<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>2
<FILENAME>t16549exv3w1.txt
<DESCRIPTION>EX-3.1
<TEXT>
<PAGE>

                                                                     EXHIBIT 3.1

[FLAG SYMBOL LOGO]   Industry Canada    Industrie Canada

CERTIFICATE
OF AMALGAMATION

CANADA BUSINESS
CORPORATIONS ACT

HENRY BIRKS & SONS INC.
HENRY BIRKS ET FILS INC.
______________________________________________
NAME OF CORPORATION-DENOMINATION DE LA SOCIETE

I hereby certify that the above-named corporation resulted from an amalgamation,
under section 185 of the Canada Business Corporations Act, of the corporations
set out in the attached articles of amalgamation.

/s/ Robert Lit
------------------------
DIRECTOR - DIRECTEUR

CERTIFICAT
DE FUSION

LOI CANADIENNE SUR
LES SOCIETES PAR ACTIONS

357267-6
_______________________________________
CORPORATION NUMBER-NUMERO DE LA SOCIETE

Je certifie que la societe susmentionnee est issue d'une fusion, en vertu de
l'article 185 de la Loi canadienne sur les societes par actions, des societes
dont les denominations apparaissent dans les statuts de fusion ci-joints.

DECEMBER 26, 1998/LE 26 DECEMBER 1998

      DATE OF AMALGAMATION - DATE DE FUSION

[CANADA FLAG SYMBOL LOGO]

<PAGE>

                                 CANADA BUSINESS
                                CORPORATIONS ACT
                                     FORM 9
                            ARTICLES OF AMALGAMATION
                                  (SECTION 185)

1 -   NAME OF AMALGAMATED CORPORATION

      HENRY BIRKS & SONS INC. / HENRY BIRKS ET FILS INC.

2 -   THE PLACE IN CANADA WHERE THE REGISTERED OFFICE IS TO BE SITUATED

      Urban Community of Montreal
      Province of Quebec

3 -   THE CLASSES AND ANY MAXIMUM NUMBER OF SHARES THAT THE CORPORATION IS
      AUTHORIZED TO ISSUE

      Unlimited number of common shares; and
      Unlimited number of non-voting common shares.

I.    The common shares shall have attached thereto the following rights,
      privileges, restriction and conditions:

(a)   VOTING - Each common share shall entitle the holder thereof to one (1)
      vote at all meetings of the shareholders of the Corporation (except
      meetings at which only holders of another specified class of shares are
      entitled to vote pursuant to the provisions hereof or pursuant to the
      provisions of the Canada Business Corporations Act (hereinafter
      referred to as the "Act")).

(b)   RANKING ON LIQUIDATION AND DIVIDENDS - In the event of the liquidation,
      dissolution or winding-up of the Corporation, whether voluntary or
      involuntary, or other distribution of assets of the Corporation among
      shareholders for the purpose of winding-up its affairs, subject to the
      rights, privileges, restrictions and conditions attaching to any other
      class of shares ranking prior to the common shares or the non-voting
      shares, the holders of the common shares and the holders of the non-voting
      common shares shall be entitled to receive the remaining property of the
      Corporation, the holders of the common shares and the holders of the
      non-voting common shares shall rank equally with respect to the payment of
      dividends and distribution of assets in the event of the liquidation,
      dissolution or winding-up of the Corporation, whether voluntary or
      involuntary, or any other distribution of the assets of the Corporation
      among shareholders for the purpose of winding-up its affairs.

II.   The non-voting common shares shall have attached thereto the following
      rights, privileges, restrictions and conditions:

(a)   VOTING - Subject to the provisions of the Act or as otherwise expressly
      provided herein, the holders of the non-voting common shares shall not be
      entitled to receive notice of, nor to attend or vote at meetings of the
      shareholders of the Corporation

(b)   CONVERSION - Except as provided for herein below, the non-voting common
      shares shall not have any conversion rights attached thereto. In the event
      that the Corporation becomes a reporting issuer, as such term is defined
      in any securities legislation or securities regulation applicable to the
      Corporation, then each non-voting common share will become convertible at
      the option of the holder into one common share of the Corporation subject
      to any adjustment hereunder.

      If the corporation shall declare a dividend or make a distribution on its
      outstanding common shares, in either case payable in common shares, other
      than pursuant to any dividend reinvestment and stock purchase plan, or
      shall divide its outstanding common shares into a greater number of
      shares, or shall consolidate its outstanding common

<PAGE>

      shares into a lesser number of shares (any such event being herein called
      a "common share reorganization"), the conversion basis then in effect
      shall be adjusted immediately after the effective date or record date at
      which the holders of common shares are determined for purposes of the
      common share reorganization by multiplying the conversion basis in effect
      immediately prior to such effective date or record date by a fraction, the
      numerator or which shall be the number of common shares outstanding
      immediately after giving effect to such common share reorganization and
      the denominator of which shall be the number of common shares outstanding
      on such effective date or record date before giving effect to such common
      share reorganization.

      If and whenever at any time there is a capital reorganization of the
      Corporation not covered by the above sub-paragraph or a consolidation or
      merger or amalgamation of the Corporation with or into any other company
      or body corporate, including by way of a sale whereby all or substantially
      all of the Corporation's undertaking and assets would become the property
      of any other company or body corporate (any of which is herein called a
      "capital reorganization"), any holder of Non-Voting Common shares who has
      not exercised his right of conversion prior to the effective date of such
      capital reorganization shall be entitled to receive and shall accept, upon
      the exercise of such right at any time on the effective date or
      thereafter, in lieu of the number of common shares to which he was
      theretofore entitled upon conversion, the aggregate number of shares or
      other securities or property of the Corporation or of the company or body
      corporate resulting from or acquiring under the capital reorganization
      that such holder would have been entitled to receive as a result of such
      capital reorganization if, on the effective date thereof, he had been the
      registered holder of the number of common shares to which he was
      theretofore entitled upon conversion; provided that no such capital
      reorganization shall be carried into effect unless, in the opinion of the
      directors, all necessary steps shall have been taken to ensure that the
      holders of the Non-Voting Common shares shall thereafter be entitled to
      receive such number of shares or other securities or property of the
      Corporation or of the company or body corporate resulting from the
      consolidation, merger or amalgamation or to which such sale may be made,
      as the case may be, subject to adjustment thereafter in accordance with
      the provisions similar, as nearly as may be, to those contained in this
      paragraph.

(c)   RANKING ON LIQUIDATION AND DIVIDENDS - In the event of the liquidation,
      dissolution or winding-up of the Corporation, whether voluntary or
      involuntary, or other distribution of assets of the Corporation among
      shareholders for the purpose of winding-up its affairs, subject to the
      rights, privileges, restrictions and conditions attaching to any other
      class of shares ranking prior to the common shares or the non-voting
      shares, the holders of the common shares and the holders of the non-voting
      common shares shall be entitled to receive the remaining property of the
      Corporation, the holders of the common shares and the holders of the
      non-voting common shares shall rank equally with respect to the payment of
      dividends and distribution of assets in the event of the liquidation,
      dissolution or winding-up of the Corporation, whether voluntary or
      involuntary, or any other distribution of the assets of the Corporation
      among shareholders for the purpose of winding-up its affairs.

4 -   RESTRICTIONS, IF ANY, ON SHARE TRANSFERS

      No share in the Share capital of the Corporation shall be transferred nor
      shall it be assigned without the approval of the directors certified by a
      resolution of the board of directors.

5 -   NUMBER (OR MINIMUM AND MAXIMUM NUMBER) OF DIRECTORS

      A minimum number of three (3) and a maximum number of fifteen (15).

6 -   RESTRICTIONS, IF ANY, ON BUSINESS THE CORPORATION MAY CARRY ON

      None.

<PAGE>

7     OTHER PROVISIONS, IF ANY

      (1)   the number of the shareholders of the Corporation is limited to
            fifty (50) exclusive of present or former employees of the
            Corporation or of a subsidiary of the Corporation, two or more
            persons holding one or more shares jointly being counted as a single
            shareholder;

      (2)   any distribution of securities to the public or invitation to the
            public to subscribe for the Corporation's securities is prohibited;
            and

      (3)   the directors may appoint one or more directors, who shall hold
            office for a term expiring not later than the close of the next
            annual meeting of shareholders, but the total number of directors so
            appointed may not exceed one third of the number of directors
            elected at the previous annual meeting of shareholders.

8 -   THE AMALGAMATION HAS BEEN APPROVED PURSUANT TO THAT SECTION OR SUBSECTION
      OF THE ACT WHICH IS INDICATED AS FOLLOWS:

      ___   183

       X    184(1)

      ___   184(2)

9 -   NAME OF THE AMALGAMATING CORPORATIONS

      (a)   Henry Birks & Sons Inc. - Henry Birks et Fils Inc.
      (b)   3138712

      CORPORATION NO.

      (a)   3332667
      (b)   3138712

Jan 21st, 1999                         Henry Birks & Sons Inc.
                                       Henry Birks et Fils Inc.

                                       /s/ Sabine Bruckert
                                       -----------------------------------------
                                       Name: Sabine Bruckert
                                       Title: Vice President and General Counsel

_______ , 1999                         3138712 Canada Inc.

                                       /s/ John T. Sullivan
                                       -----------------------------------------
                                       John T. Sullivan
                                       Director
_________________________________________________________
                           FOR DEPARTMENTAL USE ONLY

Corporation No.                  Filed
357267-6.                        JAN 27 1999

<PAGE>

[FLAG SYMBOL LOGO] Industry Canada           Industrie Canada

CERTIFICATE                                        CERTIFICATE
OF AMENDMENT                                       DE MODIFICATION

CANADA BUSINESS                                    LOI CANADIENNE SUR
CORPORATIONS ACT                                   LES SOCIETES PAR ACTIONS

HENRY BIRKS & SONS INC.

