Document:

EXHIBIT 10.1

Exhibit 10.1

September 29, 2005

	The Board of Directors

ShopKo Stores, Inc.

700 Pilgrim Way

Green Bay, Wisconsin  54304

RE:

Second Amendment to Agreement and Plan of Merger ("Second Amendment")

Ladies and Gentleman:

We refer to the Agreement and Plan of Merger by and among Badger Retail Holding, Inc., Badger Acquisition Corp. and ShopKo Stores, Inc. dated as of April 7, 2005, as amended by the First Amendment thereto, dated September 9, 2005 (as so amended, the "Merger Agreement"). The parties to the Merger Agreement wish to amend the Merger Agreement on the terms set forth herein, and to clarify certain matters with respect to the transactions contemplated in the Merger Agreement.  All capitalized terms used in this Second Amendment and not otherwise defined shall have the meanings ascribed to them in the Merger Agreement.   

In consideration of the warranties, covenants and agreements set forth in this Second Amendment, the parties hereto agree as follows:

1.  Section 2.7 of the Merger Agreement is hereby amended by deleting the reference to "$25.00" in the first sentence thereof, and inserting "$25.50" in its place.    

2.  Section 3.22 of the Merger Agreement is hereby amended by deleting the first sentence thereof, and inserting the following in its place:

"No "fair price," "merger moratorium," "control share acquisition" or other similar anti-takeover statute or regulation (including the provisions of Sections 180.1130 to 180.1134 and Sections 180.1140 to 180.1144 of the WBCL, inclusive) applies or purports to apply to the Company with respect to this Agreement, the Merger or any other transaction contemplated hereby. The Company Board has taken all necessary and appropriate actions to approve, in accordance with Sections 180.1140 and 180.1144 of the WBCL (to the extent applicable) and Article V of the Company Articles, the acquisition by Parent and Acquisition Sub of beneficial ownership of Company Common Stock pursuant to the Levco Voting Agreement."

3.  Section 4.6 of the Merger Agreement is hereby amended by deleting the Section in its entirety and inserting the following in its place:

"Section 4.6

Acquiror Entity's Operations.  Each Acquiror Entity was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, and except for the execution, delivery and performance of the Levco Voting Agreement and the Reimbursement Agreement, has not, other than in connection with the transactions contemplated hereby or thereby and other than those incidental to its organization and maintenance of corporate existence, (i) engaged in any business activities, (ii) conducted any operations, (iii) incurred any liabilities or (iv) owned any assets or property."

4.  Section 4.7 of the Merger Agreement is hereby amended by inserting the following at the end of such Section 4.7:

", except to the extent any Acquiror Entity may be deemed to beneficially own shares of Company Common Stock in connection with its execution, delivery and performance of the Levco Voting Agreement."

5.  Section 4.8 of the Merger Agreement is hereby amended by (a) deleting the reference to "$27 million" in clause (ii) thereof and inserting "$31.75 million" in its place; and (b) deleting the reference to “$3 million” in clause (ii) thereof and inserting “$3.25 million” in its place.

6.   Section 8.1 of the Merger Agreement is hereby amended by adding the following definitions:

"Levco Voting Agreement" means that certain voting agreement, dated as of September 29, 2005, by and among Parent, Acquisition Sub, and each of Levco Alternative Fund, Ltd., Purchase Associates L.P., Purchase Associates II, L.P., Alvarado Capital Partners, L.P., Levco GP, Inc., John A. Levin & Co., Inc. and BKF Capital Group, Inc."

"Reimbursement Agreement"  means that certain letter agreement, dated as of September 29, 2005, by and among  Parent, Acquisition Sub, and each of Levco Alternative Fund, Ltd., Purchase Associates L.P., Purchase Associates II, L.P., Alvarado Capital Partners, L.P., Levco GP, Inc., John A. Levin & Co., Inc. and BKF Capital Group, Inc."

7.  The Company represents and warrants to Parent and Acquisition Sub as follows: 

(a) The Company is duly organized, validly existing and in good standing under the laws of the State of Wisconsin. 

(b) The Company has the requisite corporate power and authority to execute and deliver this Second Amendment and (subject to receipt of the Company Shareholder Approval) to perform its obligations hereunder. The execution and delivery of this Second Amendment and the performance of its obligations hereunder have been duly and validly authorized by all necessary corporate action (subject to receipt of the Company Shareholder Approval). This Second Amendment has been duly executed and delivered by the Company, and constitutes, assuming due authorization, execution and delivery of this Second Amendment by Parent and Acquisition Sub, a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting the rights and remedies of creditors generally and to general principles of equity (regardless of whether considered in a proceeding in equity or at law). 

8.  Each of Parent and Acquisition Sub hereby jointly and severally represents and warrants to the Company as follows: 

(a) Each Acquiror Entity is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. 

(b) Each Acquiror Entity has the requisite corporate power and authority to execute and deliver this Second Amendment and to perform its obligations hereunder. The execution and delivery of this Second Amendment and the performance of its obligations hereunder have been duly and validly authorized, and this Second Amendment has been approved and adopted by the Board of Directors of each Acquiror Entity, and no other corporate proceedings on the part of either Acquiror Entity are necessary to authorize the execution, delivery and performance of this Second Amendment. Concurrently with the execution of this Second Amendment, Parent, as the sole shareholder of Acquisition Sub, is approving this Second Amendment and the transactions contemplated hereby, including the Merger. This Second Amendment has been duly executed and delivered by each Acquiror Entity and constitutes, assuming due authorization, execution and delivery of this Second Amendment by the Company, a valid and binding obligation of each Acquiror Entity, enforceable against each Acquiror Entity in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting the rights and remedies of creditors generally and to general principles of equity (regardless of whether considered in a proceeding in equity or at law).

9.  For the avoidance of doubt, from and after the date of this Second Amendment, references in the Merger Agreement to the “Agreement” or any provision thereof shall be deemed to refer to the Merger Agreement or such provision as amended hereby unless the context otherwise requires, and references in the Merger Agreement to the “date hereof” or the “date of this Agreement” shall be deemed to refer to April 7, 2005. 

10.  The provisions of the Merger Agreement set forth in Sections 8.2, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 8.10 and 8.12 are incorporated herein by reference, and are deemed to be part of this Second Amendment. 

11.  Except as expressly set forth herein, this Second Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of any party under, the Merger Agreement, nor alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Merger Agreement, all of which shall continue in full force and effect.

[SIGNATURE PAGE FOLLOWS]

Please indicate your agreement with the forgoing by executing two copies of this Amendment and returning one copy to the undersigned.

Yours truly,

BADGER RETAIL HOLDING, INC.

