conditions
specified in Sections 5.1, 5.2 and 5.13 have been fulfilled.

    5.4   Qualifications; Consents. All authorizations, approvals or permits,
if any, of any governmental authority or regulatory body of Canada or of any
province that are required in connection with the lawful issuance and sale of
the Notes and Preferred Shares pursuant to this Agreement and the Conversion
Shares upon conversion of the Notes and Preferred Shares shall be duly obtained
and effective as of the Closing. The Company shall also have obtained any and
all consents and waivers, if any, required for the consummation of the
transactions contemplated by this Agreement and the Transaction Documents.


                                      -20-


<PAGE>


    5.5   Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the applicable Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Investors and the Investors' special counsel, and they shall
have received all such counterpart original and certified or other copies of
such documents as they may reasonably request.

    5.6   Shareholders' Agreement, Security Agreement, Senior Lenders' Priority
Agreement, Pari Passu Creditors' Priority Agreement, Intercreditor Agreement,
Diamond Supply Agreement and Diamond Consignment Agreement. At the First Closing
(i) the Company and each Investor shall have executed and delivered the
Shareholders' Agreement, (ii) the Trustee and the Investors shall have executed
and delivered the Intercreditor Agreement, (iii) the Trustee and two creditors
of the Company shall have executed and delivered the Priority Agreement, (iv)
the Trustee and one creditor of the Company shall have executed and delivered
the Acknowledgement Agreement, (v) the Company and the Trustee shall have
executed and delivered the Security Agreement and (vi) [ ] and the Company shall
have executed and delivered the Diamond Supply Agreement and the Diamond
Consignment Agreement.

    5.7   Filing of Articles of Amendment. The Articles of Amendment shall have
been filed with the Director appointed under the Canada Business Corporations
Act and shall be in full force and effect at the time of Closing.

    5.8   Reservation of Conversion Shares. The Conversion Shares issuable upon
conversion of the Preferred Shares and Notes shall have been duly authorized
and reserved for issuance upon such conversion.

    5.9   Secretary's Certificate. The Investors shall have received from the
Company's Secretary, a certificate having attached thereto (i) the Company's
Articles as in effect at the time of the Closing, (ii) the Company's Bylaws as
in effect at the time of Closing; (iii) resolutions approved by the Board of
Directors and the Company's stockholders, as necessary, authorizing the
transactions contemplated hereby, including without limitation the filing of the
Articles of Amendment, and (iv) good standing certificates with respect to the
Company from the applicable authorities in its state of formation.

    5.10   Board of Directors. The Company and Henry Birks & Sons Holdings
Inc. shall have taken all necessary corporate action such that immediately
following the Closing, the authorized size of the Board of Directors of the
Company shall be ___ members and the Board shall consist of the following
directors: [_________].

    5.11   Opinion of Company Counsel. Each Investor shall have received from
Stikeman Elliott, counsel for the Company, an opinion, dated as of the Closing,
in substantially the form attached as Exhibit J.

    5.12   Acquisition Transaction. The Company shall have delivered to each
of the Investors true and correct copies of the transaction documents required
to consummate of the acquisition transaction described on Schedule C (the
"Acquisition Transaction") and the Company and the parties to the Acquisition
Transaction shall have executed and delivered all of the documents and
agreements required to consummate the Acquisition Transaction and


                                      -21-


<PAGE>


complied with all of their obligations thereunder except for the payment of the
purchase price therefor. Immediately following the First Closing, the cash
portion of the purchase price described in the Acquisition Transaction shall be
paid and immediately following the Second Closing the note delivered in
connection with the Acquisition Transaction shall be paid in full.

    5.13   No Material Adverse Change or Development. There shall have been no
material adverse changes and no material adverse developments in the business,
properties, operations, prospects, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole, since the date hereof,
and no information, of which the Investor is not currently aware, shall come to
the attention of the Investor that is materially adverse to the Company.

6.  CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.

    The obligations of the Company to each Investor under this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions by that Investor:

    6.1   Representations and Warranties. The representations and warranties
of the Investors contained in Section 3 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of the Closing.

    6.2   Performance. The Investors shall have performed and complied with
all agreements and conditions herein required to be performed or complied with
by such Investors on or before the Closing, including the delivery of the
purchase price in accordance with Section 1.2(b) hereof.