<TABLE>
<CAPTION>
HENRY BIRKS ET FILS INC.                                             357267-6
-----------------------------------------------      -----------------------------------------
 Name of corporation-Denomination de la societe      Corporation number-Numero de la societe
<S>                                                  <C>
I hereby certify that the articles of the            Je certifie que les statuts de la societe
above-named corporation were amended.                susmentionnee ont ete modifies

a) under section 13 of the Canada               [ ]  a) en vertu de l'article 13 de la Loi
   Business Corporations Act in                         canadienne sur les societes par
   accordance with the attached notice;                 actions, conformement a l'avis ci-joint,

b) under section 27 of the Canada Business      [X]  b) en vertu de l'article 27 de la Loi
   Corporations Act as set out in the                   canadienne sur les societes par
   attached articles of amendment                       actions, tel qu'il est indique dans les
   designating a series of shares,                      clauses modificatrices ci-jointes
                                                        designant une serie d'actions,

c) under section 179 of the Canada Business     [ ]  c) en vertu de l'article 179 de la Loi
   Corporations Act as set out in the                   canadienne sur les societes par
   attached articles of amendment,                      actions, tel qu'il est indique dans les
                                                        clauses modificatrices ci-jointes;

d) under section 191 of the Canada Business     [ ]  d) en vertu de l'article 191 de la Loi
   Corporations Act as set out in the                   canadienne sur les societes par
   attached articles of reorganization,                 actions, tel qu'il est indique dans les
                                                        clauses de reorganisation ci-jointes,
</TABLE>

/s/ Richard G. Shaw
-------------------
Director - Directeur                    AUGUST 19, 2002/LE 19 AOUT 2002
                                        Date of Amendment - Date de modification

[CANADA FLAG SYMBOL LOGO]
<PAGE>

                                    EXHIBIT A

                                 CANADA BUSINESS
                                CORPORATIONS ACT
                                     FORM 4
                              (SECTION 27 OR 177)

1.    Name of the Corporation

      HENRY BIRKS & SONS INC
      HENRY BIRKS ET FILS INC.

2.    Corporation No.
      357267-6

3.    The articles of the above-named Corporation are amended as follows:

      Section 2 of the articles of amalgamation be and the same is hereby
      deleted and replaced by the following:

      1.    The province or territory in Canada where the registered office is
            situated Province of Quebec

      Section 3 of the articles of amalgamation be and the same is hereby
      deleted and replaced by the following:

      The attached Schedule 1 is forming part hereof.

Date                                            Signature

August 15, 2002                                 /s/ Thomas A. Andruskevich
                                                --------------------------------

4  Capacity of                                  Printed Name
________________________________________________________________________________
                            FOR DEPARTMENTAL USE ONLY

Filed       AUG 20 2002
            AOUT 20 2002

                                     - 1 -
<PAGE>

                                   SCHEDULE 1

3 The classes and any maximum number of shares that the Corporation is
authorized to issue

      Unlimited number of common shares,

      Unlimited number of non-voting common shares; and

      2,034,578 Series A preferred shares.

I     THE COMMON SHARES SHALL HAVE ATTACHED THERETO THE FOLLOWING RIGHTS,
      PRIVILEGES, RESTRICTIONS AND CONDITIONS:

      (a)   Voting Each common share shall entitle the holder thereof to one (1)
            vote at all meetings of the shareholders of the Corporation (except
            meetings at which only holders of another specified class of shares
            are entitled to vote pursuant to the provisions hereof or pursuant
            to the provisions of the Canada Business Corporations Act
            (hereinafter referred to as the "ACT")).

      (b)   Ranking on Liquidation and Dividends. In the event of the
            liquidation, dissolution or winding-up of the Corporation, whether
            voluntary or involuntary, or other distribution of assets of the
            Corporation among shareholders for the purpose of winding-up its
            affairs, subject to the rights, privileges, restrictions and
            conditions attaching to any other class of shares ranking prior to
            the common shares or the non-voting shares, the holders of the
            common shares and the holders of the non-voting common shares shall
            be entitled to receive the remaining property of the Corporation,
            the holders of the common shares and the holders of the non-voting
            common shares shall rank equally with respect to the payment of
            dividends and distribution of assets in the event of the
            liquidation, dissolution or winding-up of the Corporation, whether
            voluntary or involuntary, or any other distribution of the assets of
            the Corporation among shareholders for the purpose of winding-up its
            affairs.

II.   THE NON-VOTING COMMON SHARES SHALL HAVE ATTACHED THERETO THE FOLLOWING
      RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS:

      (a)   Voting. Subject to the provisions of the Act or as otherwise
            expressly provided herein, the holders of the non-voting common
            shares shall not be entitled to receive notice of, nor to attend or
            vote at, meetings of the shareholders of the Corporation.

      (b)   Conversion Except as provided for herein below, the non-voting
            common shares shall not have any conversion rights attached thereto
            In the event that the Corporation becomes a reporting issuer, as
            such term is defined in any securities legislation or securities
            regulation applicable to the Corporation, then each non-

                                      - 2 -
<PAGE>

            voting common share will become convertible at the option of the
            holder into one common share of the Corporation subject to any
            adjustments hereunder.

            If the Corporation shall declare a dividend or make a distribution
            on its outstanding common shares, in either case payable in common
            shares, other than pursuant to any dividend reinvestment and stock
            purchase plan, or shall divide its outstanding common shares into a
            greater number of shares, or shall consolidate its outstanding
            common shares into a lesser number of shares (any such event being
            herein called a "COMMON SHARE REORGANIZATION"), the conversion basis
            then in effect shall be adjusted immediately after the effective
            date or record date at which the holders of common shares are
            determined for purposes of the common share reorganization by
            multiplying the conversion basis in effect immediately prior to such
            effective date or record date by a fraction, the numerator of which
            shall be the number of common shares outstanding immediately after
            giving effect to such common share reorganization and the
            denominator of which shall be the number of common shares
            outstanding on such effective date or record date before giving
            effect to such common share reorganization.

            If and whenever at any time there is a capital reorganization of the
            Corporation not covered by the above sub-paragraph or a
            consolidation or merger or amalgamation of the Corporation with or
            into any other company or body corporate, including by way of a sale
            whereby all or substantially all of the Corporations undertaking and
            assets would become the property of any other company or body
            corporate (any of which is herein called a "CAPITAL
            REORGANIZATION"), any holder of non-voting common shares who has not
            exercised his right of conversion prior to the effective date of
            such capital reorganization shall be entitled to receive and shall
            accept, upon the exercise of such right at any time on the effective
            date or thereafter, in lieu of the number of common shares to which
            he was theretofore entitled upon conversion, the aggregate number of
            shares or other securities or property of the Corporation or of the
            company or body corporate resulting from or acquiring under the
            capital reorganization that such holder would have been entitled to
            receive as a result of such capital reorganization if, on the
            effective date thereof, he had been the registered holder of the
            number of common shares to which he was theretofore entitled upon
            conversion; provided that no such capital reorganization shall be
            carried into effect unless, in the opinion of the directors, all
            necessary steps shall have been taken to ensure that the holders of
            the non-voting common shares shall thereafter be entitled to receive
            such number of shares or other securities or property of the
            Corporation or of the company or body corporate resulting from the
            consolidation, merger or amalgamation or to which such sale may be
            made, as the case may be, subject to adjustment thereafter in
            accordance with the provisions similar, as nearly as may be, to
            those contained in this paragraph.

      (c)   Ranking on Liquidation and Dividends. In the event of the
            liquidation, dissolution or winding-up of the Corporation, whether
            voluntary or involuntary, or other distribution of assets of the
            Corporation among shareholders for the purpose of winding-up its
            affairs, subject to the rights, privileges, restrictions and
            conditions

                                      - 3 -
<PAGE>

            attaching to any other class of shares ranking prior to the common
            shares or the non-voting shares, the holders of the common shares
            and the holders of the non-voting common shares shall be entitled to
            receive the remaining property of the Corporation, the holders of
            the common shares and the holders of the non-voting common shares
            shall rank equally with respect to the payment of dividends and
            distribution of assets in the event of the liquidation, dissolution
            or winding-up of the Corporation, whether voluntary or involuntary,
            or any other distribution of the assets of the Corporation among
            shareholders for the purpose of winding-up its affairs.

III.  THE SERIES A PREFERRED SHARES SHALL HAVE ATTACHED THERETO THE FOLLOWING
      RIGHTS, PRIVILEGES, PREFERENCES, RESTRICTIONS AND CONDITIONS:

      (a) Dividends. The holders of Series A Preferred Shares shall be entitled
to share in any dividends declared and paid upon or set aside for common shares
or non-voting common shares of the Corporation, pro rata in accordance with the
number of Common Shares into which such Series A Preferred Shares are then
convertible pursuant to Section 3 (III)(c) below.

      (b) Liquidation Preference. (i) In the event of the liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
or other distribution of assets of the Corporation among shareholders for the
purpose of winding-up its affairs, subject to the rights, privileges,
preferences, restrictions and conditions attaching to any other class of shares
ranking prior to the Series A Preferred Shares, the holders of Series A
Preferred Shares shall be entitled to receive, prior and in preference to any
distribution of any of the assets of the Corporation to the holders of common
shares or non-voting common shares by reason of their ownership thereof, an
amount per share equal to the sum of (the "LIQUIDATION PREFERENCE") (A) US
$4.9396 for each outstanding Series A Preferred Share (the "ORIGINAL SERIES A
ISSUE PRICE") and (B) the US dollar equivalent of an amount equal to any
declared but unpaid dividends that the holder of Series A Preferred Shares is
entitled to receive. If upon the occurrence of any such event, the assets and
funds available for distribution among the holders of the Series A Preferred
Shares shall be insufficient to permit the payment to such holders of the
Liquidation Preference, then, subject to the rights privileges, restrictions and
conditions attaching to any other class of shares ranking prior to the Series A
Preferred Shares, the entire assets and funds of the Corporation legally
available for distribution shall be distributed ratably among the holders of the
Series A Preferred Shares in proportion to the amount of such shares owned by
each such holder.

                  (ii) Upon the completion of the distribution required by
subparagraph (i) of this Section 3 (III) (b), subject to the rights, privileges,
preferences, restrictions and conditions attaching to any other class of shares
ranking prior to the Series A Preferred Shares, common shares or non-voting
common shares, the remaining assets of the Corporation available for
distribution to shareholders shall be distributed among the holders of Series A
Preferred shares, common shares and non-voting common shares pro rata based on
the number of Common Shares and Non-Voting Common Shares held by each and
assuming conversion of all such Series A Preferred Shares in accordance with
Section 3(III) (c) below.

