<PAGE>   1
                                                                    EXHIBIT 10.1

              AMENDMENT NUMBER THREE TO LOAN AND SECURITY AGREEMENT


         This Amendment Number Three to Loan and Security Agreement
("Amendment") is entered into as of November 24, 1999, among SAMUELS JEWELERS,
INC., a Delaware corporation (the "Borrower"), on the one hand, and the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), and FOOTHILL CAPITAL CORPORATION, as Agent ("Agent"), on the other
hand.

                                    RECITALS

         A. Borrower, Lenders and Agent have previously entered into that
certain Loan and Security Agreement, dated as of October 2, 1998, as amended as
of April 15, 1999 and August 30, 1999 (the "Agreement").

         B. Borrower has entered into that certain Stock Purchase Agreement,
dated October 20, 1999, with Harry S. Cohen and Steven D. Singleton (as amended,
the "Purchase Agreement") pursuant to which Borrower is acquiring all of the
outstanding shares of capital stock of C&H Rauch, Inc., a Kentucky corporation
("Rauch").

         C. Concurrently with the closing of Borrower's purchase of Rauch
pursuant to the Purchase Agreement, Borrower intends to merge Rauch with and
into Borrower (the "Merger").

         D. Borrower, Lenders and Agent desire to consent to Borrower's purchase
of Rauch and the Merger and to further amend the Agreement as provided for and
on the conditions herein.

         NOW, THEREFORE, Borrower, Lenders and Agent hereby amend certain
provisions of the Agreement as follows:

         1. DEFINITIONS. All initially capitalized terms used in this Amendment
shall have the meanings given to them in the Agreement unless specifically
defined herein.

         2.       AMENDMENTS.

                  2.1 The following new definitions are added to Section 1.1 of
the Agreement in appropriate alphabetical order:

                           "Excess Availability" means, as of the date of
                  determination: Borrower's unrestricted cash and cash
                  equivalents, plus Availability, less accounts payable that are
                  aged in excess of levels approved by Foothill.


                                       1
<PAGE>   2



                           "Permitted Rauch Notes Payments" means payments of
                  regularly scheduled interest under the Rauch Notes as provided
                  under the terms of such notes in effect on November 24, 1999,
                  plus payments of principal pursuant to the terms of such notes
                  (including at the regularly scheduled maturity thereof) in
                  effect on November 24, 1999, so long as at the time of such
                  payment (a) no Event of Default is currently in existence, and
                  (b) after taking such payment into account Borrower would have
                  (and would have had at all times during the 30 days preceding
                  such payment) Excess Availability of not less than $5,000,000.

                           "Rauch Notes" means, collectively, those certain 3
                  promissory notes, each dated as of November 24, 1999, by
                  Borrower in favor of Harry S. Cohen and Steven D. Singleton,
                  in the aggregate outstanding principal amounts of
                  [$6,000,000].

                  2.2 Section 7.1 (b) of the Agreement is amended to read as
follows:

                           "(b) Indebtedness set forth on Schedule 7.1 and the
                  Rauch Notes;"

                  2.3 Section 7.8 (a) of the Agreement is amended to read as
follows:

                           "(a) Prepay, redeem, retire, defease, purchase or
                  otherwise acquire any Indebtedness owing to any third Person
                  other than (i) Permitted Rauch Notes Payments, and (ii) the
                  Obligations, in accordance with this Agreement, and"

                  2.4 Section 7.20 (b) of the Agreement is amended to read as
follows:

                           "(b) Tangible Net Worth. A Tangible Net Worth of at
                  least the following amounts as of the last day of the fiscal
                  quarters of Borrower ending on or about the last day of the
                  following months:

<TABLE>
<CAPTION>
                  Month                              Minimum Tangible Net Worth
                  -----                              --------------------------
<S>                                                  <C>
                  November 1999                      $14,500,000
                  February 2000                      $24,000,000
                  May 2000                           $23,000,000
                  August 2000                        $21,000,000
                  November 2000                      $20,000,000
                  February 2001                      $31,500,000
                  May 2001                           $31,500,000
                  August 2001                        $29,500,000
</TABLE>


                                       2
<PAGE>   3

                  2.5 Section 7.21 of the Agreement is amended to read as
follows:

                           7.21 CAPITAL EXPENDITURES. Make capital expenditures
                  in any fiscal year in excess of the following amounts for the
                  following Fiscal Years (each a "Capital Budget"):

                                    (a) $11,500,000  in Borrower's  Fiscal Year
                  ending 2000; and

                                    (b) for each of Borrower's Fiscal Years
                  commencing with its Fiscal Year ending 2001, $7,500,000 plus
                  50% of the unused portion of the prior Fiscal Year's Capital
                  Budget.

