Document:

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                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

      This Employment Agreement (this "Agreement") is entered into effective as
of August 10, 2005 (the "Effective Date"), between Whitehall Jewellers, Inc., a
Delaware corporation (the "Company"), and Beryl Raff (the "Executive").

      WHEREAS, the Company desires to employ the Executive to serve as its Chief
Executive Officer of the Company, and the Executive desires to be employed by
the Company, upon the terms and subject to the conditions set forth herein.

      NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the Company and the Executive hereby agree as follows:

      1.    EMPLOYMENT. The Company hereby agrees to employ the Executive and
the Executive hereby agrees to be employed by the Company upon the terms and
subject to the conditions contained in this Agreement. The term of employment of
the Executive by the Company pursuant to this Agreement shall commence on the
Effective Date and shall end on the third annual anniversary of the Effective
Date (such date or any successive date to which the term thereof has been
extended pursuant to the succeeding sentence, the "Expiration Date"). Such term
shall be automatically extended for successive one-year periods unless either
the Executive or the Company gives notice that such term shall not be so
extended no later than 60 days prior to the then current Expiration Date or
unless earlier terminated pursuant to Section 4 hereof. The term of employment
as prescribed in the preceding sentence is hereinafter called the "Employment
Period." From and after the end of the Employment Period, unless earlier
terminated hereunder, the Executive's employment with the Company shall be at
will, not for any specified term and without any payment guarantees, and either
the Executive or the Company may terminate the employment relationship at any
time.

      2.    POSITION AND DUTIES; RESPONSIBILITIES. The Company shall employ the
Executive during the Employment Period as its Chief Executive Officer with
duties and responsibilities customarily associated with that position. The
Executive shall report to and be subject to direction from the Company's Board
of Directors (the "Board"). The Executive shall be nominated for the Board
effective on the first day on which she reports for active employment with the
Company, which shall be as soon as practicable after the Effective Date, and,
for so long as she is elected to the Board, shall serve as a director of the
Company at no additional compensation. During the Employment Period, the
Executive shall perform faithfully and loyally and to the best of the
Executive's abilities the duties assigned to the Executive hereunder and shall
devote the Executive's full business time, attention and effort to the affairs
of the Company and its subsidiaries and shall use the Executive's reasonable
best efforts to promote the interests of the Company and its subsidiaries. The
Executive may engage in charitable, civic or community activities and, with the
prior approval of the Board of Directors of the Company (the "Board"), which may
be granted or denied in its sole discretion, may serve as a director (but not a
lead director) of any other business corporation, provided that such activities
or service do not interfere with the Executive's duties hereunder or violate the
terms of any of the covenants contained in Sections 7 or 8 hereof. Upon any
termination of employment, Executive shall be deemed to have resigned all
appointments and positions with the Company

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and its affiliates and employee benefit plans, including any Board or Committee
appointment or election and shall execute any documents necessary or desirable
to reflect such resignation.

      3.    COMPENSATION.

            (a) Base Salary. Commencing on the first day on which she reports
      for active employment with the Company, which shall be as soon as
      practicable after the Effective Date, during her employment under this
      Agreement, the Company shall pay to the Executive a base salary at the
      rate of not less than $500,000 per annum ("Base Salary"), payable in
      accordance with the Company's executive payroll policy.

            (b) Annual Bonus. Beginning for the fiscal year ending January 31,
      2006, the Executive shall be eligible for an annual cash bonus ("Annual
      Bonus") under an arrangement approved by the compensation committee of the
      Board (the "Compensation Committee"). Such bonus arrangement shall provide
      for a target bonus of not less than 35% of Base Salary (40% for the fiscal
      years ending January 31, 2007 and January 31, 2008) and a maximum bonus
      opportunity of not less than 120% of Base Salary, provided, however, that,
      subject to Section 4, the Annual Bonus for the fiscal year ended January
      31, 2006, shall not be less than $175,000 and the sum of the Annual Bonus
      and Base Salary for each of the fiscal years ending January 31, 2007, and
      January 31, 2008, shall not be less than $675,000.

            (c) Equity-Based Compensation. As a material inducement to the
      Executive's entrance into this Agreement and employment by the Company,
      the Executive shall be granted the awards of stock options described in
      this Section 3(c) and in Section 3(h) below. The Executive shall be
      granted an award of 175,000 stock options on the Effective Date, which
      such grant shall be an employment inducement award under Section 303A.08
      of the New York Stock Exchange Listed Company Manual. As of the first
      anniversary of the Effective Date, the Executive shall be granted an
      additional award of 125,000 stock options pursuant to the terms of the
      Company's 1997 Long-Term Incentive Plan, as amended, or any successor
      thereto (the "LTIP"). In the case of the award of stock options granted on
      the Effective Date, the options shall have a strike price equal to the
      greater of (i) the Fair Market Value (as defined in the LTIP) on the date
      of grant or (ii) the average closing price of the Company's common stock,
      par value $.001 per share (the "Common Stock"), for the 30 trading days
      preceding the Effective Date, as reported on the New York Stock Exchange
      Composite Trading report. In the case of the award of stock options
      granted on the first anniversary of the Effective Date, the options shall
      have a strike price equal to the Fair Market Value on the date of grant.
      In each case the options shall provide for vesting in three equal annual
      installments commencing on the first anniversary of the date of grant. All
      options granted on the Effective Date shall be subject to the same terms
      and conditions as if granted under the LTIP. In addition to the foregoing
      option grants, the Executive shall, in the sole discretion of the
      Compensation Committee, be eligible during the Employment Period to be
      granted stock options, restricted stock and/or other equity-based
      compensation awards.

            (d) Other Benefits. During the Employment Period, the Executive
      shall be entitled to participate in the Company's employee benefit plans
      (other than severance

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      plans) generally available to executives of the Company (such benefits,
      together with the benefits referred to in (c) above, being hereinafter
      referred to as the "Employee Benefits"). The Executive shall be entitled
      to take time off for vacation or illness in accordance with the Company's
      policy for executives and to receive all other fringe benefits as are from
      time to time made generally available to executives of the Company
      (currently including vacation days of not less than four weeks annually,
      medical, dental, long term disability and life insurance, participation in
      a 401(k) plan, automobile benefits and reimbursement of expenses).

            (e) Expense Reimbursement. During the Employment Period, the Company
      shall reimburse the Executive, in accordance with the Company's policies
      and procedures, for all proper expenses incurred by the Executive in the
      performance of the Executive's duties hereunder. The Company shall
      reimburse Executive's legal fees incurred in connection with the
      negotiation of this Agreement subject to a maximum reimbursement of
      $25,000.

            (f) Right to Change Plans. Nothing in this Agreement shall be
      construed to limit, condition or otherwise encumber the rights of the
      Company to amend, discontinue, substitute or maintain any benefit plan,
      program or perquisite, and no such amendment, discontinuance, substitution
      or maintenance or failure to maintain any benefit plan, program or
      perquisite shall be construed as a breach of this Agreement.

            (g) Temporary Living and Travel Expenses. The Executive's duties
      shall be performed at the Company's headquarters in Chicago Illinois.
      Until the Executive relocates to the Chicago metropolitan area, the
      Company shall reimburse her for reasonable travel and temporary living
      expenses, provided that any such expenses which exceed $5,000 in any month
      shall be subject to Compensation Committee approval. The Company shall
      reimburse the Executive for the reasonable costs of relocating to the
      Chicago metropolitan area on a basis consistent with its prior policies
      for executive officers.