                                      - 4 -
<PAGE>

                  (iii) A holder of Series A Preferred Shares shall be entitled
to receive, at its option, the Liquidation Preference described in Section 3
(III)(b)(i) in the event of:

                        (A) a merger, amalgamation, consolidation or combination
      of the Corporation or a purchase or exchange of voting securities of the
      Corporation by any person or entity, other than

                              (1)   a merger, amalgamation, consolidation,
                                    combination, share purchase or share
                                    exchange that would result in the voting
                                    securities of the Corporation outstanding
                                    immediately prior thereto continuing to be
                                    held by the same persons or entities in
                                    substantially the same proportions and
                                    continuing to represent (either by remaining
                                    outstanding or by being converted into
                                    voting securities of the surviving entity)
                                    (aa) more than fifty percent (50%) of the
                                    combined voting power of the Corporation or
                                    such surviving entity outstanding
                                    immediately after such merger, amalgamation,
                                    consolidation, combination, share purchase
                                    or share exchange if the Common Shares of
                                    the Corporation or such surviving entity
                                    outstanding immediately after such merger,
                                    amalgamation, consolidation, combination,
                                    share purchase or share exchange are not
                                    publicly traded and listed on a U.S. stock
                                    exchange (or a Canadian stock exchange) or
                                    quoted on the Association of the Securities
                                    Dealers the National Association Automated
                                    Quotation System ("NASDAQ") for the National
                                    Market System ("NMS") or Small Cap (the
                                    "NASDAQ-NMS OR SMALL CAP") or (bb) not less
                                    than twenty-five percent (25%) of the
                                    combined voting power of the Corporation or
                                    such surviving entry outstanding immediately
                                    after such merger, amalgamation,
                                    consolidation, combination, share purchase
                                    or share exchange if the Common Shares of
                                    the Corporation or such surviving entity
                                    outstanding immediately after such merger,
                                    amalgamation, consolidation, combination,
                                    share purchase or share exchange are
                                    publicly traded and listed on a U.S. stock
                                    exchange (or a Canadian stock exchange) or
                                    quoted on the NASDAQ NMS or Small Cap; or

                              (2)   a merger, amalgamation, consolidation,
                                    combination, share purchase or share
                                    exchange effected to implement a
                                    recapitalization of the

                                     - 5 -
<PAGE>

                                    Corporation (or similar transaction) in
                                    which a person who was the beneficial owner
                                    of more than fifty percent (50%) of the
                                    Corporation's voting securities prior to the
                                    merger amalgamation, consolidation,
                                    combination, share purchase or share
                                    exchange retains or acquires, as the case
                                    may be, beneficial ownership of (aa) more
                                    than fifty percent (50%) of the combined
                                    voting power of the Corporation's
                                    outstanding securities after the merger,
                                    amalgamation, consolidation, combination
                                    share purchase or share exchange, if
                                    immediately after such merger, amalgamation,
                                    consolidation, combination, share purchase
                                    or share exchange, the Corporation's Common
                                    Shares are not publicly traded and listed on
                                    a U.S. stock exchange (or a Canadian stock
                                    exchange) or quoted on the NASDQ-NMS or
                                    Small Cap or (bb) twenty-five percent (25%)
                                    or more of the combined voting power of the
                                    Corporation's outstanding securities after
                                    such merger or combination, if immediately
                                    after such merger or combination, the
                                    Corporation's Common Shares are publicly
                                    traded and listed on a U.S. stock exchange
                                    (or a Canadian stock exchange) or quoted on
                                    the NASDAQ-NMS or Small Cap; or

                        (B) the sale or other disposition (unless captured in
      (A) above) by the Corporation of all or substantially all of the
      Corporation's assets.

                        (C) the Corporation fails to pay when due principal
      and/or interest on those certain Secured Convertible Notes (the "NOTES")
      issued pursuant to that certain Securities Purchase Agreement dated as of
      August 15, 2002 between the Corporation and the Investors named therein,
      and such failure has not been waived by the holders of the Notes or cured
      as provided in the Notes and such Notes have not thereafter been converted
      as provided in such Notes;

                        (D) an order is issued or a resolution is adopted for
      the purpose of winding-up the Corporation, or the Corporation files a
      proposal or makes an assignment of its property for the benefit of its
      creditors, or if a petition in bankruptcy is filed against the Corporation
      or any of its subsidiaries and such petition is not dismissed within
      thirty (30) days of the filing thereof, or a trustee is appointed for the
      Corporation pursuant to the Bankruptcy and Insolvency Act (Canada) or
      pursuant to any other legislation relating to insolvent persons, or if an
      application is filed pursuant to the Companies' Creditors Arrangement Act
      (Canada), or a seizure is made (unless the seizure is validly contested by
      the Corporation) or a judgment is executed against all or a substantial
      part of the Corporation's property;

                                      - 6 -
<PAGE>

                        (E) the Corporation has ceased to operate within the
      ordinary course of business;

                        (F) the Corporation fails to carry out or comply with
      any other undertaking or any other condition set forth herein or there is
      an Event of Default under and as defined in the Notes; or

                        (G) the Corporation fails to pay when due an amount
      equal to $500,000 under the Diamond Conditional Sale Agreement or the
      Diamond Supply Agreement and such failure shall continue for a period of
      thirty (30) days after the Corporation has received written notice to that
      effect from the Holder; or

                        (H) subject to subsection (G) above, the New York
Diamond Dealers Club (or any successor thereto) determines that there has been a
material breach by the Corporation under the Diamond Supply Agreement

                  (iv) In the event the requirements of Section 3 (III)(b) are
not complied with this Corporation shall forthwith either:

                        (A) cause the closing of the applicable transaction to
      be postponed until such time as the requirements of this Section 3
      (III)(b) have been complied with; or

                        (B) cancel such transaction, in which event the rights,
      preferences and privileges of the holders of the Series A Preferred Shares
      shall revert to and be the same as such rights, preferences and privileges
      existing immediately prior to the date of the first notice referred to in
      subsection 3 (III)(b) (v) hereof.

                  (v) The Corporation shall give each holder of record of Series
A Preferred Shares written notice of such impending transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 3 (III)(b) and the Corporation shall thereafter give such holders
prompt notice of any material changes thereto. The transaction shall in no event
take place sooner than twenty (20) days after the Corporation has given the
first notice provided for herein or sooner than ten (10) days after the
Corporation has given notice of any material changes provided for herein;
provided, however, that such periods may be shortened upon the written consent
of the holders of Series A Preferred Shares that are entitled to such notice
rights or similar notice rights and that represent at least a majority of the
voting power attaching to all such shares then outstanding.

      (c)   Conversion.

      The Series A Preferred Shares shall have attached thereto the following
conversion rights (the "CONVERSION RIGHTS"):

                                      - 7 -
<PAGE>

                  (i) Right to Convert. Each Series A Preferred Share shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the Corporation or any transfer agent
for such shares, into such number of fully paid and non-assessable Common Shares
as is determined by dividing the Original Series A Issue Price by the Conversion
Price applicable to such share, determined as hereafter provided, in effect on
the date the certificate is surrendered for conversion. The initial Conversion
Price per Series A Preferred Share shall be the Original Series A Issue Price;
provided, however, that the Conversion Price for the Series A Preferred Stock
shall be subject to adjustment as set forth in Section 3 (III)(c)(iv).

                  (ii) Automatic Conversion. Each Series A Preferred Share shall
automatically be converted into Common Shares at the Conversion Price at the
time in effect for such Series A Preferred Shares immediately upon the earlier
of (i) the Corporation's sale of its Common Shares in a bona fide firm
commitment underwritten public offering pursuant to a registration statement
filed with, and declared effective by, the Securities and Exchange Commission
under the United States Securities Act of 1933, as amended (the "US SECURITIES
ACT") or under a prospectus filed with, and receipted by, the applicable
securities commissions or regulatory authorities in Canada (the "CANADIAN
PROSPECTUS"), raising aggregate net proceeds to the Company of at least US
$55,000,000 at a minimum share price of US $4.94 per Common Share (adjusted to
reflect subsequent stock dividends, stock splits or recapitalization) and the
Common Shares are listed on a US stock exchange or a Canadian stock exchange or
quoted on a U S. national automated securities quotation system or (ii) the date
specified by written consent or written agreement of the holders of sixty-seven
percent (67%) of the then outstanding Series A Preferred Shares.

                  (iii) Mechanics of Conversion. Before any holder of Series A
Preferred Shares shall be entitled to convert the same into Common Shares, such
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the Corporation or of any transfer agent for the Series A
Preferred Shares, and shall give written notice to the Corporation at its
principal corporate office, of the election to convert the same and shall state
therein the name or names in which the certificate or certificates for Common
Shares are to be issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A
Preferred Shares, or to the nominee or nominees of such holder, a certificate or
certificates for the number of Common Shares to which such holder shall be
entitled as aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
Series A Preferred Shares to be converted, and the person or persons entitled to
receive the Common Shares issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such Common Shares as of such date.
If the conversion is in connection with an underwritten offering of securities
registered pursuant to the US Securities Act of 1933, as amended or made
pursuant to a Canadian Prospectus, the conversion may, at the option of any
holder tendering Series A Preferred Shares for conversion, be conditioned upon
the closing with the underwriters of the sale of securities pursuant to such
offering, in which event the persons entitled to receive the Common Shares upon
conversion of the Series A Preferred Shares shall not be deemed to have
converted such Series A Preferred Shares until immediately prior to the closing
of such sale of securities.

                                      - 8 -
<PAGE>

                  (iv) Conversion Price Adjustments of Preferred Shares for
Certain Dilutive Issuances and Combinations. The Conversion Price of the Series
A Preferred Shares shall be subject to adjustment from time to time as follows:

                        (A) Stock Splits or Subdivisions. In the event the
      Corporation should at any time or from time to time after the date upon
      which any Series A Preferred Shares were first issued (the "PURCHASE
      DATE") fix a record date for the effectuation of a split or subdivision of
      the outstanding Common Shares or the determination of holders of Common
      Shares entitled to receive a dividend or other distribution payable in
      additional Common Shares or other securities or rights convertible into,
      or entitling the holder thereof to receive directly or indirectly,
      additional Common Shares (hereinafter referred to as "COMMON SHARE
      EQUIVALENTS") without payment of any consideration by such holder for the
      additional Common Shares or the Common Share Equivalents (including the
      additional Common Shares issuable upon conversion or exercise thereof),
      then, as of such record date (or the date of such dividend distribution,
      split or subdivision if no record date is fixed), the Conversion Pnce of
      the Series A Preferred Shares shall be appropriately decreased so that the
      number of Common Shares issuable on conversion of each share of such
      series shall be increased in proportion to such increase of the aggregate
      of Common Shares outstanding and those issuable with respect to such
      Common Share Equivalents

                        (B) Combinations. If the number of Common Shares
      outstanding at any time after the Purchase Date is decreased by a
      combination of the outstanding Common Shares, then, following the record
      date of such combination, the Conversion Price for the Series A Preferred
      Shares shall be appropriately increased so that the number of Common
      Shares issuable on conversion of each Series A Preferred Shares shall be
      decreased in proportion to such decrease in outstanding shares.

