X0202 3 2005-10-03 0 0000868984 WHITEHALL JEWELLERS INC JWL 0001326150 Prentice Capital Management, LP 623 FIFTH AVENUE, 32ND FLOOR NEW YORK, NY 10022 0 0 1 0 0001326156 Zimmerman Michael 623 FIFTH AVENUE 32ND FLOOR NEW YORK NY 10022 0 0 1 0 0001341139 PWJ Funding LLC 623 FIFTH AVENUE 32ND FLOOR NEW YORK NY 10022 0 0 1 0 0001341138 PWJ Lending LLC 623 FIFTH AVENUE 32ND FLOOR NEW YORK NY 10022 0 0 1 0 Common Stock issuable upon exercise of warrants .75 2005-10-03 Common Stock 2094346 I See Notes Common Stock issuable upon conversion of notes See (3) .75 Common Stock 68020815 I See Notes Prentice Capital Management, LP (the "Investment Manager") serves as investment manager to a number of investment funds and manages investments for certain entities in managed accounts with respect to which it has voting and dispositive authority over the Common Stock reported in this Form 3. Michael Zimmerman ("Mr. Zimmerman") is responsible for the supervision and conduct of all investment activities of the Investment Manager, including, without limitation, for all investment decisions with respect to the assets of such investment funds and managed accounts. PWJ Lending LLC ("PWJ Lending") is an entity established to make certain loans to Issuer and receive warrants from Issuer in connection therewith. PWJ Funding LLC ("PWJ Funding") is an entity established to purchase secured convertible notes from Issuer. PWJ Lending and PWJ Funding are directly controlled by Prentice Capital Management, its manager. PWJ Lending may be deemed to beneficially own 2,094,346 shares issuable upon exercise of warrants, which represents 1.95% of the outstanding shares (assuming issuance of the notes as described below and 14.99% otherwise). PWJ Funding may be deemed to beneficially own 68,020,815 shares issuable upon conversion of the notes, including the payment of interest shares for the first three years of the note which shall represent 63.3% of the outstanding shares. Neither the Investment Manager nor Mr. Zimmerman directly owns any shares. The Investment Manager and Mr. Zimmerman may be deemed to beneficially own 70,115,161 shares of Common Stock, which represents approximately 65.25% of the outstanding shares. Each of the Investment Manager and Mr. Zimmerman disclaims any beneficial ownership of the shares included in this report to the extent such beneficial ownership exceeds such person's pecuniary interest therein. Subject to certain terms and conditions set forth in the Securities Purchase Agreement dated as of October 3, 2005 (the "Purchase Agreement"), the Company has agreed to sell to PWJ Funding and Holtzman Opportunity Fund, L.P. (the "Investors") $50,000,000 of secured convertible notes (the "Notes"). The stated maturity of the Notes will be three years after the date of issuance which maturity generally may be extended by the Company for up two years. The Notes will bear interest at a rate of 12.0% per annum, payable quarterly. During the initial three year term of the Notes, interest will be paid in shares of Common Stock at the conversion price (initially $0.75 per share). The notes have not yet been issued and are subject to satisfaction of certain conditions, including shareholder approval, under the Purchase Agreement. Upon issuance, the Notes will be immediately convertible into shares of Common Stock. The warrants expire 84 months after issuance date. PRENTICE CAPITAL MANAGEMENT, LP; By: /s/ Michael Weiss as Chief Financial Officer 2005-10-12