            (h) Transition Compensation. Subject to Section 4, in consideration
      of compensation which the Executive will forego at her present employer
      and as an inducement to accept employment with the Company, the Executive
      shall receive the following additional compensation:

                  (i) $1,950,000 payable as follows:

                        (A) such amount shall be payable in four equal
                  installments of $487,500 on each of the August 12, 2005,
                  February 1, 2006, February 1, 2007 and February 1, 2008,
                  provided that the Company makes the initial payment on August
                  12, 2005 and obtains a letter of credit on or before the 8th
                  business day after the Effective Date from LaSalle Bank N.A.or
                  a comparable bank providing for payment, without limitation,
                  on behalf of the Company of its obligations under this Section
                  3(h)(i) and Section 4 with respect to the installment payments
                  due February, 1, 2006, February 1, 2007 and February 1, 2008,
                  or

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                        (B) if the Company does not receive a letter of credit
                  as described in paragraph A above, such amount shall be
                  payable in three installments: $487,500 on August 12, 2005,
                  $487,500 on the 9th business day after the Effective Date, and
                  $975,000 on February 1, 2006. In the event that the Executive
                  voluntarily terminates her employment pursuant to Section
                  4(f), in the event of termination by reason of death or
                  Disability in accordance with Section 4(a) or (b), or if the
                  Board of Directors of the Company terminates Executive's
                  employment by reason of acts of Executive set forth in
                  Sections 4(c)(ii)(B), (C), (D), or (E), but for no other
                  reason, the Executive shall be required to repay the following
                  amounts to the Company within 15 days of such termination: (i)
                  if the termination occurs prior to February 1, 2006, $487,500,
                  (ii) if the termination occurs on or after February 1, 2006
                  but before February 1, 2007, $975,000, and (iii) if the
                  termination occurs on or after February 1, 2007 and prior to
                  February 1, 2008, $487,500; provided that any repayment under
                  this sentence shall be reduced by the amount if any of any
                  installment that was payable prior to termination of
                  employment but not actually paid to the Executive; provided,
                  however, that this repayment obligation shall apply only with
                  respect to payments under this Section 3(h)(i)(B).

                  (ii) The Executive shall be granted an additional 150,000
            stock options as of the Effective Date, which such stock options
            shall be an employment inducement award under Section 303A.08 of the
            New York Stock Exchange Listed Company Manual . Such options shall
            have a strike price equal to the greater of (i) the Fair Market
            Value on the date of grant or (ii) the average closing price of the
            Common Stock for the 30 trading days preceding the Effective Date,
            as reported on the New York Stock Exchange Composite Trading report
            and shall provide for vesting in three equal annual installments
            commencing on the first anniversary of the Effective Date. Options
            granted under this Section 3(h)(ii) shall be subject to the same
            terms and conditions as granted under the LTIP.

                  (iii) The Company shall reimburse the Executive for her COBRA
            costs with respect to her prior employer's health insurance plans to
            the extent that they exceed the costs paid by her while a full-time
            employee of such prior employer until she is covered by the
            Company's health insurance plans

                  (iv) The Company shall pay the Executive $15,000 on August 12,
            2005.

      4.    TERMINATION.

            (a) Death. Upon the death of the Executive, this Agreement shall
      automatically terminate any and all rights of the Executive and the
      Executive's heirs, executors and administrators to compensation and other
      benefits under this Agreement shall cease immediately, except that the
      Executive's heirs, executors or administrators, as the case may be, shall
      be entitled to:

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                  (i) accrued Base Salary through and including the Executive's
            date of death;

                  (ii) accrued Annual Bonus through and including the
            Executive's date of death (determined on a pro rata basis for the
            number of days of the fiscal year for which the Executive was
            employed by the Company), such Annual Bonus to be paid following the
            Compensation Committee's determination of the Executive's Annual
            Bonus, if any, for the fiscal year in which the Executive's date of
            death so occurred, which determination may be made at the same time
            that the Compensation Committee determines annual bonuses, if any,
            for executive officers of the Company in general; and

                  (iii) other Employee Benefits to which the Executive was
            entitled on the date of death in accordance with the terms of the
            plans and programs of the Company.

            (b) Disability. The Company may, at its option, terminate this
      Agreement upon written notice to the Executive if the Executive, because
      of physical or mental incapacity or disability, fails to perform the
      essential functions of the Executive's position, with or without
      reasonable accommodation, required of the Executive hereunder for a
      continuous period of 60 days or any 120 days within any 12-month period.
      Upon such termination, all obligations of the Company hereunder shall
      cease immediately, except that the Executive shall be entitled to:

                  (i) accrued Base Salary through and including the effective
            date of the Executive's termination of employment;

                  (ii) accrued Annual Bonus through and including the effective
            date of the Executive's termination of employment (determined on a
            pro rata basis for the number of days of the fiscal year for which
            the Executive was employed by the Company), such Annual Bonus to be
            paid following the Compensation Committee's determination of the
            Executive's Annual Bonus, if any, for the fiscal year in which the
            Executive's termination of employment so occurred, which
            determination may be made at the same time that the Compensation
            Committee determines annual bonuses, if any, for executive officers
            of the Company in general; and

                  (iii) other Employee Benefits to which the Executive is
            entitled upon termination of employment in accordance with the terms
            of the plans and programs of the Company.

In the event of any dispute regarding the existence of the Executive's
incapacity or disability hereunder, the matter shall be resolved by the
determination of a physician selected by the Board and reasonably acceptable to
the Executive or her representatives. The Executive shall submit to appropriate
medical examinations for purposes of such determination.

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            (c) Cause.

                  (i) The Company may, at its option, terminate the Executive's
            employment under this Agreement for Cause (as hereinafter defined)
            upon written notice to the Executive (the "Cause Notice"). Any such
            termination for Cause shall be authorized by the Board only after
            giving the Executive an opportunity to appear before the Board with
            counsel to address the actions or inactions which the Board believes
            may constitute grounds for termination for cause. The Cause Notice
            shall state the action(s) or inaction(s) giving rise to termination
            for Cause in reasonable detail. The Executive shall have in 20 days
            after the Cause Notice is given to cure the particular action(s) or
            inaction(s), to the extent a cure is possible. If the Executive so
            effects a cure the Cause Notice shall be deemed rescinded and of no
            force or effect.

                  (ii) As used in this Agreement, the term "Cause" shall mean
            any one or more of the following:

                        (A) any refusal by the Executive to substantially
                  perform the Executive's duties under this Agreement after
                  written demand is delivered by the Board to the Executive
                  identifying the manner in which the Executive has not
                  substantially performed her duties, or any refusal to perform
                  specific directives of the Board which are consistent with the
                  scope and nature of the Executive's duties and
                  responsibilities as set forth herein after written demand is
                  delivered by the Board to the Executive identifying the manner
                  in which the Executive has refused to perform such specific
                  directions;

                        (B) any act of embezzlement or theft by the Executive in
                  connection with the Executive's duties hereunder or in the
                  course of the Executive's employment hereunder or any prior
                  employment, any act of fraud by the Executive against the
                  Company or the Executive's admission or conviction of a felony
                  or of any crime involving moral turpitude, fraud,
                  embezzlement, theft or misrepresentation;

                        (C) any use of alcohol by the Executive that interferes
                  with the performance of the Executive's duties or adversely
                  impacts the reputation of the Executive or of the Company or
                  any illegal use of a controlled substance by the Executive;

                        (D) any willful misconduct of the Executive which either
                  results in a material financial loss to the Company and its
                  subsidiaries, taken as a whole or requires disclosure by the
                  Company to the New York Stock Exchange, the Securities and
                  Exchange Commission or the U. S. Attorney's office; or

                        (E) any breach by the Executive of any one or more of
                  the covenants contained in Section 7 or 8 hereof.