                        (C) Other Distributions. In the event the Corporation
      shall declare a distribution payable in securities of other persons,
      evidences of indebtedness issued by the Corporation or other persons,
      assets (excluding cash dividends) or options or rights not referred to in
      Section 3 (III)(c)(iv)(A), then, in each such case for the purpose of this
      Section 3 (III)(c)(iv)(C), the holders of the Series A Preferred Shares
      shall be entitled to a proportionate share of any such distribution as
      though they were the holders of the number of Common Shares of the
      Corporation into which their Series A Preferred Shares are convertible as
      of the record date fixed for the determination of the holders of Common
      Shares of the Corporation entitled to receive such distribution.

                        (D) Recapitalizations. If at any time or from time to
      time there shall be a recapitalization of the Common Shares (other than a
      subdivision, combination or merger or sale of assets transaction provided
      for elsewhere in Section 3 (III)(b) or Section 3 (III)(c) hereof,
      provision shall be made so that the holders of the Series A Preferred
      Shares shall thereafter be entitled to receive upon conversion of the
      Series A Preferred Shares the number of shares or other securities or
      property of the Corporation or otherwise, to which a holder of Common
      Shares deliverable upon conversion would have been entitled on such
      recapitalization In any such case, appropriate adjustment shall be made in
      the application of the provisions of this Section 3 (III)(c) with respect
      to the

                                      - 9 -
<PAGE>

      rights of the holders of the Series A Preferred Shares after the
      recapitalization to the end that the provisions of this Section 3 (III)(c)
      (including adjustment of the Conversion Price then in effect and the
      number of shares purchasable upon conversion of the Series A Preferred
      Shares) shall be applicable after that event as nearly equivalent as may
      be practicable.

                        (E) No Impairment. The Corporation will not, by
      amendment of its Articles or through any reorganization, recapitalization,
      transfer of assets, consolidation merger, dissolution, issue or sale of
      securities or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms to be observed or performed
      hereunder by the Corporation, but will at all times in good faith assist
      in the carrying out of all the provisions of this Section 3 (III)(c) and
      in the taking of all such action as may be necessary or appropriate in
      order to protect the Conversion Rights of the holders of the Series A
      Preferred Shares against impairment.

                        (F) No Fractional Shares and Certificate as to
      Adjustments.

                              (1)   No fractional shares shall be issued upon
                                    the conversion of any Series A Preferred
                                    Shares, and the number of Common Shares to
                                    be issued shall be rounded to the nearest
                                    whole share. Whether or not fractional
                                    shares are issuable upon such conversion
                                    shall be determined on the basis of the
                                    total number of Series A Preferred Shares
                                    the holder is at the time converting into
                                    Common Shares and the number of Common
                                    Shares issuable upon such aggregate
                                    conversion.

                              (2)   Upon the occurrence of each adjustment or
                                    readjustment of the Conversion Price of
                                    Series A Preferred Shares pursuant to this
                                    Section 3 (III)(c), the Corporation, at its
                                    expense, shall promptly compute such
                                    adjustment or readjustment in accordance
                                    with the terms hereof and prepare and
                                    furnish to each holder of Series A Preferred
                                    Shares a certificate setting forth such
                                    adjustment or readjustment and showing in
                                    detail the facts upon which such adjustment
                                    or readjustment is based The Corporation
                                    shall, upon the written request at any time
                                    of any holder of Series A Preferred Shares,
                                    furnish or cause to be furnished to such
                                    holder a like certificate setting forth (aa)
                                    such adjustment and readjustment, (bb) the
                                    Conversion Price for the Series A Preferred
                                    Shares at the time in effect, and (cc) the
                                    number of Common Shares and the amount, if
                                    any, of other property which at the time
                                    would be

                                     - 10 -
<PAGE>

                                    received upon the conversion of Series A
                                    Preferred Shares

                        (G) Notices of Record Date. In the event of any taking
      by the Corporation of a record of the holders of any class of securities
      for the purpose of determining the holders thereof who are entitled to
      receive any dividend (other than a cash dividend) or other distribution,
      any right to subscribe for, purchase or otherwise acquire any shares of
      any class or any other securities or property, or to receive any other
      right, the Corporation shall mail to each holder of Series A Preferred
      Shares, at least twenty (20) days prior to the date specified therein, a
      notice specifying the date on which any such record is to be taken for the
      purpose of such dividend, distribution or right, and the amount and
      character of such dividend, distribution or right.

                        (H) Reservation of Common Shares Issuable Upon
      Conversion. The Corporation shall at all times reserve and keep available
      out of its authorized but unissued Common Shares, solely for the purpose
      of effecting the conversion of the Series A Preferred Shares, such number
      of Common Shares as shall from time to time be sufficient to effect the
      conversion of all Series A Preferred Shares; and if at any time the number
      of authorized but unissued Common Shares shall not be sufficient to effect
      the conversion of all then outstanding Series A Preferred Shares, in
      addition to such other remedies as shall be available to the holder of
      such Preferred Shares, the Corporation will take such corporate action as
      may, in the opinion of its counsel, be necessary to increase its
      authorized but unissued Common Shares to such number of shares as shall be
      sufficient for such purposes, including, without limitation, engaging in
      best efforts to obtain the requisite shareholder approval of any necessary
      amendment to these Articles.

                        (I) Notices. Any notice required by the provisions of
      this Section 3 (III)(c) to be given to the holders of Series A Preferred
      Shares shall in writing and shall be deemed effectively given: (1) upon
      personal delivery to the party to be notified, (2) when sent by confirmed
      facsimile if sent during normal business hours of the recipient, if not,
      then on the next business day, or (3) one day after deposit with a
      nationally recognized overnight courier, specifying next day delivery,
      with written verification of receipt

      (d) Voting Rights. The holder of Series A Preferred Shares shall have the
right to one vote for each Common Share into which such Series A Preferred
Shares could then be converted, and with respect to such vote, such holder shall
have full voting rights and powers equal to the voting rights and powers of the
holders of Common Shares, and shall be entitled, notwithstanding any provision
hereof, to receive notice of and attend any shareholders' meeting in accordance
with the by-laws of this Corporation, and shall be entitled to vote, together
with holders of Common Shares, with respect to any question upon which holders
of Common Shares have the right to vote Fractional votes shall not, however, be
permitted and any fractional voting rights available on an as-converted basis
(after aggregating all Common Shares into which Series A Preferred Shares held
by each holder could be converted) shall be rounded to the nearest whole number
(with one-half being rounded upward).

                                     - 11 -
<PAGE>

      (e) Protective Provisions. Subject to the rights, privileges, restrictions
and conditions attaching to any other class of shares ranking prior to the
Series A Preferred Shares, so long as any Series A Preferred Shares are
outstanding, the Corporation shall not without first obtaining the approval (by
vote or written consent, as provided by law) of the holders not less than
sixty-seven percent (67%) of the then outstanding Series A Preferred Shares:

                        (i) alter or change the rights, preferences or
privileges of the Series A Preferred Shares;

                        (ii) amend or vary the Articles or By-Laws of the
Corporation in a manner that adversely affects the rights, preferences or
privileges of the Series A Preferred Shares;

                        (iii) re-classify any of the issued and outstanding
share capital of the Corporation; or

                        (iv) authorize or issue, or obligate itself to issue,
any equity security, (including any other security convertible into or
exercisable for any equity security) having a preference over, the Series A
Preferred Shares with respect to voting, dividends or upon liquidation,
dissolution or winding-up or merger, amalgamation, consolidation, combination,
share purchase or share exchange as set forth in this Section 3 or as otherwise
provided by law.

      (f) Status of Converted or Reacquired Stock. In the event any Series A
Preferred Shares shall be converted pursuant to Section 3 (III)(c) hereof or be
reacquired by the Corporation, the shares so converted or reacquired shall be
cancelled and shall not be issuable by the Corporation.

      (g) Ratable Treatment. Except in connection with the conversion of the
Series A Preferred Shares at the election of the holder thereof in accordance
with Section 3(c)(i), the Corporation shall treat the holders of Series A
Preferred Shares ratably in any and all matters.

                                     - 12 -
<PAGE>

[FLAG SYMBOL LOGO] Industry Canada       Industrie Canada

CERTIFICATE                                 CERTIFICAT
OF AMENDMENT                                DE MODIFICATION

CANADA BUSINESS                             LOI CANADIENNE SUR
CORPORATIONS ACT                            LES SOCIETES PAR ACTIONS

HENRY BIRKS & SONS INC.

<TABLE>
<CAPTION>
HENRY BIRKS ET FILS INC.                                              357267-6
---------------------------------------------       ---------------------------------------------
Name of corporation-Denomination de la societe        Corporation number-Numero de la societe
<S>                                                 <C>
I hereby certify that the articles of the           Je certifie que les statuts de la societe
above-named corporation were amended:               susmentionnee ont ete modifies:

a) under section 13 of the Canada              [ ]  a) en vertu de l'article 13 de la Loi
   Business Corporations Act in accordance             canadienne sur les societes par
   with the attached notice;                           actions, conformement a l'avis ci-joint;

b) under section 27 of the Canada              [ ]  b) en vertu de l'article 27 de la Loi
   Business Corporations Act as set out in             canadienne sur les societes par
   the attached articles of amendment                  actions, tel qu'il est indique dans les
   designating a series of shares;                     clauses modificatrices ci-jointes
                                                       designant une serie d'actions;

c) under section 179 of the Canada             [X]  c) en vertu de l'article 179 de la Loi
   Business Corporations Act as set out in             canadienne sur les societes par
   the attached articles of amendment;                 actions, tel qu'il est indique dans les
                                                       clauses modificatrices ci-jointes;

d) under section 191 of the Canada             [ ]  d) en vertu de l'article 191 de la Loi
   Business Corporations Act as set out in             canadienne sur les societes par
   the attached articles of reorganization;            actions, tel qu'il est indique dans les
                                                       clauses de reorganisation ci-jointes;
</TABLE>

/s/ Richard G. Shaw                              MARCH 7, 2005/LE 7 MARS 2005
-----------------------                 Date of Amendment - Date de modification
Richard G. Shaw
Director - Directeur

[CANADA FLAG SYMBOL LOGO]
<PAGE>

                                 CANADA BUSINESS
                                CORPORATIONS ACT
                                     FORM 4
                              ARTICLES OF AMENDMENT
                               (SECTION 27 OR 177)

1 -   NAME OF THE CORPORATION

      Henry Birks & Sons Inc.
      Henry Birks et Fils Inc.

