SCHEDULE 2
                          CONVERTIBLE NOTE CERTIFICATE

QUALITY PRINCE LIMITED
Incorporated in the British Virgin Islands.
Registered Office    P.O. Box 3444
                     Road Town
                     Tortola
                     British Virgin Islands

THIS IS TO  CERTIFY  THAT the total  face  value of the  convertible  note ("the
Note") in respect of which this  Certificate  is issued is the amount  specified
below ("Face  Value") and that the  Noteholder  named below is registered as the
holder of the Note  having  such total face value  bearing  interest at the rate
specified below. At the issue of this Certificate the Note is paid in full.

Note Holder:        Phenomenal Limited

Address:            P.O. Box 957, Offshore Incorporations Centre
                    Road Town, Tortola, British Virgin Islands

Face Value:         United States Dollars     $10,000,000

Conversion Shares:  2914  Shares  or such  other  number of shares  that will 
                    constitute  not less than 29.14% of  the total issued share
                    capital of Quality Prince Limited.

Date of Issue:

Interest Rate:      Three per cent (3%) per month compounding  monthly provided
                    that in the event the Company shall not default with respect
                    to any repayment  obligation  with respect to the Principal 
                    or  obligation  in respect of payment of interest  the rate 
                    shall be reduced to one and one half per cent (1.5%) per 
                    month.

The Note  comprised  in this  Certificate  are  issued  with and  subject to the
Conditions attached hereto.  Interest shall be calculated and paid in accordance
with the Conditions.

DATED:




                                                                               
------------------------------------------
Signed by                       Director
         ----------------------
for and on behalf of
QUALITY PRINCE LIMITED


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<PAGE>

This Certificate must be delivered to QUALITY PRINCE LIMITED before any Transfer
will be registered or any new Certificate or Certificates  issued in exchange or
repayment.



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<PAGE>

                                   CONDITIONS

1.   DEFINITIONS AND INTERPRETATION

1.1  Definitions

     (a)  Unless the contrary intention appears:

          "Business  Day"  means a day on  which  banks  are  open  for  banking
          business in Hong Kong;

          "The Company" means Quality Prince Limited;

          "Conversion Date" means, in relation to the Note, the date with effect
          from  which  the Note is  converted  into  Ordinary  Shares  following
          receipt by the Company of a notice given pursuant to and in accordance
          with the provisions of Condition 3;

          "Directors" means the Directors of the Company;

          "Group"  means  the  Company  and  its   subsidiaries  and  associated
          companies  including  without  limitation Hang Fung Jewellery  Company
          Limited,  Kai Hang Jewellery Co, Limited and Beijing Huarong Jewellery
          Co Ltd.

          "Investment  Agreement"  means the  agreement of even date between the
          Company, S.W. Lam Inc. Lam Sai Wing, Chan Yam Fai, Jane and Phenomenal
          Limited.
 
          "Maturity" and "Maturity Date" means the date ascertained  pursuant to
          Condition 6.

          "Note  Certificate"  means  the  certificate  evidencing  the  Note in
          respect of which the Noteholder is registered;

          "Noteholder"  and  "holder of notes"  means in relation to the Note at
          any  time,  the  person  registered  as the  holder of the Note in the
          Register;

          "Ordinary  Shares" means fully paid  ordinary  shares of $1.00 each in
          the capital of the Company;

          "Register"  shall  mean the  register  to be  maintained  pursuant  to
          Condition 10;

          "Securities" includes shares,  debentures,  debenture stock, notes and
          any options to subscribe for the same;



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<PAGE>


     (b)  all  references  to  statutory  provisions   (including  acts,  rules,
          regulations,  orders, by-laws and ordinances) include any modification
          or re-enactment of such statutory  provisions  (whether before,  on or
          after the date of this document) for the time being in force;

     (c)  where in these  conditions  a period of time  dating from a given day,
          act or event is specified  or allowed for any purpose,  the time shall
          be  reckoned  exclusive  of that day or of the day on which the act or
          event occurred but inclusive of the day on which that period expires;

     (d)  words importing the singular or plural include the plural and singular
          respectively;

     (e)  words importing any gender include every gender;

     (f)  all dollar ($) amounts are in United States currency;

     (g)  words denoting persons include bodies and corporations;

     (h)  a  reference  to a party or  parties  means the named  parties to this
          document  and  includes  that party's  executors,  administrators  and
          permitted  assigns,  or if a company,  its  successors  and  permitted
          assigns;

     (i)  clause headings do not affect the interpretation of this document;

     (j)  where a word or phrase is given a particular meaning in this document,
          other  parts of speech  and  grammatical  forms of that word or phrase
          have a corresponding meaning;

     (k)  a reference to a  Condition,  Schedule or Annexure is a reference to a
          Clause or Schedule of or Annexure to this document; and

     (l)  every agreement or undertaking expressed or implied by which more than
          one person is bound  binds  those  persons and any two or more of them
          jointly and each of them severally.