By:  

/s/ Michael S. Israel                           

Name:  Michael S. Israel

Title:    Secretary and Treasurer

BADGER ACQUISITION CORP.

By:

/s/ Michael S. Israel                           

Name:  Michael S. Israel

Title:    Secretary and Treasurer

Agreed to and acknowledged by this 29th day of September, 2005:

SHOPKO STORES, INC.

By:

/s/ Steven R. Andrews                           

Name:  Steven R. Andrews

Title:    Senior Vice President<PAGE>

HENRY BIRKS & SONS INC.
1240 Phillips Square
Montreal, Quebec
H3B 3H4

RE:       AMENDED AND RESTATED ACCOUNTS RECEIVABLE MANAGEMENT, LOAN & SECURITY
          AGREEMENT

Gentlemen:

         Reference is made to that certain "Amended and Restated Accounts
Receivable Management, Loan & Security Agreement" bearing effective date of July
1, 2004 by and between you and us ("GMACCF"), as amended pursuant to an
amendment letter dated October 22, 2004 and July 21, 2005 (collectively, the
"Loan Agreement"). All of the defined words and terms under the Loan Agreement
shall have the same meanings as therein set forth whenever utilized herein, save
as expressly stipulated herein to the contrary.

The Loan Agreement is hereby amended as follows:

1.   The following definitions are hereby added as Sections 1.1.10 (a) through
     1.1.10(f) hereof:

     "1.1.10(a) "BA ADVANCE" means any Advance(s), in Dollars only, in minimum
     increments of $500,000 made to Borrower hereunder, on which interest is
     payable based upon the BA Equivalent Rate;

     1.1.10(b) "BA EQUIVALENT RATE" means, for the BA Interest Period of each BA
     Advance, the rate of interest per annum equal to the annual rate of
     interest quoted on the Business Day which is the first day of such BA
     Interest Period quoted on Reuters Service Page CDOR as of approximately
     10:00 a.m. (Montreal time) as being the rate of interest for bankers'
     acceptances in Dollars for a face amount similar to the amount of the BA
     Advance and for a term similar to the applicable BA Interest Period;

     1.1.10(c) "BA INTEREST" means all interest payable by Borrower as herein
     set forth on all Outstandings under the Credit Facilities consisting of BA
     Advances as set forth in the Contract Data Sheet;

     1.1.10(d) "BA INTEREST PERIOD(S)" means the period(s) commencing on the
     date of each particular BA Advance and ending on the date which is 30, 60
     or 90 days thereafter (as selected by the Borrower in the applicable BA
     Notice) provided that:

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                                     - 2 -

          (a) if any BA Interest Period would otherwise end on a day that is not
          a Business Day, such BA Interest Period shall be extended to the
          following Business Day, unless the result of such extension would be
          to carry such BA Interest Period into another calendar month, in which
          event such BA Interest Period shall end on the preceding Business Day;

          (b) any BA Interest Period which begins on the last Business Day of a
          calendar month (or on a day for which there is no numerically
          corresponding day in the calendar month at the end of such BA Interest
          Period) shall end on the last Business Day of the calendar month at
          the end of such BA Interest Period; and,

          (c) no BA Interest Period shall extend beyond the expiry of the Term;

     1.1.10(e) "BA LOAN RATE" has the meaning set forth in the Contract Data
     Sheet;

     1.1.10(f) "BA NOTICE" means written notification (in such manner as
     determined by the Agent from time to time) given by Borrower to Lender and
     received by Lender no more than 3 Business Days and no less than two
     Business Days prior to the Business Day of the relevant BA Advance,
     specifying:

          (a)  the amount of such BA Advance; and,

          (b)  the BA Interest Period applicable to such BA Advance,

     all in form and substance as Lender shall, from time to time hereunder,
     determine. Any BA Notice given by Borrower to Lender shall be irrevocable
     by Borrower;"

2.   Section 1.1.16 ("Borrowing Base") of the Credit Agreement is hereby amended
     and replaced by the following:

     "1.1.16 "BORROWING BASE" means:

          (a)  the aggregate of:

               (i) the percentage of Eligible Accounts set forth in the Contract
               Data Sheet; and

               (ii) the lesser of (x) the percentage of Eligible Credit Card
               Accounts set forth in the Contract Data Sheet; and (y) the
               Eligible Credit Card Accounts Sublimit; and

               (iii) the lesser of (a) the aggregate of (i) the percentage of
               NOLV of eligible Finished Goods Inventory set forth in the
               Contract Data Sheet and (ii) the percentage of NOLV of Eligible
               Raw Materials Inventory set

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                                     - 3 -

               forth in the Contract Data Sheet and (b) the Eligible Inventory
               Availability Limit;

          LESS:

          (b)  the aggregate of:

               (i)   the face amount of all Accepted Letters of Credit;

               (ii)  the amount of all Letter of Credit Reserves;

               (iii) the amount of all Reserves;

               (iv)  the amount of all Priority Claims;

               (v)   the amount of any Surplus Reserve; and,

               (vi)  such portion of the Non-Revolving Loan the repayment of
                     which has not been guaranteed pursuant to a guarantee
                     granted in favour of Lender by Garantie Quebec."

3.   Section 1.1.21 "Collateral Stretch Facility" is hereby deleted;

4.   Section 1.1.35 ("Early Termination Fee") of the Credit Agreement is hereby
     amended and replaced by the following:

     "1.1.35 "EARLY TERMINATION FEE" means a payment by Borrower to Lender in
     the event of (i) Borrower's terminating this Agreement pursuant to Clauses
     14.1.2 hereof, or (II) Lender's terminating this Agreement upon occurrence
     of an event of Default pursuant to Clause 14.1.3 hereof, calculated as
     follows:

          (a) if such termination occurs on or prior to the end of December 31,
          2006, the greater of the sum of $750,000 or 1.15% of the prevailing
          Maximum Amount as at the date of termination;

          (b) if such termination occurs at any time subsequent to December 31,
          2006 but prior to July 1, 2007 an amount equal to 0.75% of the Maximum
          Amount; or,

          (c) if such termination occurs on or subsequent to July 1, 2007 but
          prior to June 30, 2008, an amount equal to 0.50% of the Maximum
          Amount;"

5.   Section 1.1.39 ("Eligible Accounts") is hereby amended and replaced by the
     following:

     "1.1.39 "ELIGIBLE ACCOUNTS" means the aggregate of the Net Face Amount of
     all Accounts (other than Eligible Credit Card Accounts) created by Borrower
     or any Credit Party in the ordinary course of business which Lender, in its
     sole discretion, determines

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                                     - 4 -

     to be acceptable for purposes of advances hereunder. Without limiting
     Lender's discretion, the following shall not be Eligible Accounts:

