X0202 4 2006-01-05 0 0000868984 WHITEHALL JEWELLERS INC JWL 0001326150 Prentice Capital Management, LP 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 0001326156 Zimmerman Michael 900 THIRD AVENUE, 11TH FLOOR NEW YORK NY 10022 0 0 1 0 Common Stock 2006-01-05 4 P 0 163433 1.20 A 2257779 I See Common Stock 2006-01-06 4 P 0 612000 1.20 A 2869779 I See Common Stock issuable upon conversion of notes See (3) 0.75 2005-10-03 4 P 0 0 0 A 2005-10-03 Common Stock 68020815 68020815 I See 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 4. 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 the Investment Manager, its manager. On January 5 and 6, 2006 PWJ Funding purchased, in two separate transactions, 163,433 and 612,000 shares of Common Stock, respectively. PWJ Lending is deemed to beneficially own 2,094,346 shares. PWJ Funding may be deemed to beneficially own 68,796,248 shares, consisting of 68,020,815 shares issuable upon conversion of the notes, including the payment of interest shares for the first three years of the notes, and 775,433 shares acquired as described in the first sentence of this footnote (2). Neither the Investment Manager nor Mr. Zimmerman directly owns any shares. The Investment Manager and Mr. Zimmerman may be deemed to beneficially own 70,328,494 shares of Common Stock. 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. Certain of the Shares held by PWJ Lending and PWJ Funding are held by various investment funds including Prentice Capital Partners, LP, Prentice Capital Partners QP, LP, Prentice Capital Offshore, Ltd., PEC I LLC, and managed accounts managed by the Investment Manager and Mr. Zimmerman, in each case, as nominee for PWJ Lending and PWJ Funding. For purposes of this Form 4, references to PWJ Lending and PWJ Funding shall be deemed to include such investment funds and managed accounts. The inital purchase price per share was $1.20 in cash, subject to adjustment based on the difference between $1.20 per share and the per share price paid by Newcastle Partners, L.P. ("Newcastle") in its tender offer payable on the same date that Newcastle pays the tendering Company stockholders for their shares of Common Stock, if at all. 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. PRENTICE CAPITAL MANAGEMENT, LP; /s/ Michael Weiss as Chief Financial Officer 2006-01-06