UNITED STATES DISTRICT COURT
                                        SOUTHERN DISTRICT OF NEW YORK

--------------------------------------------------------x
NEWCASTLE PARTNERS, L.P., and JWL                       :
ACQUISITION CORPORATION,                                :
                                                        :
                             Plaintiffs,                :       Civ. No.:
                                                        :
                       - against -                      :
                                                        :       COMPLAINT
WHITEHALL JEWELLERS, INC.,                              :
PRENTICE CAPITAL  MANAGEMENT,                           :
L.P. and HOLTZMAN OPPORTUNITY                           :
FUND, L.P.,                                             :
                                                        :
                              Defendants.               :
--------------------------------------------------------x

     Plaintiffs Newcastle Partners, L.P., and JWL Acquisition Corporation, by
their attorneys, Olshan Grundman Frome Rosenzweig & Wolosky LLP, for their
Complaint, allege:

                              Nature of the Action
                              ---------------------

     1. Plaintiff Newcastle Partners, L.P. ("Newcastle") is the second largest
independent shareholder of Whitehall Jewellers, Inc. ("Whitehall" or the
"Company"), a jewelry retailer whose shares are publicly traded. Whitehall has
called a special meeting of its shareholders for January 19, 2006 to make a
decision on whether to sell control of their company to defendant Prentice
Capital Management, L.P. ("Prentice"). The issue before the shareholders is
whether to amend Whitehall's corporate charter to permit the issuance of shares
to Prentice that will enable it to acquire more than 80% of Whitehall's
outstanding securities. Prentice's purchase will be from Whitehall directly, so
that shareholders will not receive any payment. Newcastle, by contrast, has
commenced a tender offer to acquire all shares of Whitehall at $1.50 per share.



     2. Whitehall's Board, which will remain in place under the Prentice
proposal, has implemented a variety of measures intended to tilt the playing
field in favor of Prentice, including waiving Whitehall's "poison pill" Rights
Agreement for Prentice, but not for Newcastle. As the proxy contest has
progressed, it has become clear to both Whitehall and Prentice that shareholders
had little interest in the Prentice proposal, which paid them nothing for their
company. In the final week of December 2005, Prentice and Whitehall implemented
an unlawful scheme to assure Prentice victory, notwithstanding lack of
shareholder support. With information obtained directly from Whitehall, Prentice
has contacted selected shareholders who own significant blocks and offered to
purchase their shares at a substantial premium to the market, on the condition
that the selling shareholder cast a proxy for Whitehall management at the
special meeting. The selected shareholders have been advised that the offer is
limited in time and scope, so that any failure to accept will leave them out in
the cold once Prentice has accumulated its control block. Prentice's acquisition
scheme constitutes an unregistered tender offer, under which selected
Whitehall's shareholders are pressured into selling lest they lose the premium
now being offered. At the same time, other Whitehall shareholders are denied the
benefits of the offer.

     3. This flagrant violation of the Williams Act is compounded by the
surreptitious manner in which Whitehall and Prentice have conspired to rig the
proxy contest. Although Prentice is a participant in the proxy contest, whose
identity and role must be disclosed so that all shareholders can make an
informed decision, Whitehall's proxy statement contains no such disclosure. More
important, Prentice's Schedule 13D filings fail to disclose key elements of its
plan, including the possible



                                     - 2 -


purchase of a control block, the purchase of votes in the proxy contest, and the
sub rosa arrangements with the shareholders who have sold at a premium.

     4. Preliminary and permanent injunctive relief are urgently required to
assure that Whitehall's shareholders are permitted to make an informed decision
at the special meeting, that they receive a fair price for their shares, and
that defendants' ongoing violations of the federal securities laws are halted.

                                  The Parties
                                  -----------

     5. Plaintiff Newcastle is an investment fund and is a beneficial owner of
2,018,400 shares of common stock of Whitehall Jewellers, Inc. ("Whitehall"),
representing 12% of Whitehall's outstanding shares.

     6. Plaintiff JWL Acquisition Corp. is a wholly owned subsidiary of
Newcastle, formed to make a tender offer for Whitehall's shares.

     7. Defendant Whitehall, a public company headquartered in Chicago,
Illinois, is a leading jewelry retailer, operating more than 350 jewelry stores
in 38 states including New York State.

     8. Defendant Prentice Capital Management, L.P. ("Prentice") is an
investment fund based in New York City. Defendant Holtzman Opportunity Fund,
L.P. ("Holtzman") is a Nevada Limited Partnership based in Wilkes Barre,
Pennsylvania. Holtzman has joined with Prentice to effectuate its acquisition of
Whitehall and the reference to "Prentice" below includes Holtzman.