2    GENERAL TERMS OF ISSUE

2.1  The Note shall:

     (a)  have a principal  amount of the amount  specified as the face value in
          the Note Certificate;

     (b)  be paid for in full on application;



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<PAGE>


     (c)  be  convertible  into the number of Ordinary  Shares  specified in the
          Note  Certificate in the manner and at the times provided by Condition
          3 and, subject to Condition 3;

     (d)  entitle the  Noteholder to interest at the rate  specified in the Note
          Certificate  calculated  daily on the  principal  amount of each Note,
          such interest payable in full on the Maturity Date;

     (e)  be transferable; and

     (f)  be deemed  beneficially  owned by the person  registered as the holder
          thereof.

3.   GENERAL RIGHTS OF CONVERSION

3.1  The Note shall be  convertible  into Ordinary  Shares by written notice (in
     the form if any annexed to this Note  Certificate  or in such other form as
     the Company may accept acting  reasonably)  given by the  Noteholder to the
     Company  requiring the Company to convert.  Such notice may be given at any
     time after the date of issue and on or prior to the Maturity Date.

     The notice shall be  accompanied  by the Note  Certificate.  The Noteholder
     shall  have the right to  nominate  a nominee or  nominees  to be  allotted
     shares upon the  conversion  of the Note in addition to or in  substitution
     for the Noteholder in such proportions as the Noteholder shall determine.

3.2  The  Noteholder  may in respect of any notice under this Condition 3 at its
     option convert only part of the Face Value of the Note into Ordinary Shares
     of the Company.  The number of Ordinary  Shares that shall be allotted upon
     such  exercise  shall be a  proportion  of the total  number of shares that
     would be  allotted  upon the  exercise of the entire Face Value of the Note
     Certificate   identical  to  that  proportion  that  the  amount  converted
     represents  to the total Face Value of this  Certificate.  Upon any partial
     exercise of the Note the Company  shall issue to the  Noteholder a new Note
     Certificate for the balance of the Note then outstanding on identical terms
     mutatis mutandis to this Note Certificate  (provided that the Maturity Date
     shall be the Maturity Date specified in the original Note Certificate).

3.3  A notice given pursuant to this Condition 3 shall be irrevocable.

4.   ALLOTMENT OF SHARES

4.1  The Company  shall allot the  Ordinary  Shares to which the  Noteholder  is
     entitled  upon  conversion  of the Note  pursuant  to  Condition 3 within 3
     Business Days of the Conversion  Date to the Noteholder  and/or its nominee
     as the case may be and any such  allotment  shall have effect and be deemed
     to have been made on that Conversion Date.

4.2  The Company  shall not later than 3 Business  days after  allotment  in the
     case of  conversion  pursuant to  Condition 3 forward free of charge to the
     Noteholder  (or to such  other  person as such  Noteholder  may in  writing
     request)  a  Certificate  for the number of  Ordinary  Shares  allotted  on
     conversion of the Note (and where  applicable a substitute Note Certificate
     for the balance of the Note that was not converted).



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<PAGE>


4.3  Subject to the preceding  paragraphs  of this  Condition,  Ordinary  Shares
     allotted upon  conversion of the Note shall rank in all respects pari passu
     and form one class  with the  Ordinary  Shares  on issue at the  Conversion
     Date.