          (a) Accounts which are outstanding for a period exceeding 90 days
          immediately following the earlier of (i) delivery of the relevant
          Inventory or performance of the relevant services or (ii) the date of
          the relevant invoice;

          (b) Accounts in respect of which Lender (if specifically requested by
          Lender) has not been provided with both (i) the Account Debtor's
          purchase order therefor and (ii) proof of delivery of the merchandise
          and/or services forming the object thereof, both in form and substance
          satisfactory to Lender;

          (c) any portion of any Accounts (to the extent not already deducted in
          arriving at the Net Face Amount thereof) which may reduce the amount
          of such Accounts and/or may be deducted therefrom by the relevant
          Account Debtor including, without limitation, all discounts, rebates,
          allowances, credits or any other deductions applicable thereto;

          (d) Accounts owed by an Account Debtor which is a Related Person;

          (e) Accounts with respect to which goods are placed on a consignment,
          guaranteed sale, "bill and hold", sale or return, sale on approval, or
          other terms by reason of which the payment by the Account Debtor may
          be conditional;

          (f) Accounts, the collection of which Lender, in its reasonable credit
          judgment, believes to be doubtful by reason of the Account Debtor's
          financial condition;

          (g) Accounts with respect to which goods have not been shipped and
          billed to the Account Debtor, the services have not been performed and
          accepted by the Account Debtor or does otherwise not represent a final
          sale;

          (h) Accounts that represent progress payments or other advance
          billings that are due prior to the completion of performance by
          Borrower of the subject contract for goods or services; and,

          (i) Accounts which are the object of any Dispute, to the extent of
          such Dispute (if such extent is clearly ascertainable);"

6.   The following definition of "Eligible Credit Card Accounts" is hereby added
     as Section 1.1.40 (a):

     "1.1.40(a) "ELIGIBLE CREDIT CARD ACCOUNTS" means Accounts (other than
     Eligible Accounts) generated by means of the sale of Inventory by Borrower,
     the payment of which has been made by means of a credit card issued by any
     major credit card issuers

<PAGE>
                                     - 5 -

     such as Visa, Mastercard or American Express, provided that same are
     outstanding for no more than five days from the date of sale in question;"

7.   The following definition of "Eligible Credit Card Accounts Sublimit" is
     hereby added as Section 1.1.40(b):

     "1.1.40(b) "ELIGIBLE CREDIT CARD ACCOUNTS SUBLIMIT" means the amount set
     forth on the Contract Data Sheet;"

8.   Section 1.1.56 ("Interest") is hereby amended and replaced by the
     following:

     "1.1.56 "INTEREST" means all interest payable by Borrower to Lender on
     Outstandings under the Credit Facilities consisting of Loan Advances
     pursuant to Clause 7.1 hereof and as set forth in the Contract Data Sheet;"

9.   The following definition of "Loan Advance(s)" is hereby added as Section
     1.1.64(a):

     "1.1.64(a) "LOAN ADVANCE(S)" means any Advance(s) other than BA
     Advance(s);"

10.  Section 1.1.74 ("Obligations") is hereby amended and replaced by the
     following:

     "1.1.74 "OBLIGATIONS" means the aggregate at any given time of all present
     and future amounts, of any nature or source whatsoever, owing to Lender by
     Borrower including:

          (a) all amounts under the Credit Agreement (including, without
          limitation, all Outstandings under the Credit Facilities, the face
          amount of all outstanding Letters of Credit as well as all Interest,
          BA Interest, Fees and Expenses);

          (b) all amounts under any other Credit Documents;

          (c) all amounts under any other contract, agreement, arrangement,
          occurrence, non-occurrence or operation of law, of any nature
          whatsoever, whereby Lender becomes a creditor of Borrower; and,

          (d) the full amount, from time to time, of the Other Indebtedness;"

11.  Section 1.1.76 ("Outstandings") is hereby amended and replaced by the
     following:

     "1.1.76 "OUTSTANDINGS" means the full amount of all Loan Advances and BA
     Advances and the face amount of any Bankers' Acceptances owing and
     outstanding under all of the Credit Facilities or the relevant Credit
     Facility (as the case may be), any US Dollar amount of which, for the
     purpose of calculating Outstandings, may (at Lender's discretion) be
     converted to Canadian dollars at the then prevailing selling rate of US
     Dollar to Canadian Dollar exchange of the Bank;"

12.  The following definition of "Seasonal Advances" is hereby added as Section
     1.1.88(a):

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                                     - 6 -

     "1.1.88(a) "SEASONAL ADVANCES" means either Loan Advances or BA Advances
     made to the Borrower under the Revolving Loan which are directly
     attributable to that portion of the percentage of NOLV of Eligible Finished
     Goods Inventory which exceeds 92%;"

13.  The following definition of "Seasonal Advance Interest Rate" is hereby
     added as Section 1.1.88(b):

     "1.1.88(b) "SEASONAL ADVANCE INTEREST RATE" means:

          (a)  for Loan Advances which constitute Seasonal Advances in Dollars,
               a rate equal to the Prime Rate plus 4.0% per annum;

          (b)  for Loan Advances which constitute Seasonal Advances in US
               Dollars, a rate equal to the Prime Rate plus 4.0% per annum; and

          (c)  for BA Advances which constitute Seasonal Advances, a rate equal
               to the BA Equivalent Rate for a BA Interest Period of 30 days,
               plus 5.5% per annum;"

14.  Section 3.1 is hereby amended and replaced by the following:

     "SECTION 3.1 Subject to the terms and conditions of the Credit Documents,
     Lender may, in its discretion, make loans and re-make loans to Borrower on
     a revolving basis in Dollars and/or US Dollars (collectively the "REVOLVING
     LOAN(S)") by:

          3.1.1 making Advances;

          3.1.2 issuing or causing the issuance of Letters of Credit;

          3.1.3 if specifically permitted in the Contract Data Sheet and subject
          to the provisions of Section 7.6 hereof, making BA Advances (which BA
          Advances shall be made in Dollars only); and/or

          3.1.4 if specifically permitted in the Contract Data Sheet, accepting
          or causing the acceptance of Bankers' Acceptances."

15.  Section 7 is hereby amended and replaced by the following:

     "7. INTEREST, BA INTEREST, BA ADVANCES, FEES AND EXPENSES

     7.1 All Outstandings under the Credit Facilities consisting of Loan
     Advances shall bear Interest and any overdue interest shall in turn bear
     Interest at the hereafter described rates, calculated and payable as
     hereinafter set forth. All Outstandings under the Credit Facilities
     consisting of BA Advances shall bear BA Interest and any overdue BA
     Interest shall in turn bear Interest at the hereafter described rates,
     calculated and payable as hereafter set forth.