                             Jurisdiction and Venue
                             ----------------------

     9. This Court has jurisdiction and venue is proper in this District
pursuant to Section 27 of the Exchange Act, 15 U.S.C. ss. 78aa, and federal
question jurisdiction, 28 U.S.C. ss. 1331. Section 27 of the Exchange Act, 15
U.S.C. ss. 78aa, confers exclusive jurisdiction upon the federal courts for "all
suits in equity and



                                     - 3 -


actions at law" to enforce any liability or duty under the Exchange Act. Section
27 further provides that any such suit or action may be brought in any district
in which "any act or transaction constituting the violation occurred" or "in the
district wherein the defendant is found . . . . or wherever the defendant may be
found." The acts and transactions constituting the violations alleged herein
have taken place in this District and each defendant may be found in this
District. This Court has supplemental jurisdiction over plaintiffs' state law
claims, pursuant to 28 U.S.C. ss. 1367.

     10. Venue is also proper in this judicial district because a substantial
part of the events and omissions that give rise to the claims asserted herein
occurred in this district.

                               Factual Background
                               ------------------

Whitehall's Criminal Past
-------------------------

     11. For the past two years, Whitehall and its Board have operated under a
dark cloud. On September 28, 2004, its former Chief Financial Officer plead
guilty to bank and wire fraud conspiracy involving more than $13 million. At the
same time, Whitehall entered into a non-prosecution agreement with the U.S.
Attorney's Office for the Eastern District of New York. Whitehall also agreed to
pay approximately $13 million in restitution for losses resulting from the
fraud, and to pay to the U.S. Postal Inspection Service $350,000 to defray the
costs of its investigation. The Securities and Exchange Commission (the "SEC")
also initiated a formal inquiry of Whitehall with respect to the Capital Factors
investigation.

     12. The settlement agreements, together with legal and other expenses
related to the U.S. Attorney's and SEC's investigations imposed substantial
costs on Whitehall.

                                     - 4 -


Newcastle's Investment in Whitehall
-----------------------------------

     13. On April 19, 2005, Newcastle filed its Schedule 13D, disclosing that it
owned 2,018,400 shares of Whitehall common stock as of April 15, 2005,
representing at the time 14.5% of the Company's outstanding shares. Newcastle's
stake was accumulated over nine months, at a total approximate cost of $15
million. Newcastle was then Whitehall's largest independent shareholder.

     14. On June 23, 2005, Whitehall announced the election of Steven J. Pully,
a Newcastle representative, as a director. As part of the non-prosecution
agreement that was entered into with the U.S. Attorney, Whitehall was required
to expand its Board of Directors by two people, with one person having a
financial background and another having a legal background. Mr. Pully satisfied
the financial and legal background requirement in light of his experiences as an
investor, CFA, CPA and attorney. On July 5, 2005, Mr. Pully was elected as the
non-executive Chairman of the Board.

     15. During July 2005 and thereafter, Whitehall considered raising
additional funds to address its financial needs. During this period, Newcastle
expressed interest in providing additional financing to Whitehall.

     16. In September 2005, Whitehall met with defendant Prentice, another
potential financing source. Whitehall and Prentice discussed a bridge loan
financing that would be refinanced with a larger convertible note transaction
that would require stockholder approval. Because the proposed loan was
convertible into more than 50% of Whitehall's outstanding shares, it would
effectively transfer control of Whitehall. Whitehall's Board thereafter weighed
competing offers from Newcastle and Prentice for a control block of shares.



                                     - 5 -


     17. On October 3, 2005, the Board of Directors of Whitehall met. Mr. Pully
distributed a comparison of the Prentice and Newcastle proposals demonstrating
that the Newcastle offer was superior. The Whitehall Board nonetheless
authorized the Prentice transaction, with Mr. Pully dissenting. Whitehall
executed a Purchase Agreement, Bridge Loan Agreement, the Notes and Warrants
Registrations Rights Agreement that same day.

     18. The package of agreements between Whitehall and Prentice includes the
issuance of $50,000,000 in notes convertible into Whitehall common stock. Upon
conversion, Prentice will own in excess of 60% of Whitehall's outstanding
shares. Because the agreements also include warrants and the interest payments
under the Notes may be in the form of stock, Prentice's potential ownership is
approximately 87% of Whitehall's issued and outstanding shares.

     19. The proposed transaction, however, had a significant roadblock.
Whitehall's corporate charter permitted it to issue only 60 million shares of
common stock and it had already issued approximately 13.9 million shares. Under
the Prentice agreements, it would be obligated to issue as much as 65 million
shares, far more than the number available in treasury stock. In order to issue
additional shares, Whitehall needed shareholder approval of an adjustment to its
capitalization. Accordingly, Whitehall's Board committed to obtain shareholder
approval for a reverse stock split, which would reduce the number of shares
outstanding and thus permit issuance of an 87% control block to Prentice. For
the reasons set forth below, this maneuver by Whitehall's Board was itself
improper under its corporate charter.

                                     - 6 -


     20. On October 26, 2005, Newcastle proposed to offer $1.10 per share in
cash to acquire all of the equity of Whitehall. The previous day, Whitehall had
closed at $.80 per share. The proposal thus constituted a 38% premium to the
value attributed by the market to the Prentice plan. The following day,
Whitehall rejected Newcastle's enriched offer.