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            No act or omission will be deemed willful for purposes of this
            Section if taken or omitted to be taken by the Executive in a good
            faith belief that such act or omission to act was in the best
            interests of the Company. Failure to meet performance objectives and
            standards, by itself, does not constitute Cause.

                  (iii) The exercise of the right of the Company to terminate
            this Agreement pursuant to this Section 4(c) shall not abrogate the
            rights or remedies of the Company in respect of the breach giving
            rise to such termination.

                  (iv) If the Company terminates the Executive's employment for
            Cause, all obligations of the Company hereunder shall cease, except
            that (A) the Executive shall be entitled to the payments and
            benefits specified in Sections 4(a)(i) and 4(a)(iii) hereof, and (B)
            unless the Executive's employment is terminated by the Board of
            Directors of the Company by reason of any acts of Executive set
            forth in Sections 4(c)(ii)(B), (C), (D), or (E) (but for no other
            reason, the Executive shall continue to receive installment payments
            of Transition Compensation under Section 3(h)(i).

            (d) Termination Without Cause.

                  (i) The Company may, at its option, terminate the Executive's
            employment under this Agreement upon written notice to the Executive
            for a reason other than a reason set forth in Section 4(a), 4(b) or
            4(c). Any such termination shall be authorized by the Board. If the
            Company terminates the Executive's employment for any such reason,
            all obligations of the Company hereunder shall cease immediately;
            provided, however, that, subject to Section 4(d)(ii):

                        (A) The Executive shall be entitled to her accrued Base
                  Salary through and including the date of termination and shall
                  be entitled to Employee Benefits to which she is entitled in
                  accordance with the terms of the plans and programs of the
                  Company.

                        (B) If the termination of the Executive's employment is
                  prior to the last day of the Employment Period and prior to a
                  Change in Control (as defined in Section 4(e)), the Executive
                  shall continue to receive Base Salary and target Annual Bonus
                  payments for the duration of the Employment Period, or, if
                  greater, shall receive an amount equal to the sum of the
                  Executive's Base Salary and target Annual Bonus as of the date
                  of termination payable in monthly installments over a 12 month
                  period immediately following termination of employment, the
                  target Annual Bonus in each case to be equal to the
                  Executive's target Annual Bonus for the year of termination.

                        (C) If the termination of the Executive's employment is
                  within eighteen months after a Change in Control, the
                  Executive shall be entitled

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                  to receive a lump sum payment equal to 2.99 times the sum of
                  the Executive's then Base Salary and target Annual Bonus.

                        (D) If the termination of the Executive's employment is
                  on or after the last day of the Employment Period, the
                  Executive shall be entitled to receive an amount equal to her
                  then Base Salary payable in accordance with the Company's
                  normal executive payroll practices through the first
                  anniversary of the termination date. For purposes of this
                  Section 4(d)(i)(D), if the Company gives notice pursuant to
                  Section 1 that the term of employment shall not be extended, a
                  resignation by the Executive as of the last day of the
                  Employment Period shall be deemed a termination by the
                  Company.

                        (E) The Company shall continue to pay the Executive
                  installment payments of Transition Compensation under Section
                  3(h)(i).

                        (F) The Company shall pay the Executive's costs of COBRA
                  for one year following the date of termination.

                  (ii) Notwithstanding Sections 4(d)(i)(B), (C), (D) and (E),
            payments under such Sections shall be subject to the Executive
            executing a release and non-disparagement agreement in the form
            attached hereto as Exhibit A and shall be reduced by the amount of
            salary, bonus or other compensation which the Executive receives
            from a subsequent employer or from self-employment during the period
            of time that amounts are payable to the Executive under such
            Sections, there being no obligation on Executive to seek other
            employment during such period.

            (e) Termination for Good Reason.

                  (i) The Executive may, at her option, terminate her employment
            under this Agreement upon written notice to the Company for Good
            Reason. If the Executive terminates her employment for Good Reason,
            it shall be treated as a termination by the Company without cause
            and the Executive shall be entitled to the same payments and
            benefits specified in Section 4(d)(i)(A), (B), (C), (D), (E), and
            (F) and subject to the provision of Section 4(d)(ii).

                  (ii) For purposes hereof, the term "Good Reason" shall mean
            the occurrence of any of the following without the Executive's
            express written consent: (A) the Company's failure to pay the
            Executive compensation in accordance with Section 3; (B) the
            Company's requiring the Executive to be based anywhere outside of
            the greater Chicago metropolitan area or the metropolitan area of
            the Executive's primary residence; (C) a change in the duties of the
            Executive that is inconsistent in any material adverse respect with
            Executive's position as in effect on the Effective Date; or (D) a
            material breach of this Agreement by the Company; provided, however,
            that the fact that the Company ceases to be a public company shall
            not by itself constitute Good

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            Reason. Notwithstanding the foregoing, the Executive shall not be
            deemed to have terminated her employment under this Agreement for
            Good Reason unless the Executive gives written notice to the Company
            stating in reasonable detail the events which constitute Good Reason
            and the Company does not effect a cure of the action or inaction
            constituting Good Reason within fifteen business days after receipt
            of such notice by the Company.

            (f) Voluntary Termination. Upon 60 days prior written notice to the
            Company (or such shorter period as may be permitted by the Board),
            the Executive may voluntarily terminate the Executive's employment
            with the Company for any reason. If the Executive voluntarily
            terminates the Executive's employment pursuant to this Section 4(f),
            all obligations of the Company hereunder shall cease immediately,
            except that the Executive shall be entitled to the payments and
            benefits specified in Sections 4(b)(i) and 4(b)(iii) hereof.

      5.    Change in Control.

            (a) Definition. "Change in Control" shall mean:

                  (i) The acquisition by any individual, entity or group (a
            "Person"), including any "person" within the meaning of Section
            13(d)(3) or 14(d)(2) of the Exchange Act, of Beneficial Ownership of
            50% or more of either (1) the then outstanding shares of common
            stock of the Company (the "Outstanding Company Common Stock") or (2)
            the combined voting power of the then outstanding securities of the
            Company entitled to vote generally in the election of directors (the
            "Outstanding Company Voting Securities"); excluding, however, the
            following: (A) any acquisition directly from the Company or (B) any
            acquisition by an employee benefit plan (or related trust) sponsored
            or maintained by the Company or any corporation controlled by the
            Company;

                  (ii) Approval by the stockholders of the Company of a
            reorganization, merger or consolidation or sale or other disposition
            of all or substantially all of the assets of the Company (a
            "Corporate Transaction"); excluding, however, a Corporate
            Transaction pursuant to which (1) all or substantially all of the
            individuals or entities who are the Beneficial Owners, respectively,
            of the Outstanding Company Common Stock and the Outstanding Company
            Voting Securities immediately prior to such Corporate Transaction
            will Beneficially Own, directly or indirectly, more than 50% of,
            respectively, the outstanding shares of common stock, and the
            combined voting power of the outstanding securities of such
            corporation entitled to vote generally in the election of directors,
            as the case may be, of the corporation resulting from such Corporate
            Transaction (including, without limitation, a corporation which as a
            result of such transaction owns the Company or all or substantially
            all of the Company's assets either directly or indirectly) or
            substantially the same proportions relative to each other as their
            Beneficial Ownership, immediately prior to such Corporate
            Transaction, of the Outstanding Company Common Stock and the
            Outstanding Company Voting Securities, as the case may be, (2) no
            Person (other than the

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            Company; any employee benefit plan (or related trust) sponsored or
            maintained by the Company or any corporation controlled by the
            Company, the corporation resulting from such Corporate Transaction;
            and any Person which Beneficially Owned, immediately prior to such
            Corporate Transaction, directly or indirectly, 50% or more of the
            Outstanding Company Common Stock or the Outstanding Company Voting
            Securities, as the case may be) will Beneficially Own, directly or
            indirectly, 50% or more of, respectively the outstanding shares of
            common stock of the corporation resulting from such Corporate
            Transaction or the combined voting power of the outstanding
            securities of such corporation entitled to vote generally in the
            election of directors, and (3) individuals who were members of the
            Incumbent Board will constitute at least a majority of the members
            of the board of directors of the corporation resulting from such
            Corporate Transaction; or directors of the corporation resulting
            from such Corporate Transaction; or

                  (iii) Approval by the stockholders of the Company of a plan of
            complete liquidation or dissolution of the Company.

