Document:

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                                                                    EXHIBIT 10.5

                                                               Execution Version

                          REGISTRATION RIGHTS AGREEMENT

                  REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
October 3, 2005, by and among Whitehall Jewellers, Inc., a Delaware corporation,
with headquarters located at 155 N. Wacker Drive, Suite 500, Chicago, IL 60606
(the "COMPANY"), and the undersigned buyers (each, a "BUYER" and collectively,
the "BUYERS").

                  WHEREAS:

                  A. In connection with the Securities Purchase Agreement by and
among the parties hereto of even date herewith (the "SECURITIES PURCHASE
AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell to the Buyers
an aggregate of (i) Fifty Million Dollars ($50,000,000) of the Company's secured
convertible notes due three years after the date of issuance (such notes, as the
same may be amended, modified or supplemented from time to time in accordance
with the terms thereof, the "NOTES") which will, among other things, be
convertible into shares of the common stock, $0.001 par value per share ("COMMON
STOCK") of the Company (as converted, the "CONVERSION SHARES") in accordance
with the terms of the Notes and (ii) at the time of the execution of the
Securities Purchase Agreement, warrants (the "WARRANTS") which will be
exercisable to purchase additional shares of Common Stock (as exercised, the
"WARRANT SHARES").

                  B. To induce the Buyers to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws.

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and each
of the Buyers hereby agree as follows:

                  1. Definitions.

                  As used in this Agreement, the following terms shall have the
following meanings:

                           a. "BUSINESS DAY" means any day other than Saturday,
Sunday or any other day on which commercial banks in The City of New York are
authorized or required by law to remain closed.

                           b. "CLOSING DATE" shall have the meaning set forth in
the Securities Purchase Agreement.

                           c. "EFFECTIVE DATE" means the date the Registration
Statement has been declared effective by the SEC.
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                           d. "EFFECTIVENESS DEADLINE" means the date which is
(i) in the event that the Registration Statement is not subject to a full review
by the SEC, 90 days after the earlier of (A) the Closing Date and (B) the date
on which the Securities Purchase Agreement terminates for any reason (the
"TERMINATION DATE") or (ii) in the event that the Registration Statement is
subject to review by the SEC, 150 days after the earlier of (i) the Closing Date
and (B) the Termination Date.

                           e. "FILING DEADLINE" means 45 days after the earlier
of (i) the Termination Date and (ii) the Closing Date.

                           f. "INVESTOR" means a Buyer, any transferee or
assignee thereof to whom a Buyer assigns its rights under this Agreement and who
agrees to become bound by the provisions of this Agreement in accordance with
Section 9 and any transferee or assignee thereof to whom a transferee or
assignee assigns its rights under this Agreement and who agrees to become bound
by the provisions of this Agreement in accordance with Section 9.

                           g. "PERSON" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.

                           h. "REGISTER," "REGISTERED," and "REGISTRATION" refer
to a registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 and the
declaration or ordering of effectiveness of such Registration Statement(s) by
the SEC.

                           i. "REGISTRABLE SECURITIES" means (A) in the event of
a termination of the Securities Purchase Agreement, (i) the Warrant Shares
issued and issuable upon exercise of the Warrants and (ii) any shares of capital
stock issued or issuable with respect to the Warrant Shares and the Warrants, as
a result of any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise, without regard to any limitations on conversions of
the of the Warrants and (B) from and after the Closing Date, (i) the Conversion
Shares issued or issuable upon conversion or redemption of the Notes, (ii) the
Warrant Shares issued or issuable upon exercise of the Warrants, (iii) the
Interest Shares (as defined in the Notes) issued or issuable under the Notes and
(iv) any shares of capital stock issued or issuable with respect to the
Conversion Shares, the Interest Shares, the Warrant Shares, the Notes and the
Warrants, as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitations on
conversions of the Notes or exercises of Warrants.

                           j. "REGISTRATION STATEMENT" means a registration
statement or registration statements of the Company filed under the 1933 Act
covering the Registrable Securities.

                           k. "REQUIRED HOLDERS" means the holders of at least a
majority of the Registrable Securities.

                           l. "REQUIRED REGISTRATION AMOUNT" means (A) in the
event of a termination of the Securities Purchase Agreement, 130% of the Warrant
Shares issued and issuable pursuant to the Warrants as of the trading day
immediately preceding the applicable date
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of determination and, (B) from and after the Closing Date, the sum of (i) 130%
of the sum of the number of Conversion Shares issued and issuable as of the
trading day immediately preceding the applicable date of determination, and the
number of Warrant Shares issued and issuable pursuant to the Warrants as of the
trading day immediately preceding the applicable date of determination, and (ii)
100% of the Interest Shares issued or issuable under the Notes, in each case
subject to adjustment as provided in Section 2(e).

                           m. "RULE 415" means Rule 415 under the 1933 Act or
any successor rule providing for offering securities on a continuous or delayed
basis.

                           n. "SEC" means the United States Securities and
Exchange Commission.

                  Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.

                  2. Registration.

                           a. Mandatory Registration. The Company shall prepare,
and, as soon as practicable but in no event later than the Filing Deadline, file
with the SEC the Registration Statement on Form S-1 covering the resale of all
of the Registrable Securities. The Registration Statement prepared pursuant
hereto shall register for resale at least the number of shares of Common Stock
equal to the Required Registration Amount as of the date the Registration
Statement is initially filed with the SEC. The Registration Statement shall
contain (except if otherwise directed by the Required Holders) the "Selling
Shareholders" and "Plan of Distribution" sections in substantially the form
attached hereto as Exhibit B. The Company shall use its reasonable best efforts
to have the Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the Effectiveness Deadline.

                           b. Allocation of Registrable Securities. The initial
number of Registrable Securities included in any Registration Statement and any
increase in the number of Registrable Securities included therein shall be
allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement covering
such initial number of Registrable Securities or increase thereof is declared
effective by the SEC. In the event that an Investor sells or otherwise transfers
any of such Investor's Registrable Securities, each transferee shall be
allocated a pro rata portion of the then remaining number of the applicable
Registrable Securities included in such Registration Statement for such
transferor. Any shares of Common Stock included in a Registration Statement and
which remain allocated to any Person which ceases to hold any Registrable
Securities covered by such Registration Statement shall be allocated to the
remaining Investors, pro rata based on the number of Registrable Securities then
held by such Investors which are covered by such Registration Statement. In no
event shall the Company include any securities other than Registrable Securities
on any Registration Statement without the prior written consent of the Required
Holders.

                           c. Legal Counsel. Subject to Section 5 hereof, the
Required Holders shall have the right to select one legal counsel to review any
registration pursuant to this Section 2, which shall be Schulte Roth & Zabel LLP
or such other counsel as is thereafter designated in
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writing by the Required Holders prior to the initiation of such other legal
counsel's review of any registration ("LEGAL COUNSEL"). The Company and Legal
Counsel shall reasonably cooperate with each other in performing the Company's
obligations under this Agreement.

                           d. Eligibility to use Form S-3. The Company shall use
its reasonable best efforts to become eligible to use a Form S-3 to register the
Registrable Securities as soon as practicable after the Closing, subject to the
rules and regulations of the SEC regarding eligibility to use Form S-3,
including by seeking a waiver from the SEC regarding any act or omission by the
Company that resulted in a failure of the Company to be eligible to use Form
S-3. If at any time the Company regains such eligibility, the Company shall
register the Registrable Securities on Form S-3 (or convert the Registration
Statement then in effect covering the Registrable Securities to a Form S-3) as
soon as such form is available, provided that the Company shall maintain the
effectiveness of the Registration Statement then in effect until such time as a
Registration Statement on Form S-3 covering the Registrable Securities has been
declared effective by the SEC.

                           e. Sufficient Number of Shares Registered. In the
event the number of Registrable Securities available under a Registration
Statement filed pursuant to Section 2(a) is insufficient to cover all of the
Registrable Securities required to be covered by such Registration Statement or
an Investor's allocated portion of the Registrable Securities pursuant to
Section 2(b), the Company shall amend the Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover at least the Required Registration Amount, but as of the
trading day immediately preceding the date of the filing of such amendment or
new Registration Statement, in each case, as soon as practicable, but in any
event not later than fifteen (15) days after the necessity therefor arises. The
Company shall use its reasonable best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following the
filing thereof. For purposes of the foregoing provision, the number of shares
available under a Registration Statement shall be deemed "insufficient to cover
all of the Registrable Securities" if at any time the number of shares of Common
Stock available for resale under the Registration Statement is less than the
Required Registration Amount. The calculation set forth in the foregoing
sentence shall be made without regard to any limitations on the conversion of
the Notes or the exercise of the Warrants and such calculation shall assume that
(i) the Notes and the Warrants are then convertible or exercisable into shares
of Common Stock and assuming the maximum number of Conversion Shares and Warrant
Shares, as the case may be, will be issued at the then prevailing Conversion
Price (as defined in the Notes) and Exercise Price (as defined in the Warrants)
and (ii) the maximum number of Interest Shares under the Notes, as applicable,
assuming the applicable portions of the initial outstanding principal amount of
the Notes remains outstanding through the applicable scheduled maturity dates
and assuming no conversions or redemptions of the Notes prior to the scheduled
maturity date, are issuable at the then prevailing Interest Conversion Price (as
defined in the Notes) or Conversion Rate (as defined in the Notes), as
applicable.

                           f. Effect of Failure to File and Obtain and Maintain
Effectiveness of Registration Statement. If (i) a Registration Statement
covering all of the Registrable Securities required to be covered thereby and
required to be filed by the Company pursuant to this Agreement is (A) not filed
with the SEC on or before the respective Filing Deadline (a "FILING FAILURE") or
(B) not declared effective by the SEC on or before the respective Effectiveness
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Deadline (an "EFFECTIVENESS FAILURE") or (ii) on any day after the Effective
Date sales of all of the Registrable Securities required to be included on such
Registration Statement cannot be made (other than during an Allowable Grace
Period (as defined in Section 3(r)) pursuant to such Registration Statement
(including, without limitation, because of a failure to keep such Registration
Statement effective, to disclose such information as is necessary for sales to
be made pursuant to such Registration Statement or to register a sufficient
number of shares of Common Stock) (a "MAINTENANCE FAILURE"), then, as partial
relief for the damages to any holder by reason of any such delay in or reduction
of its ability to sell the underlying shares of Common Stock (which remedy shall
not be exclusive of any other remedies available at law or in equity), the
Company shall pay to each holder of Registrable Securities relating to such
Registration Statement an amount in cash equal to one and one-half percent
(1.5%) of the aggregate Purchase Price (as such term is defined in the
Securities Purchase Agreement) of such Investor's Registrable Securities
included in such Registration Statement on each of the following dates: (i) the
day of a Filing Failure and on every thirtieth day (pro rated for periods
totaling less than thirty days) thereafter until such Filing Failure is cured;
(ii) the day of an Effectiveness Failure and on every thirtieth day (pro rated
for periods totaling less than thirty days) thereafter until such Effectiveness
Failure is cured and (iii) the initial day of a Maintenance Failure and on every
thirtieth day (pro rated for periods totaling less than thirty days) thereafter
until such Maintenance Failure is cured. The payments to which a holder shall be
entitled pursuant to this Section 2(f) are referred to herein as "REGISTRATION
DELAY PAYMENTS." Registration Delay Payments shall be paid on the earlier of (I)
the last day of the calendar month during which such Registration Delay Payments
are incurred and (II) the third Business Day after the event or failure giving
rise to the Registration Delay Payments is cured. In the event the Company fails
to make Registration Delay Payments in a timely manner, such Registration Delay
Payments shall bear interest at the rate of 1.0% per month (prorated for partial
months) until paid in full.

                  3. Related Obligations.

                  At such time as the Company is obligated to file a
Registration Statement with the SEC pursuant to Section 2(a) or 2(e), the
Company will use its reasonable best efforts to effect the registration of the
Registrable Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, the Company shall have the following obligations:

                           a. The Company shall promptly prepare and file with
the SEC a Registration Statement with respect to the Registrable Securities (but
in no event later than the applicable Filing Deadline) and use its reasonable
best efforts to cause such Registration Statement relating to the Registrable
Securities to become effective as soon as practicable after such filing (but in
no event later than the Effectiveness Deadline). The Company shall keep each
Registration Statement effective pursuant to Rule 415 at all times until the
earlier of (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or successor thereto) promulgated under the
1933 Act or (ii) the date on which the Investors shall have sold all the
Registrable Securities covered by such Registration Statement (the "REGISTRATION
PERIOD"), which Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading. The term "reasonable best
efforts" shall
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mean, among other things, that the Company shall submit to the SEC, within two
(2) Business Days after the Company learns that no review of a particular
Registration Statement will be made by the staff of the SEC or that the staff
has no further comments on the Registration Statement, as the case may be, and
the approval of Legal Counsel pursuant to Section 3(c), a request for
acceleration of effectiveness of such Registration Statement to a time and date
not later than 48 hours after the submission of such request.

                           b. The Company shall prepare and file with the SEC
such amendments (including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement. In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant to
this Section 3(b)) by reason of the Company filing a report on Form 10-K, Form
10-Q, or Form 8-K or any analogous report under the Securities Exchange Act of
1934, as amended (the "1934 ACT"), the Company shall have incorporated such
report by reference into the Registration Statement, if applicable, or shall
file such amendments or supplements with the SEC on the same day on which the
1934 Act report is filed which created the requirement for the Company to amend
or supplement the Registration Statement.

                           c. The Company shall (A) permit Legal Counsel to
review and comment upon (i) the Registration Statement at least five (5)
Business Days prior to its filing with the SEC and (ii) all amendments and
supplements to all Registration Statements (except for reports incorporated by
reference therein) within a reasonable number of days prior to their filing with
the SEC, and (B) not file any Registration Statement or amendment or supplement
thereto in a form to which Legal Counsel reasonably objects. The Company shall
not submit a request for acceleration of the effectiveness of a Registration
Statement or any amendment or supplement thereto without the prior approval of
Legal Counsel, which consent shall not be unreasonably withheld or delayed. The
Company shall furnish to Legal Counsel, without charge, (i) copies of any
correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement, (ii) promptly after the
same is prepared and filed with the SEC, one copy of any Registration Statement
and any amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor, and
all exhibits and (iii) upon the effectiveness of any Registration Statement, one
copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto. The Company shall reasonably cooperate with
Legal Counsel in performing the Company's obligations pursuant to this Section
3.

                           d. The Company shall furnish to each Investor whose
Registrable Securities are included in any Registration Statement, without
charge, (i) promptly after the same is prepared and filed with the SEC, at least
one copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents
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incorporated therein by reference, if requested by an Investor, all exhibits and
each preliminary prospectus, (ii) upon the effectiveness of any Registration
Statement, ten (10) copies of the prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number of
copies as such Investor may reasonably request) and (iii) such other documents,
including copies of any preliminary or final prospectus, as such Investor may
reasonably request from time to time in order to facilitate the disposition of
the Registrable Securities owned by such Investor.

                           e. The Company shall use its reasonable best efforts
to (i) register and qualify, unless an exemption from registration and
qualification applies, the resale by Investors of the Registrable Securities
covered by a Registration Statement under such other securities or "blue sky"
laws of all applicable jurisdictions in the United States, (ii) prepare and file
in those jurisdictions, such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify
Legal Counsel and each Investor who holds Registrable Securities of the receipt
by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.

                           f. The Company shall notify Legal Counsel and each
Investor in writing, of the happening of any event, as promptly as practicable
after becoming aware of such event, as a result of which the prospectus included
in a Registration Statement, as then in effect, includes an untrue statement of
a material fact or omission to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (provided that in no
event shall such notice contain any material, nonpublic information), and,
subject to Section 3(r), promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
ten (10) copies of such supplement or amendment to Legal Counsel and each
Investor (or such other number of copies as Legal Counsel or such Investor may
reasonably request). The Company shall also promptly notify Legal Counsel and
each Investor in writing, (i) when a prospectus or any prospectus supplement or
post-effective amendment has been filed, and when a Registration Statement or
any post-effective amendment has become effective (notification of such
effectiveness shall be delivered to Legal Counsel and each Investor by facsimile
or e-mail on the same day of such effectiveness and by overnight mail), (ii) of
any request by the SEC for amendments or supplements to a Registration Statement
or related prospectus or related information, and (iii) of the Company's
reasonable determination that a post-effective amendment to a Registration
Statement would be appropriate.
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                           g. The Company shall use its reasonable best efforts
to prevent the issuance of any stop order or other suspension of effectiveness
of a Registration Statement, or the suspension of the qualification of any of
the Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify Legal Counsel and each Investor who
holds Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.

                           h. At the reasonable request of any Investor, on the
date of the effectiveness of the Registration Statement and thereafter from time
to time on such dates as an Investor may reasonably request the Company shall
(i) use reasonable best efforts to furnish to such Investor, a letter, dated
such date, from the Company's independent certified public accountants in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
Investors, and (ii) furnish to such Investor an opinion, dated as of such date,
of counsel representing the Company for purposes of such Registration Statement,
in form, scope and substance as is customarily given in an underwritten public
offering, addressed to the Investors.

                           i. The Company shall make available for inspection by
(i) any Investor, (ii) Legal Counsel and (iii) one firm of accountants or other
agents retained by the Investors (collectively, the "INSPECTORS"), all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the "RECORDS"), as shall be reasonably deemed
necessary by each Inspector, and cause the Company's officers, directors and
employees, counsel and the Company's independent certified public accountants to
supply all information which any Inspector may reasonably request; provided,
however, that each Inspector shall agree to hold in strict confidence and shall
not make any disclosure (except to an Investor) or use of any Record or other
information which the Company determines in good faith to be confidential, and
of which determination the Inspectors are so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement of which
the Inspector has knowledge. Each Investor agrees that it shall, upon learning
that disclosure of such Records is sought in or by a court or governmental body
of competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. Nothing herein (or in any other confidentiality agreement
between the Company and any Investor) shall be deemed to limit the Investors'
ability to sell Registrable Securities in a manner which is otherwise consistent
with applicable laws and regulations.

                           j. The Company shall hold in confidence and not make
any disclosure of information concerning an Investor provided to the Company
unless (i) the Company reasonably determines, after consultation with the
Investors and Legal Counsel, disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other final,
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non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

                           k. The Company shall use its reasonable best efforts
either to (i) cause all the Registrable Securities covered by a Registration
Statement to be listed on each securities exchange on which securities of the
same class or series issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of such
exchange, or (ii) secure designation and quotation of all the Registrable
Securities covered by the Registration Statement on the Nasdaq National Market,
or (iii) if, despite the Company's reasonable best efforts to satisfy the
preceding clause (i) or (ii), the Company is unsuccessful in satisfying the
preceding clause (i) or (ii), to secure the inclusion for quotation on The
Nasdaq SmallCap Market for such Registrable Securities and, without limiting the
generality of the foregoing, to use its reasonable best efforts to arrange for
at least two market makers to register with the National Association of
Securities Dealers, Inc. ("NASD") as such with respect to such Registrable
Securities. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section 3(k).

                           l. The Company shall cooperate with the Investors who
hold Registrable Securities being offered and, to the extent applicable,
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the Investors may reasonably
request and registered in such names as the Investors may request.

                           m. If requested by an Investor, the Company shall
within five days of receipt of notice from such Investor (i) incorporate in a
prospectus supplement or post-effective amendment such information as an
Investor reasonably requests to be included therein relating to the sale and
distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering; and (ii)
make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment.

                           n. The Company shall use its reasonable best efforts
to cause the Registrable Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities.

                           o. The Company shall make generally available to its
security holders as soon as practical, but not later than 90 days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the 1933 Act)
<PAGE>
covering a twelve-month period beginning not later than the first day of the
Company's fiscal quarter next following the effective date of the Registration
Statement.

                           p. The Company shall otherwise use its reasonable
best efforts to comply with all applicable rules and regulations of the SEC in
connection with any registration hereunder.

                           q. Within two (2) Business Days after a Registration
Statement which covers Registrable Securities is ordered effective by the SEC,
the Company shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.

                           r. Notwithstanding anything to the contrary herein,
at any time after the Registration Statement has been declared effective by the
SEC, the Company may delay the disclosure of material, non-public information
concerning the Company the disclosure of which at the time is not, in the good
faith opinion of the Board of Directors of the Company and its counsel, in the
best interest of the Company and, in the opinion of counsel to the Company,
otherwise required (a "GRACE PERIOD"); provided, that the Company shall promptly
(i) notify the Investors in writing of the existence of material, non-public
information giving rise to a Grace Period (provided that in each notice the
Company will not disclose the content of such material, non-public information
to the Investors) and the date on which the Grace Period will begin, and (ii)
notify the Investors in writing of the date on which the Grace Period ends; and,
provided further, that no Grace Period shall exceed 20 consecutive days and
during any 365 day period such Grace Periods shall not exceed an aggregate of 60
days and the first day of any Grace Period must be at least 2 trading days after
the last day of any prior Grace Period (an "ALLOWABLE GRACE PERIOD"). For
purposes of determining the length of a Grace Period above, the Grace Period
shall begin on and include the date the holders receive the notice referred to
in clause (i) and shall end on and include the later of the date the holders
receive the notice referred to in clause (ii) and the date referred to in such
notice. Upon expiration of the Grace Period, the Company shall again be bound by
the first sentence of Section 3(f) with respect to the information giving rise
thereto unless such material non-public information is no longer applicable.
Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to deliver unlegended shares of Common Stock to a transferee of an
Investor in accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale, and delivered a copy of the
prospectus included as part of the applicable Registration Statement, prior to
the Investor's receipt of the notice of a Grace Period and for which the
Investor has not yet settled.