2 -   CORPORATION NO.

      3572676

3 -   THE ARTICLES OF THE ABOVE-NAMED CORPORATION ARE AMENDED AS FOLLOWS:

      A.    The authorized capital of the Corporation is hereby amended by the
            creation of:

            -     An unlimited number of Class A Voting Shares;

            -     An unlimited number of Class B Multiple Voting Shares; and

            -     100,000 Class C Shares.

      B.    Each issued and outstanding common share of the Corporation is
            hereby converted into 1.01166 Class A Voting Shares provided,
            however, that the Corporation shall not, upon such conversion, issue
            fractions of Class A Voting Shares. In the event that such
            conversion would result in the issuance of a fraction of a Class A
            Voting Share to a shareholder, such fraction of a Class A Voting
            Share to which the shareholder would otherwise have been entitled
            shall be rounded to the nearest whole Class A Voting Share, without
            any further consideration (if applicable).

      C.    The authorized but unissued common shares of the Corporation are
            hereby cancelled.

      D.    Section 3 of the articles of amalgamation of the Corporation, as
            amended by articles of amendment on August 19, 2002, is hereby
            deleted and replaced by the following:

            The attached Schedule 1 is forming part hereof.

<PAGE>

                                     - 2 -

DATE                                SIGNATURE

March 7, 2005                       /s/ Thomas A. Andruskevich
                                    --------------------------

4- CAPACITY OF                       PRINTED NAME

DIRECTOR                            THOMAS A. ANDRUSKEVICH

________________________________________________________________________________
                            FOR DEPARTMENTAL USE ONLY

Filed

MAR 09 2005
MARS 09 2005
<PAGE>

                                   SCHEDULE 1

3-    THE CLASSES AND MAXIMUM NUMBER OF SHARES THAT THE CORPORATION IS
      AUTHORIZED TO ISSUE:

      Unlimited number of Class A Voting Shares without nominal or par value;
      Unlimited number of Class B Multiple Voting Shares without nominal or par
      value;
      100,000 Class C Shares;
      Unlimited number of non-voting common shares; and
      2,034,578 Series A Preferred Shares.

      Any capitalized term shall have the meaning assigned to such term in these
      Articles. Any reference herein to the Act is a reference to the Canada
      Business Corporations Act as it now exists and as it may be amended from
      time to time and any reference herein to a section of the Act is a
      reference to a section of the Act as such section is presently numbered or
      as it may be renumbered from time to time.

I.    THE CLASS A VOTING SHARES SHALL HAVE ATTACHED THERETO THE FOLLOWING
      RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS:

      (a)   Voting. Each Class A Voting Share shall entitle the holder thereof
            to one (1) vote at all meetings of the shareholders of the
            Corporation (except meetings at which only holders of another
            specified class of shares are entitled to vote pursuant to the
            provisions hereof or pursuant to the provisions of the Act).

      (b)   Ranking on Liquidation. In the event of the liquidation, dissolution
            or winding up of the Corporation, whether voluntary or involuntary,
            or other distribution of assets of the Corporation among
            shareholders for the purpose of winding up its affairs, subject to
            the rights, privileges, restrictions and conditions attaching to any
            other class of shares ranking prior to the Class A Voting Shares,
            Class B Multiple Voting Shares or non-voting common shares, the
            holders of the Class A Voting Shares, the holders of the Class B
            Multiple Voting Shares and the holders of the non-voting common
            shares shall be entitled to receive the remaining property of the
            Corporation. The holders of the Class A Voting Shares, the holders
            of the Class B Multiple Voting Shares and the holders of the
            non-voting common shares shall rank equally with respect to the
            distribution of assets in the event of the liquidation, dissolution
            or winding up of the Corporation, whether voluntary or involuntary,
            or any other distribution of the assets of the Corporation among
            shareholders for the purpose of winding up its affairs.

      (c)   Dividends and Distributions. In addition to any dividend or
            distribution declared by the directors of the Corporation in respect
            of Class A Voting Shares, holders of Class A Voting Shares shall be
            entitled to receive a dividend or distribution, whether cash,
            non-cash or some combination thereof, equal (on a per share basis)
            to any dividend or distribution declared by the directors of the
            Corporation in respect of the Class B Multiple Voting Shares and/or
            the non-voting common shares. Dividends and distributions on Class
            A Voting Shares

<PAGE>

                                       - 2 -

            shall be payable on the date fixed for payment of the dividend or
            distribution in respect of Class A Voting Shares or, if applicable,
            on the date fixed for payment of any dividend or distribution in
            respect of Class B Multiple Voting Shares and/or non-voting common
            shares.

      (d)   Subdivision, Consolidation, Reclassification or other Change. No
            subdivision, consolidation or reclassification of, or other change
            to, the Class A Voting Shares shall be carried out, either directly
            or indirectly unless, at the same time, the Class B Multiple Voting
            Shares and non-voting common shares are subdivided, consolidated,
            reclassified or changed in the same manner and on the same basis.

      (e)   Equal Status. Except as expressly provided in Section 3(II) and (IV)
            below, Class A Voting Shares, Class B Multiple Voting Shares and
            non-voting common shares shall have the same rights and privileges
            and shall rank equally, share ratably and be equal in all respects
            as to all matters.

II.   THE CLASS B MULTIPLE VOTING SHARES SHALL HAVE ATTACHED THERETO THE
      FOLLOWING RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS:

      (a)   Voting. Each Class B multiple voting share shall entitle the holder
            thereof to ten (10) votes at all meetings of the shareholders of the
            Corporation (except meetings at which only holders of another
            specified class of shares are entitled to vote pursuant to the
            provisions hereof or pursuant to the provisions of the Act).

      (b)   Ranking on Liquidation. In the event of the liquidation, dissolution
            or winding up of the Corporation, whether voluntary or involuntary,
            or other distribution of assets of the Corporation among
            shareholders for the purpose of winding up its affairs, subject to
            the rights, privileges, restrictions and conditions attaching to any
            other class of shares ranking prior to the Class B Multiple Voting
            Shares, Class A Voting Shares or non-voting common shares, the
            holders of the Class B Multiple Voting Shares, Class A Voting Shares
            and non-voting common shares shall be entitled to receive the
            remaining property of the Corporation. The holders of the Class B
            Multiple Voting Shares, Class A Voting Shares and non-voting common
            shares shall rank equally with respect to the distribution of assets
            in the event of the liquidation, dissolution or winding up of the
            Corporation, whether voluntary or involuntary, or any other
            distribution of the assets of the Corporation among shareholders for
            the purpose of winding up its affairs.

      (c)   Dividends and Distributions. In addition to any dividend or
            distribution declared by the directors in respect of Class B
            Multiple Voting Shares, holders of Class B Multiple Voting Shares
            shall be entitled to receive a dividend or distribution, whether
            cash, non-cash or some combination thereof, equal (on a per share
            basis) to any dividend or distribution declared by the directors of
            the Corporation in respect of Class A Voting Shares and/or
            non-voting common shares. Dividends and distributions on Class B
            Multiple Voting Shares shall be payable on the dated fixed for
            payment of the dividend or distribution in respect of Class B
            Multiple Voting Shares or, if applicable, on the date fixed for
            payment

<PAGE>

                                       - 3 -

            of a dividend or distribution in respect of Class A Voting Shares
            and/or non-voting common shares.

      (d)   Conversion by Holder into Class A Voting Shares. Each Class B
            multiple voting share may at any time and from time to time, at the
            option of the holder, be converted into one (1) fully paid and
            non-assessable Class A voting share. Such conversion right shall be
            exercised as follows:

            (i)   the holder of Class B Multiple Voting Shares shall send to the
                  transfer agent of the Corporation a written notice,
                  accompanied by a certificate or certificates representing the
                  Class B Multiple Voting Shares in respect of which the holder
                  desires to exercise such conversion right. Such notice shall
                  be signed by the holder of the Class B Multiple Voting Shares
                  in respect of which such right is being exercised, or by the
                  duly authorized representative thereof, and shall specify the
                  number of Class B Multiple Voting Shares which such holder
                  desires to have converted. The holder shall also pay any
                  governmental or other tax, if any, imposed in respect of such
                  conversion. The conversion of the Class B Multiple Voting
                  Shares into Class A Voting Shares shall take effect upon
                  receipt by the transfer agent of the Corporation of the
                  conversion notice accompanied by the certificate or
                  certificates representing the Class B Multiple Voting Shares
                  in respect of which the holder desires to exercise such
                  conversion right.

            (ii)  upon receipt of such notice and certificate or certificates by
                  the transfer agent of the Corporation, the Corporation shall,
                  effective as of the date of such receipt, issue or cause to be
                  issued a certificate or certificates representing Class A
                  Voting Shares into which Class B Multiple Voting Shares are
                  being converted. If less than all of the Class B Multiple
                  Voting Shares represented by any certificate are to be
                  converted, the holder shall be entitled to receive a new
                  certificate representing the Class B Multiple Voting Shares
                  represented by the original certificate which are not to be
                  converted.

      (e)   Subdivision, Consolidation, Reclassification or other Change. No
            subdivision, consolidation or reclassification of, or other change
            to, the Class B Multiple Voting Shares shall be carried out unless,
            at the same time, the Class A Voting Shares and the non-voting
            common shares are subdivided, consolidated, reclassified or changed
            in the same manner and on the same basis.

      (f)   Equal Status. Except as expressly provided in Section 3(I) above and
            in Section 3(IV) below, Class B Multiple Voting Shares, Class A
            Voting Shares and non-voting common shares shall have the same
            rights and privileges and shall rank equally, share ratably and be
            equal in all respects as to all matters.