5.   COVENANTS BY THE COMPANY

5.1  The Company hereby  covenants with each  Noteholder  that it will until the
     Noteholder  converts the Note into Ordinary  Shares,  or until the date the
     whole  of  the  Principal  and  any  interest  accruing  is  repaid  to the
     Noteholder, whichever is the later date:

     (a)  execute and do all such  assurances  and things as shall be reasonably
          necessary for  conferring  the full benefit of these  Conditions  upon
          each Noteholder;

     (b)  use its best  endeavors  to carry on and conduct  the  business of the
          Group in a proper and efficient  manner and without  limitation at all
          times  preserve  and  keep in full  force  and  effect  its  corporate
          existence  and rights and  franchises  material to the business of the
          Group;

     (c)  keep or cause to be kept proper books of account and to enter  therein
          full  particulars of all dealings and  transactions in relation to the
          business  of the  Group and all of its  subsidiaries  and to make such
          records available according to these Conditions;

     (d)  maintain or cause to be  maintained  in good repair and working  order
          and  condition  all assets of the Group used or useful in the business
          of the  Group  and  form  time to time  make or  cause  to be made all
          appropriate   repairs  renewals  and  replacements  of  those  assets;
          adequately  insure and keep insured with insurers or  underwriters  of
          good repute all of the  property  and assets of the Group as may be of
          an insurable  nature against all risks properly  insurable  against in
          the  ordinary  course  of  business  and as may  from  time to time be
          prudent  having regard to the nature and extent of the business of the
          Group and to duly pay all  premiums  and other sums payable in respect
          of such insurances;

     (e)  duly comply with all statutory requirements with respect to the filing
          of reports, accounts and statements and the furnishing thereof to such
          statutory  or other  bodies or persons  required or entitled by law to
          receive  the same by the  members of the  Group,  and to keep open all
          registers maintained by the Company and the other members of the Group
          for inspection and all other like matters;

     (f)  ensure that:

          (i)  the  Company  will at all times have  sufficient  authorized  but
               un-issued  ordinary capital to permit Noteholders to exercise the
               right of conversion into Ordinary Shares;



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<PAGE>


          (ii) the voting and other rights attached to the Ordinary Shares shall
               not be altered in a manner which is  prejudicial to the interests
               of Noteholders;

          (iii)it will  observe and perform all the  covenants,  conditions  and
               agreements contained or implied in any mortgage,  charge or other
               security  given by the Company  except  where the same is waived;
               (iv) it will duly and  punctually  observe  and  perform  all the
               covenants,  terms,  conditions  and  obligations  imposed upon it
               pursuant to these Conditions;

     (g)  provide to each  Noteholder a copy of all notices  reports,  statement
          and other material as and when provided to the members of the Company;

     (h)  duly  comply with all laws  applicable  to the Company and ensure such
          compliance by all subsidiaries of the Company;

     (i)  give  timely  notice to each  Noteholder  of any  actual or  potential
          breach of any of these Conditions;

     (j)  attend to the due  payment  of all  taxation  liabilities  of and duly
          assessed to or otherwise payable by the Company or any other member of
          the Group and, in respect  thereof,  to make timely  provision for all
          such payments;

     (k)  not without the prior consent of the Noteholder:

          (i)  alter the financial year of the Company;

          (ii) suffer or allow to exist in favour of any  person,  any  security
               interest  ranking for payment in the event of a winding up of the
               Company before the Noteholder;

          (iii)grant or agree to grant any  person a charge,  mortgage,  lien or
               other encumbrance (or similar interest) over any of the Company's
               assets or  undertakings or permit or agree to permit the grant to
               any person of a charge, mortgage or other encumbrance (or similar
               interest) over any assets or undertaking of a Group member; or

          (iv) otherwise  permit any  creditor to be paid in  preference  to the
               payment of interest to the Noteholder or capital upon  redemption
               of the Note as the case may require.

          (vi) issue any  Ordinary  Shares  or other  Securities  or permit  any
               member  of the  Group  to  issue  any  Ordinary  Shares  or other
               Securities.



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<PAGE>


6.   MATURITY AND REPAYMENT

6.1  The Maturity  Date of the Notes shall be the  expiration of ten months from
     the Date of Issue specified in the Note Certificate. Upon the Maturity Date
     the Company shall repay the principal  amount of the Note together with all
     interest accruing in respect of the Note at that date.

6.2  In the event that the Company  shall  default with respect to the repayment
     of the principal amount of the Note and/or the interest accruing in respect
     thereto the Company shall  immediately on default be liable for interest at
     the rate  specified  in the Note  Certificate  calculated  from the date of
     drawdown and payable  monthly on the first  Business  Day of each  calender
     month. The  Noteholder's  entitlement to such interest shall be in addition
     to any other  remedy  of the  Noteholder  whether  under the terms of these
     Conditions or otherwise.

