Document:

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                                                                   Exhibit 10.11

                                OPTION AGREEMENT

THIS OPTION AGREEMENT (the "AGREEMENT") is entered as of March 15, 2005 to
replace the option agreement dated February 5th , 2005 which is hereby cancelled

BETWEEN:                           HENRY BIRKS & SONS INC., / HENRY BIRKS ET
                                   FILS INC. (the "BORROWER")

AND:                               GMAC COMMERCIAL FINANCE CORPORATION -
                                   CANADA / SOCIETE FINANCIERE COMMERCIALE
                                   GMAC - CANADA ("GMAC")

AND:                               HENRY BIRKS & SONS HOLDINGS INC. / SOCIETE
                                   DE PORTEFEUILLE HENRY BIRKS ET FILS INC. (the
                                   "PARENT")

      WHEREAS, on July 23, 1998, the Borrower, GMAC (then known as BNY Financial
Corporation - Canada / Corporation Financiere BNY - Canada) and the Parent (then
known as Borgosesia Acquisitions Corporation / Corporation d'Acquisitions
Borgosesia) entered into an agreement (the "AMENDMENT AGREEMENT") pursuant to
which the Parent confirmed having irrevocably given and granted to GMAC the
option to purchase 11,896 Common shares (adjusted so as to equal 0.50% of all
then issued and outstanding shares of all classes and categories in the
Borrower's capital stock) for the purchase price of One Dollar (Cdn.$1.00) per
share (to a maximum of Cdn.$12,000) (the "PARENT'S OPTION") exercisable by GMAC
at any time prior to April 30, 2008, subject to certain conditions;

      WHEREAS the Borrower, GMAC and the Parent now wish to cancel the Parent's
Option and to replace it by the New Option (as defined below); and

      WHEREAS the Borrower and GMAC are party to that certain "Amended and
Restated Accounts Receivable Management, Loan & Security Agreement" bearing
formal date July 1, 2004 (the "Loan Agreement");

      NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

1.    The Parent's Option is hereby cancelled and replaced by the New Option (as
      defined below).

2.    The Borrower hereby irrevocably grants to GMAC the option to purchase
      46,845 Class A Voting Shares in its share capital for the purchase price
      of Cdn.$0.256 per share (the "NEW OPTION"), exercisable, in whole or in
      part, by GMAC at any time prior to April 30, 2008 by GMAC sending to the
      Borrower, to the address set forth in the Amendment Agreement, one or more
      written notices specifying the number of Class A Voting Shares with
      respect to which it wishes to exercise the New Option. The written
      notice(s) must be accompanied by a certified cheque to the order of the
      Borrower, in the amount of the applicable purchase price for such Class A
      Voting Shares. Immediately following the

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                                      -2-

      receipt of such notice(s) and payment(s), the Borrower shall issue the
      Class A Voting Shares underlying the New Option (or any portion thereof
      being exercised) and shall transmit to GMAC the share certificate(s)
      representing such Class A Voting Shares. The number of shares to which
      GMAC shall be entitled pursuant to the New Option shall not be adjusted in
      the event the Borrower's share capital is increased or decreased, nor
      shall the New Option be affected in any way by virtue of any class of
      shares of the capital stock of the Borrower becoming listed on a public
      securities exchange.

3.    The New Option granted hereby is wholly independent, shall function wholly
      independently from the Loan Agreement and shall remain in full force and
      effect notwithstanding the termination of the Loan Agreement and/or
      repayment of all Obligations (as such term is defined in the Loan
      Agreement) due under the Loan Agreement. In addition, the failure by the
      Borrower to respect the terms of the present Option Agreement shall
      constitute a Default under the Loan Agreement.

4.    Article 5 of the Amendment Agreement is hereby repealed. All other terms
      and conditions of the Amendment Agreement shall remain unchanged.

5.    The Borrower hereby represents and warrants that the rights granted under
      the present Option Agreement as well as the issue of all shares in its
      share capital in favour of GMAC have been duly authorized by all necessary
      corporate authorization and that same is not prohibited or restricted in
      any way by virtue of the articles of incorporation, by-laws or shareholder
      or other agreement relating to the Borrower.

6.    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.

IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT AT THE DATE FIRT
MENTIONED ABOVE.

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

  /s/ Sabine Bruckert
------------------------

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                                      -3-

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

  /s/ C. Edwards
-----------------------------

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

  /s/ Marco Pasteris
-----------------------
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                                      -3-

1.6.  Headings

      The headings of the Articles and Sections herein are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.