            (b) Acceleration of Options. Any and all options to purchase
      securities of the Company held by the Executive shall be immediately
      vested and exercisable upon a Change in Control whether or not Executive
      continues in the employment of the Company after the Change in Control.

      6.    FEDERAL AND STATE WITHHOLDING. The Company shall deduct from the
amounts payable to the Executive pursuant to this Agreement the amount of all
required federal, state and local withholding taxes in accordance with the
Executive's Form W-4 on file with the Company, and all applicable federal
employment taxes.

      7.    NONCOMPETITION; NONSOLICITATION.

            (a) General. The Executive acknowledges that in the course of the
      Executive's employment with the Company the Executive has and will become
      familiar with trade secrets and other confidential information concerning
      the Company and its subsidiaries and that the Executive's services will be
      of special, unique and extraordinary value to the Company and its
      subsidiaries.

            (b) Noncompetition. The Executive agrees that, subject to any
      minimum notice period with her current employer, during the period
      beginning on the Effective Date and ending with her termination of
      employment for any reason other than pursuant to Section 4(f) or one year
      after the termination of the Executive's employment pursuant to Section
      4(f) (the "Noncompetition Period") the Executive shall not in any manner,
      directly or indirectly, through any person, firm or corporation, alone or
      as a member of a partnership or as an officer, director, stockholder,
      investor or employee of or consultant to any other corporation or
      enterprise or otherwise, engage or be engaged, or assist any other person,
      firm, corporation or enterprise in engaging, or being engaged, in
      operating specialty retail jewelry stores or jewelry departments in retail
      stores in North America.

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            (c) Nonsolicitation. The Executive further agrees that during a
      period of one year following termination of employment for any reason the
      Executive shall not (i) in any manner, directly or indirectly, induce or
      attempt to induce any employee of the Company or any of its subsidiaries,
      or any person who was an employee of the Company or any of its
      subsidiaries during the 12 month period preceding the date of the
      Executive's termination of employment to terminate or abandon his or her
      employment for any purpose whatsoever, (ii) seek to interfere with any
      business relationship between the Company or any of its subsidiaries and
      any other party, or (iii) in connection with any business to which Section
      7(b) applies, call on, service, solicit or otherwise do business with any
      customer of the Company or any of its subsidiaries.

            (d) Exceptions. Nothing in this Section 7 shall prohibit the
      Executive from being (i) a stockholder in a mutual fund or a diversified
      investment company or (ii) an owner of not more than two percent of the
      outstanding stock of any class of a corporation, any securities of which
      are publicly traded, so long as the Executive has no active participation
      in the business of such corporation.

            (e) Reformation. If, at any time of enforcement of this Section 7, a
      court or an arbitrator holds that the restrictions stated herein are
      unreasonable under circumstances then existing, the parties hereto agree
      that the maximum period, scope or geographical area reasonable under such
      circumstances shall be substituted for the stated period, scope or area
      and that the court or arbitrator shall be allowed to revise the
      restrictions contained herein to cover the maximum period, scope and area
      permitted by law. This Agreement shall not authorize a court or arbitrator
      to increase or broaden any of the restrictions in this Section 7.

      8.    CONFIDENTIALITY. The Executive shall not, at any time during the
Employment Period or thereafter, make use of or disclose, directly or
indirectly, any (i) trade secret or other confidential or secret information of
the Company or of any of its subsidiaries or (ii) other technical, business,
proprietary or financial information of the Company or of any of its
subsidiaries not available to the public generally or to the competitors of the
Company or to the competitors of any of its subsidiaries ("Confidential
Information"), except to the extent that such Confidential Information (a)
becomes a matter of public record or is published in a newspaper, magazine or
other periodical or on electronic or other media available to the general
public, other than as a result of any act or omission of the Executive, (b) is
required to be disclosed by any law, regulation or order of any court or
regulatory commission, department or agency, provided that the Executive gives
prompt notice of such requirement to the Company to enable the Company to seek
an appropriate protective order, or (c) is required to be used or disclosed by
the Executive to perform properly the Executive's duties under this Agreement.
Promptly following the termination of the Employment Period, the Executive shall
surrender to the Company all records, memoranda, notes, plans, reports, computer
tapes and software and other documents and data which constitute Confidential
Information which the Executive may then possess or have under the Executive's
control (together with all copies thereof).

      9.    INVENTIONS. The Executive hereby assigns to the Company the
Executive's entire right, title and interest in and to all discoveries and
improvements, patentable or otherwise, trade secrets and ideas, writings and
copyrightable material, which may be conceived by the Executive or developed or
acquired by the

                                       11
<PAGE>

Executive during the Employment Period, which may pertain directly or indirectly
to the business of the Company or any of its subsidiaries. The Executive agrees
to disclose fully all such developments to the Company upon its request, which
disclosure shall be made in writing promptly following any such request. The
Executive shall, upon the Company's request, execute, acknowledge and deliver to
the Company all instruments and do all other acts which are necessary or
desirable to enable the Company or any of its subsidiaries to file and prosecute
applications for, and to acquire, maintain and enforce, all patents, trademarks
and copyrights in all countries. In accordance with the Illinois Employee Patent
Act, 765 ILCS 1060, the Executive is hereby notified by the Company, and
understands, that the foregoing provisions do not apply to an invention for
which no equipment, supplies, facilities or trade secret information of the
Company was used and which was developed entirely on the Executive's own time,
unless (i) the invention relates (A) to the business of the Company or (B) to
the Company's actual or demonstrably anticipated research and development, or
(ii) the invention results from any work performed by the Executive for the
Company.

      10.   ENFORCEMENT; CONSENT TO JURISDICTION. The parties hereto agree that
the Company and its subsidiaries would be damaged irreparably in the event that
any provision of Section 7 or 8 of this Agreement were not performed in
accordance with its terms or were otherwise breached and that money damages
would be an inadequate remedy for any such nonperformance or breach.
Accordingly, the Company and its successors and permitted assigns shall be
entitled, in addition to other rights and remedies existing in their favor, to
an injunction or injunctions to prevent any breach or threatened breach of any
of such provisions and to enforce such provisions specifically (without posting
a bond or other security), and to extend the Noncompetition Period by any and
all periods during which the Executive shall be found to have been in violation
of the covenants contained in Section 7 and 8. Executive agrees that the
Executive will submit to the personal jurisdiction of the courts of the State of
Illinois in any action by the Company to enforce an arbitration award against
the Executive or to obtain interim injunctive or other relief pending an
arbitration decision. The Executive waives the right to claim that any such
court is an inconvenient forum for the resolution of any such action.