                  2.6 Section 8.11 of the Agreement is hereby amended to read as
follows:

                           "If Borrower makes any payment on the Rauch Notes
                  other than a Permitted Rauch Notes Payment, or if Borrower
                  makes any payment on account of Indebtedness that has been
                  contractually subordinated in right of payment to the payment
                  of the Obligations, except to the extent such payment is
                  permitted by the terms of the subordination provisions
                  applicable to such Indebtedness;"

                  2.7 Schedule E-1 of the Agreement is amended in its entirety
as set forth on Schedule E-1 to this Amendment.

                  2.8 Agent and Lenders hereby consent to Borrower's purchase of
Rauch in accordance with the terms of the Purchase Agreement and the Merger of
Rauch into Borrower.

                  2.9 Borrower agrees to do each of the following within 45 days
of the completion of the Merger of Rauch into Borrower: (i) deliver to Agent a
reviewed opening balance sheet for the Borrower reflecting the combined
entities; and (ii) terminate any depositary or cash collection accounts
maintained with BankBoston respecting Collections for any of the C. H. Rauch
retail store locations, and commence forwarding all such Collections through the
cash management system currently in place with respect to the other retail store
locations of Borrower, and in conformity with Section 2.8 of the Loan Agreement.
Failure to comply with either of these conditions shall be an Event of Default
under the Loan Agreement.

         3. REPRESENTATIONS AND WARRANTIES. Borrower hereby affirms to Lenders
and Agent that all of Borrower's representations and warranties set forth in the
Agreement are true, complete and accurate in all respects as of the date hereof
(except to the extent such representations and warranties relate solely to an
earlier date).

         4. DEFAULTS; WAIVER. Borrower hereby affirms to Lenders and Agent that
no Default or Event of Default exists as of the date hereof.


                                       3
<PAGE>   4

         5. CONDITIONS PRECEDENT. The effectiveness of this Amendment is
expressly conditioned upon the following:

                  (a) Receipt by Agent of fully executed copies of this
Amendment;

                  (b) Receipt by Agent of evidence satisfactory to Agent that:
(i) the purchase of Rauch by Borrower has been consummated in accordance with
the Purchase Agreement and (ii) the Merger has been completed; and

                  (c) Payment of a fee to Agent, for the pro rata account of
Lenders, in the amount of $50,000.

         6. COSTS AND EXPENSES. Borrower shall pay to Agent all of Agent's
out-of-pocket costs and expenses (including, without limitation, the reasonable
fees and expenses of its counsel, which counsel may include any local counsel
reasonably deemed necessary, search fees, filing and recording fees,
documentation fees, appraisal fees, travel expenses, and other fees) arising in
connection with the preparation, execution, and delivery of this Amendment and
any related documents.

         7. LIMITED EFFECT. In the event of a conflict between the terms and
provisions of this Amendment and the terms and provisions of the Agreement, the
terms and provisions of this Amendment shall govern. In all other respects, the
Agreement, as amended, modified, and supplemented hereby, shall remain in full
force and effect.


                                       4
<PAGE>   5

         8. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which when so executed and delivered shall be deemed to be an original. All
such counterparts, taken together, shall constitute but one and the same
Amendment. This Amendment shall become effective upon the execution of a
counterpart of this Amendment by each of the parties hereto.

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first set forth above.

                             SAMUELS JEWELERS, INC.,
                             a Delaware corporation

                             By:    /s/ DOUG BULLOCK
                                    --------------------------------------------
                             Title: Vice President
                                    --------------------------------------------


                             FOOTHILL CAPITAL CORPORATION,
                             a California corporation, as Agent and as a Lender

                             By:    /s/ ROBERT CASTINE
                                    --------------------------------------------
                             Title: Vice President
                                    --------------------------------------------


                             LASALLE BUSINESS CREDIT, INC.,
                             a Delaware corporation

                             By:    /s/ HERBERT M. KIDD, II
                                    --------------------------------------------
                             Title: S. V. P.
                                    --------------------------------------------


                             SUNROCK CAPITAL CORP.,
                             a Delaware corporation

                             By:    /s/ JOHN D. ERWIN
                                    --------------------------------------------
                             Title: S. V. P.
                                    --------------------------------------------


                                       5