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                                     - 7 -

     7.2 All Interest shall be payable by Borrower to Lender in arrears on the
     last Business Day of each month, calculated on the average daily
     Outstandings resulting from Advances under the Revolving Loan and the
     Non-Revolving Loan (as the case may be) at the rates hereafter set forth,
     commencing with the first payment of Interest by Borrower to Lender on the
     last Business Day of the month during which the initial Advance occurs
     hereunder. Interest on overdue Interest will be calculated on the same
     basis but will be compounded monthly and payable upon demand. All Interest
     shall be payable both before as well as after any demand for payment, any
     Default or any judgment.

     7.3 The rates of Interest on all Outstandings consisting of Loan Advances
     under:

          7.3.1 the Revolving Loan (other than any Authorized Overadvance) shall
                be:

                (a) for Dollars, a rate equal to the Revolving Loan Rate for
                Dollars (and, to the extent applicable, a rate equal to the
                Seasonal Advance Interest Rate); and,

                (b) for US Dollars, a rate equal to the Revolving Loan Rate for
                US Dollars (and, to the extent applicable, a rate equal to the
                Seasonal Advance Interest Rate);

          7.3.2 any Authorized Overadvance shall be:

                (a) for Dollars, a rate equal to the Authorized Overadvance Rate
                for Dollars: and,

                (b) for US Dollars, a rate equal to the Authorized Overadvance
                Rate for US Dollars; and

          7.3.3 any Non-Revolving Loan(s) shall be:

                (a) for Dollars, a rate equal to the Non-Revolving Loan Rate for
                Dollars: and,

                (b) for US Dollars, a rate equal to the Non-Revolving Loan Rate
                for US Dollars,

                based upon the weighted average of Prime Rate during each month
                for which the foregoing rates of Interest are calculated.

     7.4 All BA Interest shall be payable by Borrower to Lender on each
     particular BA Advance in arrears on the earlier of:

                7.4.1 the Business Day upon which the applicable BA Interest
                Period ends; or,

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                                     - 8 -

                7.4.2 the 90th day immediately following the commencement of the
                applicable BA Interest Period (or, if such day is not a Business
                Day, the nearest Business Day immediately preceding such day).

     All BA Interest shall be payable both before as well as after any demand
     for payment, any Default or any judgment.

     7.5 The rate of BA Interest on all Outstandings consisting of BA Advances
     under the Revolving Loan shall be the BA Loan Rate (and the Seasonal
     Advance Interest Rate, to the extent applicable).

     7.6 In the event that, from time to time hereunder, Lender makes or
     re-makes BA Advances under the Revolving Loan, then:

          7.6.1 each BA Advance shall be made only after Lender shall have
                received the applicable BA Notice;

          7.6.2 each BA Advance shall be made for the amount stipulated in the
                applicable BA Notice and for and during the BA Interest Period
                stipulated in the applicable BA Notice;

          7.6.3 each BA Advance shall be made only to the extent that the Bank
                is able to furnish to Lender:

                (a) the BA Equivalent Rate for the BA Interest Period requested
                by the Borrower in the applicable BA Notice;

                (b) funds are available to Lender from the Bank based on the BA
                Equivalent Rate for the BA Interest Period requested by Borrower
                in the applicable BA Notice;

          7.6.4 the full amount of each BA Advance shall be completely repaid by
                Borrower to Lender at the end of each applicable BA Interest
                Period by either:

                (a) another BA Advance (in accordance with the provisions hereof
                in general and Clauses 7.6.1, 7.6.2 and 7.6.3 hereof in
                particular); or,

                (b)    a Loan Advance; and,

          7.6.5 in the absence of the full amount of a BA Advance being
                completely repaid by Borrower at the end of the applicable BA
                Interest Period by another BA Advance, then same shall be
                completely repaid by a Loan Advance and Borrower shall be
                deemed, for all purposes, to have

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                                     - 9 -

                irrevocably instructed and authorized Lender to make such Loan
                Advance in order to fully repay the particular BA Advance.

     7.7 In the event that, from time to time hereunder, Lender makes loans or
     re-makes loans to Borrower under the Revolving Loan and/or the
     Non-Revolving Loan by Lender's accepting or arranging for the acceptance of
     Bankers' Acceptances, then:

          7.7.1 any such Bankers' Acceptances so accepted shall be in multiples
                of CDN$100,000.00 or US$100,000.00 (as the case may be) and
                shall be for terms equal to multiples of 30 days and not to
                exceed 90 days;

          7.7.2 upon acceptance of any Bankers' Acceptance, the face value of
                each such accepted Bankers' Acceptance shall be deemed, for all
                purposes to constitute Outstandings under the Revolving Loan or
                the Non-Revolving Loan (as the case may be), repayable by
                Borrower to Lender in accordance with the provisions of the
                present Credit Agreement;

          7.7.3 upon acceptance of any Bankers' Acceptances, Borrower shall
                immediately pay to Lender all Bankers' Acceptance Costs
                applicable thereto; and,

          7.7.4 in addition to all Bankers' Acceptance Costs, upon acceptance of
                any Bankers' Acceptances, Borrower shall immediately pay to
                Lender the Bankers' Acceptance Fee applicable thereto;

     7.8 All rates of Interest, BA Interest and Bankers' Acceptance Fees under
     the Revolving Loan, any Authorized Overadvance and any Non-Revolving
     Loan(s) hereunder may be computed either on the basis of a year (ie. 365
     days or 366 days in a leap year) or on the basis of a 360 day period. In
     the event computed on the basis of 360 day period, then the applicable
     Revolving Loan Rate, BA Loan Rate, Authorized Overadvance Rate,
     Non-Revolving Loan Rate, and/or Bankers' Acceptance Fees, as the case may
     be, shall constitute rates on a per annum (ie. yearly) basis equivalent to
     such rates divided by 360 and multiplied by the number of days in any given
     year (being .01389 times greater than such rates in any ordinary year and
     .01667 times greater than such rates in any leap year).

     7.9 In the event of occurrence of Default, each of the Revolving Loan Rate,
     the BA Loan Rate, the Authorized Overadvance Rate, the Non-Revolving Loan
     Rate and the Bankers' Acceptance Fees shall be automatically increased and
     set at the highest Revolving Loan Rate designated herein, as further
     increased by two percentage points (2%) effective as of the occurrence of
     such Default and continuing for so long as such Default is outstanding. In
     the event of existence of any Unauthorized Overadvance, Borrower shall
     immediately pay to Lender (and Lender shall be entitled to charge to
     Borrower's account as part of the Revolving Loans) the Overadvance Fee.
     Such

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                                     - 10 -

     Overadvance Fee shall be in addition to and not constitute part of the
     Interest and the BA Interest payable hereunder.