     21. Steven Pully resigned from the Whitehall Board of Directors, expressing
his view that the failure to accept Newcastle's clearly superior offer was a
breach of duty to Whitehall shareholders.

Whitehall's Proxy Statement
---------------------------

     22. On November 14, 2005, Whitehall filed a preliminary proxy statement
with the SEC to solicit proxies for use at a special meeting of stockholders
(the "Special Meeting") to approve (i) the issuance of shares of Whitehall
common stock pursuant to the terms of the Notes, (ii) an amendment to
Whitehall's certificate of incorporation to effect a 1 for 2 reverse stock split
of Whitehall's capital stock, and (iii) to elect persons designated by Prentice
to Whitehall's Board of Directors, who will became a majority of the Board.
Prentice's current directors will remain in place.

     23. On November 29, 2005, Newcastle filed with the SEC a Schedule TO
announcing its intention to commence a tender offer to acquire, through JWL
Acquisition Corp., all outstanding shares of Whitehall common stock. That same
day, Newcastle filed with the SEC a preliminary proxy statement relating to its
solicitation of proxies in opposition to management's proxy statement.


     24. On December 5, 2005, Newcastle filed with the SEC a Schedule TO,
Schedule 14A, and Schedule 13D/A announcing that Newcastle had commenced through
JWL Acquisition Corp. its tender offer at $1.20 per share. At


                                     - 7 -


all times relevant, Whitehall has had in place a Rights Agreement commonly known
as a "poison pill". Public companies have routinely adopted such provisions,
which have an in terrorem effect on any shareholder acquiring in excess of a
specific level, usually 15%, without board approval. Newcastle's tender offer is
conditioned on Whitehall waving its poison pill, a step that Whitehall's Board
has refused to take. As a result of this blocking mechanism, Newcastle is
prevented from completing its tender offer and Whitehall's shareholders are
denied the right to choose whether or not to accept the offer.

     25. On December 9, 2005, the Whitehall Board set January 19, 2006 as the
date for the Special Meeting, with December 9, 2005 as the record date. A few
days earlier, Prentice and an affiliate exercised their Warrants to purchase
2,094,346 shares of Whitehall's common stock at $0.75 per share. This purchase
gave Prentice control over approximately 15% of the shares eligible to vote at
the Special Meeting.

     26. On December 16, 2005, Whitehall filed with the SEC a Schedule l4D-9 in
response to the tender offer by Newcastle. In this filing, Whitehall recommended
that the stockholders not tender their shares to Newcastle at $1.20 per share,
purportedly because the Prentice proposal was superior. On December 27, 2005,
Whitehall disseminated its definitive proxy statement to all shareholders.

Whitehall and Prentice Violate Federal Law to Obtain Votes.
-----------------------------------------------------------

     27. Because Newcastle's proposal offered all Whitehall shareholders an
opportunity to receive cash for their stock, while Prentice offered nothing, the
handwriting was on the wall from the outset. Upon information and belief,
shortly after Whitehall commenced its proxy solicitation in December 2005, it



                                     - 8 -


learned that many large holders had no intention of supporting management and
were anxious to tender to Newcastle, but could not do so as a result of the
"poison pill" invoked by Whitehall's management.

     28. In late December 2005, a substantial Whitehall shareholder contacted
Whitehall's proxy solicitor to inquire whether it might locate a buyer for his
shares. Within minutes, he received a return call from a Prentice representative
with an offer that was impossible to refuse. Although Whitehall shares then
traded in the public markets at approximately $.93 per share, Prentice offered
to pay $1.20 per share, provided that the shareholder first cast his vote for
Whitehall management. Prentice further advised the shareholder that this offer
was being made to a select group of significant shareholders. The inference to
be drawn was obvious: Once Prentice had assembled its desired block, it would
cease all buying activity and the opportunity to sell shares at a premium would
be lost. In light of the coercive nature of this offer, the shareholder accepted
on Friday December 30, 2005. That same day, the shareholder executed a proxy in
electronic form in favor of Whitehall's management. Prentice delayed payment,
however, for several days and therefore did not take possession until January 4,
2005.

     29. Upon information and belief, Prentice completed at least one other
transaction with a major shareholder on similar or about terms at the same time.

     30. On Wednesday, January 4, 2006, Newcastle upped the ante, increasing the
price in its tender offer to $1.50 per share, a premium of 88% to Whitehall's
trading price before its initial proposal. Undeterred, Prentice continued its
secret buying campaign, offering yet another large shareholder $1.35 per share
for



                                     - 9 -


his block. Prentice's campaign is now underway and will soon result in its
unlawful accumulation of sufficient shares to push through its own agenda at the
Special Meeting.