1.7.  Severability

      Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall not invalidate the remaining provisions hereof and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

1.8.  Governing Law

      The parties agree that this Agreement shall be conclusively deemed to be a
contract made under, and shall for all purposes be governed by and construed in
accordance with, the laws of the Province of Quebec and the laws of Canada
applicable therein.

1.9.  Jurisdiction

      Any suit, action or proceeding against the Borrower with respect to this
Agreement or any judgement entered by any court in respect thereof may be
brought in the courts of the Province of Quebec and the parties hereto hereby
submit to the non-exclusive jurisdiction of such courts for the purposes of any
such suit, action or proceeding.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

2.1.  Representations and Warranties of the Borrower

      The Borrower represents and warrants to the Lender that, as of the date
      hereof:

(a)   it is a duly constituted legal person, is validly existing under the laws
      of Canada, and it has the power and authority to enter into and perform
      its obligations under this Agreement;

(b)   the entering into, performance of and compliance with this Agreement (i)
      is within its powers and has been duly authorized by all necessary
      corporate action on its part, and (ii) will not constitute a material
      default under, be in violation of, or be in conflict with, any of its
      constating documents or by-laws, or with any other agreement or instrument
      to which it is a party or by which it is bound, or of any law, regulation,
      ordinance or decree having application within its jurisdiction of
      constitution;

(c)   this Agreement has been duly authorised, executed and delivered by it and
      is binding on it and enforceable against it in accordance with its terms,
      subject to (i) any limitation under applicable laws relating to
      bankruptcy, insolvency, arrangements or other laws of general application
      affecting the enforcement of creditors' rights, and (ii) the discretion
      that a court may exercise in the granting of equitable remedies such as
      specific performance and injunction; and

(d)   there is no litigation and there are no legal proceedings pending or, to
      the knowledge of the Borrower, threatened against it or its property
      before any court or administrative agency of any country, nor is there any
      claim known to it and not disclosed in writing to the Lender, which
      materially adversely affects or could so affect its ability to perform its
      obligations set forth in this Agreement.

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                                      -4-

                                   ARTICLE III
                                    THE LOAN

3.1.  Establishment of the Loan

      Subject to the terms and conditions of this Agreement, and relying on each
of the representations and warranties set out in Article II hereof, the Lender
hereby establishes the Loan in favour of the Borrower.

3.2.  Disbursements by the Lender

(a)   The Lender hereby covenants to disburse five hundred thousand dollars
      ($500,000) of the principal amount of the Loan to the Borrower by no later
      than 3:00 p.m. (Montreal time) on February 27, 2004. The Lender and the
      Borrower will arrange to have the foregoing sum of money sent by the
      Lender and received by the Borrower (by no later than 3:00 p.m. (Montreal
      time) on February 27, 2004) by way of wire transfer initiated by the
      Lender to an account to be designated by the Borrower.

(b)   The Lender hereby agrees to disburse the remaining two million dollars
      ($2,000,000) of the principal amount of the Loan to the Borrower by no
      later than 3:00 p.m. (Montreal time) on March 20, 2004. All such
      disbursement(s) shall be made by way of wire transfer initiated by the
      Lender to an account to be designated by the Borrower.

                                   ARTICLE IV
                                  INTEREST RATE

4.1.  Interest rate

      The Principal Amount shall bear interest, before and after maturity,
calculated on a semi-annual basis, from the first date of disbursement of
principal of the Loan, until its repayment in full, at the Interest Rate.
Subject to Section 5.3(a) hereunder, the Borrower will pay accrued interest, if
any, to the Lender on the last day of each successive six-month period, it being
understood that the first such six-month period shall begin on the day upon
which the Lender first disburses money to the Borrower hereunder. Unpaid
interest on the Principal Amount or any unpaid balance thereof will bear
interest at the rate stated hereinabove, the whole compounded semi-annually from
their due date until the date payment is received by the Lender.

                                   ARTICLE V
                             REPAYMENT OF THE LOAN

5.1.  Repayment of the Loan

      Subject to Section 5.3(a) hereunder, the Borrower shall repay the
aggregate unpaid Principal Amount of the Loan, as well as all unpaid interest
that has accrued thereon, on February 28, 2005, unless the Borrower has notified
the Lender in writing at least five (5) Business Days prior to February 28, 2005
that it wishes to extend the term of the loan for an additional twelve (12)
months, in which case, subject to Section 5.3(a) hereunder, the Borrower shall
repay the aggregate unpaid principal amount of the Loan, as well as all unpaid
interest that has accrued thereon, on February 28, 2006.