                  4. Obligations of the Investors.

                           a. At least five (5) Business Days prior to the first
anticipated filing date of a Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from each such
Investor if such Investor elects to have any of such Investor's Registrable
Securities included in such Registration Statement. It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this
<PAGE>
Agreement with respect to the Registrable Securities of a particular Investor
that such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it, as shall be reasonably
required to effect and maintain the effectiveness of the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.

                           b. Each Investor, by such Investor's acceptance of
the Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from such Registration Statement.

                           c. Each Investor agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f) or Section 3(r), such Investor will
immediately discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities until such
Investor's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(g) or the first sentence of 3(f) or receipt of notice
that no supplement or amendment is required or the end of the applicable Grace
Period or such earlier date as designated in the notice contemplated by Section
3(r) hereof . Notwithstanding anything to the contrary, the Company shall cause
its transfer agent to deliver unlegended shares of Common Stock to a transferee
of an Investor in accordance with the terms of the Securities Purchase Agreement
in connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor's receipt of
a notice from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f) or Section 3(r) and for which the
Investor has not yet settled.

                           d. Each Investor covenants and agrees that it will
comply with the prospectus delivery requirements of the 1933 Act as applicable
to it in connection with sales of Registrable Securities pursuant to the
Registration Statement.

                  5. Expenses Of Registration.

                  All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company shall be paid by the Company.
The Company shall also reimburse PWJ Funding LLC for the reasonable fees and
disbursements of Legal Counsel incurred in connection with registrations,
filings or qualifications pursuant to Sections 2 and 3 of this Agreement.

                  6. Indemnification.

                  In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
<PAGE>
                           a. To the fullest extent permitted by law, the
Company will, and hereby does, indemnify, hold harmless and defend each
Investor, the directors, officers, partners, members, employees, agents,
representatives of, and each Person, if any, who controls any Investor within
the meaning of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED PERSON"),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys' fees, amounts paid in settlement or
expenses, joint or several, (collectively, "CLAIMS") incurred in investigating,
preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the SEC,
whether pending or threatened, whether or not an indemnified party is or may be
a party thereto ("INDEMNIFIED DAMAGES"), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities or other
"blue sky" laws of any jurisdiction in which Registrable Securities are offered
("BLUE SKY FILING"), or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to a Registration Statement or
(iv) any material violation of this Agreement (the matters in the foregoing
clauses (i) through (iv) being, collectively, "VIOLATIONS"). Subject to Section
6(c), the Company shall reimburse the Indemnified Persons, promptly as such
expenses are incurred and are due and payable, for any reasonable legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person for such
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant to Section
3(d); (ii) with respect to any preliminary prospectus, shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(d), and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a Violation and such Indemnified
Person, notwithstanding such advice, used it or failed to deliver the correct
prospectus as required by the 1933 Act and such correct prospectus was timely
made available
<PAGE>
pursuant to Section 3(d); (iii) shall not be available to the extent such Claim
is based on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company, including a corrected prospectus, if
such prospectus or corrected prospectus was timely made available by the Company
pursuant to Section 3(d); and (iv) shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld or delayed. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Investors pursuant to Section 9.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Person if the
untrue statement or omission of material fact contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as then amended or
supplemented.

                           b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees to severally and
not jointly indemnify, hold harmless and defend, to the same extent and in the
same manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement and each Person, if
any, who controls the Company within the meaning of the 1933 Act or the 1934 Act
(each, an "INDEMNIFIED PARTY"), against any Claim or Indemnified Damages to
which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are
based upon any Violation, in each case to the extent, and only to the extent,
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in
connection with such Registration Statement or in any filing made in connection
with the qualification of the offering under the securities or other "blue sky"
laws of any jurisdiction in which Registrable Securities are offered; and,
subject to Section 6(c), such Investor will reimburse any legal or other
expenses reasonably incurred by an Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld or
delayed; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented.

                           c. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action or proceeding (including any governmental action or proceeding) involving
a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this
<PAGE>
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses of not more than one counsel
for such Indemnified Person or Indemnified Party to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. In the case of an Indemnified Person, legal counsel referred to in
the immediately preceding sentence shall be selected by the Required Holders to
which the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate reasonably with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the Indemnified Party or Indemnified Person which relates to such action or
Claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent, provided, however, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the prior written consent of the Indemnified Party or Indemnified
Person, consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such Claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.

                           d. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or Indemnified
Damages are incurred.

                           e. The indemnity agreements contained herein shall be
in addition to (i) any cause of action or similar right of the Indemnified Party
or Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

                  7. Contribution.
<PAGE>
                  To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no person involved in the sale of Registrable Securities which person is
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) in connection with such sale shall be entitled to contribution
from any person involved in such sale of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (ii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities pursuant to
such Registration Statement.

                  8. Reports Under The 1934 Act.

                  Until the date on which (A) the Investors shall have sold all
the Conversion Shares and the Warrant Shares and (B) none of the Notes or
Warrants is outstanding, with a view to making available to the Investors the
benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration ("RULE 144"), the
Company agrees to:

                           a. make and keep public information available, as
those terms are understood and defined in Rule 144;

                           b. file with the SEC in a timely manner all reports
and other documents required of the Company under the 1933 Act and the 1934 Act
so long as the Company remains subject to such requirements (it being understood
that nothing herein shall limit the Company's obligations under Section 4(c) of
the Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and

                           c. furnish to each Investor so long as such Investor
owns Registrable Securities, promptly upon request, (i) a written statement by
the Company, if true, that it has complied with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably requested
to permit the Investors to sell such securities pursuant to Rule 144 without
registration.

                  9. Assignment of Registration Rights.

                  The rights under this Agreement shall be automatically
assignable by the Investors to any transferee of Registrable Securities if: (i)
the Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned;
(iii) immediately following such transfer or assignment the further disposition
of such securities by the transferee or assignee is restricted under the 1933
Act and applicable state securities laws; (iv) at or before the time the Company
<PAGE>
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement.

                  10. Amendment of Registration Rights.

                  Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Required Holders. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company. No such
amendment shall be effective to the extent that it applies to less than all of
the holders of the Registrable Securities. No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification of any
provision of any of this Agreement unless the same consideration also is offered
to all of the parties to this Agreement.

                  11. Miscellaneous.

                           a. A Person is deemed to be a holder of Registrable
Securities whenever such Person owns or is deemed to own of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the such record owner of such Registrable
Securities.

                           b. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one Business Day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:

                  If to the Company:

                                    Whitehall Jewellers, Inc.
                                    155 North Wacker Drive, Suite 500
                                    Chicago, Illinois 60606
                                    Telephone:       (312) 782-6800
                                    Facsimile:       (312)
                                    Attention:       General Counsel

                           With a copy (for informational purposes only) to:

                                    Sidley Austin Brown & Wood LLP
                                    Bank One Plaza
                                    10 South Dearborn Street
                                    Chicago, Illinois 60603
                                    Telephone:       (312) 853-7000
<PAGE>
                                    Facsimile:       (312) 853-7036
                                    Attention:       John Sabl, Esq.

                  If to Legal Counsel:

                                    Schulte Roth & Zabel LLP
                                    919 Third Avenue
                                    New York, New York 10022
                                    Telephone:       (212) 756-2000
                                    Facsimile:       (212) 593-5955
                                    Attention:       Robert Goldstein, Esq.

If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers, or to such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

                           c. Failure of any party to exercise any right or
remedy under this Agreement or otherwise, or delay by a party in exercising such
right or remedy, shall not operate as a waiver thereof.

                           d. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting
The City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement
<PAGE>
in that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

                           e. This Agreement and the other Transaction Documents
(as defined in the Securities Purchase Agreement) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Agreement and the
other Transaction Documents supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.

                           f. Subject to the requirements of Section 9, this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.

                           g. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.

                           h. This Agreement may be executed in identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.

                           i. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

                           j. All consents and other determinations required to
be made by the Investors pursuant to this Agreement shall be made, unless
otherwise specified in this Agreement, by the Required Holders, determined as if
all of the Notes held by Investors then outstanding have been converted into
Registrable Securities and all Warrants then outstanding have been exercised for
Registrable Securities without regard to any limitations on conversion of the
Notes or on exercises of the Warrants.

                           k. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent and no
rules of strict construction will be applied against any party.

                           l. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not
for the benefit of, nor may any provision hereof be enforced by, any other
Person.
<PAGE>
                           m. The obligations of each Buyer hereunder are
several and not joint with the obligations of any other Buyer, and no provision
of this Agreement is intended to confer any obligations on any Buyer vis a vis
any other Buyer. Nothing contained herein, and no action taken by any Buyer
pursuant hereto, shall be deemed to constitute the Buyers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Buyers are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated herein.

                                  * * * * * *
<PAGE>
                  IN WITNESS WHEREOF, each Buyer and the Company have caused
their respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

                                    COMPANY:

                                    WHITEHALL JEWELLERS., INC.

                                    By: /s/ John R. Desjardins
                                       ------------------------------
                                           Name: John R. Desjardins
                                           Title: Executive Vice
                                                  President & Chief
                                                  Financial Officer
<PAGE>
                  IN WITNESS WHEREOF, each Buyer and the Company have caused
their respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

                                  BUYER:

                                  PWJ FUNDING LLC

                                  By:    /s/ Michael Weiss
                                         ---------------------------------
                                         Name: Michael Weiss
                                         Title:  CFO of Prentice Capital
                                         Management, LP, the Manager
<PAGE>
                  IN WITNESS WHEREOF, each Buyer and the Company have caused
their respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

                                 BUYER:

                                 PWJ LENDING LLC

                                 By:    /s/ Jonathan Duskin
                                        ----------------------------
                                        Name: Jonathan Duskin
                                        Title:   Managing Director
<PAGE>
                  IN WITNESS WHEREOF, each Buyer and the Company have caused
their respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

                                   BUYER:

                                   HOLTZMAN OPPORTUNITY FUND, L.P.

                                   By: Holtzman Financial Advisors, LLC,
                                   its General Partner

                                   By: SH Independence, LLC, its Managing Member

                                   By:    /s/ Seymour Holtzman                ,
                                          ------------------------------------
                                          Name: Seymour Holtzman
                                          Title:   Sole Member
<PAGE>
                               SCHEDULE OF BUYERS

<TABLE>
<CAPTION>
                                                    BUYER ADDRESS                  BUYER'S REPRESENTATIVE'S ADDRESS
              BUYER                             AND FACSIMILE NUMBER                     AND FACSIMILE NUMBER
              -----                             --------------------                     --------------------
<S>                                      <C>                                       <C>
          PWJ FUNDING LLC                623 Fifth Avenue                               Schulte Roth & Zabel LLP
                                         32nd Floor                                     919 Third Avenue
                                         New York, NY  10022                            New York, NY 10022
                                         Attention: Michael Zimmerman                   Attn:  Robert Goldstein,
                                         Facsimile: 212-756-1464                        Esq.
                                         Telephone: (___) ___-____                      Facsimile:  (212) 593-5955
                                                                                        Telephone:  (212) 756-2000
    PWJ LENDING LLC                      623 Fifth Avenue                               Schulte Roth & Zabel LLP
                                         32nd Floor                                     919 Third Avenue
                                         New York, NY  10022                            New York, NY 10022
                                         Attention: Michael Zimmerman                   Attn:  Robert Goldstein,
                                         Facsimile: 212-756-1464                        Esq.
                                              Telephone:        (___) ___-____          Facsimile:  (212) 593-5955
                                                                                        Telephone:  (212) 756-2000
    HOLTZMAN OPPORTUNITY FUND, L.P.
</TABLE>

                                                                       EXHIBIT A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

LaSalle Bank
135 South LaSalle Street
Chicago, IL  60603

[
Attention: ____________

                  Re:  WHITEHALL JEWELLERS, INC.

Ladies and Gentlemen:

                  We are counsel to Whitehall Jewellers, Inc., a Delaware
corporation (the "COMPANY"), and have represented the Company in connection with
that certain Securities Purchase Agreement (the "PURCHASE AGREEMENT") entered
into by and among the Company and the buyers named therein (collectively, the
"HOLDERS") pursuant to which the Company issued to the Holders secured
convertible notes (the "NOTES") convertible into shares of the Company's Common
Stock, par value $.001 per share (the "COMMON STOCK") (as converted, the
"CONVERSION SHARES") and warrants (the "WARRANTS") exercisable for shares of
Common Stock (the "WARRANT SHARES"). Pursuant to the Purchase Agreement, the
Company also has entered into a Registration Rights Agreement with the Holders
(the "REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company agreed,
among other things, to register the resale of the Registrable Securities (as
defined in the Registration Rights Agreement), including the shares of Common
Stock issuable upon conversion of the Notes and as interest under the Notes and
upon exercise of the Warrants under the Securities Act of 1933, as amended (the
"1933 ACT"). In connection with the Company's obligations under the Registration
Rights Agreement, on
<PAGE>
____________ ___, 2005, the Company filed a Registration Statement on Form S-3
(File No. 333-_____________) (the "REGISTRATION STATEMENT") with the Securities
and Exchange Commission (the "SEC") relating to the Registrable Securities which
names each of the Holders as a selling stockholder thereunder.

                  In connection with the foregoing, we advise you that a member
of the SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
<PAGE>
                  This letter shall serve as our standing opinion to you that
the shares of Common Stock are freely transferable by the Holders pursuant to
the Registration Statement. You need not require further letters from us to
effect any future legend-free issuance or reissuance of shares of Common Stock
to the Holders as contemplated by the Company's Irrevocable Transfer Agent
Instructions dated October __, 2005. This letter shall serve as our standing
instructions to you with regard to this matter.

                                         Very truly yours,

                                         [ISSUER'S COUNSEL]

                                         By:_____________________

CC: [LIST NAMES OF HOLDERS]
<PAGE>
                                                                       EXHIBIT B

                              SELLING STOCKHOLDERS

         The shares of common stock being offered by the selling stockholders
are issuable upon conversion of the secured convertible notes and as interest
thereon upon exercise of the warrants. For additional information regarding the
notes and warrants, see "Private Placement of Secured Convertible Notes and
Warrants" above. We are registering the shares of common stock in order to
permit the selling stockholders to offer the shares for resale from time to
time. In addition to the ownership of the notes and the warrants, the selling
stockholders have had only the following material relationships with the Company
over the past three years:__________________.

         The table below lists the selling stockholders and other information
regarding the beneficial ownership of the shares of common stock by each of the
selling stockholders. The second column lists the number of shares of common
stock beneficially owned by each selling stockholder, based on its ownership of
the notes and the warrants, as of ________, 200_, assuming conversion of all the
notes and exercise of all warrants held by the selling stockholders on that
date, without regard to any limitations on conversions or exercise.

         The third column lists the shares of common stock being offered by this
prospectus by the selling stockholders.

         In accordance with the terms of registration rights agreements with the
holders of the notes and the warrants, this prospectus generally covers the
resale of at least (A) 130% of the sum of (i) the maximum number of shares of
common stock issuable upon conversion of the notes (assuming that the notes are
convertible at their initial Conversion Price and without taking into account
any limitations on the conversion of the notes set forth in such notes) and (ii)
the maximum number of shares of common stock issuable upon exercise of the
related warrants (without taking into account any limitations on the exercise of
the warrants set forth in the warrants) and (B) the maximum number of Interest
Shares under the Notes, as applicable, assuming the applicable portions of the
initial outstanding principal amount of the Notes remains outstanding through
the applicable scheduled maturity dates and assuming no conversions or
redemptions of the Notes prior to the scheduled maturity date, are issuable at
the then prevailing Interest Conversion Price (as defined in the Notes) or
Conversion Rate (as defined in the Notes), as applicable., in each case as of
the trading day immediately preceding the date this registration statement was
initially filed with the SEC. Because the conversion price of the notes and the
exercise price of the warrants may be adjusted, the number of shares that will
actually be issued may be more or less than the number of shares being offered
by this prospectus. The fourth column assumes the sale of all of the shares
offered by the selling stockholders pursuant to this prospectus.

         The selling stockholders may sell all, some or none of their shares in
this offering. See "Plan of Distribution."
<PAGE>
<TABLE>
<CAPTION>
                                                                    MAXIMUM NUMBER OF SHARES
                                          NUMBER OF SHARES OWNED     TO BE SOLD PURSUANT TO      NUMBER OF SHARES
NAME OF SELLING STOCKHOLDER                  PRIOR TO OFFERING           THIS PROSPECTUS        OWNED AFTER OFFERING
---------------------------                  -----------------           ---------------        --------------------
<S>                                       <C>                       <C>                         <C>
[PWJ FUNDING/LLC/PWJ LENDING LLC.] (1)                                                                   0
HOLTZMAN OPPORTUNITY FUND, L.P.
[OTHER BUYERS]

         (1)
</TABLE>
<PAGE>
                              PLAN OF DISTRIBUTION

         We are registering the shares of common stock issuable upon conversion
of the notes and upon exercise of the warrants and as interest on the notes to
permit the resale of these shares of common stock by the holders of the notes
and the warrants from time to time after the date of this prospectus. We will
not receive any of the proceeds from the sale by the selling stockholders of the
shares of common stock. We will bear all fees and expenses incident to our
obligation to register the shares of common stock.

         The selling stockholders may sell all or a portion of the shares of
common stock beneficially owned by them and offered hereby from time to time
directly or through one or more underwriters, broker-dealers or agents. If the
shares of common stock are sold through underwriters or broker-dealers, the
selling stockholders will be responsible for underwriting discounts or
commissions or agent's commissions. The shares of common stock may be sold in
one or more transactions at fixed prices, at prevailing market prices at the
time of the sale, at varying prices determined at the time of sale, or at
negotiated prices. These sales may be effected in transactions, which may
involve crosses or block transactions,

-        on any national securities exchange or quotation service on which the
         securities may be listed or quoted at the time of sale;

-        in the over-the-counter market;

-        in transactions otherwise than on these exchanges or systems or in the
         over-the-counter market;

-        through the writing of options, whether such options are listed on an
         options exchange or otherwise;

-        ordinary brokerage transactions and transactions in which the
         broker-dealer solicits purchasers;

-        block trades in which the broker-dealer will attempt to sell the shares
         as agent but may position and resell a portion of the block as
         principal to facilitate the transaction;

-        purchases by a broker-dealer as principal and resale by the
         broker-dealer for its account;

-        an exchange distribution in accordance with the rules of the applicable
         exchange;

-        privately negotiated transactions;

-        short sales;

-        pursuant to Rule 144 under the Securities Act;

-        broker-dealers may agree with the selling securityholders to sell a
         specified number of such shares at a stipulated price per share;
<PAGE>
-        a combination of any such methods of sale; and

-        any other method permitted pursuant to applicable law.

         If the selling stockholders effect such transactions by selling shares
of common stock to or through underwriters, broker-dealers or agents, such
underwriters, broker-dealers or agents may receive commissions in the form of
discounts, concessions or commissions from the selling stockholders or
commissions from purchasers of the shares of common stock for whom they may act
as agent or to whom they may sell as principal (which discounts, concessions or
commissions as to particular underwriters, broker-dealers or agents may be in
excess of those customary in the types of transactions involved). In connection
with sales of the shares of common stock or otherwise, the selling stockholders
may enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the shares of common stock in the course of hedging in
positions they assume. The selling stockholders may also sell shares of common
stock short and deliver shares of common stock covered by this prospectus to
close out short positions. The selling stockholders may also loan or pledge
shares of common stock to broker-dealers that in turn may sell such shares.

         The selling stockholders may pledge or grant a security interest in
some or all of the notes and the warrants or shares of common stock owned by
them and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time pursuant to this prospectus or any amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act of
1933, as amended, amending, if necessary, the list of selling stockholders to
include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus. The selling stockholders also may transfer
and donate the shares of common stock in other circumstances in which case the
transferees, donees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.

         The selling stockholders and any broker-dealer participating in the
distribution of the shares of common stock may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commission paid, or any
discounts or concessions allowed to, any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act. At the time a
particular offering of the shares of common stock is made, a prospectus
supplement, if required, will be distributed which will set forth the aggregate
amount of shares of common stock being offered and the terms of the offering,
including the name or names of any broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
stockholders and any discounts, commissions or concessions allowed or reallowed
or paid to broker-dealers.