    6.3   Qualifications; Consents. All authorizations, approvals or permits,
if any, of any Governmental Authority that are required in connection with the
lawful issuance and sale of the Securities pursuant to this Agreement shall be
duly obtained and effective as of the Closing. The Company shall also have
obtained any and all consents and waivers, if any, required for the consummation
of the transactions contemplated by this Agreement and the Shareholders'
Agreement.

    6.4   Shareholders' Agreement, Intercreditor Agreement, Senior Lenders'
Priority Agreement, Pari Passu Creditor's Priority Agreement, Security
Agreement, Diamond Supply Agreement and Diamond Consignment Agreement. At the
First Closing (i) the Company and each Investor shall have executed and
delivered the Shareholders' Agreement, (ii) the Trustee and the Investors shall
have executed and delivered the Intercreditor Agreement, (iii) the Trustee and
two creditors of the Company shall have executed and delivered the Priority
Agreement, (iv) the Trustee and one creditor of the Company shall have executed
and delivered the Acknowledgement Agreement, (v) the Company and the Trustee
shall have executed and delivered the Security Agreement and (vi) [ ] and the
Company shall have executed and delivered the Diamond Supply Agreement and the
Diamond Consignment Agreement.

    6.5   Filing of Articles of Amendment. The Articles of Amendment shall have
been filed with the Director appointed under the Canada Business Corporations
Act and shall be in full force and effect at the time of Closing.


                                      -22-


<PAGE>


7.  MISCELLANEOUS.

    7.1   Survival. The warranties, representations and pre-closing covenants
of the Company and Investors contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and the First and
Second Closings for a period of six months from the Second Closing and shall in
no way be affected by any investigation of the subject matter thereof made by or
on behalf of the Investors or the Company and the post-closing covenants of the
Company and the Investors contained in or made pursuant to this Agreement shall
survive the execution and delivery and the Closings.

    7.2   Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
permitted transferees of any Securities). Nothing in this Agreement, express or
implied, is intended to confer upon any party, other than the parties hereto or
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

    7.3   Governing Law and Jurisdiction.

        (a)   This Agreement shall be governed by and construed under the laws
of the Province of Quebec and the federal laws of Canada, applicable therein.

        (b)   The Company and the Investors irrevocably consent to the
jurisdiction of the courts of the Province of Quebec in any suit or proceeding
based on or arising under this Agreement and irrevocably agree that all claims
in respect of such suit or proceeding may be heard and determined in such
courts. The Company and the Investors irrevocably waive the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The Company
further agrees that service of process upon the Company mailed by first class
mail shall be deemed in every respect effective service of process upon the
Company in any such suit or proceeding. Nothing herein shall affect the right of
any Investor to serve process in any other manner permitted by Law. The Company
and the Investors agree that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.

    7.4   Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.

    7.5   Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
address as set forth on the signature page hereof or at such other address as
such party may designate by ten (10) days advance written notice to the other
parties hereto.


                                      -23-


<PAGE>


    7.6   Finder's Fee. Each party represents that it neither is nor will be
obligated for any finder's fee or commission in connection with this
transaction. Each Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its officers, partners,
employees or representatives is responsible. The Company agrees to indemnify and
hold harmless each Investor from any liability for any commission or
compensation in the nature of a finder's fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.

    7.7   Expenses. Irrespective of whether the Closing is effected, the
Company and each Investor shall pay all costs and expenses that such Person
incurs with respect to the negotiation, execution, delivery and performance of
this Agreement. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, or any other Transaction Document, or the
Articles of Amendment, the prevailing party shall be entitled to reasonable
attorney's fees, costs, and necessary disbursements in addition to any other
relief to which such party may be entitled.

    7.8   Amendments and Waivers.

        (a)   Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Required Investors. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any Securities purchased under this Agreement at the time outstanding (including
Conversion Shares), each future holder of all such securities and the Company.

        (b)   Each Investor acknowledges that by operation of Section 7.8(a)
above, the Required Investors will have the power to diminish or eliminate all
rights of such Investor under this Agreement.

    7.9   Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind or character on
any party's part of any breach, default or noncompliance under this Agreement,
or any waiver on such party's part of any provisions or conditions of the
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to any party, shall be cumulative and
not alternative.

    7.10   Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable Law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.


                                      -24-


<PAGE>


    7.11   Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties, and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.

    7.12   Pronouns. All pronouns contained herein, and any variations thereof,
shall be deemed to refer to the masculine, feminine or neutral, singular or
plural, as to the identity of the parties hereto may require.