     31. There can be no doubt that Prentice has worked closely with Whitehall.
Among other things, Prentice would not have embarked on its campaign to purchase
a control block absent information from Whitehall as to the identity of key
shareholders and as to the number of shares necessary for Whitehall to prevail.
Prentice has no doubt also targeted shareholders whom it believes are likely to
vote against management. It is therefore anxious to conceal its activities, lest
shareholders pressure Whitehall's Board to level the playing field. The conduct
of Prentice and Whitehall presents clear violations of federal securities laws.

Whitehall's Violations of Federal Proxy Laws.
---------------------------------------------

     32. Whitehall's proxy materials contain a host of material omissions.
First, and most glaring, Whitehall fails to disclose that Prentice has become a
"participant" in the proxy contest. Under SEC regulations promulgated to assure
adequate disclosure, each party who seeks a proxy must disclose the identity of
any "participant" and his efforts and provide information regarding the
participant. By virtue of its role in buying votes, Prentice is clearly a
participant. But Whitehall nowhere discloses this key fact.

     33. In its proxy materials and in other SEC filings, Whitehall has taken
the position that the price offered by Newcastle is not fair to Whitehall's
shareholders. Whitehall has not disclosed, however, that it has tacitly
consented to Prentice acquiring a large block of shares at this very price. Nor
does the proxy statement disclose that, by virtue of Whitehall's coordination
with Prentice and its waiver of the "poison pill" for Prentice, it is actively
facilitating Prentice in



                                     - 10 -


acquiring a control block that may determine the outcome of the meeting. This
disclosure is highly material to Whitehall shareholders, who no doubt would
unanimously object to Whitehall's plan if they were informed that those who
objected stood to obtain a premium for their shares, while those who supported
management would be left in the cold.

Prentice's Section 13(d) Violations
-----------------------------------

     34. Prentice's Schedule 13D also fails to disclose material information.
First, Prentice has not disclosed its sub rosa voting arrangements reached with
shareholders under which they have agreed to vote for management in exchange for
payments from Prentice. Disclosure of such contracts or arrangements is mandated
by Item 6 of the Schedule 13D. By virtue of this non-disclosure, Prentice has
also kept secret the aggregate number of shares that it controls. Thus, the
information regarding its beneficial ownership is also incorrect. For example,
while Prentice reached deals to purchase shares on December 30, 2005, it
thereafter warehoused the stock until Wednesday, January 4, 2006, at which time
it made payment. Through this device, Prentice has kept Whitehall shareholders
in the dark and failed to fulfill its legal obligation to promptly amend its
Schedule 13D to disclose these events.

     35. Prentice's warehousing of stock constitutes a classic violation of
Section 13(d), universally condemned by the Courts. Through this illegal device,
parties seek to obtain control of a corporation without providing the
marketplace with the information that Schedule 13D requires.

     36. Prentice's Schedule 13D is also false and misleading because it fails
to disclose the highly material steps that it has undertaken to influence



                                     - 11 -


Whitehall's corporate affairs, namely participating in the proxy contest by
paying for votes.

Prentice's Section 14(d) Violations
-----------------------------------

     37. In Section 14(d) of the Exchange Act, Congress has promulgated
requirements for parties who wish to conduct tender offers. These requirements
are intended to assure that all holders are treated fairly, without coercion,
and that any change in control will occur with the utmost disclosure. Courts
have recognized that a party that engages in conduct that is the equivalent of a
tender offer without compliance with SEC regulations violates Section 14(d). The
campaign undertaken by Prentice has all the earmarks of a de facto tender offer.
The offering price is at a premium to market; shareholders have been told that
the offer will be made on a limited basis; from the context, it is clear that
Prentice will acquire only a limited number of shares, so that once it has
reached its quota, it will withdraw from the market place. As a result,
shareholders who receive this offer are coerced into selling their shares,
because they realize that failure to do so will leave them a minority in a
Prentice-controlled entity. Conversely, those who do not receive the offer are
deprived of the opportunity to sell at a premium, as required by the "all
holders" rule, a central tenet of the Williams Act.

Whitehall's Other Illegal Acts
------------------------------

     38. Whitehall's violations of federal law are accompanied by serious
violations of Delaware corporate law. As a result of Whitehall's decision to
accept the Prentice offer, Whitehall has put itself on the auction block. It is
therefore duty bound to conduct a fair auction and not favor one bidder over the
other. However, Whitehall has rigged the contest by invoking the "poison pill"
against Newcastle, but waiving the same device for Prentice. The term "poison
pill" is



                                     - 12 -


commonly used to refer to Stockholder Rights Agreements, such as the
one adopted by Whitehall. Such plans have an in terrorem effect on acquisitions
above a specific threshold, in this case 15%. Any party who crosses this
threshold without Board approval will have its interest diluted drastically,
because other shareholders will then be permitted to exercise their rights.
Whitehall's use of its "poison pill" against Newcastle has effectively halted
Newcastle's tender offer. By waiving the same device for Prentice, Whitehall has
permitted Prentice to engage in the activities described above, namely the
acquisition of a control block, perhaps sufficient to dictate the outcome of the
Special Meeting.