     7.10 In addition to, and not constituting part of, the Interest and the BA
     Interest, Borrower shall pay to Lender:

          7.10.1 the Arrangement Fee, which shall be paid in full by Borrower to
                Lender immediately upon the making of the first Advance
                hereunder;

          7.10.2 the Monitoring Fee, which shall be paid, on a monthly basis on
                the last day of each calendar month, by Borrower to Lender
                during each calendar month (with a part of any calendar month
                being counted as a full calendar month) commencing at the end of
                the first calendar month immediately following the Effective
                Date and thereafter, until both the Obligations shall have been
                fully paid and discharged and Borrower is no longer entitled to
                avail itself of the Credit Facilities;

          7.10.3 the Standby Fee, which shall be paid on a monthly basis on the
                last day of each calendar month, by Borrower to Lender during
                each calendar month (with a part of any calendar month being
                counted as a full calendar month) commencing at the end of the
                first calendar month immediately following the Effective Date
                and thereafter until both the Obligations shall have been fully
                paid and discharged and Borrower is no longer entitled to avail
                itself of the Credit Facilities;

          7.10.4 the Overadvance Fee for and during each calendar month during
                which the Overadvance Fee is applicable (with a part of any
                calendar month being counted as a full calendar month); and,

          7.10.5 all other Fees hereunder as and when due hereunder; and,

          7.10.6 all Expenses as and when due hereunder.

     7.11 None of the Fees or Expenses shall, under any circumstances, be deemed
     to constitute part of the Interest or BA Interest. All Fees and Expenses,
     on the one hand, and all Interest, on the other hand, shall operate and be
     paid by Borrower to Lender independently of one another."

16.  Sections 8.2 and 8.3 are hereby amended and replaced by the following:

     "8.2 The receipt of any Collections by Lender shall be applied on the
     Settlement Date to reduce the Outstandings under the Revolving Loan only to
     the extent that such Collection is honoured for payment. Should any
     Collection not be honoured for payment, then Borrower shall be deemed not
     to have made such payment on the Settlement Date and all Interest and BA
     Interest will be re-calculated accordingly.

<PAGE>
                                     - 11 -

     8.3 The Loan Account will be charged with all Advances, Interest, BA
     Interest, Fees and Expenses and any other payment obligation of Borrower
     hereunder. In accordance with Clause 8.2 hereof, the Loan Account will be
     credited with all payments received by Lender from Borrower or for
     Borrower's account, including all Collections."

17.  Section 12.1.2 is hereby amended and replaced by the following:

     "12.1.2 Borrower shall pay all Interest and BA Interest to Lender on the
     respective due dates therefor hereunder."

18.  Section 12.3 is hereby amended and replaced by the following:

     "12.3 Should Borrower or any Credit Party fail to pay when due any amounts
     hereunder (other than repayment of Outstandings under the Credit
     Facilities, Interest, BA Interest, Fees and Expenses) or fail to perform
     any of their obligations hereunder, Lender may do so, after Notice thereof
     to Borrower. In such event, Borrower shall pay to Lender, upon Lender's
     simple demand therefor, all amounts so paid by Lender together with
     Interest thereon. Any such payments made by Lender shall not negate or
     remedy any Default which may have existed as a result of any of the
     foregoing."

19.  Sections 13.1.3 and 13.1.6 are hereby amended and replaced by the
     following:

     "13.1.3 the failure by Borrower to pay, as and when due hereunder, any
     Interest and any BA Interest where same remains unremedied following the
     expiry of five (5) days immediately following Notice thereof by Lender to
     Borrower;"

     "13.1.6 the failure by Borrower to fully repay any other amounts which may
     become owing by Borrower to Lender under any of the Credit Documents (other
     than Outstandings, the face amount of all outstanding Letters of Credit,
     Interest, BA Interest, Fees, Expenses or periodic capital repayments of the
     Non-Revolving Loan) and same remaining unpaid for a period of 14 days
     immediately following Notice thereof by Lender to Borrower;"

20.  Section 14.2 is hereby amended and replaced by the following:

     "14.2 Borrower expressly acknowledges that the nature, calculation and
     amount of the Early Termination Fee as well as the Minimum Term have been
     agreed to by Lender and Borrower as part of the overall agreement as to the
     Credit Facilities to be made available by Lender to Borrower hereunder and
     the pricing of such Credit Facilities (which pricing includes the rate(s)
     of Interest and BA Interest as well as the nature and amounts of Fees and
     Expenses hereunder). Borrower furthermore acknowledges that the nature,
     calculation and amount of the Early Termination Fee and the Minimum Term
     are an integral part of and partial consideration for Lender's making the
     Credit Facilities Available to Borrower and the pricing thereof and that,
     in such context, the nature, calculation and amount of the Early
     Termination Fee and the Minimum Term are fair and reasonable in all
     respects;"

21.  Lender and Borrower hereby confirm that the business plan of Borrower for
     the period of April 1, 2005 through March 31, 2006 annexed as Exhibit I
     hereto, will constitute the

<PAGE>
                                     - 12 -

     sole business plan to serve as the basis of Borrower's projections and
     covenants for the purposes of the Loan Agreement for the period in
     question.

22.  The Contract Data Sheet is hereby amended and replaced by the contract data
     sheet annexed to the present letter agreement and initialed and signed by
     Lender, Borrower and the Guarantor.

     Concurrently with the execution hereof, Borrower shall pay to GMACCF an
extension fee of $81,250.00, which fee shall be deemed fully earned by us upon
receipt thereof and which may be immediately debited from of the Borrower's
account as constituting part of the Obligations; Borrower's execution hereof
constituting GMACCF's authority to do so.

     As a further condition to the implementation of the present amendment
letter, Borrower shall deliver to GMACCF three (3) originals of a duly completed
and executed Security Agreement governed by the laws of the State of New York.

     Save and except as expressly stipulated herein, the Credit Agreement shall
be and remain in full force and effect in accordance with the terms, conditions
and contents thereof. Nothing herein contained shall be deemed to constitute a
waiver or renunciation by us to any of the Borrower's undertakings, covenants,
representations, warranties or Obligations other than as expressly set out
herein.

     The parties hereto acknowledge that they have requested and are satisfied
that the foregoing, as well as all notices, actions and legal proceedings be
drawn up in the English language./Les parties a cette convention reconnaissent
qu'elles ont exige que ce qui precede ainsi que tous avis, actions et procedures
legales soient rediges et executes en anglais et s'en declarent satisfaites.

EXECUTED AT THE CITY OF MONTREAL, PROVINCE OF QUEBEC, THIS 13TH DAY OF
SEPTEMBER, 2005.