    7.13   Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement, once
executed by a party, may be delivered to the other parties hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement. In the event any signature is delivered by facsimile
transmission, the party using such means of delivery shall cause the manually
executed Execution Page(s) hereof to be physically delivered to the other party
within five (5) days of the execution hereof, provided that the failure to so
deliver any manually executed Execution Page shall not effect the validity or
enforceability of this Agreement.

    7.14   Jury Trial. Each party to this Agreement hereby waives a trial by
jury in any legal action or proceeding relating to this Agreement.

    7.15   Publicity and Confidentiality. From and after the date hereof, the
Company and each Investor agrees that it shall make no written or other public
disclosure or announcement regarding this transaction or regarding the parties
hereto to any Person without the prior written consent of the other parties,
provided that disclosures to Investor's capital investors, the professional
advisors and employees of each of the parties hereto and, with prior notice to
the applicable Investor, regulatory authorities or as otherwise required by law
shall be permitted. Neither the Company nor any Investor shall issue any press
release or generate other publicity concerning the transactions contemplated
hereby without the prior written consent of the other parties hereto. All
documents, materials and information ("Information") relating to the Company
provided to the Investors by the Company or its representatives, and all
Information relating to an Investor provided to the Company by such Investor,
are confidential and proprietary to the disclosing party, and each Investor
jointly and severally, the Company and their representatives, respectively, will
maintain the Information in strict confidence. Such confidential and proprietary
documents, material and information shall not however include documents,
materials or information that (a) is now and subsequently becomes generally
available to the public or such Investor, the Company or their respective
representatives, as the case may be, through no fault or breach on the part of
such Investor, the Company or their respective representatives, as the case may
be, (b) such Investor, the Company or their respective representatives, as the
case may be, can demonstrate to have had rightfully in its possession without a
confidentiality obligation prior to disclosure hereunder or (c) is independently
developed by such Investor, the Company or their respective representatives, as
the case may be, without the use of any confidential or proprietary documents,
materials or information of the Company, such Investor or their respective
representatives, as the case may be.


                                      -25-


<PAGE>


    7.16   Further Assurances. At and after Closing, the Company and each
Investor agree to take and do such further actions and things reasonably
required to consummate the purchase and sale of securities contemplated hereby.

    7.17   Language. The parties have required that this Agreement and all
instruments relating hereto be in the English language; les parties ont exige
que la presente convention et tout autre document afferent aux presentes soient
en langue anglaise.

    7.18   Termination. In the event that the First Closing shall not have
occurred on or before ________, 2002, unless the parties agree otherwise, this
Agreement shall terminate at the close of business on such date. Notwithstanding
any termination of this Agreement, any party not in breach of this Agreement
shall preserve all rights and remedies it may have against another party hereto
for a breach of this Agreement prior to or relating to the termination hereof.

    7.19   Joint Participation in Drafting. Each party to this Agreement has
participated in the negotiation and drafting of this Agreement and the other
Transaction Documents to which it is a party. As such, the language used herein
and therein shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be applied
against any party to this Agreement.

                           [SIGNATURE PAGES TO FOLLOW]


                                      -26-


<PAGE>


        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                  THE COMPANY:

                                  HENRY BIRKS & SONS INC.

                                  By:__________________________________
                                  Name:________________________________
                                  Its:___________________________________

                                  Address:   1240 Phillips Square
                                             Montreal Quebec
                                             H3B 3H4
                                             Telecopier: (514) 397-2577
                                  Attention: President and Corporate Secretary

                                  with copies to:

                                  Stikeman Elliott
                                  Suite 4000
                                  1155 Rene-Levesque Blvd. West
                                  Montreal, Quebec
                                  H3B 3V2
                                  Fax: (514) 397-3222
                                  Telephone: (514) 397-3000

                                  Attention: J. Anthony Penhale, Esq.
                                             Nicolas J. Beugnot, Esq.

                                  INVESTORS:

                                  PRIME INVESTMENTS SA

                                  By:__________________________________
                                  Name:________________________________
                                  Its:___________________________________


                                      -27-


<PAGE>



                                  Address:   Saphir Building lst Floor
                                             63 Boulevard Prince Felix
                                             L1513 - Luxembourg

                                  The postal address and telephone numbers are:
                                        P.O. Box 415
                                        L-2014 Luxembourg
                                        Contact Person: Mr. Marco Dijkerman
                                        Telephone: 352-427171224
                                        Fax:  352-421961


                                  with copies to:

                                  Wolf, Block, Schorr and Solis-Cohen LLP
                                  250 Park Avenue
                                  New York, New York  10177
                                  Telephone: 212 883-4911
                                  Fax:  212 672-1111

                                  Attention:  Lawrence L. Ginsburg, Esq.