5.2.  Prepayment Privilege

      Subject to Section 5.3(a) hereunder and notwithstanding any other
provision of this Agreement, the Borrower shall have the right, but not the
obligation, in its sole discretion at any time, to prepay the whole or part of
the Principal Amount as well as any and all interest due thereon to the Lender
without notice, bonus or penalty. Any and all amount repaid upon the Loan cannot
be re-borrowed.

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                                      -5-

5.3.  Authorization to Effect Repayment

(a)   Notwithstanding any other provision of this Agreement, the Borrower's
      obligation to pay any amount of the Principal Amount of the Loan and/or
      any amount of interest that has accumulated thereon to the Lender, shall
      be subject to the Borrower having received all consents necessary so that
      the Borrower's payment of such sums to the Lender will not constitute a
      default under, be in violation of, or be in conflict with, any of its
      constating documents or by-laws, or with any agreement or instrument to
      which it is a party or by which it is bound (including, without limitation
      (i) any credit or loan agreement, arrangement or facility that it has
      entered into prior to this Agreement, or (ii) any agreement, prior to this
      Agreement, pursuant to which any party has been granted a hypothec or
      other security interest by the Borrower), or of any law, regulation,
      ordinance or decree having application within its jurisdiction of
      constitution.

(b)   Due to Section 5.3(a) above, should the Borrower not repay the aggregate
      unpaid Principal Amount of the Loan, as well as all unpaid interest that
      has accrued thereon at the expiry of the term of the Loan (as the term of
      the Loan is set out at Section 5.1 above), then such term shall be
      extended by the Borrower for additional successive twelve (12) month
      periods until such time as the Borrower repays (or prepays in accordance
      with Section 5.2 above), the whole of the Principal Amount of the Loan as
      well as any and all interest due thereon.

5.4.  No Set-Off; No Withholding

      The Borrower shall make all payments to the Lender pursuant to this
Agreement without set-off, compensation or counterclaim, free and clear of, and
exempt from, and without deduction for or on account of, any Tax under Part XIII
of the ITA (or any successor part) in respect of any such payment ("PART XIII
TAX"). In the event the Borrower is required to deduct or withhold Part XIII
Tax, the Borrower shall:

(a)   pay or cause to be paid to the appropriate authority, the amount of the
      withholding or deduction (including the full amount of Taxes required to
      be deducted or withheld from any additional sums paid by the Borrower to
      the Lender under this Section 5.4). The Borrower shall pay such amounts to
      such appropriate authority within the time period required by applicable
      law;

(b)   produce to the Lender not later than 30 days after that payment, the
      original receipt of payment thereof or a certified copy of such receipt or
      other evidence of such payment reasonably satisfactory to the Lender; and

(c)   pay such additional sums to the Lender, as may be necessary so that the
      net amount received by the Lender, after all Part XIII Tax, will not be
      less than the amount the Lender would have received had no such Part XIII
      Tax been applicable, provided that no sum shall be paid by the Borrower
      under this paragraph (c) to the extent that the Lender would not have been
      subject to such withholding or deduction had the Lender made a declaration
      of eligibility for treaty benefit or other similar claim for exemption to
      the relevant tax authority or had the Lender taken any action in order to
      satisfy any other statutory requirement which would have entitled the
      Lender to treaty benefit or other similar claim for exemption but failed
      to do so prior to the relevant payment date.

      If, as a result of any deduction or withholding, the Borrower makes any
payment of any additional amounts to the Lender and the Lender determines that
it has received or has been granted a credit against or relief or remission for
or repayment of any Tax paid or payable by it in respect of or which takes into
account the deduction or withholding, the Lender will, to the extent it
determines that it can do so without prejudice to the retention of the amount of
such credit, relief, remission or repayment, pay to the Borrower such amount as
the Lender shall determine to be attributable to such Part XIII Tax and which
will leave it (after such payment) in a position which it determines to be no
better and no worse than it would have been if the Borrower had not been
required to make such deduction or withholding.

<PAGE>
                                      -6-

5.5.  Place of Payment

      All payments of principal, interest and other amounts shall be paid by the
Borrower to the Lender by wire transfer to an account to be designated by the
Lender.