     39. Second, according to Whitehall's proxy, a vote of a majority of its
outstanding shares is sufficient to complete the Prentice transaction. Whitehall
has taken the position that such a vote is sufficient to effectuate a reverse
stock split, under which its issued and outstanding shares will be reduced from
approximately 15.8 million to approximately 8.4 million. The corporate charter,
which has authorized 60 million shares, will then permit issuance of sufficient
shares to Prentice so that it may exercise all rights under its convertible
note. Whitehall's corporate charter, however, makes clear that a vote of 75% of
the outstanding shares is necessary to complete the transaction.

     40. In its Fourth Article, the Whitehall charter provides:

          FOURTH: The total number of shares of all classes of stock which the
     Corporation shall have authority to issue is 62,026,026 of which 60,000,000
     shares shall be Common Stock with a par value of $0.001 per share (the
     "Common Stock"); of which 26,026 shall be Class B Common Stock with a par
     value of $1.000 per share (the "Class B Common Stock"); and of which
     2,000,000 shares shall be Preferred Stock with a par value

                                     - 13 -


     of $0.001 per share, issuable in series (the "Preferred Stock"), consisting
     of 309,183 shares of Series A Junior Participating Preferred Stock with a
     par value of $0.001 per share.

     41. The Twelfth Article of the Charter states that "the affirmative vote of
the holders of shares of voting stock of the corporation representing at least
seventy-five per cent (75%) of the voting power of all the then outstanding
shares. . . shall be required to (i) reduce or eliminate the number of
authorized shares of any capital stock set forth in Article Fourth or (ii) amend
or repeal or adopt any provision inconsistent with Articles Fourth . . . and
this Article Twelfth . . . "

     42. The proposed transaction runs afoul of both subparts of this provision.
By virtue of the reverse stock split, Whitehall's Board has undertaken the
functional equivalent of eliminating the number of authorized shares of capital
stock. Through this device, a majority of shareholders, but less than 75%, could
endlessly reduce the number of shares and thus render the ceiling on authorized
shares meaningless. In order for the Fourth Article to have any significance, a
vote of 75% of the shareholders must be required for a reverse stock split.
Moreover, the reverse stock split is a "provision inconsistent with" the Fourth
Article. When Newcastle and other shareholders purchased their stock, they held
a specific percentage of the authorized capital and under the charter, were
assured that no further shares could be authorized absent a 75% vote. The
reverse stock split is a provision inconsistent with this clear contractual
right, because it fundamentally alters the percentage of the authorized capital
owned by each shareholder. It also alters the respective voting rights of Class
A stock and Class B stock, which has supervoting rights. As a result of the
reverse split, each shareholder's vote relative to the Class B stock has been
drastically altered.

                                     - 14 -


                             First Claim for Relief
                             ----------------------

              (Against All Defendants - Violations of Section 14(a)
                  of the Exchange Act and the Rules thereunder)
                  ---------------------------------------------

     43. Plaintiffs incorporate paragraphs 1 through 42 above.

     44. Congress and the SEC have designed an extensive regulatory structure
governing proxy solicitations to ensure that proxy contests be held in a fair
and orderly manner so that stockholders may make an informed decision as to how
they will vote their shares. Section 14(a) of the Exchange Act provides that it
shall be unlawful for any person to solicit proxies in contravention of the
rules and regulations promulgated by the SEC.

     45. Rule 14a-9 prohibits the solicitation of proxies by any communication
containing any false or misleading statement of material fact or omitting to
state any material fact.

     46. Rule 14a-3, with certain exceptions not applicable here, requires that
before the commencement of a proxy solicitation, a written proxy statement
containing the information specified in Schedule 14A be filed with the SEC and
distributed to each person solicited in connection with any solicitation
governed by Section 14(a).

     47. In proxy materials concerning election contests, specific and
additional disclosure is required concerning the "participants" in a
solicitation. Pursuant to Instruction 3 to Item 4 of SEC Schedule 14A, the terms
"participant" and "participant in a solicitation" include the following:

          (i) The registrant;

          (ii) Any director of the registrant, and any nominee for whose
          election as a director proxies are solicited;



                                     - 15 -


          (iii) Any committee or group which solicits proxies, any member of
          such committee or group, and any person whether or not named as a
          member who, acting alone or with one or more other persons, directly
          or indirectly takes the initiative, or engages, in organizing,
          directing, or arranging for the financing of any such committee or
          group;

          (iv) Any person who finances or joins with another to finance the
          solicitation of proxies, except persons who contribute not more than
          $500 and who are not otherwise participants;

          (v) Any person who lends money or furnishes credit or enters into any
          other arrangements, pursuant to any contract or understanding with a
          participant, for the purpose of financing or otherwise inducing the
          purchase, sale, holding or voting of securities of the registrant by
          any participant or other persons, in support of or in opposition to a
          participant; except that such terms do not include a bank, broker or
          dealer who, in the ordinary course of business, lends money or
          executes orders for the purchase or sale of securities and who is not
          otherwise a participant; and

          (vi) Any person who solicits proxies.