<PAGE>

                                       - 4 -

III.  THE CLASS C SHARES SHALL HAVE ATTACHED THERETO THE FOLLOWING RIGHTS,
      PRIVILEGES, RESTRICTIONS AND CONDITIONS:

      (a)   Voting. Each Class C Share shall entitle the holder thereof to one
            hundred (100) votes at all meetings of the shareholders of the
            Corporation (except meetings at which only holders of a specified
            class of shares are entitled to vote separately pursuant to the
            provisions hereof or pursuant to the provisions of the Act).

      (b)   Dividends. The holders of the Class C Shares shall not be entitled
            to receive any dividends.

      (c)   Liquidation, Dissolution or Winding up. In the event of the
            liquidation, dissolution or winding up of the Corporation, the
            holders of the Class C Shares shall not be entitled to participate
            in the property and assets of the Corporation.

      (d)   Redemption by the Corporation. The Class C Shares may be redeemed by
            the Corporation, at any time and from time to time. The redemption
            price payable by the Corporation for each Class C Share will be
            equal to the consideration received by the Corporation for the
            issuance of such Class C Share.

IV.   THE NON-VOTING COMMON SHARES SHALL HAVE ATTACHED THERETO THE FOLLOWING
      RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS:

      (a)   Voting. Subject to the provisions of the Act or as otherwise
            expressly provided herein, the holders of the non-voting common
            shares shall not be entitled to receive notice of, nor to attend or
            vote at, meetings of the shareholders of the Corporation.

      (b)   Conversion. Except as provided for herein below, the non-voting
            common shares shall not have any conversion rights attached thereto.
            In the event that the Corporation becomes a reporting issuer, as
            such term is defined in any securities legislation or securities
            regulation applicable to the Corporation, then each non-voting
            common share will become convertible at the option of the holder
            into one Class A Voting Share of the Corporation subject to any
            adjustments hereunder.

            If the Corporation shall declare a dividend or make a distribution
            on its outstanding Class A Voting Shares or Class B Multiple Voting
            Shares, in either case payable in Class A Voting Shares or Class B
            Multiple Voting Shares other than pursuant to any dividend
            reinvestment and stock purchase plan, or shall divide its
            outstanding Class A Voting Shares or Class B Multiple Voting Shares
            into a greater number of shares, or shall consolidate its
            outstanding Class A Voting Shares or Class B Multiple Voting Shares
            into a lesser number of shares (any such event being herein called a
            "COMMON SHARE REORGANIZATION"), the conversion basis then in effect
            shall be adjusted immediately after the effective date or record
            date at which the holders of Class A Voting Shares and Class B
            Multiple Voting Shares are determined for purposes of the Common
            Share Reorganization by multiplying the conversion basis in effect
            immediately prior

<PAGE>

                                       - 5 -

            to such effective date or record date by a fraction, the numerator
            of which shall be the number of Class A Voting Shares and Class B
            Multiple Voting Shares outstanding immediately after giving effect
            to such Common Share Reorganization and the denominator of which
            shall be the number of Class A Voting Shares and Class B Multiple
            Voting Shares outstanding on such effective date or record date
            before giving effect to such Common Share Reorganization.

            If and whenever at any time there is a capital reorganization of the
            Corporation not covered by the above sub-paragraph or a
            consolidation or merger or amalgamation of the Corporation with or
            into any other company or body corporate, including by way of a sale
            whereby all or substantially all of the Corporations undertaking and
            assets would become the property of any other company or body
            corporate (any of which is herein called a "CAPITAL
            REORGANIZATION"), any holder of non-voting common shares who has not
            exercised his right of conversion prior to the effective date of
            such capital reorganization shall be entitled to receive and shall
            accept, upon the exercise of such right at any time on the effective
            date or thereafter, in lieu of the number of Class A Voting Shares
            to which he was theretofore entitled upon conversion, the aggregate
            number of shares or other securities or property of the Corporation
            or of the company or body corporate resulting from or acquiring
            under the capital reorganization that such holder would have been
            entitled to receive as a result of such Capital Reorganization if,
            on the effective date thereof, he had been the registered holder of
            the number of Class A Voting Shares to which he was theretofore
            entitled upon conversion; provided that no such capital
            reorganization shall be carried into effect unless, in the opinion
            of the directors, all necessary steps shall have been taken to
            ensure that the holders of the non-voting common shares shall
            thereafter be entitled to receive such number of shares or other
            securities or property of the Corporation or of the company or body
            corporate resulting from the consolidation, merger or amalgamation
            or to which such sale may be made, as the case may be, subject to
            adjustment thereafter in accordance with the provisions similar, as
            nearly as may be, to those contained in this paragraph.

      (c)   Ranking on Liquidation. In the event of the liquidation, dissolution
            or winding up of the Corporation, whether voluntary or involuntary,
            or other distribution of assets of the Corporation among
            shareholders for the purpose of winding up its affairs, subject to
            the rights, privileges, restrictions and conditions attaching to any
            other class of shares ranking prior to the non-voting common shares,
            Class A Voting Shares or Class B Multiple Voting Shares, the holders
            of the non-voting common shares, the holders of the Class A Voting
            Shares and the holders of the Class B Multiple Voting Shares shall
            be entitled to receive the remaining property of the Corporation.
            The holders of the non-voting common shares, the holders of the
            Class A Voting Shares and the holders of the Class B Multiple Voting
            Shares shall rank equally with respect to the distribution of assets
            in the event of the liquidation, dissolution or winding up of the
            Corporation, whether voluntary or involuntary, or any other
            distribution of the assets of the Corporation among shareholders for
            the purpose of winding up its affairs.

<PAGE>

                                     - 6 -

      (d)   Dividends and Distributions. In addition to any dividend or
            distribution declared by the directors of the Corporation in respect
            of non-voting common shares, holders of non-voting common shares
            shall be entitled to receive a dividend or distribution, whether
            cash, non-cash or some combination thereof equal (on a per-share
            basis) to any dividend or distribution declared by the directors of
            the Corporation in respect of the Class A Voting Shares and/or the
            Class B Multiple Voting Shares. Dividends and distributions on
            non-voting common shares shall be payable on the date fixed for
            payment of the dividend or distribution in respect of the non-voting
            common shares or, if applicable, on the date fixed for payment of
            any dividend or distribution in respect of Class A Voting Shares
            and/or Class B Multiple Voting Shares.

V.    THE SERIES A PREFERRED SHARES SHALL HAVE ATTACHED THERETO THE FOLLOWING
      RIGHTS, PRIVILEGES, PREFERENCES, RESTRICTIONS AND CONDITIONS:

      (a)   Dividends. The holders of Series A Preferred Shares shall be
            entitled to share in any dividends declared and paid upon or set
            aside for Class A Voting Shares, Class B Multiple Voting Shares or
            non-voting common shares of the Corporation, pro rata in accordance
            with the number of Class A Voting Shares into which such Series A
            Preferred Shares are then convertible pursuant to Section 3(V)(c)
            below.

      (b)   Liquidation Preference.

            (i)   In the event of the liquidation, dissolution or winding up of
                  the Corporation, whether voluntary or involuntary, or other
                  distribution of assets of the Corporation among shareholders
                  for the purpose of winding-up its affairs, subject to the
                  rights, privileges, preferences, restrictions and conditions
                  attaching to any other class of shares ranking prior to the
                  Series A Preferred Shares, the holders of Series A Preferred
                  Shares shall be entitled to receive, prior and in preference
                  to any distribution of any of the assets of the Corporation to
                  the holders of Class A Voting Shares, Class B Multiple Voting
                  Shares of non-voting common shares by reason of their
                  ownership thereof, an amount per share equal to the sum of
                  (the "LIQUIDATION PREFERENCE") (A) US$4.9396 for each
                  outstanding Series A Preferred Share (the "ORIGINAL SERIES A
                  ISSUE PRICE") and (B) the US dollar equivalent of an amount
                  equal to any declared but unpaid dividends that the holder of
                  Series A Preferred Shares is entitled to receive. If upon the
                  occurrence of any such event, the assets and funds available
                  for distribution among the holders of the Series A Preferred
                  Shares shall be insufficient to permit the payment to such
                  holders of the Liquidation Preference, then, subject to the
                  rights, privileges, restrictions and conditions attaching to
                  any other class of shares ranking prior to the Series A
                  Preferred Shares, the entire assets and funds of the
                  Corporation legally available for distribution shall be
                  distributed ratably among the holders of the Series A
                  Preferred Shares in proportion to the amount of such shares
                  owned by each such holder.

<PAGE>

                                     - 7 -

            (ii)  Upon the completion of the distribution required by
                  subparagraph (i) of this Section 3(V)(b), subject to the
                  rights, privileges, preferences, restrictions and conditions
                  attaching to any other class of shares ranking prior to the
                  Series A Preferred Shares, Class A Voting Shares, Class B
                  Multiple Voting Shares or non-voting common shares, the
                  remaining assets of the Corporation available for distribution
                  to shareholders shall be distributed among the holders of
                  Series A Preferred Shares, Class A Voting Shares, Class B
                  Multiple Voting Shares and non-voting common shares pro rata
                  based on the number of Class A Voting Shares, Class B Multiple
                  Voting Shares and non-voting common shares held by each and
                  assuming conversion of all such Series A Preferred Shares in
                  accordance with Section 3(V)(c) below.