         Under the securities laws of some states, the shares of common stock
may be sold in such states only through registered or licensed brokers or
dealers. In addition, in some states the shares of common stock may not be sold
unless such shares have been registered or qualified for sale in such state or
an exemption from registration or qualification is available and is complied
with.
<PAGE>
         There can be no assurance that any selling stockholder will sell any or
all of the shares of common stock registered pursuant to the shelf registration
statement, of which this prospectus forms a part.

         The selling stockholders and any other person participating in such
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder, including,
without limitation, Regulation M of the Exchange Act, which may limit the timing
of purchases and sales of any of the shares of common stock by the selling
stockholders and any other participating person. Regulation M may also restrict
the ability of any person engaged in the distribution of the shares of common
stock to engage in market-making activities with respect to the shares of common
stock. All of the foregoing may affect the marketability of the shares of common
stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.

         We will pay all expenses of the registration of the shares of common
stock pursuant to the registration rights agreement, estimated to be $[ ] in
total, including, without limitation, Securities and Exchange Commission filing
fees and expenses of compliance with state securities or "blue sky" laws;
provided, however, that a selling stockholder will pay all underwriting
discounts and selling commissions, if any. We will indemnify the selling
stockholders against liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights agreements, or the
selling stockholders will be entitled to contribution. We may be indemnified by
the selling stockholders against civil liabilities, including liabilities under
the Securities Act, that may arise from any written information furnished to us
by the selling stockholder specifically for use in this prospectus, in
accordance with the related registration rights agreements, or we may be
entitled to contribution.

Once sold under the shelf registration statement, of which this prospectus forms
a part, the shares of common stock will be freely tradable in the hands of
persons other than our affiliates.<PAGE>

                                                                    EXHIBIT 10.6

             WAIVER, CONSENT, AND FOURTH AMENDMENT TO SECOND AMENDED
          AND RESTATED REVOLVING CREDIT AND GOLD CONSIGNMENT AGREEMENT

      THIS WAIVER, CONSENT, AND FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED
REVOLVING CREDIT AND GOLD CONSIGNMENT AGREEMENT (this "Amendment") is entered
into as of the 3 day of October, 2005 by and among the banks that are or may
from time to time become parties hereto (individually a "Bank" and collectively,
the "Banks"), LASALLE BANK NATIONAL ASSOCIATION, a national banking association,
as administrative agent ("Administrative Agent") and collateral agent, and as an
Accommodation Bank, BANK OF AMERICA, N. A., a national banking association, as
managing agent ("Managing Agent"), BACK BAY CAPITAL FUNDING LLC ("Back Bay"), as
Accommodation Facility agent ("Accommodation Facility Agent") and as an
Accommodation Bank, and WHITEHALL JEWELLERS, INC., a Delaware corporation
("Borrower").

                              W I T N E S S E T H:

      WHEREAS, the Agents (as defined in the Agreement, as amended hereby), the
Banks and the Borrower are parties to that certain Second Amended and Restated
Revolving Credit and Gold Consignment Agreement dated as of July 29, 2003, as
amended by that certain First Amendment to Second Amended and Restated Revolving
Credit and Gold Consignment Agreement dated as of March 23, 2004, that certain
Second Amendment to Second Amended and Restated Revolving Credit and Gold
Consignment Agreement dated as of January 31, 2005, and that certain Third
Amendment to Second Amended and Restated Revolving Credit and Gold Consignment
Agreement dated as of April 6, 2005 (collectively, the "Agreement"); and

      WHEREAS, on or about September 14, 2005, the Administrative Agent notified
the Borrower that one or more Events of Default had occurred under the Agreement
(collectively, the "Existing Defaults"); and

      WHEREAS, the Borrower has advised the Administrative Agent that the
Borrower has agreed to a "Bridge Loan Term Sheet" with Prentice Capital
Management, LP ("Prentice"), a copy of which is annexed hereto marked Exhibit
"A", pursuant to which the Borrower intends to enter into a $30,000,000.00 loan
arrangement with Prentice and/or one or more entities managed by Prentice and
other participating investors, and which is to be secured by a security interest
in substantially all of the Borrower's assets subordinate to the security
interest granted to, and held by, the Agents and the Banks (the "Subordinate
Financing"); and

      WHEREAS, the Borrower has advised the Administrative Agent that the
Borrower has entered into a term sheet (the "Trade Lien Term Sheet"), a copy of
which is annexed hereto marked Exhibit "B", with respect to the treatment of the
Borrower's trade indebtedness, and that as contemplated therein, the Borrower
intends to enter into a "Trade Lien Agreement" with a "Collateral Trustee" on
behalf of the Borrower's trade vendors; and

      WHEREAS, the Borrower has advised the Administrative Agent that the
Subordinate Financing is contemplated to be a bridge loan facility leading to a
$50,000,000.00 Secured Convertible Note facility (the "Convertible Facility"),
as contemplated in a term sheet (the

<PAGE>

"Convertible Facility Term Sheet") entered into by the Borrower with Prentice, a
copy of which is annexed hereto marked Exhibit "C";

      WHEREAS, the Borrower has requested that the Agents and the Banks (i)
waive the Existing Defaults and reinstate the commitment of the Banks and the
Accommodation Banks to make loans and advances and to grant financial
accommodations to or for the benefit of the Borrower, (ii) consent to the
Subordinate Financing, the Trade Lien Agreement, and the execution of the term
sheet with respect to the Convertible Facility, and (iii) amend certain other
provisions of the Agreement; and

      WHEREAS, the Agents and the Banks are willing to do so in accordance with
the terms and conditions of this Amendment.

      NOW, THEREFORE, for and in consideration of the premises and mutual
agreements herein contained and for the purposes of setting forth the terms and
conditions of this Amendment, the parties, intending to be bound, hereby agree
as follows:

      1. Incorporation of the Agreement. All capitalized terms which are not
defined hereunder shall have the same meanings as set forth in the Agreement (as
amended hereby), and the Agreement, to the extent not inconsistent with this
Amendment, is incorporated herein by this reference as though the same were set
forth in its entirety. To the extent any terms and provisions of the Agreement
are inconsistent with the amendments set forth in Section 6 below, such terms
and provisions shall be deemed superseded hereby. Except as specifically set
forth herein, the Agreement shall remain in full force and effect and its
provisions shall be binding on the parties hereto.

      2. Preconditions to Effectiveness. This Amendment shall not take effect
unless and until each and all of the following items has been satisfied or
delivered, as the case may be, and in all events, to the satisfaction of the
Agents, in their sole and exclusive discretion. The willingness of the Agents
and the Banks to enter into this Amendment is expressly conditioned upon the
prior satisfaction of the following conditions precedent. The Borrower expressly
acknowledges and agrees that the Agents and the Banks are relying upon the
satisfaction of the following conditions precedent (collectively, the
"Preconditions to Effectiveness"):

            (a) The Borrower shall have closed on, or be simultaneously closing
with Prentice on, the Subordinate Financing, and the Subordinate Financing shall
be upon terms and conditions acceptable to the Agents, in their sole and
exclusive discretion, substantially in accordance with the Bridge Loan Term
Sheet.

            (b) The Agents shall have entered into an Intercreditor and Lien
Subordination Agreement with Prentice and/or the lenders participating in the
Subordinate Financing on terms and conditions acceptable to the Agents, in their
sole and exclusive discretion.

            (c) The Trade Lien Term Sheet shall be fully executed and in full
force and effect.

                                        2
<PAGE>

            (d) The Administrative Agent shall have entered into a security
agreement, blocked account agreement, control agreement, or similar agreement,
and received whatever additional documents, instruments, and agreements may be
necessary to perfect the Agents' and the Banks' security interest in all cash
deposited into escrow in as contemplated in connection with the Trade Lien Term
Sheet;

            (e) The Agents shall have finalized the form of Intercreditor and
Lien Subordination Agreement with Prentice and/or the lenders who shall be
participating in the Convertible Facility on terms and conditions acceptable to
the Agents, in their sole and exclusive discretion.

            (f) The Administrative Agent shall have received from the Borrower
each of the following fully executed documents, in form and substance
satisfactory to the Administrative Agent, and all of the transactions
contemplated by each such document shall have been consummated or each condition
contemplated by each such document shall have been satisfied:

                  (i) This Amendment;

                  (ii) A Fee Letter with the Administrative Agent and the
      Managing Agent in form and substance acceptable to them, in their sole and
      exclusive discretion;

                  (iii) An Accommodation Facility Fee Letter in form and
      substance acceptable to the Accommodation Facility Agent, in its sole and
      exclusive discretion;

                  (iv) Secretary's Certificate of the Borrower with resolutions
      and incumbency; and

                  (v) A Borrowing Base report dated October 3, 2005 confirming
      that the Borrower would have had Borrowing Availability as of October 3,
      2005 in an amount not less than $15,000,000.00, after giving effect to all
      payments required to be made at the closing on this Amendment and the
      Subordinate Financing (including the escrowed funds), including closing
      fees, costs, expenses, and attorneys' fees payable by the Borrower and the
      application of the proceeds of the Subordinate Financing in accordance
      with this Amendment, and after giving effect to the requirements of
      Section 10.1 of the Agreement as amended by this Amendment;

                  (vi) Such other documents, certificates, and opinions as the
      Agents may request; and

            (g) The Administrative Agent shall have delivered to the Borrower
written notice confirming satisfaction of each and all of the other
Preconditions to Effectiveness of this Amendment.

      3. Waiver of Existing Defaults. Subject to the Preconditions to
Effectiveness set forth in Section 2, above, the Agents and the Banks hereby
waive the Existing Defaults. The Commitments of the Banks and the Accommodation
Banks to make loans and advances and to grant financial accommodations to or for
the benefit of the Borrower are hereby reinstated.

                                        3
<PAGE>

            (a) This waiver and reinstatement shall not take effect upon the
execution of this Amendment by the Agents and the Banks, and only shall become
effective upon satisfaction in full of each of the Preconditions to
Effectiveness;

            (b) This waiver relates only to the identified Existing Defaults, is
a one-time waiver, and shall not be deemed to constitute a consent or waiver
with respect to (x) similar matters of the Borrower, or (y) any other Events of
Default, whether now existing or hereafter arising, including, without
limitation, on account of the breach of any other provision of the Agreement;
and

            (c) This waiver and reinstatement is made in express reliance upon
the terms and conditions of this Amendment, including all representations,
warranties, and covenants of the Borrower set forth herein.

      4. Consent to Subordinate Financing, Trade Lien Agreement, and Convertible
Facility. In the absence of this Amendment, the Subordinate Financing, the Trade
Lien Agreement, the execution of the Convertible Facility Term Sheet, and the
other documents or agreements entered into in connection with any of the
foregoing would violate, among other provisions, the terms and conditions of the
following Sections of the Agreement: (i) Section 5.8.2, "New Issuance
Prepayment," (ii) Section 9.1, "Restrictions on Indebtedness," (iii) Section
9.2, "Restrictions on Liens", (iv) Section 9.13, "Issuance of Equity
Securities", and (v) Section 13.1(p).

            (a) The Agents and the Banks consent to the Subordinate Financing,
the Trade Lien Term Sheet, the Trade Lien Agreement, and the execution of the
Convertible Facility Term Sheet, and the other documents or agreements entered
into in connection with any of the foregoing, and waive any violation of the
Agreement which may be, or has been, occasioned thereby, including without
limitation, any violation of the terms and conditions of the foregoing
enumerated Sections of the Agreement. The Net Proceeds of the Subordinate
Financing shall be applied in accordance with Section 5.9(c) of the Agreement,
as amended by this Amendment.

            (b) The foregoing consent and waiver is made in express reliance
upon the terms and conditions of this Amendment, including all representations,
warranties, and covenants of the Borrower set forth herein.

            (c) In connection with the Convertible Facility, the Borrower shall
(i) file a notice of meeting, proxy statement and form of proxy (together, the
"Proxy Statement") with the Securities and Exchange Commission ("SEC") in
compliance with the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder, on or before October 31, 2005 relating
to a special meeting of the Borrower's stockholders to approve: (A) up to a 1 to
3 reverse stock split, (B) the Convertible Facility, and (C) the issuance of
shares of common stock upon payment of interest on, or conversion of, the
"Convertible Note", and exercise of the "Warrants" (as defined in the
Convertible Facility Term Sheet); and (ii) obtain the requisite approvals of the
Borrower's stockholders to the proposals in the Proxy Statement at a special
meeting of the Borrower's stockholders to be held on or before (x) December 30,
2005, or (y) if the SEC determines to review the foregoing, January 31, 2006.

                                       4
<PAGE>

            (d) The Borrower has delivered to the Administrative Agent copies of
the forms of the documents, instruments, and agreements which will be used to
evidence, consummate, and implement the Convertible Facility which are annexed
hereto collectively marked Exhibit "D" (collectively, the "Convertible Facility
Documents"). So long as the Convertible Facility is evidenced, consummated, and
implemented in accordance with the Convertible Facility Documents, then the
Agents and the Banks (i) consent to the consummation and implementation of the
Convertible Facility, (ii) notwithstanding the provisions of Section 5.8.2 of
the Agreement, consent to the use of a portion of the proceeds thereunder to,
among other things, repay the amounts due under the Subordinate Financing, and
(iii) waive any violation of the Agreement which may be, or has been, occasioned
thereby, including any violation of the terms and conditions of the foregoing
enumerated Sections.

            (e) The Borrower acknowledges and agrees that except with respect to
a closing on the Convertible Facility and use of a portion of the proceeds
thereof received by the Borrower to repay the amounts due on the Subordinate
Financing (or use of a portion of the proceeds of another independent source of
equity which shall have been obtained on terms and conditions acceptable to the
Agents, in their sole and exclusive discretion), no proceeds of Revolving Credit
Loans shall be used to repay the Subordinate Financing.

      5. Store Closing Program. Incidental to the Bridge Financing and the
contemplated closing on the Convertible Facility, the Borrower has indicated
that it may implement a program of store closing sales pursuant to which the
Borrower liquidates all Collateral located at, and thereafter closes certain of
its stores. In this regard:

            (a) Not less than fourteen (14) days prior to the intended
implementation of the store closing program, the Borrower shall have presented
to the Administrative Agent a definitive list of the stores designated to be
included in the store closing program, along with pro forma financial
projections incorporating the anticipated results and economic impact of
consummating the store closing sales.

            (b) Any such store closing program shall be implemented and the
store closing sales shall be conducted by a nationally recognized professional
retail inventory liquidation firm (a "Liquidator") on behalf of the Borrower,
and the Borrower shall implement the store closing program in accordance with a
written so-called "Agency Agreement" with the Liquidator.

            (c) The number of stores to be included in the store closing
program, the Borrower's pro forma financial projections, and the Agency
Agreement all shall be on terms and conditions acceptable to the Agents, in
their sole and exclusive discretion. Further, upon the commencement of the store
closing sales, all Inventory at the Borrower's stores which are to be included
in the sales shall be removed from Eligible Inventory in such amounts as the
Agents may determine, in their sole and exclusive discretion.

            (d) All proceeds payable by the Liquidator pursuant to the Agency
Agreement on account of the store closing sales shall be paid directly to the
Administrative Agent and applied in reduction of the Obligations under the
Agreement in accordance with Section 5.9(c). Further, upon receipt of the
proceeds of the store closing sales, the Borrowing Base shall be

                                        5
<PAGE>

permanently adjusted and reduced in a manner to be determined by the Agents, in
their sole and exclusive discretion.

            (e) Nothing in this Amendment shall be deemed consent by the Agents
to the implementation of store closing sales or similarly styled sales. Any such
consent shall be granted only pursuant to a further agreement in writing
executed on behalf of the Borrower and the Agents, the execution and delivery of
whatever additional documents, instruments, and agreements that the Agents may
require, and shall otherwise be upon such terms and conditions as the Agents may
require, in their sole and exclusive discretion.

      6. Amendment of the Agreement. Subject to the Preconditions to
Effectiveness set forth in Section 2, above, from and after the execution of
this Amendment, the Agreement is amended as set forth in this Section 6.
However, this Amendment (i) shall not take effect upon the execution of this
Amendment by the Borrower, the Agents and the Banks, and only shall become
effective upon satisfaction in full of each of the Preconditions to
Effectiveness, and (ii) is made in express reliance upon the terms and
conditions of this Amendment, including all representations, warranties, and
covenants of the Borrower set forth herein.

            (a) New Definitions. The following definitions are hereby inserted
in their appropriate alphabetical order:

      AGENT OR AGENTS. ANY OR ALL, AS THE CASE MAY BE, OF THE ADMINISTRATIVE
      AGENT, THE MANAGING AGENT, AND/OR THE ACCOMMODATION FACILITY AGENT.

      EARLY TERMINATION FEE. ANY "EARLY TERMINATION FEE" SET FORTH IN EITHER
      THAT CERTAIN FEE LETTER EXECUTED AS OF THE FOURTH AMENDMENT CLOSING DATE
      BETWEEN THE BORROWER AND THE ADMINISTRATIVE AGENT, OR THAT CERTAIN
      ACCOMMODATION FACILITY FEE LETTER EXECUTED AS OF THE FOURTH AMENDMENT
      CLOSING DATE AMONG THE BORROWER, THE ADMINISTRATIVE AGENT, AND THE
      ACCOMMODATION FACILITY AGENT.

      FOURTH AMENDMENT CLOSING DATE. OCTOBER 3, 2005.

      CONSOLIDATED EBITDA. WITH RESPECT TO THE BORROWER AND ITS SUBSIDIARIES AND
      ANY PARTICULAR FISCAL PERIOD, THE CONSOLIDATED EARNINGS (OR LOSS) FROM
      OPERATIONS OF THE BORROWER AND ITS SUBSIDIARIES FOR SUCH PERIOD, AFTER
      ELIMINATING THEREFROM ALL NON-CASH EXTRAORDINARY NONRECURRING ITEMS OF
      INCOME (INCLUDING GAINS ON THE SALE OF ASSETS AND EARNINGS FROM THE SALE
      OF DISCONTINUED BUSINESS LINES), AND AFTER ALL EXPENSES AND OTHER PROPER
      CHARGES, BUT BEFORE PAYMENT OR PROVISION FOR (a) ANY INCOME TAXES OR
      INTEREST EXPENSES FOR SUCH PERIOD, (b) DEPRECIATION FOR SUCH PERIOD, (c)
      AMORTIZATION FOR SUCH PERIOD, AND (d) ALL OTHER NON-CASH CHARGES FOR SUCH
      PERIOD, ALL DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES.

      MAJORITY BANKS. AS OF ANY DATE, THE BANKS (OTHER THAN DELINQUENT BANKS)
      WHOSE AGGREGATE COMMITMENTS TOGETHER CONSTITUTE FIFTY-ONE PERCENT (51%) OF
      THE TOTAL COMMITMENT.

      SUBORDINATE FACILITY. BOTH (i) THAT CERTAIN BRIDGE TERM LOAN FINANCING
      FACILITY (THE "BRIDGE LOAN") ESTABLISHED ON OCTOBER 3, 2005 BY AND BETWEEN
      THE BORROWER AND PRENTICE CAPITAL MANAGEMENT, LP (OR ONE OR MORE ENTITIES
      MANAGED BY SUCH PERSON) EVIDENCED BY, AMONG OTHER THINGS, A BRIDGE TERM
      LOAN CREDIT AGREEMENT OF EVEN DATE, AND (ii) THE SECURED CONVERTIBLE NOTE
      FACILITY CONTEMPLATED TO REFINANCE THE BRIDGE LOAN (THE "CONVERTIBLE
      FACILITY").

                                        6
<PAGE>

      TRADE LIEN AGREEMENT. THAT CERTAIN TRADE LIEN AGREEMENT TO BE ENTERED INTO
      BY AND BETWEEN THE BORROWER AND A COLLATERAL TRUSTEE TO BE NAMED THEREIN,
      AS CONTEMPLATED BY THE "TRADE LIEN TERM SHEET" (SO-CALLED HEREIN) EXECUTED
      SEPTEMBER, 2005.

      UNANIMOUS BANKS. AS OF ANY DATE, THE BANKS (OTHER THAN DELINQUENT BANKS)
      WHOSE AGGREGATE COMMITMENTS TOGETHER CONSTITUTE ONE HUNDRED PERCENT (100%)
      OF THE TOTAL COMMITMENT.

      UNUSED LINE FEE. IS DEFINED IN SECTION 2.13(c).

            (b) Revised Definitions. The following definitions are hereby
deleted and amended and restated as follows:

      BALANCE SHEET DATE. OCTOBER 3, 2005.