                                  HENRY BIRKS & SONS HOLDINGS INC.

                                  By:__________________________________
                                  Name:________________________________
                                  Its:___________________________________

                                  Address:   ______________________________
                                             ______________________________


                                  with copies to:


                                      -28-



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>5
<FILENAME>ex3_080902.txt
<DESCRIPTION>REGISTRATION RIGHTS AGREEMENT
<TEXT>

                                                                       Exhibit 3











                              --------------------


                          REGISTRATION RIGHTS AGREEMENT

                              --------------------

                                     Between

                             MAYOR'S JEWELERS, INC.

                                       and

                             HENRY BIRKS & SONS INC.



                           Dated as of August 20, 2002



<PAGE>


                  REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
August 20, 2002, between Mayor's Jewelers, Inc., a Delaware corporation (the
"Seller"), and Henry Birks & Sons Inc., a Canadian corporation (the
"Purchaser").

                  WHEREAS, subject to the terms and subject to the conditions
set forth in an Investment Agreement dated the date hereof between the Seller
and the Purchaser, wherein the Purchaser has subscribed for and purchased from
the Seller, and the Seller has issued and sold to the Purchaser, a total of
15,000 shares of Series A Convertible Preferred Stock of the Seller (the
"Shares") convertible into 50,000,000 shares of, and warrants (the "Warrants")
exercisable to purchase 37,272,787 shares of, the Common Stock, par value
$0.0001 (the "Common Stock"), of the Seller;

                  WHEREAS, the Shares and the Warrants and the Common Stock
issuable upon conversion of the Shares or exercise of the Warrants have not been
registered under the Securities Act of 1993, as amended (the "Securities Act");

                  WHEREAS the Seller and the Purchaser are entering into this
Agreement to provide for certain rights and obligations with respect to the
registration under the Securities Act of the Common Stock issuable upon
conversion of the Shares or exercise of the Warrants.

                  NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Seller and the
Purchaser hereby agree as follows:

                  5.1   S-3 Registration Statement. At any time six months
following the date hereof, upon the written request of the Purchaser, the Seller
shall be obligated to:

                        5.1.1   Prepare and file a registration statement with
                                the SEC on Form S-3 under the Securities Act (or
                                in the event that the Seller is ineligible to
                                use such form, such other form as the Seller is
                                eligible to use under the Securities Act) (the
                                "Registration Statement") covering the resale of
                                the Common Stock held by the Purchaser following
                                conversion of its Shares or upon exercise of its
                                Warrants (the "Registrable Securities"), which
                                Registration Statement (including any amendments
                                or supplements thereto and prospectuses
                                contained therein) shall not contain any untrue
                                statement of a material fact or omit to state a
                                material fact required to be stated therein, or
                                necessary to make the statements therein not
                                misleading. Such Registration Statement shall,
                                in addition and without limitation, register
                                (pursuant to Rule 416 under the Securities Act,
                                or otherwise) such additional indeterminate
                                number of Registrable Securities as shall be
                                necessary to prevent dilution resulting from
                                stock splits, stock dividends or similar
                                transactions. Thereafter, the Seller shall use
                                its reasonable best efforts to cause such
                                Registration Statement and other filings to be
                                declared effective as soon as practicable.


<PAGE>


                        5.1.2   Prepare and file with the SEC such amendments
                                and supplements to such Registration Statement
                                and the prospectus used in connection with such
                                Registration Statement as may be necessary to
                                keep the Registration Statement effective and to
                                comply with the provisions of the Securities Act
                                with respect to the disposition of all
                                securities covered by such Registration
                                Statement as set forth in the Registration
                                Statement and then on a continuous basis in
                                accordance with Rule 415 under the Securities
                                Act; and, notify the Purchaser of the
                                effectiveness of such Registration Statement and
                                any amendments or supplements thereto.

                        5.1.3   Furnish to the Purchaser such numbers of copies
                                of a current prospectus conforming with the
                                requirements of the Securities Act, copies of
                                the Registration Statement, any amendment or
                                supplement thereto and any documents
                                incorporated by reference therein and such other
                                documents as the Purchaser may reasonably
                                require in order to facilitate the disposition
                                of Registrable Securities owned by the
                                Purchaser.