      11.   REPRESENTATIONS. The Executive represents and warrants to the
Company that (a) the execution, delivery and performance of this Agreement by
the Executive does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which the Executive is a party or by which the Executive is bound, and (b) the
Executive is not a party to or bound by any employment agreement, noncompetition
agreement or confidentiality agreement with any other person or entity which
would prevent her from entering into and fully performing her duties,
responsibilities and obligations under this Agreement or would otherwise limit
the manner in which she may perform such duties, responsibilities and
obligations. Each party acknowledges that the Executive is a party to an
employment agreement dated March 1, 2003 with J. C. Penney Company, a copy of
which has been provided to the Company by the Executive, under which the
Executive is currently employed and which has certain notice, confidentiality
and other obligations relating to her employment. Neither party believes that
the provisions set forth in such March 1, 2003 agreement would prevent the
Executive from entering into and fully performing her duties, responsibilities
and obligations under this Agreement. The Executive agrees that she will not
retain any documents containing "Proprietary Information" within the meaning of
such March 1, 2003 agreement. The Company agrees that the Executive shall not be

                                       12
<PAGE>

required to, and the Executive agrees that she will not, use confidential
information or trade secrets of any prior employer in connection with the
performance of her duties hereunder.

      12.   SURVIVAL. Sections 7, 8, 9 and 10 of this Agreement shall survive
and continue in full force and effect in accordance with their respective terms,
notwithstanding any termination of the Employment Period.

      13.   ARBITRATION. Except as otherwise set forth in Section 9 hereof, any
dispute or controversy between the Company and the Executive, whether arising
out of or relating to this Agreement, the breach of this Agreement, or
otherwise, shall be settled by arbitration in Chicago, Illinois administered by
the American Arbitration Association, with any such dispute or controversy
arising under this Agreement being so administered in accordance with its
Commercial Rules then in effect, and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator shall have the authority to award any remedy or relief that a court
of competent jurisdiction could order or grant, including, without limitation,
the issuance of an injunction. However, either party may, without inconsistency
with this arbitration provision, apply to any court having jurisdiction over
such dispute or controversy and seek interim provisional, injunctive or other
equitable relief until the arbitration award is rendered or the controversy is
otherwise resolved. Except as necessary in court proceedings to enforce this
arbitration provision or an award rendered hereunder, or to obtain interim
relief, neither a party nor an arbitrator may disclose the existence, content or
results of any arbitration hereunder without the prior written consent of the
Company and the Executive. The Company and the Executive acknowledge that this
Agreement evidences a transaction involving interstate commerce. Notwithstanding
any choice of law provision included in this Agreement, the United States
Federal Arbitration Act shall govern the interpretation and enforcement of this
arbitration provision.

      14.   NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed given when (a) delivered
personally or by overnight courier to the following address of the other party
hereto (or such other address for such party as shall be specified by notice
given pursuant to this Section) or (b) sent by facsimile to the following
facsimile number of the other party hereto (or such other facsimile number for
such party as shall be specified by notice given pursuant to this Section), with
the confirmatory copy delivered by overnight courier to the address of such
party pursuant to this Section 13:

            If to the Company, to:

            Whitehall Jewellers, Inc.
            155 N. Wacker Drive
            Chicago, IL 60606
            Attn: Secretary
            Fax No: (312) 469-5680

            with a copy to:

                                       13
<PAGE>

            Herbert W. Krueger
            Mayer, Brown, Rowe & Maw LLP
            71 South Wacker Drive
            Chicago, IL 60606
            Fax No.: (312) 706-9122

            If to the Executive, to:
            The last address filed by the Executive with the
            Secretary of the Company

            with a copy to:

            Jim A. Watson
            Carrington, Coleman, Sloman & Blumenthal L.L.P.
            200 Crescent Court, Suite 500
            Dallas, Texas 75201
            Fax No.: (214) 855-1333

      15.   SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement or the validity, legality or enforceability of such provision in any
other jurisdiction, but this Agreement shall be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

      16.   ENTIRE AGREEMENT. This Agreement, except as provided below,
constitutes the entire agreement and understanding between the parties with
respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related in any manner to the subject matter hereof. The
parties are also parties to agreements relating to indemnification, stock
options, and employee benefits which have terms and provisions independent of
this Agreement.

      17.   SUCCESSORS AND ASSIGNS. This Agreement shall be enforceable by the
Executive and the Executive's heirs, executors, administrators and legal
representatives, and by the Company and its successors and assigns.

      18.   GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Illinois without
regard to principles of conflict of laws.

      19.   AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended or waived only by the written agreement of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.

                                       14
<PAGE>

      20.   COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original and both of which together shall
constitute one and the same instrument.

                               * * * * * * * * * *

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

                                            WHITEHALL JEWELLERS, INC.

                                            /s/ Steven Pully
                                            ------------------------------------
                                            By: Steven Pully
                                            Title: Chairman of the Board

                                            /s/ Beryl Raff
                                            ------------------------------------
                                            Name: Beryl Raff

                                       15
<PAGE>

                                                                       EXHIBIT A

                                 GENERAL RELEASE

            THIS GENERAL RELEASE (this "Release") is executed by __________
("Executive") pursuant to Section 4(d)(ii) of the Employment Agreement dated as
of August __, 2005 (the "Employment Agreement") between Whitehall Jewellers,
Inc., a Delaware corporation ("Whitehall"), and Executive.

            WHEREAS, Executive's employment with Whitehall is terminating;

            WHEREAS, Whitehall and Executive intend that the terms and
conditions of the Employment Agreement and this Release shall govern all issues
related to the Executive's employment and termination of employment with
Whitehall;

            WHEREAS, Executive has had 21 days to consider the form of this
Release;

            WHEREAS, Whitehall advised Executive in writing to consult with an
attorney before signing this Release;

            WHEREAS, Executive acknowledges that the consideration to be
provided to Executive under Section 4(d)(i) of the Employment Agreement is
sufficient to support this Release; and

            WHEREAS, Executive understands that Whitehall regards the
representations by Executive in the Employment Agreement and this Release as
material and that Whitehall is relying on such representations in paying amounts
to Executive pursuant to the Employment Agreement.

            THE EXECUTIVE THEREFORE AGREES AS FOLLOWS:

            1.    Executive's employment with Whitehall shall terminate on
_______________, and Executive has and will receive the payments and benefits
set forth in Section 4(d)(i) of the Employment Agreement in accordance with the
terms and subject to the conditions thereof.

            2.    Executive and each of her past, present and future spouses,
family, relatives, successors, heirs, executors, administrators, trustees,
agents, representatives, affiliates and assigns and each and every person or
entity that purports to assert rights or claims through her or on her behalf
(collectively, the "Executive Releasing Parties"), individually and
collectively, hereby fully, finally and forever waive and unconditionally
release, acquit and discharge each of Whitehall and its past, present and future
affiliates, executive benefit plans and programs and other related entities
(whether or not wholly owned) and the past, present and future officers,
directors, executives, agents, shareholders, trustees, fiduciaries,
administrators, attorneys and representatives of each of them, and any other
person or entity in privity with any of them (collectively, the "Whitehall
Released Parties") from, and covenant and agree not to sue any of the Whitehall
Released Parties with regard to any and all claims, whether currently known

                                       16
<PAGE>

or unknown, which Executive now has, ever has had or may ever have against any
of the Whitehall Released Parties, including claims arising from or related to:

                  (i) Executive's employment with Whitehall or the termination
            thereof, including but not limited to claims of wrongful discharge;
            breach of contract; employment discrimination under the Civil Rights
            Act of 1866, Title VII of the Civil Rights Act of 1964, the Civil
            Rights Act of 1991, the Age Discrimination in Employment Act, the
            Americans with Disabilities Act, the Rehabilitation Act of 1973, the
            Illinois Human Rights Act, the Chicago Human Rights Ordinance,
            and/or the Cook County Human Rights Ordinance, or any other
            statutory or common law causes of action;

                  (ii) except as expressly contemplated thereby, the Employment
            Agreement; and

                  (iii) any contract or tort actions, or actions of any nature
            whatsoever under any other federal, state, or local law (common or
            statutory), regulation, ordinance or executive order.