7.   RIGHT TO SEEK WINDING UP ORDER

7.1  If the  Company  fails to make  payment of  principal  and/or  interest  in
     respect  of the Note for a period of 7 days or more  after the due date for
     payment  (and has  failed to make such  payment  within a further 7 days of
     receipt of a written  notice from the  Noteholder  requiring  payment)  any
     Noteholder may without prejudice to any other remedy institute  proceedings
     in the courts of Hong Kong for the winding up of the Company.

8.   NOTE DUE ON DEFAULT

8.1  Notwithstanding  any other Condition but subject to the proviso  hereafter,
     the face value of the Note shall at the option of the Noteholder become due
     and payable in cash  forthwith on the  occurrence of any one or more of the
     following events:

     (a)  if the Company does not repay or otherwise redeem any Note on the date
          upon which such repayment or redemption becomes due in accordance with
          these Conditions;

     (b)  if the Company  does not pay any interest to the  Noteholder  or other
          moneys  (except  principal  moneys and premiums)  which become due and
          payable by the Company  pursuant to these  Conditions,  in the case of
          interest,  within 2 Business Days after it becomes due for payment and
          in the case of any such other  moneys,  within 2  Business  Days after
          demand therefor by the Noteholder;

     (c)  if the Company or any member of the Group shall  default (as principal
          or as guarantor or other surety) in the payment of any principal of or
          premium,  if any,  or  interest  on any  indebtedness  in  respect  of
          borrowed  money  (other than the Note),  or in the  performance  of or
          compliance  with any term of any evidence of such  indebtedness  or of
          any  mortgage,   indenture,   or  other  agreement  relating  to  such
          indebtedness,  if that default  gives to the holder of the  obligation
          the right to accelerate the indebtedness;



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<PAGE>


     (d)  if any action is taken for the winding up of the Company or any member
          of the Group  (including the appointment of a provisional  liquidator)
          and that action is not stayed or dismissed within 30 days;

     (e)  if an order is made for the winding up, or dissolution without winding
          up, of the Company or any member of the Group;

     (f)  if an effective resolution is passed for the winding up of the Company
          or any member of the Group unless the winding up is for the purpose of
          reconstruction  or amalgamation  and the scheme of  reconstruction  or
          amalgamation with or without modification has the prior consent of the
          holder of the Note;

     (g)  if any distress or execution is levied or enforced upon or against any
          of the assets or  property  of the  Company or any member of the Group
          for a sum or sums  exceeding in aggregate  Hong Kong dollars $3,000 or
          its equivalent in any other currency;

     (h)  if a  controller,  receiver or receiver and manager is appointed of or
          an encumbrancer  takes possession of the undertaking of the Company or
          any member of the Group or any part thereof;

     (i)  if the Company or any member of the Group  stops  payment of its debts
          generally;

     (j)  if the Company or any member of the Group ceases or threatens to cease
          to carry on its business;

     (k)  if any Company or any member of the Group enters into any  arrangement
          or composition with creditors generally;

     (l)  if without the prior consent in writing of the  Noteholder the Company
          or any member of the Group pays any dividend while any interest on the
          Note has become payable and remains unpaid;

     (m)  if the  Company  shall fail or cease to observe or perform  any one or
          more of its covenants or undertakings in Condition 5;

     (n)  if any written  representation or representation  made by or on behalf
          of the Company in the Investment  Agreement or otherwise in connection
          with the transactions  contemplated in the Investment  Agreement shall
          prove to have been false or incorrect  in any material  respect on the
          date on which it has been made; or

     (o)  if the  Company is in breach of any other of these  Conditions  or any
          term of the Investment  Agreement (save for the obligations  specified
          in this  Condition) and such default is not remedied  within seven (7)
          days of  notice  in  writing  being  given  by the  Noteholder  to the
          Company.



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<PAGE>


9.   CONDITIONS BINDING ON PARTIES AND SUCCESSORS

     These conditions shall be binding upon the Company, the Noteholders and all
     persons claiming through or under them respectively.

10.  REGISTER

10.1 The  Company  shall  maintain a Register  of  Noteholders  and shall  enter
     therein all  transactions  and details  required by these  Conditions to be
     entered therein.

10.2 The Register shall be maintained at the Registered Office of the Company or
     at such  other  location  as the  Company  may  select  and  notify  to the
     Noteholders.