                                   ARTICLE VI
                                    HYPOTHEC

6.1.  Hypothec

      On or prior to February 27, 2004, the Borrower shall have granted to the
Lender a moveable hypothec without delivery in respect of all of its moveable
property, present and future, of whatsoever nature and kind and wheresoever
situated in order to secure the full and final repayment of the Loan. The deed
of moveable hypothec shall be in form and substance satisfactory to both the
Borrower and the Lender acting reasonably.

                                   ARTICLE VII
                                EVENTS OF DEFAULT

7.1.  Events of Default

      Each of the following events shall, notwithstanding compliance by the
Borrower with the terms and conditions hereof, constitute an Event of Default by
the Borrower under this Agreement:

(a)   the non-payment when due by the Borrower of the Principal Amount or
      interest or any portion thereof or any other amount payable hereunder; or

(b)   the breach or failure of the Borrower to observe and perform any covenant
      or provision of this Agreement; or

(c)   the commencement of proceedings for the dissolution, liquidation,
      termination, compromise, arrangement or winding-up of the Borrower or for
      the suspension of the operations of the Borrower; or

(d)   if the Borrower ceases or threatens to cease carrying on its enterprise or
      makes or agrees to make a bulk sale of substantially all of its assets
      without the written consent of the Lender or if the Borrower is adjudged
      or declared bankrupt or insolvent or makes an assignment for the benefit
      of its creditors, petitions or applies or allows the petition or
      application to any tribunal for the appointment of a receiver,
      sequestrator or trustee for it or for substantially all of its property,
      or if the Borrower commences any proceedings relating to it under any
      reorganisation, arrangement, readjustment of debt, dissolution or
      liquidation law or statute of any jurisdiction whether now or hereafter in
      effect, or by any act indicates its consent to, approval of, or
      acquiescence in, any such proceeding commenced against it or against
      substantially all of its property, or suffers the appointment of any such
      receiver, sequestrator or trustee.

7.2.  Acceleration

      Upon the occurrence of any one or more of the Events of Default, but
subject to Section 5.3(a) hereof, (i) the Principal Amount and all accrued and
unpaid interest thereon, all interest on interest and all other amounts owing by
the Borrower to the Lender shall, at the option of the Lender, become due and
payable within ten (10) days of the occurrence of any one or more of the Events
of Default, and this, without presentation, demand, protest or other notice of
any kind, all of which are hereby expressly waived by the Borrower and/or (ii)
the Lender shall thereupon be entitled to enforce its rights under and pursuant
to this Agreement and/or (iii) the Lender may declare any obligation of the
Lender to make any sums available hereunder to the Borrower to be terminated
whereupon the same shall forthwith terminate.

<PAGE>
                                      -7-

      Any omission by the Lender to notify the Borrower of an Event of Default
shall not be construed as a waiver of such Event of Default or any of the
Lender's rights herein.

                                  ARTICLE VIII
                             EXPENSES AND INDEMNITY

8.1.  Expenses and Indemnity

      All statements, reports, certificates, appraisals, examinations and other
documents or information, if any, required to be furnished to the Lender by the
Borrower under this Agreement shall be supplied by the Borrower without cost to
the Lender.

                                   ARTICLE IX
                           NOTICES AND COMMUNICATIONS

9.1.  Notices

      Every notice required or permitted to be given hereunder shall, save as
otherwise hereinbefore specifically provided, be in writing to the party for
whom it is intended and such written notice shall be delivered personally, by
messenger or be sent by ordinary mail or by facsimile. The date of receipt of
any such notice shall (i) if delivered personally or by messenger be deemed to
be the date of delivery, (ii) if mailed as aforesaid, be deemed to be the third
(3rd) Business Day next following the date of such mailing, and (iii) if sent by
facsimile shall be deemed to be received on the date of transmission if
transmission occurs prior to 12:00 p.m. (Montreal time) on a Business Day and on
the next Business Day following the date of transmission in any other case.

9.2.  Addresses for Notices

      The personal delivery, mailing addresses and facsimile number of the
parties hereto for the purposes hereof shall be:

(a)   in the case of the Borrower:

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

      Attention: Mr. Thomas A. Andruskevich, President and Chief Executive
      Officer

      Telecopier number: +1 514 397-2577; and

(b)   in the case of the Lender:

      REGALUXE INVESTMENT SARL
      25A boulevard Royal
      Luxembourg 2449

      Attention: Mr. Filippo Recami, Chief Executive Officer, Managing Director

      Telecopier number: + 011-352-817-4827

<PAGE>
                                      -8-

      or such other mailing address or telecopier number as such parties from
      time to time may notify the others as aforesaid.