This Release does not release, waive or discharge any rights or claims that may
arise or actions or omissions after the date of this Release, or any right to
indemnification of Executive under any indemnification agreement entered into
with Whitehall. The consideration offered in Section 4(d)(i) of the Employment
Agreement is accepted by Executive as being in full accord, satisfaction,
compromise and settlement of any and all claims or potential claims, and
Executive expressly agrees that she is not entitled to, and shall not receive,
any further recovery of any kind from Whitehall or any of the other Whitehall
Released Parties, and that in the event of any further proceedings whatsoever
based upon any matter released herein, neither Whitehall nor any of the other
Whitehall Released Parties shall have any further monetary or other obligation
of any kind to Executive, including any obligation for any costs, expenses or
attorneys' fees incurred by or on behalf of Executive. Executive agrees that she
has no present or future right to employment with Whitehall or any of the other
Whitehall Released Parties and that she will not apply for or otherwise seek
employment with any of them.

            3.    Executive expressly represents and warrants that she is the
sole owner of the actual and alleged claims, demands, rights, causes of action
and other matters that are released herein; that the same have not been
transferred or assigned or caused to be transferred or assigned to any other
person, firm, corporation or other legal entity; and that she has the full right
and power to grant, execute and deliver the general release, undertakings and
agreements contained herein.

            4.    Executive agrees not to make any public statements, encourage
others to make statements or release information intended to disparage or defame
Whitehall or any of its shareholders, directors, officers, or employees.
Notwithstanding the foregoing nothing in this paragraph 4 shall prohibit
executive from making truthful statements when required by order of a court or
other body having jurisdiction.

            5.    ACKNOWLEDGMENT BY EXECUTIVE. BY EXECUTING THIS RELEASE,
EXECUTIVE EXPRESSLY ACKNOWLEDGES THAT SHE HAS READ THIS

                                       17
<PAGE>

RELEASE CAREFULLY, THAT SHE FULLY UNDERSTANDS ITS TERMS AND CONDITIONS, THAT SHE
HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE,
THAT SHE HAS BEEN ADVISED THAT SHE HAS HAD 21 DAYS WITHIN WHICH TO DECIDE
WHETHER OR NOT TO EXECUTE THIS RELEASE AND THAT SHE INTENDS TO BE LEGALLY BOUND
BY IT. DURING A PERIOD OF SEVEN DAYS FOLLOWING THE DATE OF HER EXECUTION OF THIS
RELEASE, EXECUTIVE SHALL HAVE THE RIGHT TO REVOKE THE RELEASE OF CLAIMS UNDER
THE AGE DISCRIMINATION IN EMPLOYMENT ACT BY SERVING WITHIN SUCH PERIOD WRITTEN
NOTICE OF REVOCATION. IF EXECUTIVE EXERCISES HIS RIGHTS UNDER THE PRECEDING
SENTENCE, SHE SHALL NOT BE ENTITLED TO ANY AMOUNTS REMAINING PAYABLE TO HER OR
ANY BENEFITS TO BE PROVIDED TO HER PURSUANT TO SECTION 4 OF THE SEPARATION
AGREEMENT.

            6.    The Employment Agreement and this Release constitute the
entire understanding between the parties. Executive has not relied on any oral
statements that are not included in the Employment Agreement or this Release.

            7.    This Release shall be construed, interpreted and applied in
accordance with the internal laws of the State of Illinois without regard to the
principle of conflicts of laws.

                                                     EXECUTIVE
                                                     ___________________________

Date: ___________________________

                                       18<PAGE>

                                                                    EXHIBIT 10.2

                            INDEMNIFICATION AGREEMENT

      This Indemnification Agreement ("AGREEMENT") is entered into as of the
10th day of August by and between Whitehall Jewellers, Inc., a Delaware
corporation (the "COMPANY"), and the director of the Company identified on the
signature page hereto (the "DIRECTOR" or "INDEMNITEE").

                                    RECITALS

      A. The Company and the Director recognize the substantial increase in
corporate litigation in general, subjecting directors, officers, employees,
controlling persons, fiduciaries and other agents and affiliates to expensive
litigation risks at the same time as the availability and coverage of liability
insurance has been severely limited.

      B. The current protection available to directors, officers, employees,
controlling persons, fiduciaries and other agents and affiliates of the Company
may not be adequate under the present circumstances, and directors, officers,
employees, controlling persons, fiduciaries and other agents and affiliates of
the Company (or persons who may be alleged or deemed to be the same), including
the Indemnitee, may not be willing to continue to serve or be associated with
the Company in such capacities without additional protection.

      C. The Company (i) desires to attract and retain the involvement of highly
qualified persons, such as the Director, to serve and be associated with the
Company, and (ii) accordingly, wishes to provide for the indemnification and
advancement of expenses to the Director to the maximum extent permitted by law.

      NOW, THEREFORE, the Company and the Director hereby agree as follows:

      1.    Indemnification.

            (a) Indemnification of Expenses. The Company shall indemnify and
hold harmless the Director to the fullest extent permitted by law if he or she
was or is or becomes a party to or witness or other participant in, or is
threatened to be made a party to or witness or other participant in, any
threatened, pending or completed action, suit, proceeding or alternative dispute
resolution mechanism, or any hearing, inquiry or investigation that Indemnitee
in good faith believes might lead to the institution of any such action, suit,
proceeding or alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a "CLAIM") by reason of (or
arising in part out of) any event or occurrence related to the fact that
Indemnitee is or was (or is alleged to be or to have been) a director, officer,
employee, controlling person, fiduciary or other agent or affiliate of the
Company, or any subsidiary of the Company, or is or was (or is alleged to be or
to have been) serving at the request of the Company as a director, officer,
employee, controlling person, fiduciary or other agent or affiliate of another
corporation, partnership, joint

<PAGE>

venture, trust or other enterprise, or by reason of any action or inaction on
the part of Indemnitee while serving (or allegedly serving) in such capacity
including, without limitation, any and all losses, claims, damages, expenses and
liabilities, joint or several (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit proceeding or any claim asserted) under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, which relate directly or indirectly to the registration,
purchase, sale or ownership of any securities of the Company or to any fiduciary
obligation owed with respect to the Company and its stockholders (hereinafter an
"INDEMNIFICATION EVENT"), against any and all reasonable expenses (including
reasonable attorneys' fees and all other reasonable costs, expenses and
obligations incurred in connection with investigating, defending a witness in or
participating in (including on appeal), or preparing to defend, be a witness in
or participate in, any such action, suit, proceeding, alternative dispute
resolution mechanism, hearing, inquiry or investigation), judgments, fines,
penalties and amounts paid in settlement (if such settlement is approved in
advance by the Company, which approval shall not be unreasonably withheld) of
such Claim and any federal, state, local or foreign taxes imposed on Indemnitee
as a result of the actual or deemed receipt of any payments under this Agreement
(collectively, hereinafter "EXPENSES"), including all interest, assessments and
other charges paid or payable in connection with or in respect of such Expenses.
Such payment of Expenses shall be made by the Company as soon as practicable but
in any event no later than ten (10) days after written demand by the Indemnitee
therefor is presented to the Company.