                        5.1.4   Register and qualify, or obtain an appropriate
                                exemption from registration or qualification
                                for, the securities covered by such Registration
                                Statement under such other securities or "Blue
                                Sky" laws of each jurisdiction of the United
                                States as the Purchaser may reasonably request,
                                (B) prepare and file in those jurisdictions such
                                supplements (including post-effective
                                amendments) and supplements to such
                                registrations and qualifications as may be
                                necessary to maintain the effectiveness thereof,
                                (C) take such other actions as may be necessary
                                to maintain such registrations and
                                qualifications in effect at all times, and (D)
                                take all other actions reasonably necessary or
                                advisable to qualify the Registrable Securities
                                for sale in such jurisdictions; provided that
                                the Seller shall not be required in connection
                                therewith or as a condition thereto to qualify
                                to do business as a foreign corporation in any
                                jurisdiction in which it is not now qualified,
                                or to file a general consent to service of
                                process in any jurisdiction with respect to
                                matters unrelated to the issuance of the Common
                                Stock pursuant hereto.

                        5.1.5   Promptly notify the Purchaser in writing of the
                                happening of any such event as a result of which
                                the prospectus (including any supplements
                                thereto or thereof) included in such
                                Registration Statement, as then in effect,
                                includes an untrue statement of material fact or
                                omits to state a material fact required to be
                                stated therein or necessary to make the
                                statements therein not misleading in light of
                                the circumstances then existing, and use its
                                reasonable best efforts to promptly update
                                and/or correct such prospectus to


<PAGE>


                                correct such untrue statement or omission, and
                                deliver such number of copies of such supplement
                                or amendment to the Purchaser as the Purchaser
                                may reasonably request.

                        5.1.6   Promptly notify the Purchaser of the issuance by
                                the SEC or any state securities commission or
                                agency of any stop order suspending the
                                effectiveness of the Registration Statement or
                                the initiation of any proceedings for that
                                purpose. The Seller shall take all actions
                                necessary to prevent the issuance of any stop
                                order and, if any stop order is issued, to
                                obtain the lifting thereof at the earliest
                                possible time.

                        5.1.7   Permit counsel, designated by the Purchaser to
                                review (A) the Registration Statement and (B)
                                all amendments and supplements thereto relating
                                to information concerning the Purchaser within a
                                reasonable period of time prior to filing
                                thereof, to the extent practicable.

                        5.1.8   List the Registrable Securities covered by such
                                Registration Statement with all securities
                                exchange(s) and/or markets on which the Common
                                Stock is then listed and prepare and file any
                                required filings with the National Association
                                of Securities Dealers, Inc. or any exchange or
                                market where the shares of Common Stock are
                                traded.

                        5.1.9   If applicable, take all steps necessary to
                                enable the Purchaser to avail itself of the
                                prospectus delivery mechanism set forth in Rule
                                153 (or successor thereto) under the Securities
                                Act.

                        5.1.10  Provide a CUSIP number and a transfer agent and
                                registrar, which may be a single entity, for the
                                Registrable Securities not later than the
                                effective date of the Registration Statement.

                        5.1.11  At the reasonable request of the Purchaser,
                                prepare and file with the SEC such amendments
                                (including post-effective amendments) and
                                supplements to the Registration Statement and
                                the prospectus used in connection with the
                                Registration Statement as may be necessary in
                                order to change the plan of distribution set
                                forth in such Registration Statement.

                        5.1.12  Furnish to the Purchasers (i) a "10b-5 negative
                                assurances letter" from the Seller's counsel and
                                (ii) an independent auditor's comfort letter,
                                each of which shall be addressed to the
                                Purchaser and similar to such as would be
                                provided in an underwritten offering.

                        5.1.13  In the event of any underwritten public
                                offering, enter into and perform its obligations
                                under an underwriting agreement, in usual


<PAGE>


                                and customary form, with the managing
                                underwriter of such offering.

                  5.2 Suspension of Registration Statement. Upon written notice
to the Purchaser, the Seller may suspend the use of any prospectus used in
connection with the Registration Statement if the Board of Directors of the
Seller determines in good faith based upon advice of counsel that the use of the
prospectus would be misleading because of material non-public information known
to the Seller and disclosure of which is determined by the Board of Directors to
be materially detrimental to the Seller and is not otherwise required by law;
provided, however, that the Seller may utilize this provision only once in any
twelve (12) month period and any such suspension shall not exceed forty-five
(45) calendar days. The Seller will use its reasonable best efforts to cause any
such suspension to terminate at the earliest possible date.