9.3.  Election of domicile

      The Borrower hereby elects domicile at the address mentioned in Subsection
9.2(a) above for the purposes of receiving notices, demands or other
communications and for the service of legal proceedings. If the Lender is unable
to locate the Borrower at such address, the giving of any notice, demand or
other communication or the service of any legal proceeding may be made at the
office of the clerk of the Superior Court in the district in which the address
of the Borrower referred to in Subsection 9.2(a) is located, at which office, in
such event, the Borrower also elects domicile for purposes of giving any notice,
demand or other communication or the service of any legal proceeding.

                                    ARTICLE X
                               GENERAL PROVISIONS

10.1. Amendments

      No amendment, modification or waiver of any provision of this Agreement or
consent to any departure by the Borrower from any provision of this Agreement
will be effective unless it is in writing and signed by the Lender, and then the
amendment, modification, waiver or consent will be effective only in the
specific instance and for the specific purpose for which it was given.

10.2. Extension of Time

      No extension of time given by the Lender to the Borrower or anyone
claiming under the Borrower, shall in any way affect or prejudice the rights of
the Lender against the Borrower or any other person liable for payment of the
moneys owing hereunder or secured by the Security.

10.3. Assignment

      No party shall be permitted to assign its rights under this Agreement
without the express written consent of the other party hereto. This Agreement
shall be binding upon, and shall enure to the benefit of each of the parties
hereto and their respective successors and permitted assigns.

10.4. Whole Agreement

      This Agreement and the documents contemplated hereby constitutes the whole
and entire agreement among the parties hereto and cancels and supersedes any
prior agreements or undertakings, written or verbal, in respect thereof.

10.5. Counterparts

      This Agreement may be executed in one or more counterparts (including
counterparts by facsimile), each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

10.6. Copy received

      The Borrower hereby acknowledges receipt of a copy of this Agreement.

10.7. Language

      The parties hereby confirm their express wish that this Agreement and all
the documents and agreements directly and indirectly related hereto be drawn up
in English. Les parties reconnaissent leur volonte expresse que la

<PAGE>
                                      -9-

presente convention ainsi que tous les documents et conventions qui s'y
rattachent directement ou indirectement soient rediges en langue anglaise.

            [THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

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                                      -10-

IN WITNESS WHEREOF, executed by the parties at the place and date first
mentioned above.

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

                             By: /s/ John D. Ball
                                ------------------------------------------------
                                 Name:  John D. Ball
                                 Title: Senior Group Vice President and Chief
                                 Financial  Officer

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

                             By: /s/ Marco Pasteris
                                ------------------------------------------------
                                 Name:  Marco Pasteris
                                 Title: Group Vice President Finance

                             REGALUXE INVESTMENT SARL

                             By: /s/ Filippo Recami
                                ------------------------------------------------
                                 Name:  Filippo Recami
                                 Title: Chief Executive Officer and Managing
                                 Director

<PAGE>
                                      -11-

                            HENRY BIRKS AND SONS INC.

Att: REGALUXE INVESTMENTS SARL

With reference to the Loan Agreement in the principal amount of CDN $ 2,500,000
executed on February 6th, 2004, hereby we elect to exercise our option to renew
the loan for a period of additional twelve months as per the section 2 "TERM" of
said loan agreement.

Executed this 23rd day of February 2005

HENRY BIRKS AND SONS INC.

Per:

________________________________

AGREED AND ACCPETED

REGALUXE INVESTMENTS SARL

Per:

_________________________________<PAGE>

                                                                   Exhibit 10.12

                                 LOAN AGREEMENT

                                 by and between

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

                                       and

                            REGALUXE INVESTMENT SARL

                          Dated as of February 16, 2004

<PAGE>

                                 LOAN AGREEMENT

Entered into in the City of Montreal, Province of Quebec, this 16th day of
February, 2004:

BY AND BETWEEN:     HENRY BIRKS & SONS INC./HENRY BIRKS ET FILS INC., a
                    corporation existing under the Canada Business Corporations
                    Act and having its head office at 1240 Phillips Square,
                    Montreal, Quebec, H3B 3H4 (the "BORROWER");

AND:                REGALUXE INVESTMENT SARL, a corporation existing under the
                    laws of Luxembourg and having a place of business at 25A
                    Boulevard Royal, Luxembourg 2449 (the "LENDER").

                                    ARTICLE I
                                 INTERPRETATION

1.1.  Definitions

      In this Agreement, unless something in the subject matter or context is
      inconsistent therewith:

      "AGREEMENT" means this Agreement, as it may hereafter be amended,
      supplemented, modified, renewed, replaced or restated from time to time.