            (b) Reviewing Party. Notwithstanding the foregoing, (i) the
obligations of the Company under Section 1(a) shall be subject to the condition
that the Reviewing Party (as defined in Section 10(f) hereof) shall not have
determined (in a written opinion, in any case in which the Independent Legal
Counsel referred to in Section 1(c) hereof is involved) that Indemnitee would
not be permitted to be indemnified under applicable law, and (ii) the obligation
of the Company to make an advance payment of Expenses to Indemnitee pursuant to
Section 2(a) (an "EXPENSE ADVANCE") shall be subject to the condition that, if,
when and to the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial determination is made
with respect thereto. Indemnitee's obligation to reimburse the Company for any
Expense Advance shall be unsecured and no interest shall be charged thereon. If
there has not been a Change in Control (as defined in Section 10(d) hereof), the
Reviewing Party shall be selected by the Board of Directors with the approval of
the Indemnitee (which

                                      -2-
<PAGE>

approval shall not be unreasonably withheld), and if there has been such a
Change in Control (other than a Change in Control (i) which has been approved by
a majority of the Company's Board of Directors prior to such Change in Control
and (ii) following which a majority of the Board of Directors of the Company is
comprised of directors who were directors of the Company immediately prior to
the Change in Control), the Reviewing Party shall be the Independent Legal
Counsel referred to in Section 10(e) hereof subject to the approval of the
Indemnitee (which approval shall not be unreasonably withheld). If there has
been no determination by the Reviewing Party or if the Reviewing Party
determines that Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, Indemnitee shall have the
right to commence litigation seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any aspect thereof,
including the legal or factual bases therefor, and the Company hereby consents
to service of process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the Company and
Indemnitee.

            (c) Contribution. If the indemnification provided for in Section
1(a) above for any reason is held by a court of competent jurisdiction to be
unavailable to an Indemnitee in respect of any losses, claims, damages, expenses
or liabilities referred to therein, then the Company, in lieu of indemnifying
Indemnitee thereunder, shall contribute to the amount paid or payable by
Indemnitee as a result of such losses, claims, damages, expenses or liabilities
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Indemnitee, or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Indemnitee in
connection with the action or inaction which resulted in such losses, claims,
damages, expenses or liabilities, as well as any other relevant equitable
considerations. In connection with the registration of the Company's securities,
the relative benefits received by the Company and Indemnitee shall be deemed to
be in the same respective proportions that the net proceeds from the offering
(before deducting expenses) received by the Company and the Indemnitee, in each
case as set forth in the table on the cover page of the applicable prospectus,
bear to the aggregate public offering price of the securities so offered. The
relative fault of the Company and Indemnitee shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Indemnitee and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.

            The Company and Indemnitee agree that it would not be just and
equitable if contribution pursuant to this Section 1(c) were determined by pro
rata or per capita allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. In connection with the registration of the Company's
securities, in no event shall an Indemnitee be required to contribute any amount
under this Section 1(c) in excess of the lesser of (i) that proportion of the
total of such losses, claims, damages or liabilities indemnified against equal
to the proportion of the total securities sold under such registration statement
which is being sold by Indemnitee or (ii) the net proceeds received by
Indemnitee from its sale of securities under such registration statement. No
person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not found guilty of such fraudulent misrepresentation.

                                      -3-
<PAGE>

            (d) Survival Regardless of Investigation. The indemnification and
contribution provided for in this Section 1 will remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnitee.

            (e) Change in Control. The Company agrees that if there is a Change
in Control (as defined below) of the Company (other than a Change in Control
which has been approved by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Control) then, with respect
to all matters thereafter arising concerning the rights of Indemnitee to
payments of Expenses under this Agreement or any other agreement or under the
Company's Certificate of Incorporation or Bylaws as now or hereafter in effect,
Independent Legal Counsel (as defined in Section 10(e) hereof) shall be selected
by the Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law. The
Company agrees to abide by such opinion and to pay the reasonable fees of the
Independent Legal Counsel referred to above and to fully indemnify such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.

            (f) Mandatory Payment of Expenses. Notwithstanding any other
provision of this Agreement other than Section 9 hereof, to the extent that an
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in the defense of any
action, suit, proceeding, inquiry or investigation referred to in Section (1)(a)
hereof or in the defense of any claim, issue or matter therein, Indemnitee shall
be indemnified against all Expenses incurred by Indemnitee in connection
therewith.

      2.    Expenses; Indemnification Procedure.

            (a) Advancement of Expenses. The Company shall advance all Expenses
incurred by Indemnitee. The advances to be made hereunder shall be paid by the
Company to the Indemnitee as soon as practicable but in any event no later than
ten (10) days after written demand by Indemnitee therefor to the Company.

            (b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
Claim made against Indemnitee for which indemnification will or could be sought
under this Agreement. In addition, Indemnitee shall give the Company such
information and cooperation as it may reasonably require and as shall be within
Indemnitee's power.

            (c) No Presumptions; Burden of Proof. For purposes of this
Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by applicable
law. In addition, neither the failure of the Reviewing Party to have made a
determination as to whether Indemnitee has met any

                                      -4-
<PAGE>

particular standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that the Indemnitee has not met such
standard of conduct or did not have such belief, prior to the commencement of
legal proceedings by Indemnitee to secure a judicial determination that the
Indemnitee should be indemnified under applicable law, shall be a defense to the
Indemnitee's claim or create a presumption that the Indemnitee has not met any
particular standard of conduct or did not have any particular belief. In
connection with any determination by the Reviewing Party or otherwise as to
whether the Indemnitee is entitled to be indemnified hereunder, the burden of
proof shall be on the Company to establish that the Indemnitee is not so
entitled.

            (d) Notice to Insurers. If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 2(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of Indemnitee, all amounts payable as a result of such action, suit,
proceeding, inquiry or investigation in accordance with the terms of such
policies.

            (e) Selection of Counsel. In the event the Company shall be
obligated hereunder to pay the Expenses of any Claim, the Company shall be
entitled to assume the defense of such Claim, with counsel approved by the
Indemnitee, which approval shall not be unreasonably withheld, upon the delivery
to Indemnitee of written notice of its election to do so. After delivery of such
notice, approval of such counsel by the Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees of counsel subsequently incurred by Indemnitee with
respect to the same Claim; provided that, (i) the Indemnitee shall have the
right to employ Indemnitee's counsel in any such Claim at the Indemnitee's
expense and (ii) if (A) the employment of counsel by the Indemnitee has been
previously authorized by the Company, (B) Indemnitee shall have reasonably
concluded that there is a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (C) the Company shall not
continue to retain such counsel to defend such Claim, then the fees and expenses
of the Indemnitee's counsel shall be at the expense of the Company. The Company
shall have the right to conduct such defense as it sees fit in its sole
discretion, including the right to settle any claim, action or proceeding
against Indemnitee without the consent of Indemnitee, provided such settlement
includes a full release of the Indemnitee by the claimant from all liabilities
or potential liabilities under such claim.