      DELINQUENT BANK. MEANS ANY BANK THAT FAILS (i) TO MAKE AVAILABLE TO THE
      ADMINISTRATIVE AGENT ITS PRO RATA SHARE OF ANY LOAN OR TO PURCHASE ANY
      LETTER OF CREDIT PARTICIPATION OR (ii) TO COMPLY WITH THE PROVISIONS OF
      Section 15 WITH RESPECT TO MAKING DISPOSITIONS AND ARRANGEMENTS WITH THE
      OTHER BANKS, WHERE SUCH BANK'S SHARE OF ANY PAYMENT RECEIVED, WHETHER BY
      SETOFF OR OTHERWISE, IS IN EXCESS OF ITS PRO RATA SHARE OF SUCH PAYMENTS
      DUE AND PAYABLE TO ALL OF THE BANKS, IN EACH CASE AS, WHEN AND TO THE FULL
      EXTENT REQUIRED BY THE PROVISIONS OF THIS CREDIT AGREEMENT. A "DELINQUENT
      BANK" SHALL BE DEEMED A DELINQUENT BANK UNTIL SUCH TIME AS SUCH
      DELINQUENCY IS SATISFIED.

      NRLV. NRLV MEANS THAT PERCENTAGE, AS DETERMINED BY THE ADMINISTRATIVE
      AGENT AND THE MANAGING AGENT FROM THE THEN MOST RECENT APPRAISAL OF THE
      BORROWER'S INVENTORY UNDERTAKEN AT THE REQUEST OF THE AGENTS, REFLECTING
      THE ESTIMATE OF THE NET RECOVERY ON THE BORROWER'S INVENTORY IN THE EVENT
      OF AN IN-STORE LIQUIDATION OF THAT INVENTORY.

            (c) Deleted Definitions. The following definitions are hereby
deleted and each reference to the specified terms is correspondingly removed:

                  (i)   Required Availability Reserve;

                  (ii)  Appraised (GOB) Percentage of Eligible Inventory;

                  (iii) Effective Percentage;

                  (iv)  Field Examination Reserve; and

                  (v)   Minimum Excess Availability.

            (d) Increase in Commitment.

                  (i) The definition of the term "Total Revolver Commitment" is
      hereby amended by deleting the figure "$125,000,000.00" contained therein,
      and substituting the figure "$140,000,000.00" in its place.

                  (ii) Schedule 1 is hereby deleted and replaced with a new
      Schedule 1 in the form annexed hereto marked Exhibit "E".

            (e) Extended Maturity Date.

                                        7
<PAGE>

                  (i) The definition of "Maturity Date" and Section 2.12(c) are
      hereby amended by deleting the date "July 31, 2006" contained therein and
      substituting the date "OCTOBER 3, 2008" in its place in each instance.

                  (ii) Section 2.8 is hereby deleted in its entirety and the
      following is inserted in its place:

      MATURITY. THE BORROWER SHALL PAY ON THE MATURITY DATE, AND THERE SHALL
      BECOME ABSOLUTELY DUE AND PAYABLE ON THE MATURITY DATE, ALL OF THE
      OBLIGATIONS, INCLUDING ALL REVOLVING CREDIT LOANS AND LOANS UNDER THE
      ACCOMMODATION FACILITY, OUTSTANDING ON SUCH DATE, TOGETHER WITH ANY AND
      ALL ACCRUED AND UNPAID INTEREST THEREON, AND ALL FEES, COSTS, EXPENSES,
      AND OTHER AMOUNTS DUE BY THE BORROWER HEREUNDER.

            (f) Amendment of Borrowing Base.

                  (i) The definition of "Borrowing Base" is hereby amended by
      deleting the first sentence thereof, and substituting the following in its
      place:

      BORROWING BASE. AT THE RELEVANT TIME OF REFERENCE THERETO, AN AMOUNT EQUAL
      TO THE LEAST OF:

      (i) $140,000,000.00,

      (ii) THE LESSER OF EITHER (x) THE REVOLVING LOAN BORROWING BASE, PLUS THE
      OUTSTANDING PRINCIPAL BALANCE OF THE ACCOMMODATION FACILITY, OR (y)
      $125,000,000.00, PLUS THE OUTSTANDING PRINCIPAL BALANCE OF THE
      ACCOMMODATION FACILITY, OR

      (iii) DURING THE PERIOD OF:

            1. SUBJECT TO SUBPARAGRAPH 2, BELOW:

            (A) JANUARY 16 THROUGH DECEMBER 18 EACH YEAR, THE SUM OF (a) 85% OF
            ELIGIBLE CREDIT CARD RECEIVABLES, PLUS (b) 100% OF THE NRLV OF
            ELIGIBLE INVENTORY, MINUS (c) SUCH RESERVES AS MAY BE ESTABLISHED BY
            THE ADMINISTRATIVE AGENT AND THE MANAGING AGENT IN THEIR SOLE AND
            EXCLUSIVE DISCRETION.

            (B) DECEMBER 19 THROUGH DECEMBER 30 EACH YEAR, THE SUM OF (a) 85% OF
            ELIGIBLE CREDIT CARD RECEIVABLES, PLUS (b) 88% OF THE NRLV OF
            ELIGIBLE INVENTORY, MINUS (c) SUCH RESERVES AS MAY BE ESTABLISHED BY
            THE ADMINISTRATIVE AGENT AND THE MANAGING AGENT IN THEIR SOLE AND
            EXCLUSIVE DISCRETION.

            (C) DECEMBER 31 THROUGH JANUARY 15 EACH YEAR, THE SUM OF (a) 85% OF
            ELIGIBLE CREDIT CARD RECEIVABLES, PLUS (b) 85% OF THE NRLV OF
            ELIGIBLE INVENTORY, MINUS (c) SUCH RESERVES AS MAY BE ESTABLISHED BY
            THE ADMINISTRATIVE AGENT AND THE MANAGING AGENT IN THEIR SOLE AND
            EXCLUSIVE DISCRETION.

            2. NOTWITHSTANDING THE FOREGOING, FOR THE PERIOD FROM THE FOURTH
            AMENDMENT CLOSING DATE THROUGH DECEMBER 18, 2006 ONLY:

            (A) FOURTH AMENDMENT CLOSING DATE THROUGH DECEMBER 25, 2005, THE SUM
            OF (a) 85% OF ELIGIBLE CREDIT CARD RECEIVABLES, PLUS (b) 65% OF THE
            COST VALUE OF ELIGIBLE INVENTORY, MINUS (c) SUCH RESERVES AS MAY BE
            ESTABLISHED BY THE ADMINISTRATIVE AGENT AND THE MANAGING AGENT IN
            THEIR SOLE AND EXCLUSIVE DISCRETION.

                                        8
<PAGE>

            (B) DECEMBER 26, 2005 THROUGH JANUARY 1, 2006, THE SUM OF (a) 85% OF
            ELIGIBLE CREDIT CARD RECEIVABLES, PLUS (b) 88% OF THE NRLV OF
            ELIGIBLE INVENTORY, MINUS (c) SUCH RESERVES AS MAY BE ESTABLISHED BY
            THE ADMINISTRATIVE AGENT AND THE MANAGING AGENT IN THEIR SOLE AND
            EXCLUSIVE DISCRETION.

            (C) JANUARY 2, 2006 THROUGH JANUARY 8, 2006, THE SUM OF (a) 85% OF
            ELIGIBLE CREDIT CARD RECEIVABLES, PLUS (b) 90% OF THE NRLV OF
            ELIGIBLE INVENTORY, MINUS (c) SUCH RESERVES AS MAY BE ESTABLISHED BY
            THE ADMINISTRATIVE AGENT AND THE MANAGING AGENT IN THEIR SOLE AND
            EXCLUSIVE DISCRETION.

            (D) JANUARY 9, 2006 THROUGH JANUARY 15, 2006, THE SUM OF (a) 85% OF
            ELIGIBLE CREDIT CARD RECEIVABLES, PLUS (b) 93% OF THE NRLV OF
            ELIGIBLE INVENTORY, MINUS (c) SUCH RESERVES AS MAY BE ESTABLISHED BY
            THE ADMINISTRATIVE AGENT AND THE MANAGING AGENT IN THEIR SOLE AND
            EXCLUSIVE DISCRETION.

            (E) JANUARY 16, 2006 THROUGH DECEMBER 18, 2006, THE SUM OF (a) 85%
            OF ELIGIBLE CREDIT CARD RECEIVABLES, PLUS (b) 100% OF THE NRLV OF
            ELIGIBLE INVENTORY, MINUS (c) SUCH RESERVES AS MAY BE ESTABLISHED BY
            THE ADMINISTRATIVE AGENT AND THE MANAGING AGENT IN THEIR SOLE AND
            EXCLUSIVE DISCRETION.

                  (ii) The definition of "LIBOR Applicable Margin" is hereby
      deleted and the following is inserted in its place:

      LIBOR APPLICABLE MARGIN. AT ALL TIMES, TWO AND ONE-HALF PERCENT (2.50%).

                  (iii) The definition of "Revolving Loan Borrowing Base" is
      hereby deleted in its entirety and the following is inserted in its place:

      REVOLVING LOAN BORROWING BASE. AT THE RELEVANT TIME OF REFERENCE THERETO,
      AN AMOUNT DETERMINED BY THE ADMINISTRATIVE AGENT AND THE MANAGING AGENT BY
      REFERENCE TO THE MOST RECENT BORROWING BASE REPORT DELIVERED TO THE BANKS
      AND THE AGENTS PURSUANT TO Section 5.2(A), WHICH IS EQUAL TO:

      (A) DURING THE PERIOD FROM THE FOURTH AMENDMENT CLOSING DATE THROUGH
      DECEMBER 25, 2005, THE SUM OF (a) 85% OF ELIGIBLE CREDIT CARD RECEIVABLES,
      PLUS (b) THE 60% OF THE COST VALUE OF ELIGIBLE INVENTORY, MINUS (c) SUCH
      RESERVES AS MAY BE ESTABLISHED BY THE ADMINISTRATIVE AGENT AND THE
      MANAGING AGENT IN THEIR SOLE AND EXCLUSIVE DISCRETION;

      (B) DURING THE PERIOD FROM DECEMBER 26, 2005 AND THEREAFTER, THE SUM OF
      (a) 85% OF ELIGIBLE CREDIT CARD RECEIVABLES, PLUS (b) 85% OF THE NRLV OF
      ELIGIBLE INVENTORY, MINUS (c) SUCH RESERVES AS MAY BE ESTABLISHED BY THE
      ADMINISTRATIVE AGENT AND THE MANAGING AGENT IN THEIR SOLE AND EXCLUSIVE
      DISCRETION.

            (g) Submission of Borrowing Base Reports.

                  (i) Section 5.2(a) is hereby deleted in its entirety and the
      following is inserted in its place:

      (a) THE BANKS SHALL HAVE NO OBLIGATION TO MAKE ANY EXTENSION OF CREDIT IF,
      AT ANY TIME, THE OUTSTANDING FACILITY AMOUNTS, AFTER GIVING EFFECT TO SUCH
      EXTENSION OF CREDIT, WOULD EXCEED THE BORROWING BASE. THE BORROWING BASE
      SHALL BE DETERMINED BY THE ADMINISTRATIVE AGENT AND THE MANAGING AGENT BY
      REFERENCE TO THE MOST RECENT BORROWING BASE REPORT DELIVERED TO THE
      ADMINISTRATIVE AGENT BY THE BORROWER, WHICH SHALL BE DELIVERED WEEKLY, AT
      OR BEFORE 11:00 AM EACH WEDNESDAY, AND WHICH MAY, IN THE BORROWER'S
      DISCRETION, BE SUBMITTED MORE FREQUENTLY, INCLUDING DAILY, VIA FACSIMILE
      OR BY E-MAIL, WITH THE ORIGINAL SUBMITTED THEREAFTER BY FIRST CLASS MAIL.

                                        9
<PAGE>

                  (ii) Schedule A to the Agreement (Borrowing Base Report) is
      hereby deleted and replaced with the Schedule attached hereto as Schedule
      A (Borrowing Base Report).

                  (iii) The provisions of Section 8.4(f) are hereby deleted in
      their entirety and the following is inserted in their place:

                  [INTENTIONALLY OMITTED].

                  (iv) Section 12.5 is hereby amended by deleting the reference
      "Section 8.4(f)" and substituting the reference "5.2(A)" in its place in
      each instance.

            (h) Fees.

                  (i) Section 2.12(e) is hereby deleted in its entirety and the
      following is hereby inserted in its place:

      (e) THE BORROWER SHALL PAY TO THE ACCOMMODATION FACILITY AGENT AND THE
      ACCOMMODATION BANKS THE FEES IN THE AMOUNTS AND AT THE TIMES, AND IN
      ACCORDANCE WITH THAT CERTAIN ACCOMMODATION FACILITY FEE LETTER DATED AS OF
      THE FOURTH AMENDMENT CLOSING DATE ENTERED INTO BY AND BETWEEN THE BORROWER
      AND THE ACCOMMODATION BANKS. SUCH FEES SHALL BE FOR THE SOLE BENEFIT OF
      THE ACCOMMODATION FACILITY AGENT AND THE ACCOMMODATION BANKS, AS SET FORTH
      THEREIN AND SHALL CONSTITUTE OBLIGATIONS.

                  (ii) A new Section 2.13 is hereby created and inserted in its
      appropriate numerical order, as follows:

      2.13. UNUSED LINE FEE. IN ADDITION TO ANY OTHER FEE PAYABLE BY THE
      BORROWER HEREUNDER, THE BORROWER SHALL PAY THE ADMINISTRATIVE AGENT FOR
      THE RATABLE BENEFIT OF EACH BANK (OTHER THAN THE ACCOMMODATION BANKS) THE
      "UNUSED LINE FEE" (SO REFERRED TO HEREIN) OF .375% PER ANNUM OF THE
      AVERAGE DIFFERENCE, DURING THE MONTH JUST ENDED (OR RELEVANT PERIOD WITH
      RESPECT TO THE PAYMENT BEING MADE ON THE MATURITY DATE) BETWEEN THE
      BORROWING BASE AND THE AGGREGATE OF THE OUTSTANDING FACILITY AMOUNTS. THE
      UNUSED LINE FEE SHALL BE PAID IN ARREARS, ON THE LAST DAY OF EACH CALENDAR
      MONTH AFTER THE EXECUTION OF THIS AGREEMENT AND ON THE MATURITY DATE. THE
      ADMINISTRATIVE AGENT IS HEREBY AUTHORIZED BY THE BORROWER TO MAKE A
      REVOLVING CREDIT LOAN TO TIMELY PAY THE UNUSED LINE FEE AS AND WHEN DUE
      SET FORTH HEREIN.

            (i) Letters of Credit Fees. Section 3.6 is hereby deleted in its
entirety and the following is inserted in its place:

      LETTER OF CREDIT FEE. THE BORROWER SHALL PAY TO THE ADMINISTRATIVE AGENT
      FOR THE RATABLE ACCOUNTS OF THE BANKS (OTHER THAN THE ACCOMMODATION
      FACILITY BANKS) A FEE (IN EACH CASE, A "LETTER OF CREDIT FEE") IN RESPECT
      OF LETTERS OF CREDIT ON THE AVERAGE DAILY MAXIMUM DRAWING AMOUNT AT A RATE
      PER ANNUM EQUAL TO (a) WITH RESPECT TO EACH STANDBY LETTER OF CREDIT, 3.0%
      AND (b) WITH RESPECT TO EACH DOCUMENTARY LETTER OF CREDIT, 2.5%, SUCH
      LETTER OF CREDIT FEES BEING PAYABLE MONTHLY IN ARREARS ON THE LAST
      BUSINESS DAY OF EACH CALENDAR MONTH AND ON THE MATURITY DATE. THE BORROWER
      SHALL ALSO PAY TO EACH ISSUING BANK, AT SUCH TIME OR TIMES AS SUCH CHARGES
      ARE CUSTOMARILY MADE BY EACH ISSUING BANK, THE ISSUING BANK'S CUSTOMARY
      ISSUANCE FEES OR AMENDMENT FEES, AS THE CASE MAY BE, AND EACH ISSUING
      BANK'S CUSTOMARY TIME NEGOTIATION FEES PER DOCUMENT EXAMINATION OR OTHER
      ADMINISTRATIVE FEES.

            (j) Financial Statements and Projections.

                                       10
<PAGE>

                  (i) Section 7.4.2 is hereby deleted in its entirety and the
      following is hereby inserted in its place:

      PROJECTIONS. THE PROJECTIONS OF THE OPERATING BUDGETS OF THE BORROWER AND
      ITS SUBSIDIARIES ON A CONSOLIDATED BASIS, BALANCE SHEETS AND CASH FLOW
      STATEMENTS PRESENTED TO THE AGENTS AS THE BORROWER'S "BUSINESS PLAN",
      COPIES OF WHICH HAVE BEEN DELIVERED TO THE AGENTS, ARE BASED ON A VARIETY
      OF ASSUMPTIONS WITH RESPECT TO GENERAL ECONOMIC, FINANCIAL AND MARKET
      CONDITIONS USED IN FORMULATING SUCH PROJECTIONS WHICH ARE BELIEVED BY THE
      BORROWER TO BE REASONABLE AS OF THE DATE OF THE BUSINESS PLAN BUT THAT ARE
      INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES,
      ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE
      CONTROL OF THE BORROWER. TO THE KNOWLEDGE OF THE BORROWER OR ANY OF ITS
      SUBSIDIARIES, AS OF THE FOURTH AMENDMENT CLOSING DATE NO FACTS EXIST THAT
      (INDIVIDUALLY OR IN THE AGGREGATE) WOULD RESULT IN ANY MATERIAL CHANGE IN
      ANY OF SUCH PROJECTIONS. THE BUSINESS PLAN HAS BEEN PREPARED ON THE BASIS
      OF THE ASSUMPTIONS STATED THEREIN AND REFLECT THE CURRENT ESTIMATES OF THE
      BORROWER AND ITS SUBSIDIARIES OF THE RESULTS OF OPERATIONS AND OTHER
      INFORMATION PROJECTED THEREIN.

                  (ii) Section 7.5.2 is hereby amended by deleting the first
      sentence thereof, and substituting the following in its place:

      AFTER THE CLOSING ON, AND CONSUMMATION OF, THE CONVERTIBLE FACILITY AND
      OTHERWISE GIVING EFFECT TO THE TRANSACTIONS CONTEMPLATED BY THIS CREDIT
      AGREEMENT AND THE OTHER LOAN DOCUMENTS, THE BORROWER AND ITS SUBSIDIARIES
      ON A CONSOLIDATED BASIS ARE SOLVENT.

                  (iii) Section 8.4(d) is hereby deleted in its entirety and the
      following is inserted in its place:

                        [INTENTIONALLY OMITTED].

                  (iv) The date for submission of the Borrower's (x) finalized
      month end July, 2005 financial statements is hereby extended to October
      31, 2005; (y) draft management month-end August, 2005 financial statements
      is hereby extended to October 15, 2005, and (z) finalized month end
      August, 2005 financial statements is hereby extended to November 15, 2005.

            (k) Inventory Appraisals; Examinations.Sections 8.9.2 and 8.9.3 of
the Agreement are hereby deleted in their entirety, and the following are
inserted in their place:

      8.9.2. APPRAISALS; EXAMINATIONS. (a) THE AGENTS SHALL OBTAIN SUCH
      APPRAISALS OF THE COLLATERAL AT THE TIMES, AND WITH SUCH FREQUENCY, AS THE
      AGENTS, IN THEIR SOLE AND EXCLUSIVE DISCRETION, MAY DETERMINE, TO BE
      CONDUCTED BY SUCH APPRAISERS AS ARE SATISFACTORY TO THE AGENTS.
      NOTWITHSTANDING THE FOREGOING, (i) PRIOR TO THE OCCURRENCE OF ANY EVENT OF
      DEFAULT, THE BORROWER SHALL ONLY BE OBLIGATED TO REIMBURSE THE AGENTS FOR
      THREE (3) APPRAISALS OF THE COLLATERAL IN ANY TWELVE (12) MONTH PERIOD,
      AND (ii) FROM AND AFTER THE OCCURRENCE OF ANY EVENT OF DEFAULT, THE AGENTS
      MAY CAUSE SUCH ADDITIONAL APPRAISALS TO BE UNDERTAKEN AS THE AGENTS, IN
      THEIR SOLE AND EXCLUSIVE DISCRETION, DEEM NECESSARY OR APPROPRIATE, EACH
      OF WHICH SHALL BE AT THE BORROWER'S EXPENSE.

            (b) THE AGENTS SHALL CONDUCT SUCH COMMERCIAL FINANCE FIELD
      EXAMINATIONS OF THE BORROWER'S BOOKS AND RECORDS AT THE TIMES, AND WITH
      SUCH FREQUENCY, AS THE AGENTS, IN THEIR SOLE AND EXCLUSIVE DISCRETION, MAY
      DETERMINE, TO BE CONDUCTED BY SUCH EXAMINERS AS ARE SATISFACTORY TO THE
      AGENTS. NOTWITHSTANDING THE FOREGOING, (i) PRIOR TO THE OCCURRENCE OF ANY
      EVENT OF DEFAULT, THE BORROWER SHALL ONLY BE OBLIGATED TO REIMBURSE THE
      AGENTS FOR THREE (3) COMMERCIAL FINANCE FIELD EXAMINATIONS IN ANY TWELVE
      (12) MONTH PERIOD, AND (ii) FROM AND AFTER THE OCCURRENCE OF ANY EVENT OF
      DEFAULT, THE AGENTS MAY CAUSE SUCH ADDITIONAL COMMERCIAL FINANCE FIELD
      EXAMINATIONS TO BE

                                       11
<PAGE>

      UNDERTAKEN AS THE AGENTS, IN THEIR SOLE AND EXCLUSIVE DISCRETION, DEEM
      NECESSARY OR APPROPRIATE, EACH OF WHICH SHALL BE AT THE BORROWER'S
      EXPENSE.