                  5.3 Expenses. The Seller shall pay the expenses incurred by it
in complying with its obligations under this Agreement, including all
registration and filing fees, exchange listing fees, the fees and expenses of
counsel for the Seller, the reasonable fees and expenses of one counsel retained
by the Purchaser or the Purchasers, which counsel shall be reasonably
satisfactory to the Seller, and the fees and expenses of accountants for the
Seller, but excluding any brokerage fees, selling commissions or underwriting
discounts incurred by the Purchaser in connection with sales under the
Registration Statement.

                  5.4 Registration Other Than On Form S-3. The Seller shall seek
to continue to qualify for registration on Form S-3 or any comparable or
successor form or forms, or in the event that the Seller is ineligible to use
form, such form as the Seller is eligible to use under the Securities Act. If
the Seller is ineligible to use Form S-3, the Purchaser may, on demand, require
the Seller to register the Registrable Securities under the Securities Act on
such other form the Seller is eligible to use, and may require the Seller to do
so on up to three (3) separate registration statements; in addition to other
rights of the Purchasers under this Agreement, the Purchaser may require the
Seller to register the Registrable Securities on any registration statement of
the Seller filed with the SEC for purposes of a public offering of the Seller's
securities.

                  5.5 Effectiveness of Registration Statement. In the case of
the registration effected by the Seller pursuant to this Agreement, the Seller
will use its reasonable best efforts to keep such registration effective until
the Purchaser has completed the sales or distribution described in the
Registration Statement relating thereto or, if earlier, until such Registrable
Securities may be sold under Rule 144(k) (provided that the Seller's transfer
agent has accepted an instruction from the Seller to such effect).

                  5.6 Indemnification. i) The Seller will indemnify the
Purchaser, each of its directors, officers and partners, and each person
controlling the Purchaser within the meaning of Section 15 of the Securities Act
and the rules and regulations thereunder, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any registration statement, prospectus, offering circular or other document
incident to any registration,


<PAGE>


qualification or compliance effected by the Seller pursuant to this Agreement,
or based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Seller of the Securities Act or any state
securities law or in either case, any rule or regulation thereunder applicable
to the Seller and relating to action or inaction required of the Seller in
connection with any such registration, qualification or compliance, and will
reimburse the Purchaser, each of its officers, directors and partners, and each
person controlling the Purchaser, for any legal and any other expenses
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, provided that the Seller will not be
liable in any such case to the Purchaser to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to the Seller by
or on behalf of the Purchaser therefor and stated to be specifically for use
therein. The indemnity agreement contained in this Agreement shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Seller (which consent
will not be unreasonably withheld).

                        5.6.1   The Purchaser (the "Indemnifying Purchaser")
                                will severally indemnify the Seller, each of its
                                directors, officers and partners, each person
                                who controls the Seller within the meaning of
                                Section 15 of the Securities Act and the rules
                                and regulations thereunder, against all claims,
                                losses, damages and liabilities (or actions in
                                respect thereof) arising out of or based on any
                                untrue statement (or alleged untrue statement)
                                of a material fact contained in any such
                                registration statement, prospectus, offering
                                circular or other document, or any omission (or
                                alleged omission) to state therein a material
                                fact required to be stated therein or necessary
                                to make the statement therein not misleading,
                                and will reimburse the Seller and its directors,
                                officers and partners, or control persons for
                                any legal or any other expenses reasonably
                                incurred in connection with investigating and
                                defending any such claim, loss, damage,
                                liability or action, in each case to the extent,
                                but only to the extent, that such untrue
                                statement (or alleged untrue statement) or
                                omission (or alleged omission) is made in such
                                registration statement, prospectus, offering
                                circular or other document in reliance upon and
                                in conformity with written information furnished
                                to the Seller by such Indemnifying Purchaser and
                                stated to be specifically for use therein;
                                provided, however, that the obligations of an
                                Indemnifying Purchaser hereunder shall be
                                limited to an amount equal to the net proceeds
                                received by such Indemnifying Purchaser of
                                securities sold pursuant to the Registration
                                Statement. The indemnity agreement contained in
                                this Agreement shall not apply to amounts paid
                                in settlement of any such claims, losses,
                                damages or liabilities if such settlement is
                                effected without the consent of the Indemnifying
                                Purchaser (which consent shall not be
                                unreasonably withheld).