     48. Upon information and belief, Whitehall has provided Prentice with the
identity of Whitehall's shareholders to allow Prentice to approach Whitehall
shareholders to purchase their shares under circumstances reasonably calculated
to result in the procurement, withholding or revocation of a proxy.

     49. Prentice has communicated with Whitehall stockholders in order to
purchase and has purchased Whitehall stockholder shares under circumstances
reasonably calculated to result in the procurement, withholding or revocation of
a proxy.

     50. Upon information and belief, Prentice continues to contact Whitehall
stockholders to make offers to purchase their shares under circumstances
reasonably calculated to result in the procurement, withholding or revocation of
a proxy.

                                     - 16 -


     51. Prentice's actions in actively contacting Whitehall shareholders,
making offers to purchase their shares, purchasing their shares, and seeking
agreements from shareholders to sign Whitehall management proxies are actions
reasonably calculated to result and has resulted in the procurement, withholding
or revocation of a proxy.

     52. By virtue of Prentice's financing the acquisition of Whitehall shares,
Prentice is procuring, withholding or seeking to revoke a proxy and thus is a
participant pursuant to Instruction 3 to Item 4 of SEC Schedule 14A.

     53. Items 4(b)(2) and 5(b)(1) of Schedule 14A requires disclosure of each
"participant" in a proxy solicitation and detailed information in regulating
those participants. 54. Whitehall has not disclosed in its Schedule 14A
Prentice's participation in Whitehall's proxy solicitation.

     55. As set forth above, the proxy material filed by defendant Whitehall
with the SEC and disseminated to shareholders violates these requirements in
numerous respects. The above misleading statements and omissions are material to
any decision by shareholders with respect to the proxy solicitation by defendant
Whitehall.

     56. As a result of the above violations of Section 14(a) of the Exchange
Act and the regulations promulgated thereunder, unless defendants' conduct of
ongoing proxy solicitation is restrained by this Court, Newcastle, its
stockholders and the investing public have been and will continue to be
irreparably injured.

                                     - 17 -


     57. By virtue of the foregoing, defendants have violated and continue to
violate Section 14(a) of the Exchange Act and the rules and regulations
promulgated thereunder.

     58. Plaintiffs have no adequate remedy at law.


                                     - 18 -


                             Second Claim for Relief
                             -----------------------

 (Against Prentice and Holtzman -- Violations of Section 13(d) of the Exchange
                         Act and Rule 1 3-d thereunder)
                         ------------------------------

     59. Plaintiffs incorporate paragraphs 1 through 58 above.

     60. Section 13(d) of the Exchange Act, and the rules and regulations
promulgated thereunder, require that any person, or any group of persons, acting
for the purpose of acquiring, holding, or voting a corporation's securities must
file a statement with the SEC within 10 days after acquiring beneficial
ownership of more than 5% of any class of the corporation's voting securities.

     61. That statement, known as a Schedule 13D, must set forth the reporting
person's background, identity, residence, citizenship, and the nature and amount
of their beneficial ownership.

     62. A Schedule 13D must also report the source and amount of funds used to
purchase the beneficially owned securities. If the purchasers' purpose is to
obtain control of the corporation, their Schedule 13D must set forth their plans
or proposals for any major change in the corporation's structure.

     63. In addition, a Schedule 13D must report the purchasers' agreements,
arrangements, or understandings concerning the corporation's securities.

     64. Prentice and Holtzman are the beneficial owners of more than 5% of the
outstanding shares of Whitehall common stock.

     65. On October 3, 2005, Prentice and Holtzman (collectively "Prentice")
filed Form 13D with the SEC relating to the Whitehall financing.

     66. Consistent with Section 13(d) purpose, Prentice was obligated to alert
the marketplace to its intention to rapidly accumulate or aggregate large


                                     - 19 -


amounts of Whitehall stock, which might represent a potential shift in corporate
control.

     67. Prentice is engaged in a scheme to amass Whitehall stock for the
purpose of effecting the Whitehall proxy solicitation for the purpose of a
takeover of Whitehall and substantially altering its business and operations,
without disclosing such intention in public filings as required under Section
13(d) of the Securities and Exchange Act.

     68. Prentice's failure to disclose, in any of its 13D filings, its
intention to acquire a block of Whitehall stock in order to exercise control
over the corporation or to participate in any transaction having such purpose or
effect is a violation of SEC Rules.

     69. The defendant Prentice, as a member of a group within the meaning of
SEC Rule 13d-5(b)(1) promulgated under the Exchange Act who have entered into an
agreement to coordinate their purchases of Whitehall common stock for the
purpose of placing majority voting control of the common stock in the hands of
Prentice and for other undisclosed purposes, had a statutory obligation to file
a Schedule 13D within 10 days of reaching that agreement. Defendant Prentice,
however, failed to do so.