            (iii) A holder of Series A Preferred Shares shall be entitled to
                  receive, as its option, the liquidation Preference described
                  in Section 3(V)(b)(i) in the event of:

                  (A)   a merger, amalgamation, consolidation or combination of
                        the Corporation or a purchase or exchange of voting
                        securities of the Corporation by any person or entity,
                        other than

                        (1)   a merger, amalgamation, consolidation,
                              combination, share purchase or share exchange that
                              would result in the voting securities of the
                              Corporation outstanding immediately prior thereto
                              continuing to be held by the same persons or
                              entities in substantially the same proportions and
                              continuing to represent (either by remaining
                              outstanding or by being converted into voting
                              securities of the surviving entity) (aa) more than
                              fifty percent (50%) of the combined voting power
                              of the Corporation or such surviving entity
                              outstanding immediately after such merger,
                              amalgamation, consolidation, combination, share
                              purchase or share exchange if the Class A Voting
                              Shares of the Corporation or such surviving entity
                              outstanding immediately after such merger,
                              amalgamation, consolidation, combination, share
                              purchase or share exchange are not publicly traded
                              and listed on a U.S. stock exchange (or a Canadian
                              stock exchange) or quoted on the Association of
                              the Securities Dealers the National Association
                              Automated Quotation System ("NASDAQ") for the
                              National Market System ("NMS") or Small Cap (the
                              "NASDAQ-NMS or SMALL CAP") or (bb) not less than
                              twenty-five percent (25%) of the combined voting
                              power of the Corporation or such surviving entity
                              outstanding immediately after such merger,
                              amalgamation, consolidation, combination, share
                              purchase or share exchange if the Class A Voting
                              Shares of

<PAGE>
                                     - 8 -

                              the Corporation or such surviving entity
                              outstanding immediately after such merger,
                              amalgamation, consolidation, combination, share
                              purchase or share exchange are publicly traded and
                              listed on a U.S. stock exchange (or a Canadian
                              stock exchange) or quoted on the NASDAQ-NMS or
                              Small Cap; or

                        (2)   a merger, amalgamation, consolidation,
                              combination, share purchase or share exchange
                              effected to implement a recapitalization of the
                              Corporation (or similar transaction) in which a
                              person who was the beneficial owner of more than
                              fifty percent (50%) of the Corporation's voting
                              securities prior to the merger amalgamation,
                              consolidation, combination, share purchase or
                              share exchange retains or acquires, as the case
                              may be, beneficial ownership of (aa) more than
                              fifty percent (50%) of the combined voting power
                              of the Corporation's outstanding securities after
                              the merger, amalgamation, consolidation,
                              combination, share purchase or share exchange, if
                              immediately after such merger, amalgamation,
                              consolidation, combination, share purchase or
                              share exchange, the Corporation's Class A Voting
                              Shares are not publicly traded and listed on a
                              U.S. stock exchange (or a Canadian stock exchange)
                              or quoted on the NASDAQ-NMS or Small Cap or (bb)
                              twenty-five percent (25%) or more of the combined
                              voting power of the Corporation's outstanding
                              securities after such merger or combination, if
                              immediately after such merger or combination, the
                              Corporation's Class A Voting Shares are publicly
                              traded and listed on a U.S. stock exchange (or a
                              Canadian stock exchange) or quoted on the
                              NASDAQ-NMS or Small Cap; or

                  (B)   the sale or other disposition (unless captured in (A)
                        above) by the Corporation of all or substantially all of
                        the Corporation's assets;

                  (C)   the Corporation fails to pay when due principal and/or
                        interest on those certain Secured Convertible Notes (the
                        "NOTES") issued pursuant to that certain Securities
                        Purchase Agreement dated as of August 15, 2002 between
                        the Corporation and the Investors named therein, and
                        such failure has not been waived by the holders of the
                        Notes or cured as provided in the Notes and such Notes
                        have not thereafter been converted as provided in such
                        Notes;

                  (D)   an order is issued or a resolution is adopted for the
                        purpose of winding-up the Corporation, or the
                        Corporation files a proposal or makes an assignment of
                        its property for the benefit of its

<PAGE>
                                     - 9 -

                        creditors, or if a petition in bankruptcy is filed
                        against the Corporation or any of its subsidiaries and
                        such petition is not dismissed within thirty (30) days
                        of the filing thereof, or a trustee is appointed for the
                        Corporation pursuant to the Bankruptcy and Insolvency
                        Act (Canada) or pursuant to any other legislation
                        relating to insolvent persons, or if an application is
                        filed pursuant to the Companies' Creditors Arrangement
                        Act (Canada), or a seizure is made (unless the seizure
                        is validly contested by the Corporation) or a judgment
                        is executed against all or a substantial part of the
                        Corporation's property;

                  (E)   the Corporation has ceased to operate within the
                        ordinary course of business;

                  (F)   the Corporation fails to carry out or comply with any
                        other undertaking or any other condition set forth
                        herein or there is an Event of Default under and as
                        defined in the Notes; or

                  (G)   the Corporation fails to pay when due an amount equal to
                        $500,000 under the Diamond Conditional Sale Agreement or
                        the Diamond Supply Agreement and such failure shall
                        continue for a period of thirty (30) days after the
                        Corporation has received written notice to that effect
                        from the Holder; or

                  (H)   subject to subsection (G) above, the New York Diamond
                        Dealers Club (or any successor thereto) determines that
                        there has been a material breach by the Corporation
                        under the Diamond Supply Agreement.

            (iv)  In the event the requirements of Section 3(V)(b) are not
                  complied with this Corporation shall forthwith either:

                  (A)   cause the closing of the applicable transaction to be
                        postponed until such time as the requirements of this
                        Section 3(V)(b) have been complied with; or

                  (B)   cancel such transaction, in which event the rights,
                        preferences and privileges of the holders of the Series
                        A Preferred Shares shall revert to and be the same as
                        such rights, preferences and privileges existing
                        immediately prior to the date of the first notice
                        referred to in subsection 3(V)(b)(v) hereof.

            (v)   The Corporation shall give each holder of record of Series A
                  Preferred Shares written notice of such impending transaction
                  not later than twenty (20) days prior to the shareholders'
                  meeting called to approve such transaction, or twenty (20)
                  days prior to the closing of such transaction, whichever is
                  earlier, and shall also notify such holders in writing of the
                  final approval of such transaction. The first of such notices
                  shall describe

<PAGE>
                                     - 10 -

                  the material terms and conditions of the impending transaction
                  and the provisions of this Section 3(V)(b) and the Corporation
                  shall thereafter give such holders prompt notice of any
                  material changes thereto. The transaction shall in no event
                  take place sooner than twenty (20) days after the Corporation
                  has given the first notice provided for herein or sooner than
                  ten (10) days after the Corporation has given notice of any
                  material changes provided for herein; provided, however, that
                  such periods may be shortened upon the written consent of the
                  holders of Series A Preferred Shares that are entitled to such
                  notice rights or similar notice rights and that represent at
                  least a majority of the voting power attaching to all such
                  shares then outstanding.

      (c)   Conversion.

      The Series A Preferred Shares shall have attached thereto the following
      conversion rights (the "CONVERSION RIGHTS"):

            (i)   Right to Convert. Each Series A Preferred Share shall be
                  convertible, at the option of the holder thereof, at any time
                  after the date of issuance of such share, at the office of the
                  Corporation or any transfer agent for such shares, into such
                  number of fully paid and non-assessable Class A Voting Shares
                  as is determined by dividing the Original Series A Issue Price
                  by the Conversion Price applicable to such share, determined
                  as hereafter provided, in effect on the date the certificate
                  is surrendered for conversion. The Conversion Price per Series
                  A Preferred Share shall be the Original Series A Issue Price
                  multiplied by 0.988474; provided, however, that the Conversion
                  Price for the Series A Preferred Shares shall be subject to
                  adjustment as set forth in Section 3(V)(c)(iv).

            (ii)  Automatic Conversion. Each Series A Preferred Share shall
                  automatically be converted into Class A Voting Shares at the
                  Conversion Price at the time in effect for such Series A
                  Preferred Shares immediately upon the earlier of (i) the
                  Corporation's sale of its Class A Voting Shares in a bona fide
                  firm commitment underwritten public offering pursuant to a
                  registration statement filed with, and declared effective by,
                  the Securities and Exchange Commission under the United States
                  Securities Act of 1933, as amended (the "US SECURITIES ACT")
                  or under a prospectus filed with, and receipted by, the
                  applicable securities commissions or regulatory authorities in
                  Canada (the "CANADIAN PROSPECTUS"), raising aggregate net
                  proceeds to the Company of at least US$55,000,000 at a minimum
                  share price of US$4.94 per Class A Voting Shares (adjusted to
                  reflect subsequent stock dividends, stock splits or
                  recapitalization) and the Class A Voting Shares are listed on
                  a US stock exchange or a Canadian stock exchange or quoted on
                  a U.S. national automated securities quotation system or (ii)
                  the date specified by written consent or written agreement of
                  the holders of sixty-seven percent (67%) of the then
                  outstanding Series A Preferred Shares.

<PAGE>
                                     - 11 -

            (iii) Mechanics of Conversion. Before any holder of Series A
                  Preferred Shares shall be entitled to convert the same into
                  Class A Voting Shares, such holder shall surrender the
                  certificate or certificates therefor, duly endorsed, at the
                  office of the Corporation or of any transfer agent for the
                  Series A Preferred Shares, and shall give written notice to
                  the Corporation at its principal corporate office, of the
                  election to convert the same and shall state therein the name
                  or names in which the certificate or certificates for Class A
                  Voting Shares are to be issued. The Corporation shall, as soon
                  as practicable thereafter, issue and deliver at such office to
                  such holder of Series A Preferred Shares, or to the nominee or
                  nominees of such holder, a certificate or certificates for the
                  number of Class A Voting Shares to which such holder shall be
                  entitled as aforesaid. Such conversion shall be deemed to have
                  been made immediately prior to the close of business on the
                  date of such surrender of the Series A Preferred Shares to be
                  converted, and the person or persons entitled to receive the
                  Class A Voting Shares issuable upon such conversion shall be
                  treated for all purposes as the record holder or holders of
                  such Class A Voting Shares as of such date. If the conversion
                  is in connection with an underwritten offering of securities
                  registered pursuant to the US Securities Act of 1933, as
                  amended or made pursuant to a Canadian Prospectus, the
                  conversion may, at the option of any holder tendering Series A
                  Preferred Shares for conversion, be conditioned upon the
                  closing with the underwriters of the sale of securities
                  pursuant to such offering, in which event the persons entitled
                  to receive the Class A Voting Shares upon conversion of the
                  Series A Preferred Shares shall not be deemed to have
                  converted such Series A Preferred Shares until immediately
                  prior to the closing of such sale of securities.