      8.9.3. INTENTIONALLY OMITTED.

            (l) Permitted Indebtedness. Section 9.1 is hereby amended by
inserting new subparagraphs (i)and (j) in their appropriate place and
alphabetical order:

            (i) INDEBTEDNESS PURSUANT TO THE SUBORDINATE FACILITY.

            (j) INDEBTEDNESS PURSUANT TO THE TRADE LIEN AGREEMENT.

            (m) Permitted Liens. Section 9.2 is hereby amended by inserting new
subparagraphs (k) and (l) in their appropriate place and alphabetical order:

            (k) LIENS IN CONNECTION WITH AND TO SECURE INDEBTEDNESS PURSUANT TO
            THE SUBORDINATE FACILITY.

            (l) LIENS IN CONNECTION WITH AND TO SECURE INDEBTEDNESS PURSUANT TO
            THE TRADE LIEN AGREEMENT; PROVIDED THAT SUCH LIENS ARE SUBJECT TO AN
            INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT IN FORM AND SUBSTANCE
            ACCEPTABLE TO THE AGENTS, IN THEIR SOLE AND EXCLUSIVE DISCRETION.

            (n) Revised Financial Performance Covenants.

                  (i) Section 10.1 is hereby deleted in its entirety and the
      following is inserted in its place:

            "THE BORROWER SHALL MAINTAIN BORROWING AVAILABILITY IN AN AMOUNT
            GREATER THAN $7,000,000.00 AT ALL TIMES."

                  (ii) Section 10.2 is hereby deleted in its entirety and the
      following is inserted in its place:

            "THE BORROWER (i) SHALL NOT SUFFER TO OCCUR AT ANY TIME A VOTE OF
            THE BORROWER'S SHAREHOLDERS FAILING TO APPROVE OR REJECTING THE
            CONVERTIBLE FACILITY, (ii) SHALL NOT WITHDRAW THE PROXY STATEMENT
            RELATING TO THE CONVERTIBLE FACILITY, AND (iii) SHALL HAVE RECEIVED
            NET PROCEEDS FROM THE CONSUMMATION OF THE CONVERTIBLE FACILITY IN AN
            AMOUNT NOT LESS THAN $18,000,000.00 (AFTER REPAYMENT OF THE AMOUNTS
            DUE ON THE SUBORDINATE FINANCING) ON OR BEFORE DECEMBER 30, 2005 OR,
            IF THE SECURITIES EXCHANGE COMMISSION DETERMINES TO CONDUCT A REVIEW
            OF THE CONVERTIBLE FACILITY, JANUARY 31, 2006."

                  (iii) Section 10.3 is hereby deleted in its entirety and the
      following is inserted in its place:

            "NO SOONER THAN NINETY (90) NOR LATER THAN THIRTY (30) DAYS PRIOR TO
            THE END OF EACH OF THE BORROWER'S FISCAL YEARS, THE BORROWER SHALL
            HAVE DELIVERED TO THE ADMINISTRATIVE AGENT A BUSINESS PLAN COVERING
            THE SUCCEEDING FISCAL YEAR, IN FORM AND SCOPE ACCEPTABLE TO THE
            AGENTS, IN THE AGENTS' SOLE AND EXCLUSIVE DISCRETION, DEMONSTRATING
            ADEQUATE LIQUIDITY FOR THE BORROWER'S BUSINESS OPERATIONS THROUGH
            THE END OF THAT SUCCEEDING FISCAL YEAR."

                  (iv) Section 10.4 is hereby deleted in its entirety and the
      following is inserted in its place:

                                       12
<PAGE>

                        "INTENTIONALLY OMITTED."

                  (v) Section 10.5 is hereby deleted in its entirety and the
      following is inserted in its place:

                        "INTENTIONALLY OMITTED."

            (o) Private Label Credit Cards. Section 8.16 is hereby deleted in
its entirety and the following is inserted in its place:

            PRIVATE LABEL CREDIT CARD PROGRAM. THE BORROWER WILL MAINTAIN IN
            EFFECT AT ALL TIMES CREDIT PROGRAMS PROVIDED BY PERSONS OTHER THAN
            THE BORROWER AND ITS SUBSIDIARIES WHICH ARE NON-RECOURSE TO THE
            BORROWER AND ITS SUBSIDIARIES.

            (p) Distributions.

                  (i) The provisions of Section 9.4 are hereby deleted in their
      entirety and the following are inserted in their place:

            DISTRIBUTIONS. THE BORROWER WILL NOT MAKE ANY DISTRIBUTIONS, EXCEPT
            FOR (i) DISTRIBUTIONS TO EXISTING SHAREHOLDERS TO "CASH OUT"
            FRACTIONAL SHARES AND SIMILAR MATTERS INCIDENTAL TO THE CONVERTIBLE
            FACILITY, AND (ii) EITHER (x) DISTRIBUTIONS TO EFFECT REPURCHASES OF
            ANY OF THE BORROWER'S COMMON STOCK, OR (y) CASH DISTRIBUTIONS;
            PROVIDED THAT, WITH RESPECT TO EITHER THE DISTRIBUTIONS TO EFFECT
            REPURCHASES OF THE BORROWER'S COMMON STOCK OR THE CASH DISTRIBUTIONS
            DESCRIBED IN THIS CLAUSE (II): (A) SUCH DISTRIBUTIONS MAY BE MADE
            ONLY ONCE DURING ANY TWELVE (12) MONTH PERIOD, AND THEN ONLY WITHIN
            THE SIXTY (60) DAY PERIOD AFTER THE DELIVERY BY THE BORROWER OF ITS
            YEAR END AUDITED FINANCIAL STATEMENTS, WITH THE FIRST SUCH
            DISTRIBUTION NOT TO BE MADE UNTIL AFTER THE DELIVERY OF THE FISCAL
            YEAR END JANUARY 31, 2007 AUDITED FINANCIAL STATEMENTS; (B) AT THE
            TIME OF THE MAKING THE PROPOSED DISTRIBUTION THE BORROWER IS NOT
            THEN IN DEFAULT AND NO EVENT OF DEFAULT HAS OCCURRED OR IS
            CONTINUING, NOR WOULD THE MAKING OF THE PROPOSED DISTRIBUTION CAUSE
            THE BORROWER TO BE IN DEFAULT OR CAUSE AN EVENT OF DEFAULT; (C)
            IMMEDIATELY AFTER GIVING EFFECT TO THE PROPOSED DISTRIBUTION, (1)
            THE BORROWER WOULD HAVE EXCESS BORROWING AVAILABILITY OF AT LEAST
            $22,000,000.00, AND (2) THE BORROWER IS PROJECTED TO MAINTAIN EXCESS
            BORROWING AVAILABILITY OF NOT LESS THAN $22,000,000.00 AT ALL TIMES
            ON A PRO FORMA BASIS FOR THE SUCCEEDING TWELVE (12) MONTH PERIOD (AS
            SATISFACTORILY ESTABLISHED PURSUANT TO PROJECTIONS REVIEWED AND
            APPROVED BY THE AGENTS, IN THEIR SOLE AND EXCLUSIVE DISCRETION); AND
            (D) IMMEDIATELY AFTER GIVING EFFECT TO THE PROPOSED DISTRIBUTION,
            THE BORROWER WOULD HAVE MAINTAINED A FIXED CHARGE COVERAGE RATIO AS
            DEFINED BELOW, ON A TRAILING 12 MONTH BASIS, OF NOT LESS THAN 1.2X
            (AS SATISFACTORILY ESTABLISHED PURSUANT TO A COMPLIANCE CERTIFICATE
            EXECUTED BY THE BORROWER'S CHIEF FINANCIAL OFFICER AND SUBMITTED TO,
            AND APPROVED BY THE AGENTS, IN THEIR SOLE AND EXCLUSIVE DISCRETION,
            INCLUDING ALL CALCULATIONS RELEVANT THERETO). AS USED HEREIN, THE
            TERM "FIXED CHARGE COVERAGE RATIO" SHALL BE THE RESULT OF (i)
            CONSOLIDATED EBITDA FOR THE TRAILING 12 MONTH PERIOD MINUS CAPITAL
            EXPENDITURES AND CASH TAXES DIVIDED BY (ii) THE SUM OF CASH INTEREST
            EXPENSE, PRINCIPAL PAYMENTS ON INDEBTEDNESS, PAYMENTS ON CAPITAL
            LEASES (WITHOUT DUPLICATION), AND DISTRIBUTIONS OTHERWISE PERMITTED
            HEREIN.

                  (ii) The last sentence of Section 7.5.1 is hereby deleted and
      the following is inserted in its place:

            EXCEPT AS EXPRESSLY PERMITTED BY SECTION 9.4, SINCE THE BALANCE
            SHEET DATE, THE BORROWER HAS NOT MADE ANY DISTRIBUTION.

                                       13
<PAGE>

            (q) Section 9.5.2 of the Agreement, "Disposition of Assets," is
hereby amended by deleting the figure "80%" contained therein, and substituting
the figure "85%" in its place.

            (r) Conforming Amendments.

                  (i) Section 5.8.1 of the Agreement is hereby deleted in its
      entirety and the following is inserted in its place:

      5.8.1 ASSET DISPOSITION PREPAYMENT. THE BORROWER SHALL PAY TO THE
      ADMINISTRATIVE AGENT, FOR THE ACCOUNTS OF THE BANKS (EACH, AN "ASSET
      DISPOSITION PREPAYMENT"), IMMEDIATELY UPON THE RECEIPT BY THE BORROWER OF
      THE PROCEEDS OF ANY ASSET DISPOSITIONS, AN AMOUNT EQUAL TO ONE HUNDRED
      PERCENT (100%) OF THE NET PROCEEDS RECEIVED BY THE BORROWER IN CONNECTION
      WITH SUCH ASSET DISPOSITION.

                  (ii) Section 5.8.2 of the Agreement, New Issuance Prepayment,
      is hereby amended by:

                        (1) Deleting the phrase "within ten (10) days" contained
            therein, and substituting the phrase "IMMEDIATELY" in its place.

                        (2) Deleting the phrase "fifty percent 50%" contained
            therein, and substituting the phrase "ONE HUNDRED PERCENT (100%)" in
            its place.

                  (iii) Section 5.8.3 of the Agreement is hereby deleted in its
      entirety and the following is inserted in its place:

      5.8.3 APPLICATIONS OF MANDATORY PREPAYMENTS. EACH ASSET DISPOSITION
      PREPAYMENT OR NEW ISSUANCE PREPAYMENT (COLLECTIVELY, "MANDATORY
      PREPAYMENTS") RECEIVED BY THE ADMINISTRATIVE AGENT SHALL BE APPLIED TO THE
      OBLIGATIONS AS FOLLOWS:

      (i) FIRST, TO PAY ALL FEES AND EXPENSES THEN DUE AND PAYABLE UNDER THIS
      CREDIT AGREEMENT (INCLUDING FEES AND EXPENSES FOR CASH MANAGEMENT, BUT
      EXCLUDING THE EARLY TERMINATION FEE);

      (ii) SECOND, TO PAY ALL PERMITTED OVERADVANCES, PLUS ALL ACCRUED AND
      UNPAID INTEREST THEREON;

      (iii) THIRD, TO PAY ALL ACCRUED AND UNPAID INTEREST ON THE REVOLVING
      CREDIT LOANS (INCLUDING LOANS UNDER THE ACCOMMODATION FACILITY);

      (iv) FOURTH, TO CASH COLLATERALIZE ALL REIMBURSEMENT OBLIGATIONS,
      INCLUDING 102% OF THE FACE AMOUNT OF ALL OUTSTANDING LETTERS OF CREDIT;

      (v) FIFTH, TO REPAY THE REVOLVING CREDIT LOANS (OTHER THAN UNDER THE
      ACCOMMODATION FACILITY) WHICH ARE BASE RATE LOANS;

      (vi) SIXTH, TO REPAY THE REVOLVING CREDIT LOANS (OTHER THAN UNDER THE
      ACCOMMODATION FACILITY) WHICH ARE LIBOR LOANS;

      (vii) SEVENTH, TO REPAY ALL OTHER OBLIGATIONS (OTHER THAN ANY EARLY
      TERMINATION FEE) DUE AND OWING TO THE AGENTS AND THE BANKS (OTHER THAN THE
      ACCOMMODATION BANKS UNDER THE ACCOMMODATION FACILITY) UNDER THE LOAN
      DOCUMENTS;

                                       14
<PAGE>

      (viii) EIGHTH, TO REPAY THE REVOLVING CREDIT LOANS WHICH ARE OUTSTANDING
      UNDER THE ACCOMMODATION FACILITY;

      (ix) NINTH, TO PAY ANY EARLY TERMINATION FEE DUE AND OWING TO THE BANKS
      (OTHER THAN THE ACCOMMODATION BANKS UNDER THE ACCOMMODATION FACILITY)
      UNDER THE LOAN DOCUMENTS;

      (x) TENTH, TO PAY ANY EARLY TERMINATION FEE AND ALL OTHER OBLIGATIONS DUE
      AND OWING TO THE ACCOMMODATION BANKS UNDER THE LOAN DOCUMENTS; AND

      (xi) ELEVENTH, TO THE BORROWER'S OPERATING ACCOUNTS.

                  (iv) The first paragraph of Section 5.9(c) of the Agreement is
      hereby deleted in its entirety and the following is inserted in its place:

      (c) PRIOR TO THE OCCURRENCE OF AN EVENT OF DEFAULT, ALL FUNDS TRANSFERRED
      TO THE CONCENTRATION ACCOUNTS AND ANY AMOUNTS REQUIRED TO BE REPAID
      PURSUANT TO Section 5.9(b)(i) SHALL BE APPLIED TO THE OBLIGATIONS AS
      FOLLOWS:

      (A) FIRST, TO PAY ALL FEES AND EXPENSES THEN DUE AND PAYABLE UNDER THIS
      CREDIT AGREEMENT (INCLUDING FEES AND EXPENSES FOR CASH MANAGEMENT, BUT
      EXCLUDING ANY EARLY TERMINATION FEE);

      (B) SECOND, TO PAY ALL PERMITTED OVERADVANCES, PLUS ALL ACCRUED AND UNPAID
      INTEREST THEREON;

      (C) THIRD, TO PAY ALL ACCRUED AND UNPAID INTEREST ON THE REVOLVING CREDIT
      LOANS (INCLUDING LOANS UNDER THE ACCOMMODATION FACILITY);

      (D) FOURTH, BUT ONLY IN THE CASE OF A REQUIRED REPAYMENT PURSUANT TO
      Section 5.9(b)(i), TO CASH COLLATERALIZE ALL REIMBURSEMENT OBLIGATIONS,
      INCLUDING 102% OF THE FACE AMOUNT OF ALL OUTSTANDING LETTERS OF CREDIT;

      (E) FIFTH, TO REPAY REVOLVING CREDIT LOANS (OTHER THAN UNDER THE
      ACCOMMODATION FACILITY) WHICH ARE BASE RATE LOANS;

      (F) SIXTH, TO REPAY REVOLVING CREDIT LOANS (OTHER THAN UNDER THE
      ACCOMMODATION FACILITY) WHICH ARE LIBOR LOANS;

      (G) SEVENTH, TO REPAY ALL OTHER OBLIGATIONS (OTHER THAN ANY EARLY
      TERMINATION FEE) DUE AND OWING TO THE AGENTS AND THE BANKS (OTHER THAN THE
      ACCOMMODATION BANKS UNDER THE ACCOMMODATION FACILITY) UNDER THE LOAN
      DOCUMENTS;

      (H) EIGHTH, TO REPAY REVOLVING CREDIT LOANS WHICH ARE OUTSTANDING UNDER
      THE ACCOMMODATION FACILITY;

      (I) NINTH, TO PAY ANY EARLY TERMINATION FEE DUE AND OWING TO THE BANKS
      (OTHER THAN THE ACCOMMODATION BANKS UNDER THE ACCOMMODATION FACILITY)
      UNDER THE LOAN DOCUMENTS;

      (J) TENTH, TO PAY ANY EARLY TERMINATION FEE AND ALL OTHER OBLIGATIONS DUE
      AND OWING TO THE ACCOMMODATION BANKS UNDER THE LOAN DOCUMENTS; AND

      (K) ELEVENTH, TO THE BORROWER'S OPERATING ACCOUNTS.

                  (v) Section 5.10 of the Agreement is hereby deleted in its
      entirety and the following is inserted in its place:

                                       15
<PAGE>

      5.10 REPAYMENTS OF LOANS AND DISTRIBUTION OF COLLATERAL PROCEEDS AFTER
      EVENT OF DEFAULT. IN THE EVENT THAT FOLLOWING THE OCCURRENCE AND DURING
      THE CONTINUANCE OF AN EVENT OF DEFAULT, THE COLLATERAL AGENT, ANY OTHER
      AGENT OR ANY BANK, AS THE CASE MAY BE, RECEIVES ANY MONIES, WHETHER
      PURSUANT TO Section 4.4(C), Section 8.14 OR Section 13.4 OR OTHERWISE WITH
      RESPECT TO THE REALIZATION UPON ANY OF THE COLLATERAL, SUCH MONIES SHALL
      BE DISTRIBUTED FOR APPLICATION AS FOLLOWS (THE BORROWER HEREBY AUTHORIZING
      AND CONSENTING TO SUCH APPLICATION):

      (a) FIRST, TO THE PAYMENT OF, OR (AS THE CASE MAY BE) THE REIMBURSEMENT OF
      THE AGENTS FOR OR IN RESPECT OF ALL REASONABLE COSTS, EXPENSES,
      DISBURSEMENTS AND LOSSES WHICH SHALL HAVE BEEN INCURRED OR SUSTAINED BY
      THE AGENTS IN CONNECTION WITH THE COLLECTION OF SUCH MONIES BY THE AGENTS,
      FOR THE EXERCISE, PROTECTION OR ENFORCEMENT BY THE COLLATERAL AGENT OF ALL
      OR ANY OF THE RIGHTS, REMEDIES, POWERS AND PRIVILEGES OF THE COLLATERAL
      AGENT, FOR THE BENEFIT OF THE AGENTS AND THE BANKS, UNDER THIS CREDIT
      AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR IN RESPECT OF THE
      COLLATERAL, INCLUDING, WITHOUT LIMITATION, THE FEES AND EXPENSES OF
      COUNSEL TO THE AGENTS, OR IN SUPPORT OF ANY PROVISION OF ADEQUATE
      INDEMNITY TO THE AGENTS AGAINST ANY TAXES OR LIENS WHICH BY LAW SHALL
      HAVE, OR MAY HAVE, PRIORITY OVER THE RIGHTS OF THE AGENTS TO SUCH MONIES;

      (b) SECOND, TO PAY ALL PERMITTED OVERADVANCES, PLUS ALL ACCRUED AND UNPAID
      INTEREST THEREON;

      (c) THIRD, TO PAY ALL ACCRUED AND UNPAID INTEREST ON THE REVOLVING CREDIT
      LOANS (INCLUDING LOANS UNDER THE ACCOMMODATION FACILITY);

      (d) FOURTH, TO CASH COLLATERALIZE ALL REIMBURSEMENT OBLIGATIONS, INCLUDING
      102% OF THE FACE AMOUNT OF ALL OUTSTANDING LETTERS OF CREDIT;

      (e) FIFTH, TO REPAY THE REVOLVING CREDIT LOANS (OTHER THAN UNDER THE
      ACCOMMODATION FACILITY) WHICH ARE BASE RATE LOANS;

      (f) SIXTH, TO REPAY THE REVOLVING CREDIT LOANS (OTHER THAN UNDER THE
      ACCOMMODATION FACILITY) WHICH ARE LIBOR LOANS;

      (g) SEVENTH, TO REPAY ALL OTHER OBLIGATIONS (OTHER THAN ANY EARLY
      TERMINATION FEE) DUE AND OWING TO THE AGENTS AND THE BANKS (OTHER THAN THE
      ACCOMMODATION BANKS UNDER THE ACCOMMODATION FACILITY) UNDER THE LOAN
      DOCUMENTS;

      (h) EIGHTH, TO REPAY THE REVOLVING CREDIT LOANS WHICH ARE OUTSTANDING
      UNDER THE ACCOMMODATION FACILITY;

      (i) NINTH, TO PAY ANY EARLY TERMINATION FEE DUE AND OWING TO THE BANKS
      (OTHER THAN THE ACCOMMODATION BANKS UNDER THE ACCOMMODATION FACILITY)
      UNDER THE LOAN DOCUMENTS;

      (j) TENTH, TO PAY ANY EARLY TERMINATION FEE AND ANY OTHER OBLIGATIONS DUE
      AND OWING TO THE ACCOMMODATION BANKS UNDER THE LOAN DOCUMENTS;

      (j) ELEVENTH, UPON PAYMENT AND SATISFACTION IN FULL OR OTHER PROVISIONS
      FOR PAYMENT IN FULL SATISFACTORY TO EACH OF THE BANKS AND THE AGENTS OF
      ALL OF THE OBLIGATIONS, TO THE PAYMENT OF ANY UNPAID OBLIGATIONS REQUIRED
      TO BE PAID PURSUANT TO Section 9-615(a) OF THE UNIFORM COMMERCIAL CODE OF
      THE STATE OF ILLINOIS; AND

      (k) TWELFTH, THE EXCESS, IF ANY, SHALL BE RETURNED TO THE BORROWER OR TO
      SUCH OTHER PERSONS AS ARE ENTITLED THERETO.