     70. Because of this violation, plaintiffs have been, are now, and will be
irreparably injured because Prentice's failure to file a Schedule 13D deprives
plaintiffs of information to which they are lawfully entitled and which is
necessary to understand Prentice's purposes and plans concerning Whitehall so
that plaintiffs can be fully informed in making any decisions to sell or vote
its common stock.

     71. Plaintiff has no adequate remedy at law.

                                     - 20 -


     72. Plaintiffs are entitled to an Order directing Prentice to file a
Schedule 13D that complies in all respects with the pertinent statutory and
regulatory requirements.

                             Third Claim for Relief
                             ----------------------

        (Against Prentice and Holtzman -- Injunction under Williams Act)
        ----------------------------------------------------------------

     73. Plaintiffs incorporate paragraphs 1 through 72 above.

     74. The Williams Act amended the Exchange Act to protect shareholders and
investors from being forced to act hastily without full disclosure.

     75. Prentice in violation of the Williams Act prohibition against "creeping
tender offers" is engaged in an deliberative widespread scheme to solicit the
purchase of shares from Whitehall shareholders.

     76. Prentice's scheme is to purchase a substantial controlling percentage
of Whitehall stock.

     77. Prentice's offer to purchase Whitehall shares is being made at a
premium over the prevailing market price for Whitehall shares.

     78. The terms Prentice is offering are firm and not subject to negotiation.

     79. Prentice's scheme is to purchase a fixed number of Whitehall shares.

     80. Prentice's offer to purchase Whitehall shares is open for only a
limited period of time.

     81. By virtue of the timing and firm terms of Prentice's offer, Whitehall
shareholders are under pressure to sell their Whitehall stock.

     82. Through the Williams Act, Congress has adopted policies, implemented in
SEC regulations, designed to regulate tender offers. Among other



                                     - 21 -


things, Section 14(d) of the Exchange Act, and the regulations promulgated
thereunder, require full disclosure to the market place of the offer as well as
its terms. The regulations also require that the offer be made to "all holders"
and if the offer is for less than all shares, that the purchase price is to be
pro rated among those who tender. The tender offer regulations are intended to
effectuate federal policies protecting shareholders from coercive practices,
which have the effect of pressuring shareholders into accepting below market
offers. They also further the policy of assuring that an offer is made fairly to
all holders, not to a select few. Last, pursuant to SEC regulations, the offers
must be held open for specific time frames and with adequate disclosure, to
permit shareholder to make an informed decision.

     83. Prentice is now conducting a de facto tender offer without complying
with the SEC regulations. Among other things, Prentice has not filed disclosure
materials announcing to the market place the terms of its offer; it has not
provided shareholders adequate time to consider the offer; and it has not made
the offer to "all holders" of Whitehall stock.

     84. As a result of the foregoing, defendants Prentice and Holtzman have
violated, and continue to violate, Section 14(d) of the Exchange Act and the
regulations thereunder. Plaintiffs are entitled to preliminary and permanent
injunctive relief barring these violations and an order requiring Prentice and
Holtzman to disgorge all shares acquired in violation of federal law.

     85. Plaintiffs have no adequate remedy at law.

                            Fourth Claim for Relief
                            -----------------------

   (Against Whitehall -- Shareholder Rights Agreement -- Declaratory Judgment)
   ---------------------------------------------------------------------------

     86. Plaintiffs incorporate paragraphs 1 through 85 above.



                                     - 22 -


     87. When faced with a potential change in control, Whitehall must act with
fairness to shareholders in accordance with its fundamental duties of care and
loyalty.

     88. When multiple suitors are competing for control, the concern for
fairness forbids directors from using defensive mechanisms such as "poison pill"
terms to thwart an action or to favor one bidder over another.

     89. When, as here, bidders make relatively similar offers, Whitehall cannot
fulfill its duties by playing favorites with contending factions.

     90. Based on the foregoing, Plaintiffs are entitled to an Order enjoining
Whitehall from invoking the "poison pill" against plaintiffs.

     91. Plaintiffs have no adequate remedy at law.

                             Sixth Claim for Relief
                             ----------------------

                      (Against Whitehall -- Second Restated
               Certificate of Incorporation -- Declaratory Relief)
               ---------------------------------------------------

     92. Plaintiffs incorporate paragraphs 1 through 91 above.

     93. Article Twelfth of Whitehall's Second Restated Certificate of
Incorporation provides that "the affirmative vote of the holders of shares of
voting stock of the Corporation representing at lest seventy-five (75%) of the
voting power of all of the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to (i) reduce or eliminate the
number of authorized shares of any capital stock set forth in Article Fourth."