                                    GMAC COMMERCIAL FINANCE CORPORATION-
                                    CANADA/SOCIETE FINANCIERE
                                    COMMERCIALE GMAC-CANADA

                                    Per:  /s/ Francis D. Garvin
                                    --------------------------------------------
                                    Francis D. Garvin, authorized representative

AGREED AND ACCEPTED:

HENRY BIRKS & SONS INC./HENRY BIRKS & FILS INC.
Per:

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

<PAGE>
                                     - 13 -

HENRY BIRKS & SONS HOLDINGS INC./HENRY BIRKS & FILS SOCIETE DE PORTEFEUILLE INC.

Per:

/s/ Marco Pasteris
--------------------------------------------
Name: Marco Pasteris
Title: Chief Operating Officer

HENRY BIRKS & SONS U.S., INC.

Per:

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

<PAGE>

                               CONTRACT DATA SHEET

This is the Amended Contract Data Sheet to and forming part of the Amended and
Restated Accounts Receivable Management, Loan & Security Agreement between GMAC
Commercial Finance Corporation - Canada, as Lender, and Henry Birks & Sons Inc.,
as Borrower, bearing formal date July 1, 2004, as amended pursuant to amendment
letters dated October 22, 2004, July 21, 2005 and the amendment letter executed
concurrently herewith. This Contract Data Sheet replaces the former Contract
Data Sheet in its entirety.

1.   CREDIT FACILITIES

1.1. REVOLVING LOAN:

     1.1.1. Maximum Amount:             $65,000,000.00

     1.1.2. Eligible Accounts:          80 %

     1.1.3. Eligible Credit Card Accounts: 85%

     1.1.4. Eligible Credit Card Accounts Sublimit: $2,000,000.00

     1.1.5. NOLV of Eligible Finished Goods Inventory:

           (a) 85 % during the period of December 21 through February 15;

           (b) 92% during the periods of August 16 through December 20 and
           February 16 through March 15;

           (c) 95% during the period of March 16 through August 15, 2006;

           (d) 94% during the period of March 16 through August 15, 2007; and

           (e) 93% during the period of March 16 through June 30, 2008.

     1.1.6. NOLV of Eligible Raw Materials Inventory: 100 %

     1.1.7. Eligible Inventory Availability Limit: N/A

     1.1.8. Value of Additional Collateral: Not Applicable

     1.1.9. Overadvance Availability:        Not Applicable

1.2. NON-REVOLVING LOAN(s):

     1.2.1. Loan corresponding to Loan number 7015-82 in the principal amount of
     $400,000.00, first disbursed on October 16, 2000 maturing on October 1,
     2005, repayable in equal

<PAGE>
                                     Page 2

     consecutive monthly installments of $6,666.66 and bearing interest at the
     annual rate equal to the Prime Rate plus 2.50% per annum, the balance of
     which was $20,000.37 as at July 26, 2005;

     1.2.2. Loan corresponding to Loan number 7015-83 in the principal amount of
     $2,567,353.14, first disbursed on April 18, 2001 maturing on January 1,
     2006, repayable in equal consecutive monthly installments of $50,000.00 and
     bearing interest at the annual rate equal to the Prime Rate plus 2.50% per
     annum, the balance of which was $295,613.14 as at July 26, 2005;

     1.2.3. Loan corresponding to Loan number 7015-84 in the principal amount of
     $2,901,730.75, first disbursed on May 14, 2001 maturing on September 1,
     2006, repayable in equal consecutive monthly installments of $50,000.00 and
     bearing interest at the annual rate equal to the Prime Rate plus 0.625% per
     annum, the balance of which was $699,816.23 as at July 26, 2005;

2.   INTEREST

2.1. REVOLVING LOAN RATE:

     2.1.1. As and from July 31, 2005, with effect retroactive to July 1, 2005
     and subject to both section 2.1.2 hereof and, where applicable, the
     Seasonal Advance Rate, all Outstandings resulting from Advances under the
     Revolving Loan in Dollars, shall bear interest at the following annual
     interest rates based on the corresponding Borrowing Base Surplus as
     verified on a quarterly basis, based on the average Borrowing Base Surplus
     for the immediately preceding quarter, as set forth in the table below:

          BORROWING BASE SURPLUS                  APPLICABLE REVOLVING LOAN RATE
          ----------------------                  ------------------------------
          $4,000,000 or more                      Prime Rate
          less than $4,000,000                    Prime Rate plus 0.25%

     2.1.2. All Outstandings resulting from Advances under the Revolving Loan in
     Dollars shall bear interest at the following annual interest rates based on
     the corresponding Borrowing Base Surplus as verified on a quarterly basis,
     based on the average Borrowing Base Surplus for the immediately preceding
     quarter, as set forth in the table below, in the event of the occurrence of
     either of the following events, effective as at the corresponding dates
     indicated below:

          (a) in the event that the majority of the minority group of public
          shareholders of Mayor's vote to reject the proposed transaction
          whereby the outstanding shares held by the minority public
          shareholders of Mayor's Jewelers, Inc. ("Mayor's") are

<PAGE>
                                     Page 3

          exchanged for shares in the capital stock of Borrower (the "Merger"),
          in which case such interest rates shall be effective as and from the
          occurrence of such event, unless such event occurs prior to October
          31, 2005, in which case such interest rates shall be effective as and
          from October 31, 2005; or

          (b) the Merger is not completed on or before December 31, 2005, in
          which case such interest rates shall be effective as and from January
          1, 2006;

          BORROWING BASE SURPLUS              APPLICABLE REVOLVING LOAN RATE
          ----------------------              ------------------------------
          Greater than  $15,000,000           Prime Rate
          $3,000,000 - $15,000,000            Prime Rate plus 0.25%
          Less than $3,000,000                Prime Rate plus 0.50%

     2.1.3. As and from July 31, 2005 and subject to section 2.1.4 hereof and,
     where applicable, the Seasonal Advance Rate, all Outstandings resulting
     from Advances under the Revolving Loan in US Dollars, shall bear interest
     at the following annual interest rates based on the corresponding Borrowing
     Base Surplus as verified on a quarterly basis, based on the average
     Borrowing Base Surplus for the immediately preceding quarter, as set forth
     in the table below:

          BORROWING BASE SURPLUS              APPLICABLE REVOLVING LOAN RATE
          ----------------------              ------------------------------
          $4,000,000 or more                  Prime Rate
          less than $4,000,000                Prime Rate plus 0.25%

     2.1.4. All Outstandings resulting from Advances under the Revolving Loan in
     US Dollars shall bear interest at the following annual interest rates based
     on the corresponding Borrowing Base Surplus as verified on a quarterly
     basis, based on the average Borrowing Base Surplus for the immediately
     preceding quarter, as set forth in the table below, in the event of the
     occurrence of either of the following events, effective as at the
     corresponding dates indicated below:

          (a) in the event that the majority of the minority group of public
          shareholders of Mayor's vote to reject the Merger, in which case such
          interest rates shall be effective as and from the occurrence of such
          event, unless such event occurs prior to October 31, 2005, in which
          case such interest rates shall be effective as and from October 31,
          2005; or

          (b) the Merger is not completed on or before December 31, 2005, in
          which case such interest rates shall be effective as and from January
          1, 2006;

          BORROWING BASE SURPLUS              APPLICABLE REVOLVING LOAN RATE
          ----------------------              ------------------------------
          Greater than  $15,000,000           Prime Rate
          $3,000,000 - $15,000,000            Prime Rate plus 0.25%
          Less than $3,000,000                Prime Rate plus 0.50%

<PAGE>
                                     Page 4

2.2. AUTHORIZED OVERADVANCE RATE:  Not Applicable

2.3. NON-REVOLVING LOAN RATE:

     2.3.1. Loan 7015-81: annual rate equal to the Prime Rate plus 0.375%;

     2.3.2. Loan 7015-82: annual rate equal to the Prime Rate plus 2.50%

     2.3.3. Loan 7015-83: annual rate equal to the Prime Rate plus 2.50%

     2.3.4. Loan 7015-84: annual rate equal to the Prime Rate plus 0.625%

3.   BANKERS' ACCEPTANCES

3.1.        Permitted
     -----
       X    Not Permitted
     -----

3.2. BANKERS' ACCEPTANCE FEES:          Not Applicable

4.   BA ADVANCES/BA INTEREST

BA ADVANCES:

       X    Permitted
     -----

            Not Permitted
     -----

4.1. BA LOAN RATE:

          4.1.1. As and from July 31, 2005 and subject to section 4.1.2 hereof
          and, where applicable, the Seasonal Advance Rate, all Outstandings
          resulting from Advances under the Revolving Loan in Dollars, shall
          bear interest at the following annual interest rates based on the
          corresponding Borrowing Base Surplus as verified on a quarterly basis,
          based on the average Borrowing Base Surplus for the immediately
          preceding quarter, as set forth in the table below:

<PAGE>
                                     Page 5

          BORROWING BASE SURPLUS         APPLICABLE REVOLVING LOAN RATE
          ----------------------         ------------------------------
          Greater than $13,000,000       BA Equivalent Rate plus 1.25% per annum
          $9,000,000 - $13,000,000       BA Equivalent Rate plus 1.50% per annum
          $4,000,000 - <$9,000,000       BA Equivalent Rate plus 1.75% per annum
          Less than $4,000,000           BA Equivalent Rate plus 2.00% per annum

          4.1.2. All Outstandings resulting from Advances under the Revolving
          Loan in Dollars shall bear interest at the following annual interest
          rates based on the corresponding Borrowing Base Surplus as verified on
          a quarterly basis, based on the average Borrowing Base Surplus for the
          immediately preceding quarter, as set forth in the table below, in the
          event of the occurrence of either of the following events, effective
          as at the corresponding dates indicated below:

               (a) in the event that the majority of the minority group of
               public shareholders of Mayor's vote to reject the Merger, in
               which case such interest rates shall be effective as and from the
               occurrence of such event, unless such event occurs prior to
               October 31, 2005, in which case such interest rates shall be
               effective as and from October 31, 2005; or

               (b) the Merger is not completed on or before December 31, 2005,
               in which case such interest rates shall be effective as and from
               January 1, 2006;

          BORROWING BASE SURPLUS        APPLICABLE REVOLVING LOAN RATE
          ----------------------        ------------------------------
          Greater than $15,000,000      BA Equivalent Rate plus 1.75% per annum
          $3,000,000 - $15,000,000      BA Equivalent Rate plus 2.00% per annum
          Less than $3,000,000          BA Equivalent Rate plus 2.25% per annum

5.   LETTERS OF CREDIT

5.1. LETTER OF CREDIT LIMIT:            N/A

5.2. LETTER OF CREDIT RESERVES:         50 % of the face amount of all
                                        Unaccepted Letters of Credit

5.3. LETTER OF CREDIT FEE:              0.25 % per month, calculated on the
                                        average daily balance of outstanding
                                        Letters of Credit for each month

6.   FEES

<PAGE>
                                     Page 6

6.1. ARRANGEMENT FEE:                   N/A

6.2. MONITORING FEE:                    $7,500.00 per month plus an additional
                                        amount of $5,000.00 per month during the
                                        months of February through June,
                                        inclusive

6.3. STANDBY FEE:                       0.25 % per annum

7.   CREDIT PARTIES                     Henry Birks & Sons U.S., Inc.

8.   GUARANTOR                          Henry Birks & Sons U.S., Inc.

                                        Henry Birks & Sons Holdings Inc.
                                        (formerly Borgosesia Acquisitions Corp.)

9.   TERM

9.1. EFFECTIVE DATE:                    July 1, 2005

9.2. MINIMUM TERM:                      3 consecutive Contract Years as and from
                                        the Effective Date.

10.  ADDRESS FOR BORROWER AND ANY CREDIT PARTIES:

     1240 Phillips Square
     Montreal, Quebec
     H3B 3H4

11.  PERMITTED CHARGES:

     -    Rights in favour of vendors having sold goods to the Borrower by way
          of consignment or conditional sale;

     -    Rights in favour of lessors of equipment and/or machinery which have
          been leased by lease or capital lease to the Borrower;

<PAGE>
                                     Page 7

     -    Movable Hypothec in the amount of $3,120,000 registered in favour of
          Scojen Limited Partnership and Rhode Island Industrial Recreational
          Building Authority on April 6, 2005 under number 05-0188997-0001, on
          strict condition that Scojen Limited Partnership and Rhode Island
          Industrial Recreational Building Authority cede priority of all such
          hypothecary rights in favour of the Lender on terms and conditions
          satisfactory to the Lender;

     -    Movable hypothec in the amount of $5,400,000 registered in favour of
          La Financiere du Quebec on April 24, 2003 under number
          03-0193616-0001, on strict condition that La Financiere du Quebec cede
          priority of all such hypothecary rights in favour of the Lender on
          terms and conditions satisfactory to the Lender;

     -    Movable hypothec in the amount of $1,500,000 registered in favour of
          National Bank Trust Inc. on August 21, 2002 under number
          02-0368048-0001, on strict condition that National Bank Trust Inc.
          cede priority of all such hypothecary rights in favour of the Lender
          on terms and conditions satisfactory to the Lender;

12.   SURPLUS REQUIREMENTS:             For the purposes of establishing the
                                        applicable Revolving Loan Rate and
                                        applicable BA Loan Rate, the Borrowing
                                        Base Surplus shall be calculated by
                                        applying the advance rate of 85% of NOLV
                                        of Eligible Finished Goods Inventory.