      ALL DISTRIBUTIONS IN RESPECT OF (i) SUCH OBLIGATIONS SHALL BE MADE PARI
      PASSU AMONG OBLIGATIONS WITH RESPECT TO THE AGENTS' FEES PAYABLE PURSUANT
      TO Section 5.12, AND ALL OTHER OBLIGATIONS AND (ii) OBLIGATIONS OWING TO
      THE BANKS WITH RESPECT TO EACH TYPE OF OBLIGATION UNDER EACH OF THE
      CATEGORIES SPECIFIED

                                       16
<PAGE>

      ABOVE SUCH AS INTEREST, PRINCIPAL, FEES AND EXPENSES, SHALL BE MADE AMONG
      THE BANKS ENTITLED THERETO PRO RATA, IN ACCORDANCE WITH THEIR RESPECTIVE
      COMMITMENT PERCENTAGES (OR IN THE CASE OF THE ACCOMMODATION BANKS, IN
      ACCORDANCE WITH THEIR RESPECTIVE SHARE OF THE ACCOMMODATION FACILITY
      COMMITMENT AMOUNT); AND PROVIDED, FURTHER, THAT THE AGENTS MAY IN THEIR
      DISCRETION MAKE PROPER ALLOWANCE TO TAKE INTO ACCOUNT ANY OBLIGATIONS NOT
      THEN DUE AND PAYABLE.

                  (vi) Section 5.22 is hereby deleted in its entirety and the
      following is inserted in its place:

                        [INTENTIONALLY OMITTED.]

                  (vii) Section 13.1 of the Agreement is amended by the deletion
      of the following sentence at the end thereof which was added pursuant to
      the Third Amendment:

                  (viii) "EACH ACCOMMODATION BANK SHALL HAVE THE RIGHT,
      EXERCISABLE AT ANY TIME AFTER 60 DAYS FOLLOWING AN EVENT OF DEFAULT
      ARISING FROM THE BREACH BY THE BORROWER OF THE COVENANT CONTAINED IN
      SECTION 10.4 BY NOTICE TO THE ADMINISTRATIVE AGENT, TO DIRECT THE
      ADMINISTRATIVE AGENT TO DECLARE ALL AMOUNTS OWING WITH RESPECT TO THIS
      CREDIT AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS AND ALL
      REIMBURSEMENT OBLIGATIONS IMMEDIATELY DUE AND PAYABLE."

                  (ix) Section 13.1(f) is hereby deleted in its entirety and the
      following is inserted in its place:

      (f) THE BORROWER OR ANY OF ITS SUBSIDIARIES SHALL (i) FAIL TO PAY AT
      MATURITY, OR WITHIN ANY APPLICABLE PERIOD OF GRACE, ANY OBLIGATION FOR
      BORROWED MONEY OR CREDIT RECEIVED OR IN RESPECT OF ANY CAPITALIZED LEASES,
      OR (ii) FAIL TO OBSERVE OR PERFORM ANY MATERIAL TERM, COVENANT, OR
      AGREEMENT CONTAINED IN ANY AGREEMENT BY WHICH IT IS BOUND, EVIDENCING OR
      SECURING BORROWED MONEY OR CREDIT RECEIVED, OR IN RESPECT OF ANY
      CAPITALIZED LEASES, IN EACH CASE UNDER THIS SUBPARAGRAPH (f) IN EXCESS OF
      $1,000,000.00, INCLUDING WITHOUT LIMITATION, UNDER THE SUBORDINATE
      FACILITY OR UNDER THE TRADE LIEN TERM SHEET OR THE TRADE LIEN AGREEMENT,
      FOR SUCH PERIOD OF TIME AS WOULD PERMIT (ASSUMING THE GIVING OF
      APPROPRIATE NOTICE IF REQUIRED) THE HOLDER OR HOLDERS THEREOF OR OF ANY
      OBLIGATIONS ISSUED THEREUNDER TO ACCELERATE THE MATURITY THEREOF, WHETHER
      OR NOT ANY SUCH ACCELERATION HAS TAKEN PLACE;

                  (x) Section 13.2 of the Agreement is amended by the deletion
      of the following sentence at the end thereof which was added pursuant to
      the Third Amendment:

      "EACH ACCOMMODATION BANK SHALL HAVE THE RIGHT, EXERCISABLE AT ANY TIME
      AFTER 60 DAYS FOLLOWING AN EVENT OF DEFAULT ARISING FROM THE BREACH BY THE
      BORROWER OF THE COVENANT CONTAINED IN SECTION 10.4 BY NOTICE TO THE
      ADMINISTRATIVE AGENT, TO DIRECT THE ADMINISTRATIVE AGENT TO NOTIFY THE
      BORROWER TO TERMINATE THE UNUSED PORTION OF THE CREDIT UNDER THIS CREDIT
      AGREEMENT."

                  (xi) Section 13.3 of the Agreement is amended by the deletion
      of the following sentence at the end thereof which was added pursuant to
      the Third Amendment:

      "EACH ACCOMMODATION BANK SHALL HAVE THE RIGHT, EXERCISABLE AT ANY TIME
      AFTER (i) 60 DAYS FOLLOWING AN EVENT OF DEFAULT ARISING FROM THE BREACH BY
      THE BORROWER OF THE COVENANT CONTAINED IN SECTION 10.4 OR (ii) THE
      OCCURRENCE OF AN EVENT OF DEFAULT SPECIFIED IN Sections 13.1(g) OR 13.1
      (h), TO PROCEED (OR BY NOTICE TO THE ADMINISTRATIVE AGENT TO DIRECT THE
      ADMINISTRATIVE AGENT TO SO PROCEED) TO PROTECT AND ENFORCE ITS RIGHTS BY
      SUIT IN EQUITY, ACTION AT LAW, OR OTHER APPROPRIATE PROCEEDING , WHETHER
      FOR THE SPECIFIC PERFORMANCE OF ANY COVENANT OR AGREEMENT CONTAINED IN
      THIS CREDIT AGREEMENT AND THE OTHER

                                       17
<PAGE>

      LOAN DOCUMENTS OR ANY INSTRUMENT PURSUANT TO WHICH THE OBLIGATIONS ARE
      EVIDENCED, INCLUDING AS PERMITTED BY APPLICABLE LAW THE OBTAINING OF THE
      EX PARTE APPOINTMENT OF A RECEIVER, AND IF SUCH AMOUNT SHALL HAVE BECOME
      DUE, BY DECLARATION OR OTHERWISE, PROCEED TO ENFORCE THE PAYMENT THEREOF
      OR ANY OTHER LEGAL OR EQUITABLE RIGHT OF AGENTS AND BANKS."

            (s) Accommodation Banks. Section 19.10 of the Agreement is hereby
deleted in its entirety and the following is inserted in its place:

      19.10 THE INITIAL ACCOMMODATION BANKS (LASALLE AND BACK BAY) AGREE THAT,
      EXCEPT IN THE CASE OF A BUYOUT AND REPLACEMENT OF A "NON-CONSENTING BANK"
      PURSUANT TO SECTION 26 OF THIS AGREEMENT:

      (a) SO LONG AS LASALLE HOLDS ITS ENTIRE INITIAL INTEREST AS OF THE FOURTH
      AMENDMENT CLOSING DATE IN THE LOANS UNDER THE ACCOMMODATION FACILITY FOR
      ITS OWN ACCOUNT, BACK BAY (OR AN AFFILIATE OF BACK BAY) SHALL AT ALL TIMES
      CONTINUE TO HOLD ITS ENTIRE INITIAL INTEREST IN THE LOANS UNDER THE
      ACCOMMODATION FACILITY FOR ITS OWN ACCOUNT.

      (b) LASALLE MAY SELL OR ASSIGN A PORTION OF ITS INITIAL INTEREST AS OF THE
      FOURTH AMENDMENT CLOSING DATE IN THE LOANS UNDER THE ACCOMMODATION
      FACILITY, SO LONG AS: (i) BACK BAY SHALL HAVE A CORRESPONDING RIGHT TO
      SELL OR ASSIGN AN EQUAL PORTION OF ITS INITIAL INTEREST IN THE LOANS UNDER
      THE ACCOMMODATION FACILITY TO THE PROPOSED PURCHASER OR ASSIGNEE; (ii) ANY
      SUCH PURCHASER OR ASSIGNEE SHALL ALSO SIMULTANEOUSLY BE PURCHASING AN
      INTEREST IN THE REVOLVING LOANS AS WELL; AND (iii) LASALLE AT ALL TIMES
      MUST CONTINUE TO HOLD NOT LESS THAN $1,000,000.00 OF LOANS UNDER THE
      ACCOMMODATION FACILITY.

      FOR PURPOSES OF CLARITY AND THE AVOIDANCE OF DOUBT, THE FOREGOING SHALL
      NOT RESTRICT THE RIGHT OF ANY BANK WHICH IS A BANK HEREUNDER AS OF THE
      FOURTH AMENDMENT CLOSING DATE FROM SELLING OR ASSIGNING A PORTION OF ITS
      INTEREST IN THE REVOLVING CREDIT LOANS AS OTHERWISE PROVIDED HEREIN.

            (t) Agency, Voting, and Consent. The provisions of Section 15 of the
Agreement are hereby deleted in their entirety and the following provisions are
inserted in their place. In addition, to the extent that any provisions of the
Agreement are inconsistent with Section 15 as amended hereby, the following
provisions shall control:

      15.1. APPOINTMENT OF THE AGENTS.

      (a) EACH BANK APPOINTS AND DESIGNATES LASALLE BANK NATIONAL ASSOCIATION AS
      THE "ADMINISTRATIVE AGENT," BANK OF AMERICA, N. A. AS "MANAGING AGENT",
      AND BACK BAY CAPITAL FUNDING LLC, AS "ACCOMMODATION FACILITY AGENT"
      HEREUNDER AND UNDER THE LOAN DOCUMENTS.

      (b) EACH BANK AUTHORIZES THE AGENTS:

            (i) TO EXECUTE THOSE OF THE LOAN DOCUMENTS AND ALL OTHER INSTRUMENTS
            RELATING THERETO TO WHICH THE AGENTS ARE A PARTY.

            (ii) TO TAKE SUCH ACTION ON BEHALF OF THE BANKS AND TO EXERCISE ALL
            SUCH POWERS AS ARE EXPRESSLY DELEGATED TO THE AGENTS HEREUNDER AND
            IN THE LOAN DOCUMENTS AND ALL RELATED DOCUMENTS, TOGETHER WITH SUCH
            OTHER POWERS AS ARE REASONABLY INCIDENTAL THERETO.

      15.2 RESPONSIBILITIES OF AGENTS.

      (a) THE AGENTS SHALL NOT HAVE ANY DUTIES OR RESPONSIBILITIES TO, OR ANY
      FIDUCIARY RELATIONSHIP WITH, ANY BANK EXCEPT FOR THOSE EXPRESSLY SET FORTH
      IN THIS AGREEMENT.

                                       18
<PAGE>

      (b) NEITHER THE AGENTS NOR ANY OF THEIR AFFILIATES SHALL BE RESPONSIBLE TO
      ANY BANK FOR ANY OF THE FOLLOWING:

            (i) ANY RECITALS, STATEMENTS, REPRESENTATIONS OR WARRANTIES MADE BY
            THE BORROWER OR ANY OTHER PERSON.

            (ii) ANY APPRAISALS OR OTHER ASSESSMENTS OF THE ASSETS OF THE
            BORROWER OR OF ANY OTHER PERSON RESPONSIBLE FOR OR ON ACCOUNT OF THE
            OBLIGATIONS.

            (iii) THE VALUE, VALIDITY, EFFECTIVENESS, GENUINENESS,
            ENFORCEABILITY, OR SUFFICIENCY OF THIS AGREEMENT, THE LOAN
            DOCUMENTS, OR ANY OTHER DOCUMENT REFERRED TO OR PROVIDED FOR
            THEREIN.

            (iv) ANY FAILURE BY THE BORROWER OR ANY OTHER PERSON (OTHER THAN
            THAT AGENT) TO PERFORM ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS.

      (c) THE AGENTS MAY EMPLOY ATTORNEYS, ACCOUNTANTS, AND OTHER PROFESSIONALS
      AND AGENTS AND ATTORNEYS IN FACT AND SHALL NOT BE RESPONSIBLE FOR THE
      NEGLIGENCE OR MISCONDUCT OF ANY SUCH ATTORNEYS, ACCOUNTANTS, AND OTHER
      PROFESSIONALS OR AGENTS OR ATTORNEYS IN FACT SELECTED BY THE AGENTS WITH
      REASONABLE CARE. NO SUCH ATTORNEY, ACCOUNTANT, OTHER PROFESSIONAL, AGENT,
      OR ATTORNEY IN FACT SHALL BE RESPONSIBLE FOR ANY ACTION TAKEN OR OMITTED
      TO BE TAKEN BY ANY OTHER SUCH PERSON.

      (d) NEITHER THE AGENTS, NOR ANY OF THEIR DIRECTORS, OFFICERS, OR EMPLOYEES
      SHALL BE RESPONSIBLE FOR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY ANY
      OTHER OF THEM IN CONNECTION HEREWITH IN RELIANCE UPON ADVICE OF ITS
      COUNSEL NOR, IN ANY OTHER EVENT EXCEPT FOR ANY ACTION TAKEN OR OMITTED TO
      BE TAKEN AS TO WHICH A FINAL JUDICIAL DETERMINATION HAS BEEN OR IS MADE
      (IN A PROCEEDING IN WHICH SUCH PERSON HAS HAD AN OPPORTUNITY TO BE HEARD)
      THAT SUCH PERSON HAD ACTED IN A GROSSLY NEGLIGENT MANNER, IN ACTUAL BAD
      FAITH, OR IN WILLFUL MISCONDUCT.

      (e) THE AGENTS SHALL NOT HAVE ANY RESPONSIBILITY IN ANY EVENT FOR MORE
      FUNDS THAN THE AGENTS ACTUALLY RECEIVE AND COLLECT. (f) THE AGENTS, IN
      THEIR SEPARATE CAPACITY AS A BANK, SHALL HAVE THE SAME RIGHTS AND POWERS
      HEREUNDER AS ANY OTHER BANK.

      15.3 CONCERNING DISTRIBUTIONS BY THE AGENTS.

      (a) THE AGENTS IN THE AGENTS' REASONABLE DISCRETION BASED UPON THE AGENTS'
      DETERMINATION OF THE LIKELIHOOD THAT ADDITIONAL PAYMENTS WILL BE RECEIVED,
      EXPENSES INCURRED, AND/OR CLAIMS MADE BY THIRD PARTIES TO ALL OR A PORTION
      OF SUCH PROCEEDS, MAY DELAY THE DISTRIBUTION OF ANY PAYMENT RECEIVED ON
      ACCOUNT OF THE OBLIGATIONS.

      (b) THE AGENTS MAY DISBURSE FUNDS PRIOR TO DETERMINING THAT THE SUMS WHICH
      THE AGENTS EXPECT TO RECEIVE HAVE BEEN FINALLY AND UNCONDITIONALLY PAID TO
      THE AGENTS. IF AND TO THE EXTENT THAT THE AGENTS DO DISBURSE FUNDS AND IT
      LATER BECOMES APPARENT THAT THE AGENTS DID NOT THEN RECEIVE A PAYMENT IN
      AN AMOUNT EQUAL TO THE SUM PAID OUT, THEN ANY BANK TO WHOM THE AGENTS MADE
      THE FUNDS AVAILABLE, ON DEMAND FROM THE AGENTS, SHALL REFUND TO THE AGENTS
      THE SUM PAID TO THAT PERSON.

      (c) IF, IN THE OPINION OF THE AGENTS, THE DISTRIBUTION OF ANY AMOUNT
      RECEIVED BY THE AGENTS MIGHT INVOLVE THE AGENTS IN LIABILITY, OR MIGHT BE
      PROHIBITED HEREBY, OR MIGHT BE QUESTIONED BY ANY PERSON, THEN THE AGENTS
      MAY REFRAIN FROM MAKING DISTRIBUTION UNTIL THE AGENTS' RIGHT TO MAKE
      DISTRIBUTION HAS BEEN ADJUDICATED BY A COURT OF COMPETENT JURISDICTION.

      (d) THE PROCEEDS OF ANY BANK'S EXERCISE OF ANY RIGHT OF, OR IN THE NATURE
      OF, SET OFF SHALL BE FIRST, TO THE EXTENT THAT A BANK IS ENTITLED TO ANY
      DISTRIBUTION HEREUNDER, DEEMED TO CONSTITUTE SUCH

                                       19
<PAGE>

      DISTRIBUTION AND SECOND, SHARED WITH THE OTHER BANKS AS IF DISTRIBUTED
      PURSUANT TO (AND SHALL BE DEEMED AS DISTRIBUTIONS UNDER, THIS AGREEMENT.

      (e) IN THE EVENT THAT (x) A COURT OF COMPETENT JURISDICTION SHALL ADJUDGE
      THAT ANY AMOUNT RECEIVED AND DISTRIBUTED BY THE AGENTS IS TO BE REPAID OR
      DISGORGED OR (y) THOSE BANKS ADVERSELY AFFECTED THEREBY DETERMINE TO
      EFFECT SUCH REPAYMENT OR DISGORGEMENT, THEN EACH BANK TO WHICH ANY SUCH
      DISTRIBUTION SHALL HAVE BEEN MADE SHALL REPAY, TO THE AGENTS WHICH HAD
      MADE SUCH DISTRIBUTION, THAT BANK'S PRO RATA SHARE OF THE AMOUNT SO
      ADJUDGED OR DETERMINED TO BE REPAID OR DISGORGED.

      15.4 DISTRIBUTIONS OF NOTICES AND OTHER DOCUMENTS. EACH AGENT WILL FORWARD
      TO EACH BANK, PROMPTLY AFTER THAT AGENT'S RECEIPT THEREOF, A COPY OF EACH
      NOTICE OR OTHER DOCUMENT FURNISHED TO THE AGENTS PURSUANT TO THIS
      AGREEMENT, INCLUDING BORROWING BASE REPORTS, AND ANNUAL FINANCIAL
      STATEMENTS RECEIVED FROM THE BORROWER PURSUANT TO THIS AGREEMENT, OTHER
      THAN ANY OF THE FOLLOWING:

      (a) ROUTINE COMMUNICATIONS ASSOCIATED WITH REQUESTS FOR REVOLVING CREDIT
      LOANS AND/OR THE ISSUANCE OF LETTERS OF CREDIT.

      (b) ROUTINE OR NONMATERIAL COMMUNICATIONS.

      (c) ANY NOTICE OR DOCUMENT REQUIRED BY ANY OF THE LOAN DOCUMENTS TO BE
      FURNISHED TO THE BANKS BY THE BORROWER.

      (d) ANY NOTICE OR DOCUMENT OF WHICH ANY AGENTS HAS KNOWLEDGE THAT SUCH
      NOTICE OR DOCUMENT HAD BEEN FORWARDED TO THE BANKS OTHER THAN BY THE
      AGENTS.

      15.5 CONFIDENTIAL INFORMATION.

      (a) EACH BANK WILL MAINTAIN, AS CONFIDENTIAL, ALL OF THE FOLLOWING:

            (i) PROPRIETARY APPROACHES, TECHNIQUES, AND METHODS OF ANALYSIS
            WHICH ARE APPLIED BY THE AGENTS IN THE ADMINISTRATION OF THE CREDIT
            FACILITY CONTEMPLATED BY THIS AGREEMENT.

            (ii) PROPRIETARY FORMS AND FORMATS UTILIZED BY THE AGENTS IN
            PROVIDING REPORTS TO THE BANKS PURSUANT HERETO, WHICH FORMS OR
            FORMATS ARE NOT OF GENERAL CURRENCY.