<PAGE>


                        5.6.2   Each party entitled to indemnification under
                                this Agreement (the "Indemnified Party") shall
                                give notice to the party required to provide
                                indemnification (the "Indemnifying Party")
                                promptly after such Indemnified Party has actual
                                knowledge of any claim as to which indemnity may
                                be sought, and shall permit the Indemnifying
                                Party to assume the defense of any such claim or
                                any litigation resulting therefrom; provided
                                that counsel for the Indemnifying Party, who
                                shall conduct the defense of such claim or any
                                litigation resulting therefrom, shall be
                                approved by the Indemnified Party (whose
                                approval shall not unreasonably be withheld) and
                                the Indemnified Party may participate in such
                                defense at the Indemnified Party's expense
                                (unless the Indemnified Party shall have
                                reasonably concluded that there may be a
                                conflict of interest between the Indemnifying
                                Party and the Indemnified Party in such action,
                                in which case the fees and expenses of counsel
                                shall be at the expense of the Indemnifying
                                Party), and provided further that the failure of
                                any Indemnified Party to give notice as provided
                                herein shall not relieve the Indemnifying Party
                                of its obligations under this Agreement unless,
                                and only to the extent that, the Indemnifying
                                Party is materially prejudiced thereby. No
                                Indemnifying Party, in the defense of any such
                                claim or litigation shall, except with the
                                consent of each Indemnified Party, consent to
                                entry of any judgment or enter into any
                                settlement which does not include as an
                                unconditional term thereof the giving by the
                                claimant or plaintiff to such Indemnified Party
                                of a release from all liability in respect to
                                such claim or litigation. Each Indemnified Party
                                shall furnish such information regarding itself
                                or the claim in question as an Indemnifying
                                Party may reasonably request in writing and as
                                shall be reasonably required in connection with
                                the defense of such claim and litigation
                                resulting therefrom.

                        5.6.3   If the indemnification provided for in this
                                Agreement is held by a court of competent
                                jurisdiction to be unavailable to an Indemnified
                                Party with respect to any loss, liability,
                                claim, damage or expense referred to herein,
                                then the Indemnifying Party, in lieu of
                                indemnifying such Indemnified Party hereunder,
                                shall contribute to the amount paid or payable
                                by such Indemnified Party as a result of such
                                loss, liability, claim, damage or expense in
                                such proportion as is appropriate to reflect the
                                relative fault of the Indemnifying Party on the
                                one hand and of the Indemnified Party on the
                                other in connection with the statements or
                                omissions which resulted in such loss,
                                liability, claim, damage or expense, as well as
                                any other relevant equitable considerations. The
                                relative fault of the Indemnifying Party and of
                                the Indemnified Party shall be determined by
                                reference to, among other things, whether the
                                untrue (or alleged untrue) statement of a
                                material fact or the omission (or


<PAGE>


                                alleged omission) to state a material fact
                                relates to information supplied by the
                                Indemnifying Party or by the Indemnified Party
                                and the parties' relative intent, knowledge,
                                access to information and opportunity to correct
                                or prevent such statement or omission.
                                Notwithstanding the provisions of this Section,
                                the Purchaser shall not be required to
                                contribute any amount in excess of the gross
                                proceeds received by the Purchaser from
                                securities sold pursuant to the Registration
                                Statement.

                        5.6.4   Notwithstanding the foregoing, to the extent
                                that the provisions on indemnification and
                                contribution contained in the underwriting
                                agreement entered into in connection with any
                                underwritten public offering contemplated by
                                this Agreement are in conflict with the
                                foregoing provisions, the provisions in such
                                underwriting agreement shall be controlling.

                  5.7 Available Information. With a view to making available the
benefits of certain rules and regulations of the SEC which may permit the sale
of restricted securities to the public without registration, the Seller agrees
to use its reasonable best efforts to (i) make and keep public information
available as those terms are understood and defined in Rule 144 under the
Securities Act, or any successor rule, at all times after the date hereof, (ii)
use its reasonable best efforts to file with the SEC in a timely manner all
reports and other documents required of the Seller under the Securities Act and
the Exchange Act at any time, and (iii) so long as the Purchaser owns any
Registrable Securities, furnish to the Purchaser upon request, a written
statement by the Seller as to its compliance with the reporting requirements of
Rule 144, and of the Securities Act and the Exchange Act, a copy of the most
recent annual or quarterly report of the Seller, and such other reports and
documents so filed as the Purchaser may reasonably request in availing itself of
any rule or regulation of the SEC allowing the Purchaser to sell any such
securities without registration.