11.  TRANSFER OF NOTE

11.1 Subject to Condition  11.4, the Noteholder will be entitled to transfer the
     Note or any part  thereof by lodging with the Company at the address of the
     Register on which the  Noteholder's  Note are for the time being recorded a
     proper  instrument of transfer  duly stamped if necessary,  executed by the
     transferor  and executed by the  transferee  except where  execution by the
     transferee is rendered  unnecessary by the statute.  No fee will be charged
     for the registration of a transfer.

11.2 The  transferor  shall be deemed to remain  the owner of the Note until the
     name of the transferee is entered in the Register in respect thereof.

11.3 Subject to any applicable law relating  thereto,  an instrument of transfer
     shall be in a form  acceptable  to the  Directors  generally  and  shall be
     forwarded  for  registration  to the  address of the  Register on which the
     Noteholder's  Note  are for the  time  being  recorded  accompanied  by the
     certificate  for the Note to be  transferred  and if  satisfied  with  such
     evidence the Company will  register  the  transfer and will  recognize  the
     transferee as the  Noteholder  entitled to the amount of the Note comprised
     in the transfer.

11.4 Any  person  becoming  entitled  to Notes in  consequence  of the  death or
     bankruptcy of any holder of the Note may upon  producing such evidence that
     the  Noteholder  sustains the  character in respect of which he proposes to
     act under this  Condition  or of the  Noteholder's  title as the  Directors
     shall think  sufficient be registered  himself as the holder of the Note or
     subject to the preceding Conditions as to transfer, may transfer the Note.

12.  PAYMENT TO NOTEHOLDERS

12.1 Any interest principal or other moneys payable on or in respect of the Note
     shall be paid:



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     (i)  cashier's order sent through the post to the registered address of the
          Noteholder or such other address as the Noteholder shall notify; or

     (ii) by deposit to such account with any bank as the  Noteholder by written
          notice to the Company may direct.

13.  CANCELLATION PRODUCTION AND REPLACEMENT OF NOTE CERTIFICATES

13.1 If any Note Certificate  issued pursuant to these Conditions be worn out or
     defaced then upon  production  thereof to the Directors they may cancel the
     same and may issue a new Note Certificate in lieu thereof.

13.2 If a Note  Certificate  is lost or destroyed then upon proof thereof to the
     satisfaction of the Directors and in case of a lost Note  Certificate or in
     default of proof of destruction  of a Note  Certificate on such terms as to
     evidence and  indemnity  and the payment of  out-of-pocket  expenses of the
     Company in investigating  evidence as the Directors may deem adequate being
     given, a new Note Certificate in lieu thereof shall be given to the persons
     entitled to such lost or  destroyed  Note  Certificate.  An entry as to the
     issue of the new Note  Certificate  and indemnity (if any) shall be made in
     the Register.

13.3 Any  stamp  duty  payable  on a new  Note  Certificate  issued  under  this
     Condition 13 shall be paid by the Noteholder.



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                                    SCHEDULE
                                   ----------
                     NOTICE OF EXERCISE OF RIGHT TO CONVERT

I/We  being  the  Registered  Holders  of the Note in the Issue  give  notice to
convert into fully paid Ordinary  Shares the whole/only  [amount] of the Note in
accordance with the Conditions constituting the Note.

*I/We accept the fully paid Ordinary Shares to be issued pursuant to this Notice
subject to the Memorandum and Articles of Association of the Issuer. OR
                                                                    ====

*I/We  nominate  the fully paid  Ordinary  Shares to be issued  pursuant  to the
Notice  shall be held by the  following  parties  in the  following  proportions
subject to the Memorandum and Articles of Association of the Issuer.

[Name of Nominee/s and Number of Shares]

I/We agree to accept the fully paid  Ordinary  Shares to be registered in my/our
name(s) and authorize the entry of my/our  name(s) in the Register of Members in
respect of the shares to be allotted to us and the dispatch of a certificate for
those Ordinary Shares to me/us.

I/We agree to be bound by the  memorandum  and  Articles of  Association  of the
Issuer.

[Authorised signatory of Noteholder]

Dated this     day of            19

NOTES

1.   This Notice will not be effective unless given pursuant to the terms of the
     Conditions.

2.   Where the Noteholder is incorporated the common seal and attestation clause
     is to be affixed in  accordance  with its  constituent  documents  and duly
     attested.

3.   If this Notice is signed by an Attorney or other  authorised  person/s  the
     relevant  Power of Attorney or other  documentary  evidence of authority if
     not already  produced and noted by the Company must be forwarded  with this
     Notice for notation and return.