            (iv)  Conversion Price Adjustments of Preferred Shares for Certain
                  Dilutive Issuances and Combinations. The Conversion Price of
                  the Series A Preferred Shares shall be subject to adjustment
                  from time to time as follows:

                  (A)   Stock Splits or Subdivisions. In the event the
                        Corporation should at any time or from time to time
                        after the date upon which any Series A Preferred Shares
                        were first issued, (the "PURCHASE DATE") fix a record
                        date for the effectuation of a split or subdivision of
                        the outstanding Class A Voting Shares or the
                        determination of holders of Class A Voting Shares
                        entitled to receive a dividend or other distribution
                        payable in additional Class A Voting Shares or other
                        securities or rights convertible into, or entitling the
                        holder thereof to receive directly or indirectly,
                        additional Class A Voting Shares (hereinafter referred
                        to as "CLASS A VOTING SHARES EQUIVALENTS") without
                        payment of any consideration by such holder for the
                        additional Class A Voting Shares or the Class A Voting
                        Shares Equivalents (including the additional Class A
                        Voting Shares issuable upon conversion or exercise
                        thereof), then,

<PAGE>
                                     - 12 -

                        as of such record date (or the date of such dividend
                        distribution, split or subdivision if no record date is
                        fixed), the Conversion Price of the Series A Preferred
                        Shares shall be appropriately decreased so that the
                        number of Class A Voting Shares issuable on conversion
                        of each share of such series shall be increased in
                        proportion to such increase of the aggregate of Class A
                        Voting Shares outstanding and those issuable with
                        respect to such Class A Voting Shares Equivalents.

                  (B)   Combinations. If the number of Class A Voting Shares
                        outstanding at any time after the Purchase Date is
                        decreased by a combination of the outstanding Class A
                        Voting Shares, then, following the record date of such
                        combination, the Conversion Price for the Series A
                        Preferred Shares shall be appropriately increased so
                        that the number of Class A Voting Shares issuable on
                        conversion of each Series A Preferred Shares shall be
                        decreased in proportion to such decrease in outstanding
                        shares.

                  (C)   Other Distributions. In the event the Corporation shall
                        declare a distribution payable in securities of other
                        persons, evidences of indebtedness issued by the
                        Corporation or other persons, assets (excluding cash
                        dividends) or options or rights not referred to in
                        Section 3(V)(c)(iv)(A), then, in each such case for the
                        purpose of this Section 3(V)(c)(iv)(C), the holders of
                        the Series A Preferred Shares shall be entitled to a
                        proportionate share of any such distribution as though
                        they were the holders of the number of Class A Voting
                        Shares of the Corporation into which their Series A
                        Preferred Shares are convertible as of the record date
                        fixed for the determination of the holders of Class A
                        Voting Shares of the Corporation entitled to receive
                        such distribution.

                  (D)   Recapitalizations. If at any time or from time to time
                        there shall be a recapitalization of the Class A Voting
                        Shares (other than a subdivision, combination or merger
                        or sale of assets transaction provided for elsewhere in
                        Section 3(V)(b) or Section 3(V)(c) hereof, provision
                        shall be made so that the holders of the Series A
                        Preferred Shares shall thereafter be entitled to receive
                        upon conversion of the Series A Preferred Shares the
                        number of shares or other securities or property of the
                        Corporation or otherwise, to which a holder of Class A
                        Voting Shares deliverable upon conversion would have
                        been entitled on such recapitalization. In any such
                        case, appropriate adjustment shall be made in the
                        application of the provisions of this Section 3(V)(c)
                        with respect to the rights of the holders of the Series
                        A Preferred Shares after the recapitalization to the end
                        that the provisions of this Section 3(V)(c) (including
                        adjustment of the Conversion Price then in effect and
                        the number of shares purchasable upon conversion

<PAGE>
                                     - 13 -

                        of the Series A Preferred Shares) shall be applicable
                        after that event as nearly equivalent as may be
                        practicable.

                  (E)   No Impairment. The Corporation will not, by amendment of
                        its Articles or through any reorganization,
                        recapitalization, transfer of assets, consolidation
                        merger, dissolution, issue or sale of securities or any
                        other voluntary action, avoid or seek to avoid the
                        observance or performance of any of the terms to be
                        observed or performed hereunder by the Corporation, but
                        will at all times in good faith assist in the carrying
                        out of all the provisions, of this Section 3(V)(c) and
                        in the taking of all such action as may be necessary or
                        appropriate in order to protect the Conversion Rights of
                        the holders of the Series A Preferred Shares against
                        impairment.

                  (F)   No Fractional Shares and Certificate as to Adjustments.

                        (1)   No fractional shares shall be issued upon the
                              conversion of any Series A Preferred Shares, and
                              the number of Class A Voting Shares to be issued
                              shall be rounded to the nearest whole share.
                              Whether or not fractional shares are issuable upon
                              such conversion shall be determined on the basis
                              of the total number of Series A Preferred Shares
                              the holder is at the time converting into Class A
                              Voting Shares and the number of Class A Voting
                              Shares issuable upon such aggregate conversion.

                        (2)   Upon the occurrence of each adjustment or
                              readjustment of the Conversion Price of Series A
                              Preferred Shares pursuant to this Section 3(V)(c),
                              the Corporation, at its expense, shall promptly
                              compute such adjustment or readjustment in
                              accordance with the terms hereof and prepare and
                              furnish to each holder of Series A Preferred
                              Shares a certificate setting forth such adjustment
                              or readjustment and showing in detail the facts
                              upon which such adjustment or readjustment is
                              based. The Corporation shall, upon the written
                              request at any time of any holder of Series A
                              Preferred Shares, furnish or cause to be furnished
                              to such holder a like certificate setting forth
                              (aa) such adjustment and readjustment, (bb) the
                              Conversion Price for the Series A Preferred Shares
                              at the time in effect and (cc) the number of Class
                              A Voting Shares and the amount, if any, of other
                              property which at the time would be received upon
                              the conversion of Series A Preferred Shares.

                  (G)   Notices of Record Date. In the event of any taking by
                        the Corporation of a record of the holders of any class
                        of securities for

<PAGE>
                                     - 14 -

                        the purpose of determining the holders thereof who are
                        entitled to receive any dividend (other than a cash
                        dividend) or other distribution, any right to subscribe
                        for, purchase or otherwise acquire any shares of any
                        class or any other securities or property, or to receive
                        any other right, the Corporation shall mail to each
                        holder of Series A Preferred Shares, at least twenty
                        (20) days prior to the date specified therein, a notice
                        specifying the date on which any such record is to be
                        taken for the purpose of such dividend, distribution or
                        right, and the amount and character of such dividend,
                        distribution or right.

                  (H)   Reservation of Class A Voting Shares Issuable Upon
                        Conversion. The Corporation shall at all times reserve
                        and keep available out of its authorized but unissued
                        Class A Voting Shares, solely for the purpose of
                        effecting the conversion of the Series A Preferred
                        Shares, such number of Class A Voting Shares as shall
                        from time to time be sufficient to effect the conversion
                        of all Series A Preferred Shares; and if at any time the
                        number of authorized but unissued Class A Voting Shares
                        shall not be sufficient to effect the conversion of all
                        then outstanding Series A Preferred Shares, in addition
                        to such other remedies as shall be available to the
                        holder of such Series A Preferred Shares, the
                        Corporation will take such corporate action as may, in
                        the opinion of its counsel, be necessary to increase its
                        authorized but unissued Class A Voting Shares to such
                        number of shares as shall be sufficient for such
                        purposes, including, without limitation, engaging in
                        best efforts to obtain the requisite shareholder
                        approval of any necessary amendment to these Articles.

                  (I)   Notices. Any notice required by the provisions of this
                        Section 3(V)(c) to be given to the holders of Series A
                        Preferred Shares shall in writing and shall be deemed
                        effectively given: (1) upon personal delivery to the
                        party to be notified, (2) when sent by confirmed
                        facsimile if sent during normal business hours of the
                        recipient, if not, then on the next business day, or (3)
                        one day after deposit with a nationally recognized
                        overnight courier, specifying next day delivery, with
                        written verification of receipt.

      (d)   Voting Rights. The holder of Series A Preferred Shares shall have
            the right to one vote for each Class A Voting Shares into which such
            Series A Preferred Shares could then be converted, and with respect
            to such vote, such holder shall have full voting rights and powers
            equal to the voting rights and powers of the holders of Class A
            Voting Shares, and shall be entitled, notwithstanding any provision
            hereof, to receive notice of and attend any shareholders' meeting in
            accordance with the by-laws of this Corporation, and shall be
            entitled to vote together with holders of Class A Voting Shares,
            with respect to any question upon which holders of Class A Voting
            Shares have the right to vote. Fractional

<PAGE>
                                     - 15 -

            votes shall not, however, be permitted and any fractional voting
            rights available on an as-converted basis (after aggregating all
            Class A Voting Shares into which Series A Preferred Shares held by
            each holder could be converted) shall be rounded to the nearest
            whole number (with one-half being rounded upward).

      (e)   Protective Provisions. Subject to the rights, privileges,
            restrictions and conditions attaching to any other class of shares
            ranking prior to the Series A Preferred Shares, so long as any
            Series A Preferred Shares are outstanding, the Corporation shall not
            without first obtaining the approval (by vote or written consent, as
            provided by law) of the holders not less than sixty-seven percent
            (67%) of the then outstanding Series A Preferred Shares:

            (i)   alter or change the rights, preferences or privileges of the
                  Series A Preferred Shares;

            (ii)  amend or vary the Articles or By-Laws of the Corporation in a
                  manner that adversely affects the rights, preferences or
                  privileges of the Series A Preferred Shares;

            (iii) re-classify any of the issued and outstanding share capital of
                  the Corporation; or

            (iv)  authorize or issue, or obligate itself to issue, any equity
                  security, (including any other security convertible into or
                  exercisable for any equity security) having a preference over,
                  the Series A Preferred Shares with respect to voting,
                  dividends or upon liquidation, dissolution or winding-up or
                  merger, amalgamation, consolidation, combination, share
                  purchase or share exchange as set forth in this Section 3 or
                  as otherwise provided by law.

      (f)   Status of Converted or Reacquired Stock. In the event any Series A
            Preferred Shares shall be converted pursuant to Section 3(V)(c)
            hereof or be reacquired by the Corporation, the shares so converted
            or reacquired shall be cancelled and shall not be issuable by the
            Corporation.

      (g)   Ratable Treatment. Except in connection with the conversion of the
            Series A Preferred Shares at the election of the holder thereof in
            accordance with Section 3(V)(c)(i), the Corporation shall treat the
            holders of Series A Preferred Shares ratably in any and all matters.
</TEXT>
</DOCUMENT>