            (iii) THE RESULTS OF FINANCIAL EXAMINATIONS, REVIEWS, INVENTORIES,
            ANALYSIS, APPRAISALS, AND OTHER INFORMATION CONCERNING, RELATING TO,
            OR IN RESPECT OF THE BORROWER AND PREPARED BY OR AT THE REQUEST OF,
            OR FURNISHED TO ANY OF, THE BANKS BY OR ON BEHALF OF THE AGENTS.

      (b) NOTHING INCLUDED HEREIN SHALL PROHIBIT THE DISCLOSURE OF ANY SUCH
      INFORMATION AS MAY BE REQUIRED TO BE PROVIDED BY JUDICIAL PROCESS OR BY
      REGULATORY AUTHORITIES HAVING JURISDICTION OVER ANY PARTY TO THIS
      AGREEMENT.

      15.6 RELIANCE BY AGENTS. THE AGENTS SHALL BE ENTITLED TO RELY UPON ANY
      CERTIFICATE, NOTICE OR OTHER DOCUMENT (INCLUDING ANY CABLE, TELEGRAM,
      TELEX, OR FACSIMILE) REASONABLY BELIEVED BY THE AGENTS TO BE GENUINE AND
      CORRECT AND TO HAVE BEEN SIGNED OR SENT BY OR ON BEHALF OF THE PROPER
      PERSON OR PERSONS, AND UPON ADVICE AND STATEMENTS OF ATTORNEYS,
      ACCOUNTANTS AND OTHER EXPERTS SELECTED BY THE AGENTS. AS TO ANY MATTERS
      NOT EXPRESSLY PROVIDED FOR IN THIS AGREEMENT, ANY LOAN DOCUMENT, OR IN ANY
      OTHER DOCUMENT REFERRED TO THEREIN, THE AGENTS SHALL IN ALL EVENTS BE
      FULLY PROTECTED IN ACTING, OR IN REFRAINING FROM ACTING, IN ACCORDANCE
      WITH THE APPLICABLE CONSENT REQUIRED BY THIS AGREEMENT. INSTRUCTIONS GIVEN
      WITH THE REQUISITE CONSENT SHALL BE BINDING ON ALL BANKS.

      15.7 NON-RELIANCE ON AGENTS AND OTHER BANKS.

      (a) EACH BANK REPRESENTS TO ALL OTHER BANKS AND TO THE AGENTS THAT SUCH
      BANK:

                                       20
<PAGE>

            (i) INDEPENDENTLY AND WITHOUT RELIANCE ON ANY REPRESENTATION OR ACT
            BY AGENTS OR BY ANY OTHER BANK, AND BASED ON SUCH DOCUMENTS AND
            INFORMATION AS THAT BANK HAS DEEMED APPROPRIATE, HAS MADE SUCH
            BANK'S OWN APPRAISAL OF THE FINANCIAL CONDITION AND AFFAIRS OF THE
            BORROWER AND DECISION TO ENTER INTO THIS AGREEMENT.

            (ii) HAS RELIED UPON THAT BANK'S REVIEW OF THE LOAN DOCUMENTS BY
            THAT BANK AND BY COUNSEL TO THAT BANK AS THAT BANK DEEMED
            APPROPRIATE UNDER THE CIRCUMSTANCES.

      (b) EACH BANK AGREES THAT SUCH BANK, INDEPENDENTLY AND WITHOUT RELIANCE
      UPON THE AGENTS OR ANY OTHER BANK, AND BASED UPON SUCH DOCUMENTS AND
      INFORMATION AS SUCH BANK SHALL DEEM APPROPRIATE AT THE TIME, WILL CONTINUE
      TO MAKE SUCH BANK'S OWN APPRAISALS OF THE FINANCIAL CONDITION AND AFFAIRS
      OF THE BORROWER WHEN DETERMINING WHETHER TO TAKE OR NOT TO TAKE ANY
      DISCRETIONARY ACTION UNDER THIS AGREEMENT.

      (c) THE AGENTS, IN THE DISCHARGE OF THAT AGENTS' DUTIES HEREUNDER, SHALL
      NOT

            (i) BE REQUIRED TO MAKE INQUIRY OF, OR TO INSPECT THE PROPERTIES OR
            BOOKS OF, ANY PERSON.

            (ii) HAVE ANY RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF ANY
            FINANCIAL EXAMINATION, REVIEW, INVENTORY, ANALYSIS, APPRAISAL, AND
            OTHER INFORMATION CONCERNING, RELATING TO, OR IN RESPECT OF THE
            BORROWER AND PREPARED BY OR AT THE REQUEST OF, OR FURNISHED TO ANY
            OF, THE BANKS BY OR ON BEHALF OF THE AGENTS.

      (d) EXCEPT FOR NOTICES, REPORTS, AND OTHER DOCUMENTS AND INFORMATION
      EXPRESSLY REQUIRED TO BE FURNISHED TO THE BANKS BY THE AGENTS HEREUNDER,
      THE AGENTS SHALL NOT HAVE ANY AFFIRMATIVE DUTY OR RESPONSIBILITY TO
      PROVIDE ANY BANK WITH ANY CREDIT OR OTHER INFORMATION CONCERNING ANY
      PERSON, WHICH INFORMATION MAY COME INTO THE POSSESSION OF AGENTS OR ANY
      AFFILIATE OF THE AGENTS.

      (e) EACH BANK, AT SUCH BANK'S REQUEST, SHALL HAVE REASONABLE ACCESS TO ALL
      NON-PRIVILEGED DOCUMENTS IN THE POSSESSION OF THE AGENTS, WHICH DOCUMENTS
      RELATE TO THE AGENTS' PERFORMANCE OF THEIR DUTIES HEREUNDER.

      15.8 INDEMNIFICATION.

            WITHOUT LIMITING THE LIABILITIES OF THE BORROWER UNDER ANY THIS OR
      ANY OF THE OTHER LOAN DOCUMENTS, EACH BANK SHALL INDEMNIFY THE AGENTS, PRO
      RATA, FOR ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
      PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF
      ANY KIND OR NATURE WHATSOEVER (INCLUDING ATTORNEYS' REASONABLE FEES AND
      EXPENSES AND OTHER OUT OF POCKET EXPENDITURES) WHICH MAY AT ANY TIME BE
      IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENTS AND IN ANY WAY
      RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
      ANY DOCUMENTS CONTEMPLATED BY OR REFERRED TO THEREIN OR THE TRANSACTIONS
      CONTEMPLATED THEREBY OR THE ENFORCEMENT OF ANY OF TERMS HEREOF OR THEREOF
      OR OF ANY SUCH OTHER DOCUMENTS, PROVIDED, HOWEVER, NO BANK SHALL BE LIABLE
      FOR ANY OF THE FOREGOING TO THE EXTENT THAT ANY OF THE FOREGOING ARISES
      FROM ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY THE AGENTS AS TO WHICH A
      FINAL JUDICIAL DETERMINATION HAS BEEN OR IS MADE (IN A PROCEEDING IN WHICH
      EACH AGENT HAS HAD AN OPPORTUNITY TO BE HEARD) THAT THE AGENTS HAD ACTED
      IN A GROSSLY NEGLIGENT MANNER, IN ACTUAL BAD FAITH, OR IN WILLFUL
      MISCONDUCT.

      15.9 RESIGNATION OF AGENTS.

      (a) ANY AGENT MAY RESIGN AT ANY TIME BY GIVING SIXTY (60) DAYS PRIOR
      WRITTEN NOTICE THEREOF TO THE BANKS AND THE BORROWER. UPON RECEIPT OF ANY
      SUCH NOTICE OF RESIGNATION BY LASALLE BANK NATIONAL ASSOCIATION, BANK OF
      AMERICA, N. A. SHALL BE APPOINTED SUCCESSOR ADMINISTRATIVE AGENT, AND UPON
      ANY RESIGNATION BY BANK OF AMERICA, N. A., LASALLE BANK NATIONAL
      ASSOCIATION SHALL BE APPOINTED SUCCESSOR MANAGING AGENT. IN THE EVENT THAT
      EITHER OR BOTH OF BANK OF AMERICA, N. A. OR LASALLE BANK NATIONAL
      ASSOCIATION DECLINE TO BE SO APPOINTED AS SUCCESSOR AGENT, THE MAJORITY
      BANKS

                                       21
<PAGE>

      SHALL HAVE THE RIGHT TO APPOINT A SUCCESSOR TO SUCH AGENT (AND IF NO EVENT
      OF DEFAULT HAS OCCURRED, WITH THE CONSENT OF THE BORROWER, NOT TO BE
      UNREASONABLY WITHHELD AND, IN ANY EVENT, DEEMED GIVEN BY THE BORROWER IF
      NO WRITTEN OBJECTION IS PROVIDED BY THE BORROWER TO THE (RESIGNING) AGENT
      WITHIN SEVEN (7) BUSINESS DAYS NOTICE OF SUCH PROPOSED APPOINTMENT). IF A
      SUCCESSOR AGENT SHALL NOT HAVE BEEN SO APPOINTED AND ACCEPTED SUCH
      APPOINTMENT WITHIN 30 DAYS AFTER THE GIVING OF NOTICE BY THE RESIGNING
      AGENT, THEN THE RESIGNING AGENT IN CONSULTATION WITH THE BORROWER SO LONG
      AS NO EVENT OF DEFAULT IS THEN CONTINUING MAY APPOINT A SUCCESSOR AGENT,
      WHICH SHALL BE A FINANCIAL INSTITUTION HAVING A COMBINED CAPITAL AND
      SURPLUS IN EXCESS OF $200 MILLION. THE CONSENT OF THE BORROWER OTHERWISE
      REQUIRED BY THIS SECTION (a) SHALL NOT BE REQUIRED IF AN EVENT OF DEFAULT
      HAS OCCURRED.

      (b) UPON THE ACCEPTANCE OF ANY APPOINTMENT AS AN AGENT HEREUNDER BY A
      SUCCESSOR AGENT, SUCH SUCCESSOR SHALL THEREUPON SUCCEED TO, AND BECOME
      VESTED WITH, ALL THE RIGHTS, POWERS, PRIVILEGES, AND DUTIES OF THE
      (RESIGNING) AGENT SO REPLACED, AND THE (RESIGNING) AGENT SHALL BE
      DISCHARGED FROM THE (RESIGNING) AGENT'S DUTIES AND OBLIGATIONS HEREUNDER,
      OTHER THAN ON ACCOUNT OF ANY RESPONSIBILITY FOR ANY ACTION TAKEN OR
      OMITTED TO BE TAKEN BY THE (RESIGNING) AGENTS AS TO WHICH A FINAL JUDICIAL
      DETERMINATION HAS BEEN OR IS MADE (IN A PROCEEDING IN WHICH THE
      (RESIGNING) PERSON HAS HAD AN OPPORTUNITY TO BE HEARD) THAT SUCH PERSON
      HAD ACTED IN A GROSSLY NEGLIGENT MANNER, IN BAD FAITH, OR IN WILLFUL
      MISCONDUCT.

      (c) AFTER ANY RETIRING AGENT'S RESIGNATION, THE PROVISIONS OF THIS
      AGREEMENT AND OF ALL OTHER LOAN DOCUMENTS SHALL CONTINUE IN EFFECT FOR THE
      RETIRING PERSON'S BENEFIT IN RESPECT OF ANY ACTIONS TAKEN OR OMITTED TO BE
      TAKEN BY IT WHILE IT WAS ACTING AS AN AGENT.

      15.10 ADMINISTRATION OF CREDIT FACILITIES.

      (a) EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, EACH
      AGENT MAY TAKE ANY ACTION WITH RESPECT TO THE CREDIT FACILITY CONTEMPLATED
      BY THE LOAN DOCUMENTS AS THAT AGENT DETERMINES TO BE APPROPRIATE,
      PROVIDED, HOWEVER, NO AGENT IS UNDER ANY AFFIRMATIVE OBLIGATION TO TAKE
      ANY ACTION WHICH IT IS NOT REQUIRED BY THIS AGREEMENT OR THE LOAN
      DOCUMENTS SPECIFICALLY TO SO TAKE.

      (b) EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, WHENEVER
      A LOAN DOCUMENT OR THIS AGREEMENT PROVIDES THAT ACTION MAY BE TAKEN OR
      OMITTED TO BE TAKEN IN AN AGENT'S DISCRETION, THE AGENTS SHALL HAVE THE
      SOLE RIGHT IN THEIR REASONABLE JUDGMENT TO TAKE, OR REFRAIN FROM TAKING,
      SUCH ACTION WITHOUT, AND NOTWITHSTANDING, ANY VOTE OF THE BANKS. THE
      RIGHTS GRANTED TO THE BANKS WITH RESPECT TO ANY CONSENT SHALL NOT
      OTHERWISE LIMIT OR IMPAIR THE AGENTS' EXERCISE OF THEIR DISCRETION UNDER
      THE LOAN DOCUMENTS.

      (c) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT OR ANY LOAN
      DOCUMENT, INCLUDING WITHOUT LIMITATION, ANY OTHER PROVISION OF THIS
      SECTION 15:

            (i) ANY MATTER THAT REQUIRES THE CONSENT OF THE REQUIRED BANKS,
            MAJORITY BANKS, OR UNANIMOUS BANKS SHALL ALSO REQUIRE THE CONSENT OF
            EACH OF THE AGENTS.

            (ii) EXCEPT AS SET FORTH IN SECTION 15.10(c)(iii), BELOW, ANY MATTER
            WHICH MAY BE DETERMINED BY THE ADMINISTRATIVE AGENT IN ITS
            DISCRETION, SHALL ALSO REQUIRE THE CONSENT OF EACH OF THE AGENTS.

            (iii) ANY MATTER RELATING TO THE ADMINISTRATION OF THE BORROWING
            BASE SHALL REQUIRE THE CONSENT OF BOTH THE ADMINISTRATIVE AGENT AND
            THE MANAGING AGENT.

            (iv) UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT, THE AGENTS, IN
            THEIR DISCRETION MAY, AND ANY OF THE ADMINISTRATIVE AGENT, THE
            MANAGING AGENT, OR THE ACCOMMODATION FACILITY AGENT, ACTING SINGLY,
            MAY REQUIRE THE AGENTS TO, CEASE MAKING REVOLVING CREDIT LOANS,
            DECLARE THE OCCURRENCE OF AN EVENT OF DEFAULT, IMPLEMENT ANY DEFAULT
            RATE OF INTEREST, ACCELERATE ALL OBLIGATIONS, AND REQUIRE THE
            ENFORCEMENT OF THE PROVISIONS OF THE SECURITY

                                       22
<PAGE>

            DOCUMENTS AUTHORIZING THE SALE OR OTHER DISPOSITION OF ALL OR ANY
            PART OF THE COLLATERAL AND EXERCISE ALL OR ANY SUCH OTHER LEGAL AND
            EQUITABLE AND OTHER RIGHTS OR REMEDIES AS IT MAY HAVE IN RESPECT OF
            SUCH COLLATERAL.

      15.11 ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY BANKS EXCEPT AS
      OTHERWISE PROVIDED IN THIS AGREEMENT, THE CONSENT OR DIRECTION OF THE
      MAJORITY BANKS IS REQUIRED FOR ANY AMENDMENT, WAIVER, OR MODIFICATION OF
      ANY LOAN DOCUMENT.

      (a) THE MAJORITY BANKS MAY DIRECT THE AGENTS TO REQUIRE THE PROMPT
      REPAYMENT OF PERMITTED OVERADVANCES THAT HAVE BEEN OUTSTANDING FOR MORE
      THAN FORTY-FIVE (45) CONSECUTIVE BUSINESS DAYS OR THAT HAVE BEEN MADE MORE
      THAN TWICE IN ANY TWELVE MONTH PERIOD (THE BANKS RECOGNIZING THAT, EXCEPT
      AS DESCRIBED IN THIS SECTION 15.11(a), ANY LOAN OR ADVANCE UNDER THE
      REVOLVING CREDIT WHICH RESULTS IN A PERMITTED OVERADVANCE MAY BE MADE BY
      THE ADMINISTRATIVE AGENT AND THE MANAGING AGENT IN THEIR DISCRETION
      WITHOUT THE CONSENT OF THE BANKS AND THAT EACH BANK SHALL BE BOUND
      THEREBY).

      (b) THE MAJORITY BANKS MAY DIRECT THE AGENTS TO SUSPEND MAKING REVOLVING
      CREDIT LOANS (INCLUDING THE MAKING OF ANY PERMITTED OVERADVANCES), IF THE
      BORROWER IS THEN IN DEFAULT, FOLLOWING WHICH DIRECTION, AND FOR AS LONG AS
      THE BORROWER IS IN DEFAULT, THE ONLY REVOLVING CREDIT LOANS WHICH MAY BE
      MADE ARE THE FOLLOWING:

            (i) PERMITTED OVERADVANCES NOT OTHERWISE TERMINATED AS PROVIDED IN
            SECTION 15.11(a).

            (ii) REVOLVING CREDIT LOANS MADE TO "COVER" THE HONORING OF LETTERS
            OF CREDIT.

            (iii) REVOLVING CREDIT LOANS MADE WITH CONSENT OF THE MAJORITY
            BANKS.

      (c) THE MAJORITY BANKS MAY UNDERTAKE THE FOLLOWING IF AN EVENT OF DEFAULT
      HAS OCCURRED AND NOT BEEN DULY WAIVED:

            (i) REQUIRE THE AGENTS TO DECLARE ALL OBLIGATIONS TO BE IMMEDIATELY
            PAYABLE IN FULL.

            (ii) DIRECT THE AGENTS TO INCREASE THE RATE OF INTEREST TO THE
            DEFAULT RATE OF INTEREST AS PROVIDED IN, AND TO THE EXTENT PERMITTED
            BY, THIS AGREEMENT.

      15.12. ACTION REQUIRING CERTAIN CONSENT. THE CONSENT OR DIRECTION OF THE
      FOLLOWING IS REQUIRED FOR THE FOLLOWING ACTIONS:

      (a) ANY FORGIVENESS OF ALL OR ANY PORTION OF ANY PAYMENT OBLIGATION: ALL
      BANKS WHOSE PAYMENT OBLIGATION IS BEING SO FORGIVEN (OTHER THAN ANY
      DELINQUENT BANK).

      (b) ANY DECREASE IN ANY INTEREST RATE OR FEE PAYABLE UNDER ANY OF THE LOAN
      DOCUMENTS (OTHER THAN ANY FEE PAYABLE TO THE AGENTS (FOR WHICH THE CONSENT
      OF THE AGENTS SHALL BE REQUIRED): ALL BANKS ADVERSELY AFFECTED THEREBY
      (OTHER THAN ANY DELINQUENT BANK).

      15.14. ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS BANKS. NONE OF THE
      FOLLOWING MAY TAKE PLACE EXCEPT WITH UNANIMOUS BANKS:

      (a) ANY RELEASE OF A MATERIAL PORTION OF THE COLLATERAL, OTHER THAN A
      RELEASE OF COLLATERAL OTHERWISE REQUIRED OR PROVIDED FOR IN THE LOAN
      DOCUMENTS, UNLESS SUCH RELEASE IS BEING MADE TO FACILITATE A LIQUIDATION
      WHICH HAS BEEN PREVIOUSLY AUTHORIZED, OR IS OTHERWISE PERMITTED HEREUNDER,
      IN WHICH CASE NO SUCH UNANIMOUS CONSENT IS REQUIRED.

      (b) ANY AMENDMENT OF THE DEFINITIONS OF "BORROWING BASE" OR "BORROWING
      AVAILABILITY" OR OF ANY DEFINITION OF ANY COMPONENT THEREOF, SUCH THAT
      MORE CREDIT WOULD BE AVAILABLE TO THE BORROWER,

                                       23
<PAGE>

      BASED ON THE SAME ASSETS, AS WOULD HAVE BEEN AVAILABLE TO THE BORROWER
      IMMEDIATELY PRIOR TO SUCH AMENDMENT, IT BEING UNDERSTOOD, HOWEVER, THAT:

            (i) THE FOREGOING SHALL NOT LIMIT THE ADJUSTMENT BY THE AGENTS OF
            ANY RESERVE IN THE AGENTS' ADMINISTRATION OF THE REVOLVING CREDIT
            LOANS AS OTHERWISE PERMITTED BY THIS AGREEMENT.

            (ii) THE FOREGOING SHALL NOT PREVENT THE AGENTS, IN THEIR
            ADMINISTRATION OF THE REVOLVING CREDIT LOANS, FROM RESTORING ANY
            COMPONENT OF BORROWING BASE WHICH HAD BEEN LOWERED BY THE AGENTS
            BACK TO THE VALUE OF SUCH COMPONENT, AS STATED IN THIS AGREEMENT OR
            TO AN INTERMEDIATE VALUE.

      (c) ANY RELEASE OF ANY PERSON OBLIGATED ON ACCOUNT OF THE OBLIGATIONS.