                  5.8 Notice to the Seller. The Purchaser shall notify the
Seller in writing promptly after, and in no event later than five (5) business
days after, the sale or other disposition by the Purchaser of any of the
Registrable Securities.

                  5.9 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated by
this Agreement are consummated as originally contemplated to the greatest extent
possible.

                  5.10 No Third Party Beneficiaries. Except for the provisions
of Section 1.06 relating to indemnified parties, this Agreement shall be binding
upon and inure solely to the


<PAGE>


benefit of the parties hereto and their permitted assigns and nothing herein,
express or implied, is intended to or shall confer upon any other Person,
including, without limitation, any union or any employee or former employee of
the Seller, any legal or equitable right, benefit or remedy of any nature
whatsoever, including, without limitation, any rights of employment for any
specified period, under or by reason of this Agreement.

                  5.11 Currency. Unless otherwise specified in this Agreement,
all references to currency, monetary values and dollars set forth herein shall
mean United States (U.S.) dollars and all payments hereunder shall be made in
United States dollars.

                  5.12 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined exclusively in any New York state or federal court sitting in the
Borough of Manhattan of The City of New York. The parties hereto hereby (a)
submit to the exclusive jurisdiction of any state or federal court sitting in
the Borough of Manhattan of The City of New York for the purpose of any Action
arising out of or relating to this Agreement brought by any party hereto, and
(b) irrevocably waive, and agree not to assert by way of motion, defense, or
otherwise, in any such Action, any claim that it is not subject personally to
the jurisdiction of the above-named courts, that its property is exempt or
immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the transactions contemplated by this Agreement may not be enforced
in or by any of the above-named courts.

                  5.13 Waiver of Jury Trial. Each of the parties hereto hereby
waives to the fullest extent permitted by applicable law any right it may have
to a trial by jury with respect to any litigation directly or indirectly arising
out of, under or in connection with this Agreement or the transactions
contemplated by this Agreement. Each of the parties hereto (a) certifies that no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce that foregoing waiver and (b) acknowledges that it and the other
party hereto have been induced to enter into this Agreement and the transactions
contemplated by this Agreement, as applicable, by, among other things, the
mutual waivers and certifications in this Section 13.

                  5.14 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.

                  5.15 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.

                  5.16 Assignment. The Purchaser may assign its registration
rights under this Agreement in connection with a transfer of the Registrable
Securities, prior to the date of the initial filing of the Registration
Statement with the SEC, to an affiliate of the Purchaser, provided


<PAGE>


each such transferee agrees in a written instrument delivered to the Seller to
be bound by this Agreement.


<PAGE>


                  IN WITNESS WHEREOF, the Seller and the Purchaser have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.

                                          MAYOR'S JEWELERS, INC.


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




                                          HENRY BIRKS & SONS INC.


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





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>6
<FILENAME>ex4_080902.txt
<DESCRIPTION>JOINT FILING AGREEMENT
<TEXT>

                                                                       Exhibit 4


CUSIP No.  578462103


                        AGREEMENT CONCERNING JOINT FILING
                                 OF SCHEDULE 13D

                  The undersigned agree as follows:

                  (i) each of them is individually eligible to use the Schedule
13D to which this Exhibit is attached, and such Schedule 13D is filed on behalf
of each of them; and

                  (ii) each of them is responsible for the timely filing of such
Schedule 13D and any amendments thereto, and for the completeness and accuracy
of the information concerning such person contained therein; but none of them is
responsible for the completeness or accuracy of the information concerning the
other person making the filing, unless such person knows of has reason to
believe that such information is inaccurate.

                  This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same instrument.

                  Dated:  August 9, 2002

<PAGE>

                                          HENRY BIRKS & SONS INC.

                                          By:  /s/ Sabine Bruckert
                                               ---------------------------------
                                               Name:  Sabine Bruckert
                                               Title: General Counsel and
                                                      Corporate Secretary


                                          HENRY BIRKS & SONS HOLDINGS INC.

                                          By:  /s/ Marc Cantin
                                               ---------------------------------
                                               Name:  Marc Cantin
                                               Title: Director and
                                                      Corporate Secretary


                                           REGALUXE INVESTMENT Sarl.

                                          By:  /s/ Gerald Berclaz
                                               ---------------------------------
                                               Name:  Gerald Berclaz
                                               Title:   Director


                                          DR. LORENZO ROSSI DI MONTELERA

                                               /s/ Lorenzo Rossi di Montelera
                                               ---------------------------------


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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