      "BORROWER" means Henry Birks & Sons Inc./Henry Birks et Fils Inc., its
      successors and assigns, including any person resulting from the
      amalgamation of Henry Birks & Sons Inc./Henry Birks et Fils Inc. with any
      other person.

      "BUSINESS DAY" means any day, excluding Saturday, Sunday and any other day
      which, in the City of Montreal, Province of Quebec, is either a legal
      holiday or a day on which the banks are not open to the public.

      "DEFAULT" means an event or condition the occurrence of which is an Event
      of Default or would, with the lapse of time or the giving of notice, or
      both, become an Event of Default.

      "EVENT OF DEFAULT" means any one of the events described in Section 7.1.

      "EXCLUDED TAXES" means any tax on the overall net income of the Lender
      (including any branch profits tax or any similar tax on net income from
      carrying on business in a particular jurisdiction) and any capital or
      franchise tax payable by the Lender.

      "GOVERNMENTAL AUTHORITY" means, with respect to any person, any government
      or governmental body having authority over such person, including any
      regional, municipal, local or other political subdivision thereof and any
      agency, department, commission, board, bureau or instrumentality thereof
      and any other person exercising executive, legislative, judicial,
      regulatory or administrative functions or pertaining to any such
      Governmental Authority.

      "INTEREST RATE" means (i) an annual rate of eight percent (8%) for the
      first six-month period during which any Principal Amount is outstanding
      hereunder, (ii) an annual rate of ten percent (10%) for the second
      six-month period during which any Principal Amount is outstanding
      hereunder, (iii) an annual rate of twelve percent (12%) for the third
      six-month period during which any Principal Amount is outstanding
      hereunder,

<PAGE>
                                      -2-

      and (iv) an annual rate of fourteen percent (14%) for all periods
      thereafter in which any Principal Amount is outstanding hereunder. For
      Taxes refer to Section 5.4 below.

      "ITA" means the Income Tax Act (Canada) and the regulations promulgated
      thereunder, as amended, supplemented or re-enacted from time to time.

      "LENDER" means Regaluxe Investment SARL, its successors and assigns,
      including any person resulting from the amalgamation of the Lender with
      any other person.

      "LOAN" means a term loan in the principal amount of two million five
      hundred thousand dollars and zero cents ($2,500,000).

      "PERSON" means any individual, partnership, limited partnership, joint
      venture, syndicate, sole proprietorship, company or corporation with or
      without share capital, unincorporated association, trust, trustee,
      executor, government or governmental agency, authority or entity however
      designated or constituted.

      "PRINCIPAL AMOUNT" means the outstanding principal balance from time to
      time of the Loan.

      "SECURITY" means all hypothecs or security interests from time to time
      granted to or in favour of the Lender as security for the performance of
      any and all obligations of the Borrower under this Agreement including,
      without limitation, the hypothec to be granted by the Borrower pursuant to
      Section 6.1.

      "TAX" includes any and "TAXES" includes all, present and future, taxes,
      levies, imposts, stamp taxes, duties, charges to tax, fees, deductions,
      withholdings and any restrictions or conditions resulting in a charge to
      tax and all penalty, interest and other payments on or in respect thereof,
      imposed, assessed, levied or collected under the laws of any country or
      any political subdivision thereof or by any governmental agency or body or
      taxing authority thereof, but does not include Excluded Taxes.

      "WRITTEN" or "IN WRITING" shall include printing, typewriting, or any
      electronic means of communication capable of being visibly reproduced at
      the point of reception including facsimile, telecopier or telegraph.

1.2.  References

      All references to Sections, Articles are to Sections and Articles of this
Agreement. The words "HERETO", "HEREIN", "HEREOF", "HEREUNDER", "THIS AGREEMENT"
and similar expressions mean and refer to this Agreement as amended from time to
time.

1.3.  Singular and Plural

      In this Agreement where the context so admits words importing the singular
include the plural and vice-versa.

1.4.  Currency

      Except as otherwise expressly stated, all dollar amounts expressed herein
are expressed as being of lawful money of Canada and any amounts payable
hereunder shall be paid in lawful money of Canada.

1.5.  Binding on Successors, etc.

      This Agreement and everything herein contained shall extend to and bind
and enure to the benefit of the respective successors and permitted assigns of
each and every of the parties hereto and the provisions hereof shall be read
with all grammatical changes thereby rendered necessary.

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