      (d) THE MAKING OF ANY REVOLVING CREDIT LOAN WHICH, WHEN MADE, EXCEEDS
      BORROWING AVAILABILITY AND IS NOT A PERMITTED OVERADVANCE, SUBJECT,
      HOWEVER, TO THE FOLLOWING:

            (i) NO CONSENT IS REQUIRED IN CONNECTION WITH THE MAKING OF ANY
            REVOLVING CREDIT LOAN TO "COVER" ANY HONORING OF A DRAWING UNDER ANY
            L/C.

            (ii) EACH BANK RECOGNIZES THAT SUBSEQUENT TO THE MAKING OF A
            REVOLVING CREDIT LOAN WHICH DOES NOT CONSTITUTE A PERMITTED
            OVERADVANCE, THE UNPAID PRINCIPAL BALANCE OF THE REVOLVING CREDIT
            LOANS MAY EXCEED BORROWING AVAILABILITY ON ACCOUNT OF CHANGED
            CIRCUMSTANCES BEYOND THE CONTROL OF ANY AGENT (SUCH AS A DROP IN
            COLLATERAL VALUE).

      (e) ANY AMENDMENT WHICH HAS THE EFFECT OF LIMITING THE ADMINISTRATIVE
      AGENT'S AND THE MANAGING AGENT'S RIGHT OR ABILITY TO MAKE PERMITTED
      OVERADVANCES.

      (f) THE WAIVER OF THE OBLIGATION OF THE BORROWER TO REDUCE THE OUTSTANDING
      FACILITY AMOUNTS UNDER THE REVOLVING CREDIT TO AN AMOUNT PERMITTED BY THE
      BORROWING BASE (OTHER THAN A PERMITTED OVERADVANCE).

      (g) ANY AMENDMENT OF THIS ARTICLE 15.

      (h) AMENDMENT OF ANY OF THE FOLLOWING DEFINITIONS:

            "MAJORITY BANKS"

            "PERMITTED OVERADVANCE"

            "UNANIMOUS BANKS"

      (i) ANY AMENDMENT OF THE MATURITY DATE.

      (j) ANY AMENDMENT OF SECTION 10.1.

      (k) ANY WAIVER, AMENDMENT, OR MODIFICATION WHICH HAS THE EFFECT OF
      INCREASING ANY COMMITMENT .

      15.13. ACTIONS REQUIRING AGENTS' CONSENT

      (a) NO ACTION, AMENDMENT, OR WAIVER OF COMPLIANCE WITH, ANY PROVISION OF
      THE LOAN DOCUMENTS OR OF THIS AGREEMENT WHICH AFFECTS ANY AGENT IN ITS
      RESPECTIVE CAPACITY AS AN AGENT MAY BE UNDERTAKEN WITHOUT THE WRITTEN
      CONSENT OF SUCH AGENT.

                                       24
<PAGE>

      (b) NO ACTION REFERENCED HEREIN WHICH AFFECTS THE RIGHTS, DUTIES,
      OBLIGATIONS, OR LIABILITIES OF ANY AGENT SHALL BE EFFECTIVE WITHOUT THE
      WRITTEN CONSENT OF THAT AGENT.

      15.14. MISCELLANEOUS ACTIONS

      (a) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NO SINGLE BANK
      INDEPENDENTLY MAY EXERCISE ANY RIGHT OF ACTION OR ENFORCEMENT AGAINST OR
      WITH RESPECT TO THE BORROWER.

      (b) THE AGENTS SHALL BE FULLY JUSTIFIED IN FAILING OR REFUSING TO TAKE
      ACTION UNDER THIS AGREEMENT OR ANY LOAN DOCUMENT ON BEHALF OF ANY BANK
      UNLESS THE AGENTS SHALL FIRST:

            (i) RECEIVE SUCH CLEAR, UNAMBIGUOUS, WRITTEN INSTRUCTIONS AS THE
            AGENTS DEEM APPROPRIATE; AND

            (ii) BE INDEMNIFIED TO THAT AGENT'S SATISFACTION BY THE BANKS
            AGAINST ANY AND ALL LIABILITY AND EXPENSE WHICH MAY BE INCURRED BY
            THAT AGENT BY REASON OF TAKING OR CONTINUING TO TAKE ANY SUCH
            ACTION, UNLESS SUCH ACTION HAD BEEN GROSSLY NEGLIGENT, IN WILLFUL
            MISCONDUCT, OR IN BAD FAITH.

      (c) THE AGENTS MAY ESTABLISH REASONABLE PROCEDURES FOR THE PROVIDING OF
      DIRECTION AND INSTRUCTIONS FROM THE BANKS TO THE AGENTS, INCLUDING THEIR
      RELIANCE ON MULTIPLE COUNTERPARTS, FACSIMILE TRANSMISSIONS, AND TIME
      LIMITS WITHIN WHICH SUCH DIRECTIONS AND INSTRUCTIONS MUST BE RECEIVED IN
      ORDER TO BE INCLUDED IN A DETERMINATION OF WHETHER THE REQUISITE BANKS
      HAVE PROVIDED THEIR DIRECTION, CONSENT, OR INSTRUCTIONS.

            (u) Section 16(c) of the Agreement is hereby deleted and the
following is substituted in its place:

      THE REASONABLE FEES, EXPENSES AND DISBURSEMENTS OF THE ADMINISTRATIVE
      AGENT'S SPECIAL COUNSEL, COUNSEL TO THE MANAGING AGENT, OR ANY LOCAL
      COUNSEL TO ANY OF THE AGENTS INCURRED IN CONNECTION WITH THE PREPARATION,
      ADMINISTRATION, INTERPRETATION, OR ENFORCEMENT OF THE LOAN DOCUMENTS AND
      OTHER INSTRUMENTS MENTIONED HEREIN, EACH CLOSING HEREUNDER, AND
      AMENDMENTS, MODIFICATIONS, APPROVALS, CONSENTS, OR WAIVERS HERETO OR
      HEREUNDER,

            (v) Section 26 is hereby deleted in its entirety and the following
is inserted in its place:

      IF ANY ACTION TO BE TAKEN HEREUNDER REQUIRES THE CONSENT, AUTHORIZATION,
      OR AGREEMENT OF EACH ACCOMMODATION BANK, AND AN ACCOMMODATION BANK (THE
      "NON-CONSENTING BANK") FAILS TO GIVE ITS CONSENT, AUTHORIZATION, OR
      AGREEMENT AND BUT FOR SUCH FAILURE TO GIVE SUCH CONSENT, AUTHORIZATION OR
      AGREEMENT, THE ACTION WOULD BE HAVE BEEN APPROVED TO BE TAKEN, THEN THE
      ACCOMMODATION BANK AGENT, UPON AT LEAST 5 BUSINESS DAYS PRIOR IRREVOCABLE
      NOTICE TO THE NON-CONSENTING BANK, MAY PERMANENTLY REPLACE THE
      NON-CONSENTING BANK WITH ONE OR MORE SUBSTITUTE ACCOMMODATION BANKS (EACH,
      A "REPLACEMENT BANK"), AND THE NON-CONSENTING BANK SHALL HAVE NO RIGHT TO
      REFUSE TO BE REPLACED HEREUNDER. SUCH NOTICE TO REPLACE THE NON-CONSENTING
      BANK SHALL SPECIFY AN EFFECTIVE DATE FOR SUCH REPLACEMENT, WHICH DATE
      SHALL NOT BE LATER THAN 12 BUSINESS DAYS AFTER THE DATE SUCH NOTICE IS
      GIVEN. NOTWITHSTANDING THE DELIVERY BY THE ADMINISTRATIVE AGENT OF NOTICE
      TO THE NON-CONSENTING BANK THAT A REPLACEMENT BANK IS TO BE SUBSTITUTED IN
      THE PLACE OF THE NON-CONSENTING BANK, IF THE NON-CONSENTING BANK DOES IN
      FACT THEREAFTER PROVIDE ITS EXPRESS WRITTEN CONSENT TO THE SUBJECT ACTION
      PRIOR TO THE DATE THAT THE NON-CONSENTING BANK HAS ACTUALLY BEEN REPLACED
      BY A REPLACEMENT BANK, THEN THE NOTICE TO REPLACE THE NON-CONSENTING BANK
      SHALL BE DEEMED OF NO FURTHER FORCE AND EFFECT AND THE PREVIOUSLY
      DESIGNATED NON-CONSENTING BANK SHALL REMAIN AS AN ACCOMMODATION BANK.

      PRIOR TO THE EFFECTIVE DATE OF SUCH REPLACEMENT, THE NON-CONSENTING BANK
      AND EACH REPLACEMENT BANK SHALL EXECUTE AND DELIVER AN ASSIGNMENT AND
      ACCEPTANCE AGREEMENT, SUBJECT ONLY TO THE NON-

                                       25
<PAGE>

      CONSENTING BANK BEING REPAID ITS SHARE OF THE OUTSTANDING ACCOMMODATION
      FACILITY OBLIGATIONS (INCLUDING AN ALLOCABLE PORTION (SUCH PORTION TO BE
      DETERMINED BASED ON THE RELATIVE PORTION OF THE ACCOMMODATION FACILITY
      COMMITMENT AMOUNT ADVANCED BY THE NON-CONSENTING BANK) OF THE EARLY
      TERMINATION FEE TO THE EXTENT IT IS RECEIVED BY THE ACCOMMODATION BANKS)
      WITHOUT ANY PREMIUM OR PENALTY OF ANY KIND WHATSOEVER. IN THE EVENT THE
      CONDITIONS TO THE PAYMENT OF THE EARLY TERMINATION FEE ARE SATISFIED, THE
      REPLACEMENT BANK SHALL USE REASONABLE EFFORTS TO COLLECT SUCH EARLY
      TERMINATION FEE, IF THE ACCOMMODATION FACILITY AGENT DETERMINES, IN ITS
      SOLE AND EXCLUSIVE DISCRETION, THAT IT IS ECONOMICALLY REASONABLE AND
      OTHERWISE PRUDENT TO DO SO. IF THE NON-CONSENTING BANK SHALL REFUSE OR
      FAIL TO EXECUTE AND DELIVER ANY SUCH ASSIGNMENT AND ACCEPTANCE AGREEMENT
      PRIOR TO THE EFFECTIVE DATE OF SUCH REPLACEMENT, THE NON-CONSENTING BANK
      SHALL BE DEEMED TO HAVE EXECUTED AND DELIVERED SUCH ASSIGNMENT AND
      ACCEPTANCE AGREEMENT, AND THE ADMINISTRATIVE AGENT IS HEREBY AUTHORIZED TO
      EXECUTE SUCH ASSIGNMENT AND ACCEPTANCE IN THE NAME OF, AND ON BEHALF OF,
      THE NON-CONSENTING BANK. THE REPLACEMENT OF ANY NON-CONSENTING BANK SHALL
      BE MADE IN ACCORDANCE WITH THE TERMS OF SECTION 19.

            (w) Revised Schedules. All of the existing schedules to the
Agreement (other than Schedule 1) are hereby deleted and replaced with the
schedules annexed hereto collectively marked Exhibit "F". Each of Sections
9.1(f), 9.2(g), and 9.3(d) of the Agreement are hereby amended by deleting the
phrase "the date hereof" where it appears therein and substituting the phrase
"THE FOURTH AMENDMENT CLOSING DATE" in each instance.

      7. SEC Filing. The Borrower shall file its 10-Q report for the period
ending July 31, 2005 with the Securities Exchange Commission on or before
October 31, 2005.

      8. Trade Lien Agreement. On or before October 24, 2005, the Borrower shall
have closed with the Collateral Trustee on the Trade Lien Agreement, and the
Trade Lien Agreement shall be upon terms and conditions acceptable to the
Agents, in their sole and exclusive discretion, substantially in accordance with
the Trade Lien Term Sheet. At such time, the Agents shall have entered into an
Intercreditor and Lien Subordination Agreement with the Collateral Trustee on
terms and conditions acceptable to the Agents, in their sole and exclusive
discretion.

      9. Retention of Consultant. The Borrower shall continue to retain FTI
Consulting as its management and business consultant through the closing on the
Convertible Facility to assist the Borrower's management in its financial
reporting and analysis and otherwise complying with the terms and conditions of
the Agreement and this Amendment.

      10. Representations, Warranties and Covenants. The representations and
warranties set forth in Section 7 and all covenants set forth in Sections 8, 9
and 10 of the Agreement shall be deemed remade and affirmed as of the date
hereof by the Borrower, except any and all references to the Agreement in such
representations, warranties and covenants shall be deemed to include this
Amendment.

      11. Reference to the Effect on the Agreement.

            (a) References. Upon the date of this Amendment and on and after the
date hereof, each reference in the Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a reference to the
Agreement, as amended hereby.

                                       26
<PAGE>

            (b) Defaults. The Borrower acknowledges and agrees that its failure
to promptly, punctually, and faithfully perform all and singular the terms and
conditions of this Amendment, including without limitation, the requirements of
Sections 4, 5, 7, 8, and 9, above, the shall constitute Events of Default under
the Agreement.

            (c) Ratification. As specifically modified above, the Agreement and
all other documents, instruments and agreements executed and/or delivered in
connection therewith shall remain in full force and effect, and are hereby
ratified and confirmed.

      12. Representations and Warranties of the Borrower. The Borrower hereby
represents and warrants to Agents and the Banks as of the date hereof as
follows:

            (a) The execution and delivery of this Amendment and the performance
by Borrower of its obligations hereunder are within the Borrower's powers and
authority, have been duly authorized by all necessary corporate action and do
not and will not contravene or conflict with the Certificate of Incorporation or
By-laws of the Borrower;

            (b) The Agreement (as amended by this Amendment) and the other Loan
Documents constitute legal, valid and binding obligations enforceable in
accordance with their terms by the Agents and the Banks against the Borrower,
and the Borrower expressly reaffirms each of its obligations under the Agreement
(as amended by this Amendment) and each of the other Loan Documents, including,
without limitation, the Borrower's Obligations. The Borrower further expressly
acknowledges and agrees that Administrative Agent has a valid, duly perfected,
first priority and fully enforceable security interest in and lien against each
item of Collateral on behalf of the Banks, except as otherwise set forth in the
Agreement. The Borrower agrees that it shall not dispute the validity or
enforceability of the Agreement (as it was stated before and after this
Amendment) or any of the other Loan Documents or any of its respective
obligations thereunder, or the validity, priority, enforceability or extent of
the Administrative Agent's security interest in or lien against any item of
Collateral, in any judicial, administrative or other proceeding;

            (c) No consent, order, qualification, validation, license, approval
or authorization of, or filing, recording, registration or declaration with, or
other action in respect of, any governmental body, authority, bureau or agency
or other Person is required in connection with the execution, delivery or
performance of, or the legality, validity, binding effect or enforceability of,
this Amendment; and

            (d) The execution, delivery and performance of this Amendment by the
Borrower does not and will not violate any law, governmental regulation,
judgment, order or decree applicable to the Borrower and does not and will not
violate the provisions of, or constitute a default or any event of default
under, or result in the creation of any security interest or lien upon any
property of the Borrower pursuant to, any indenture, mortgage, instrument,
contract, agreement or other undertaking to which the Borrower is a party or is
subject or by which the Borrower or any of its real or personal property may be
bound.

            (e) The Borrower hereby acknowledges and agrees that there is no
basis nor set of facts on which any amount (or any portion thereof) owed by the
Borrower under the Loan

                                       27
<PAGE>

Documents could be reduced, offset, waived, or forgiven, by rescission or
otherwise; nor is there any claim, counterclaim, offset, or defense (or other
right, remedy, or basis having a similar effect) available to the Borrower with
regard thereto; nor is there any basis on which the terms and conditions of any
of the Obligations could be claimed to be other than as stated on the written
instruments which evidence such Obligations.

            (f) The Borrower hereby acknowledges and agrees that it has no
offsets, defenses, claims, or counterclaims against the Agents or the Banks or
their respective parents, affiliates, predecessors, successors, or assigns, or
their respective officers, directors, employees, attorneys, or representatives,
with respect to the Obligations, or otherwise, and that if the Borrower now has,
or ever did have, any offsets, defenses, claims, or counterclaims against the
Agents, the Banks, or their respective parents, affiliates, predecessors,
successors, or assigns, or their respective officers, directors, employees,
attorneys, or representatives, whether known or unknown, at law or in equity,
from the beginning of the world through this date and through the time of
execution of this Amendment, all of them are hereby expressly WAIVED, and the
Borrower hereby RELEASES the Agents and the Banks and their respective officers,
directors, employees, attorneys, representatives, affiliates, predecessors,
successors, and assigns from any liability therefor.

      13. Fees and Expenses. (a) The Borrower agrees to pay on demand all costs,
fees and expenses of or incurred by the Agents in connection with the
evaluation, negotiation, preparation, execution and delivery of this Amendment
and the other instruments and documents executed and delivered in connection
with the transactions described herein (including the filing or recording
thereof), including, but not limited to, the reasonable fees and expenses of
counsel for any of the Agents, search fees, and taxes payable in connection with
this Amendment and any future amendments to the Agreement.

      (b) In the event that after the date of this Amendment, the Banks (other
than the Accommodation Banks) become entitled to any increase in the interest
rate payable on the Revolving Credit Loans held by such Banks or any additional
or increased fees payable to such Banks, the Accommodation Banks shall be
entitled to a corresponding proportional (based on the total amount of all
Revolving Credit Loans outstanding) increase in the interest rate or additional
fee or increased fee payable to the Accommodation Banks, as the case may be.

      14. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same agreement.

                            [SIGNATURE PAGE FOLLOWS]

                                       28
<PAGE>

            (WAIVER, CONSENT, AND FOURTH AMENDMENT TO SECOND AMENDED
                        AND RESTATED REVOLVING CREDIT AND
                           GOLD CONSIGNMENT AGREEMENT)

      IN WITNESS WHEREOF, the parties hereto have duly executed this Waiver,
Consent, and Fourth Amendment to Second Amended and Restated Revolving Credit
and Gold Consignment Agreement as of the date first above written.

                                   WHITEHALL JEWELLERS, INC.

                                   By: /s/ John R. Desjardins
                                       -----------------------------------------
                                   Name: John R. Desjardins
                                   Title: Executive Vice President & CFO

                                   LASALLE BANK NATIONAL ASSOCIATION, for itself
                                   as a Bank and an Accommodation Bank and as
                                   Administrative Agent for the Banks

                                   By: /s/ Daniel O'Rourke
                                       -----------------------------------------
                                   Name: Daniel O'Rourke
                                   Title: First Vice President

                                   BANK OF AMERICA, N. A. , for itself as a Bank
                                   and as Managing Agent for the Banks

                                   By: /s/ Christine Hutchinson
                                       -----------------------------------------
                                   Name: Christine Hutchinson
                                   Title: Vice President

                                   BACK BAY CAPITAL FUNDING LLC, for itself as a
                                   Bank and an Accommodation Bank and as
                                   Accommodation Facility Agent  for the
                                   Accommodation Banks

                                   By: /s/ Kristan M. O'Connor
                                       -----------------------------------------
                                   Name: Kristan M. O'Connor
                                   Title: Managing Director

<PAGE>

                                   Exhibit "E"

                                   SCHEDULE 1
                   COMMITMENT PERCENTAGES AND NOTICE ADDRESSES

      Banks and their respective Commitment Percentage of the Total Revolver
Commitment are as follows:

<TABLE>
<CAPTION>
                                                        ACCOMMODATION               COMMITMENT
            BANK                      COMMITMENT     FACILITY COMMITMENT *  PERCENTAGE (PRO RATA SHARE)
---------------------------------  ---------------  ----------------------  ---------------------------
<S>                                <C>              <C>                     <C>
LaSalle Bank National Association  $ 65,500,000.00  $         3,000,000.00            46.79%
Bank of America, N. A.             $ 62,500,000.00  $                 0.00            44.64%
Back Bay Capital Funding LLC       $ 12,000,000.00  $        12,000,000.00             8.57%
         TOTALS                    $140,000,000.00  $        15,000,000.00              100%
</TABLE>

* A Bank's "Accommodation Facility Commitment" is included within, and not in
addition to, such Bank's "Commitment"

Banks and their respective Address for Notices are as follows:

                                      BANK

LaSalle Bank National Association
c/o LaSalle Retail Finance
25 Braintree Hill Office Park
Suite 205
Braintree, MA 02184
Attention: Daniel F. O'Rourke
Telephone: 781-353-6126
Facsimile: 781-353-6101

ABN AMRO Bank N.V.
65 Fifth Avenue, 25th Floor
New York, New York 10017
Attention: Jeffrey Sarfaty
Telephone: 212-649-5133
Facsimile: 212-649-5149

Bank of America, N. A.
c/o Bank of America Retail Finance Group
f/k/a Fleet Retail Group
40 Broad Street, 10th Floor
Boston, MA 02109
MA5-505-10-1
Attention: Christine Hutchinson
Telephone: 617-434-2385
Facsimile: 617-434-4185

Back Bay Capital Funding LLC
40 Broad Street, 10th Floor
Boston, MA 02109

<PAGE>

                                      BANK

MA5-505-10-1
Attention: Kristan O'Connor
Telephone: 617-434-4397
Facsimile: 617-434-4185

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