     94. Article Fourth of Whitehall's Second Restated Certificate of
Incorporation provides that "[t]he total number of shares of all classes of
stock which



                                     - 23 -


the Corporation shall have authority to issue is 62,026,026 of which 60,000,000
shares shall be Common Stock."

     95. Whitehall's proposal to amend the certificate of incorporation to
effect a 1 for 2 reverse stock split by less than a vote of seventy five percent
of Whitehall's stockholders is a violation of the Second Restated Certificate of
Incorporation.

     96. As a result of the foregoing, a genuine dispute exists between
Newcastle and Whitehall as to the number of votes required for approval of the
reverse stock split to be voted upon the Special Meeting. Based on the clear
language of the Charter, Newcastle is entitled to a declaratory judgment that
the reverse stock split cannot be passed absent approval from 75% of the issued
outstanding shares of Whitehall.

     WHEREFORE, Plaintiffs prays for judgment as follows:

          A.   Preliminarily and permanently enjoining defendants, their
               servants, employees, agents and attorneys and all persons acting
               on their behalf or in concert or participation with them, from
               directly or indirectly: violating Section 14(a) of the Exchange
               Act and the rules and regulations promulgated thereunder;
               soliciting and delivering any proxy, consent or authorization
               with respect to Whitehall securities; acquiring or attempting to
               acquire any Whitehall securities; voting in person or by proxy
               any Whitehall securities; soliciting or arranging for the
               solicitation of



                                     - 24 -


               orders to buy or to sell any Whitehall securities; otherwise
               controlling or influencing or attempting to control or influence
               in any manner the management or business policies and decisions
               of Whitehall through use of Whitehall securities or otherwise or
               taking or attempting to take any other steps in furtherance of
               any plan to change or influence the control of Whitehall included
               but not limited to, continuing their ongoing proxy solicitation.

          B.   Preliminarily and permanently enjoining defendants from
               proceeding with any proxy solicitation, or attempting to exercise
               or utilize in any manner any written proxy delivered to
               defendants, until such time as defendants have complied with all
               requirements of the Exchange Act, including, without limitation
               the filing of a complete and accurate Schedule 14A and definitive
               proxy material fully complying with the relevant provisions of
               the Exchange Act and the rules and regulations promulgated
               thereunder, and the shareholders of Whitehall have been afforded
               a sufficient opportunity to review such complete and accurate
               filing so as to render an informed decision thereon.



                                     - 25 -


          C.   Preliminarily and permanently enjoining defendants, their
               servants, employees, agents and attorneys and all persons acting
               on their behalf or in concert or participation with them, from
               directly or indirectly: violating Section 13(d) of the Exchange
               Act and the rules and regulations promulgated thereunder;
               soliciting and delivering any proxy, consent or authorization
               with respect to Whitehall securities; acquiring or attempting to
               acquire any Whitehall securities; voting in person or by proxy
               any Whitehall securities; soliciting or arranging for the
               solicitation of orders to buy or to sell any Whitehall
               securities; otherwise controlling or influencing or attempting to
               control or influence in any manner the management or business
               policies and decisions of Whitehall through use of Whitehall
               securities or otherwise or taking or attempting to take any other
               steps in furtherance of any plan to change or influence the
               control of Whitehall included but not limited to, continuing
               their ongoing proxy solicitation.

          D.   Preliminarily and permanently enjoining defendants from
               proceeding with any proxy solicitation, or attempting to exercise
               or utilize in any manner any written proxy delivered to
               defendants, until such time



                                     - 26 -


               as defendants have complied with all requirements of the Exchange
               Act, including, without limitation the filing of a complete and
               accurate Schedule 13D and definitive proxy material fully
               complying with the relevant provisions of the Exchange Act and
               the rules and regulations promulgated thereunder, and the
               shareholders of Whitehall have been afforded a sufficient
               opportunity to review such complete and accurate filing so as to
               render an informed decision thereon.

          E.   Preliminarily and permanently enjoining Whitehall from engaging
               in a violation of Section 14(d) of the Exchange act by purchasing
               shares without complying the tender offer rules promulgated by
               the SEC and directing defendants to disgorge any shares or
               proxies acquired in violation of the federal law.

          F.   Preliminarily and permanently enjoining Whitehall from invoking
               the "poison pill" against Plaintiffs.

          G.   Declaring that, under Whitehall's Charter, any reverse stock
               split cannot be effective unless approved by a vote of seventy
               five percent of Whitehall's shareholders.



                                     - 27 -


          H.   Awarding plaintiffs costs, disbursements, attorney's fees, and
               such other and further relief as the court deems just and proper.




                                     - 28 -




Dated: January 5, 2006
                                 OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP


                                 By: /s/ Robert W. Sadowski
                                     -----------------------
                                     Thomas J. Fleming (TJF4423)
                                     Robert W. Sadowski (RWS4473)
                                     Attorneys for Plaintiffs
                                     Park Avenue Tower
                                     65 East 55th Street
                                     New York, New York  10022-1106
                                     (212) 451-2300