13.   SURPLUS RESERVE:                  N/A

14.   FINANCIAL COVENANTS:

Borrower shall maintain the following financial covenants, each to be calculated
on a non-consolidated basis:

14.1. The aggregate of all Capital Expenditures during any Fiscal Year shall be
      limited to 120% of the projected amount as set forth in the business plan
      which has been (and which shall on an annual basis be) submitted to and
      approved by Lender (the "PLAN"). Based on the foregoing, the aggregate of
      all capital expenditures for the Fiscal Year ending March 31, 2006 shall
      not exceed $6,820,000; and

14.2. Borrower shall have and maintain EBITDA, tested quarterly on a Rolling
      Basis, of not less than 80% of the projected EBITDA as set forth in the
      Plan.

<PAGE>
                                     Page 8

15.   SPECIAL COVENANTS:

Borrower and the Guarantor, Henry Birks & Sons Holdings Inc. shall not
amalgamate nor shall Henry Birks & Sons Holdings Inc. distribute any of its
assets outside of the ordinary course of business or be the object of any
winding-up, dissolution, restructuring or corporate reorganization of any kind
or nature unless and until both:

15.1. Lender shall have received a detailed written outline regarding any such
      proposed transaction no less than thirty (30) days prior to the intended
      date of such transaction; and

15.2. Lender shall have consented to such proposed transaction no less than at
      least fifteen (15) days prior to the conclusion thereof, which consent
      will not be unreasonably withheld by Lender.

16.   REPORTING:

Borrower shall provide the following financial information to Lender:

16.1. For the Fiscal Year ends of March 2005 and March 2006 only, in lieu of
      audited financial statements of Borrower prepared in accordance with GAAP,
      Borrower shall provide to Lender, on an annual basis and within 120 days
      of each Fiscal Year end, the following:

          (a)  annual audited consolidating financial statements of Borrower and
               Mayor's Jewellers, Inc. prepared in accordance with generally
               accepted accounting principles, as in effect from time to time in
               the United States, consistently applied ("US GAAP");

          (b)  annual unaudited unconsolidated financial statements of Borrower,
               prepared in accordance with GAAP; and

          (c)  a reconciliation pursuant to which the unaudited financial
               statements of Borrower referred to in subparagraph (b) hereof are
               to be referenced and compared to the annual audited consolidated
               financial statements referred to in subparagraph (a) hereof.

      Notwithstanding the foregoing, in the event that the Merger prior to the
      March 2006 Fiscal Year end of Borrower, then, in such event, Borrower
      shall deliver audited annual financial statements prepared in accordance
      with US GAAP for the March 2006 and subsequent Fiscal Year ends. It is
      further understood and agreed that, in the event that the Merger is not
      concluded prior to the March 2007 Fiscal Year end of Borrower, Borrower
      shall deliver to Lender annual audited consolidated and unconsolidated
      financial statements for the March 2007 Fiscal Year End and for all
      subsequent Fiscal Year end;

16.2. On a quarterly basis, Compliance Certificates signed by the chief
      financial officer, attesting to financial covenant requirements;

<PAGE>
                                     Page 9

16.3. On a monthly basis, as at the end of each accounting month, to be
      delivered no later than 30 days following each accounting month end:

      16.3.1. financial statements prepared by management and signed by the
      chief financial officer of Borrower;

      16.3.2. a report of the chief financial officer, signed by the chief
      financial officer of Borrower;

      16.3.3. a detailed aged listing of Accounts in form and substance
      satisfactory to Lender within 15 days of each month end; and

      16.3.4. a detailed aged listing of accounts payable, to be delivered to
      Lender within 15 days of each month end;

16.4. On a weekly basis, detailed Inventory Declaration in form and substance
      satisfactory to Lender within 3 days of each weekly period;

16.5. A month by month projected operating budget and cashflow for borrower in a
      form and substance satisfactory to Lender, at such intervals Lender may
      from time to time request; and

16.6. Such other additional information and documents as Lender may, from time
      to time and at such intervals, request from Borrower.

17.   SECURITY:

17.1. The hypothecation (in such amount as may be designated by Lender from time
      to time) and security interests in favour of Lender of all of Borrower's
      and each Credit Party's present and future movable and personal property,
      whether corporeal or incorporeal, tangible or intangible, of any nature
      whatsoever, wherever situated, properly perfected in all jurisdictions
      where any such property is or may hereafter be situated, creating a
      first-ranking hypothec and security interest in Lender's favour thereon
      except for the Permitted Charges;

17.2. An unlimited Guarantee executed by Henry Birks & Sons U.S., Inc. in favour
      of the lender, with respect to any and all obligations due from time to
      time by Borrower to Lender supported by a general security agreement in
      favour of Lender charging all of such guarantor's present and future
      personal property, tangible and intangible, wherever situated, properly
      perfected in all jurisdictions where any such property is or may hereafter
      be situated, creating a first-ranking hypothec and security interest in
      Lender's favour thereon except for the Permitted Charges.

<PAGE>
                                    Page 10

LENDER:                             GMAC COMMERCIAL FINANCE CORPORATION -
                                    CANADA/SOCIETE FINANCIERE COMMERCIALE GMAC -
                                    CANADA

                                    Per:

                                    /s/  Francis D. Garvin
                                    ----------------------------------------
                                    Francis D. Garvin, authorized representative

BORROWER:                           HENRY BIRKS & SONS INC.

                                    Per:

                                    /s/  Thomas A. Andruskevich
                                    ----------------------------------------
                                    Thomas A. Andruskevich
                                    President and Chief Executive Officer

CREDIT PARTY:                       HENRY BIRKS & SONS U.S., INC.

                                    Per:

                                    /s/  Thomas A. Andruskevich
                                    ----------------------------------------
                                    Thomas A. Andruskevich
                                    President and Chief Executive Officer

GUARANTOR:                          HENRY BIRKS & SONS U.S., INC.

                                    Per:

                                    /s/  Thomas A. Andruskevich
                                    ----------------------------------------
                                    Thomas A. Andruskevich
                                    President and Chief Executive Officer

                                    HENRY BIRKS & SONS HOLDINGS INC./HENRY BIRKS
                                    ET FILS, SOCIETE DE PORTEFEUILLE INC.

                                    Per:

                                    /s/  Marco Pasteris
                                    ----------------------------------------
                                    Marco Pasteris
                                    Chief Operating Officer

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