                                      -5-
<PAGE>

      3.    Additional Indemnification Rights; Nonexclusivity.

            (a) Scope. The Company hereby agrees to indemnify Indemnitee to the
fullest extent permitted by law, notwithstanding that such indemnification may
not be specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Company's Bylaws or by statute. In
the event of any change after the date of this Agreement in any applicable law,
statute or rule which expands the right of a Delaware corporation to indemnify a
member of its Board of Directors or an officer, employee, controlling person,
agent or fiduciary, it is the intent of the parties hereto that Indemnitee shall
enjoy by this Agreement the greater benefits afforded by such change. In the
event of any change in any applicable law, statute or rule which narrows the
right of a Delaware corporation to indemnify a member of its Board of Directors
or an officer, employee, agent or fiduciary, such change, to the extent not
otherwise required by such law, statute or rule to be applied to this Agreement,
shall have no effect on this Agreement or the parties' rights and obligations
hereunder except as set forth in Section 8(a) hereof.

            (b) Nonexclusivity. The indemnification provided by this Agreement
shall be in addition to any rights to which Indemnitee may be entitled under the
Company's Certificate of Incorporation, its Bylaws, any agreement, any vote of
stockholders or disinterested directors, the General Corporation Law of the
State of Delaware, or otherwise. The indemnification provided under this
Agreement shall continue as to Indemnitee for any action Indemnitee took or did
not take while serving in an indemnified capacity even though the Indemnitee may
have ceased to serve in such capacity.

      4.    No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, Certificate of Incorporation, Bylaw or otherwise)
of the amounts otherwise indemnifiable hereunder.

      5.    Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for any portion of
Expenses incurred in connection with any Claim, but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion of such Expenses to which Indemnitee is entitled.

      6.    Mutual Acknowledgment. The Company and Indemnitee acknowledge that
in certain instances, Federal law or applicable public policy may prohibit the
Company from indemnifying its directors, officers, employees, controlling
persons, fiduciaries or other agents or affiliates under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's rights under public
policy to indemnify the Indemnitee.

      7.    Liability Insurance. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, control persons,
fiduciaries or other agents and affiliates,

                                      -6-
<PAGE>

Indemnitee shall be covered by such policies in such a manner as to provide to
the Indemnitee the same rights and benefits as are accorded to the most
favorably insured of the Company's directors.

      8.    Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of the
this Agreement:

            (a) Excluded Action or Omissions. To indemnify Indemnitee for any
intentional malfeasance by the Indemnitee or any act undertaken by the
Indemnitee where the Indemnitee did not in good faith believe the Indemnitee was
acting in the best interests of the Company, or for any other acts, omissions or
transactions from which the Indemnitee may not be relieved of liability under
applicable law;

            (b) Claims Initiated by Indemnitee. To indemnify or advance expenses
to Indemnitee with respect to Claims initiated or brought voluntarily by
Indemnitee and not by way of defense, except (i) with respect to actions or
proceedings to establish or enforce a right to indemnify under this Agreement or
any other agreement or insurance policy or under the Company's Certificate of
Incorporation or Bylaws now or hereafter in effect relating to Claims for
Indemnifiable Events, (ii) in specific cases if the Board of Directors has
approved the initiation or bringing of such Claim, or (iii) as otherwise
required under Section 145 of the Delaware General Corporation Law, regardless
of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case may
be;

            (c) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by Indemnitee with respect to any proceeding instituted by Indemnitee
to enforce or interpret this Agreement, if a court of competent jurisdiction
determines that each of the material assertions made by the Indemnitee in such
proceeding was not made in good faith or was frivolous; or

            (d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended or any similar successor statute.

      9.    Period of Limitations. No legal action shall be brought and no cause
of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.

                                      -7-
<PAGE>

      10.   Construction of Certain Phrases.

            (a) For purposes of this Agreement, references to the "COMPANY"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify is directors, officers, employees,
agents and fiduciaries, so that if Indemnitee is or was a director, officer,
employee, agent, control person or fiduciary of such constituent corporation, or
is or was serving at the request of such constituent corporation as a director,
officer, employee, control person, agent or fiduciary or another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise,
Indemnitee shall stand in the same position under the provisions of this
Agreement with respect to the resulting or surviving corporation as Indemnitee
would have with respect to such constituent corporation if its separate
existence had continued.

            (b) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a director, office, employee, agent or fiduciary of the
Company which imposes duties on, or involves services by, such director,
officer, employee, agent or fiduciary with respect to an employee benefit plan,
its participants or its beneficiaries; and if Indemnitee acted in good faith and
in a manner Indemnitee reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan, Indemnitee shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to in this Agreement.

            (c) For purposes of this Agreement a "CHANGE IN CONTROL" shall mean
(i) the acquisition by any individual, entity or group (a "Person"), including
any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act, of Beneficial Ownership of 50% or more of either (1) the then outstanding
shares of common stock of the Company (the "Outstanding Company Common Stock")
or (2) the combined voting power of the then outstanding securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); excluding, however, the following: (A)
any acquisition directly from the Company or (B) any acquisition by an employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; (ii) approval by the stockholders of the
Company of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a
"Corporate Transaction"); excluding, however, a Corporate Transaction pursuant
to which (1) all or substantially all of the individuals or entities who are the
Beneficial Owners, respectively, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such Corporate
Transaction will Beneficially Own, directly or indirectly, more than 50% of,
respectively, the outstanding shares of common stock, and the combined voting
power of the outstanding securities of such corporation entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or indirectly) or
substantially the same proportions relative to each

                                      -8-
<PAGE>

other as their Beneficial Ownership, immediately prior to such Corporate
Transaction, of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (2) no Person (other than the Company;
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, the corporation resulting
from such Corporate Transaction; and any Person which Beneficially Owned,
immediately prior to such Corporate Transaction, directly or indirectly, 50% or
more of the Outstanding Company Common Stock or the Outstanding Company Voting
Securities, as the case may be) will Beneficially Own, directly or indirectly,
50% or more of, respectively the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the combined voting
power of the outstanding securities of such corporation entitled to vote
generally in the election of directors, and (3) individuals who were members of
the Incumbent Board will constitute at least a majority of the members of the
board of directors of the corporation resulting from such Corporate Transaction;
or directors of the corporation resulting from such Corporate Transaction; or
(iii) approval by the stockholders of the Company of a plan of complete
liquidation or dissolution of the Company.

            (d) For purposes of this Agreement, "INDEPENDENT LEGAL COUNSEL"
shall mean an attorney or firm of attorneys, selected in accordance with the
provisions of Section 1(b) hereof, who shall not have otherwise performed
services for the Company or Indemnitee within the last three years (other than
with respect to matters concerning the right of Indemnitee under this Agreement,
or of other indemnitees under similar indemnity agreements).

            (e) For purposes of this Agreement, a "REVIEWING PARTY" shall mean
any appropriate person or body consisting of a member or members of the
Company's Board of Directors or any other person or body appointed by the Board
of Directors who is not a party to the particular Claim for which an Indemnitee
is seeking indemnification, or Independent Legal Counsel.

            (f) For purposes of this Agreement, "VOTING SECURITIES" shall mean
any securities of the Company that vote generally in the election of directors.

      11.   Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.

      12.   Binding Effect; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouses, heirs,
and personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all, substantially all, or a substantial part, of the business
and/or assets of the Company, by written agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. This Agreement shall
continue in effect with respect to Claims relating to Indemnifiable Events
regardless of whether Indemnitee continues to serve as a director, officer,
employee, agent, controlling person, or fiduciary of the Company or of any other
enterprise at the Company's request.

                                      -9-
<PAGE>

      13.   Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless, as a part of such action, a
court of competent jurisdiction over such action determines that each of the
material assertions made by Indemnitee as a basis for such action was not made
in good faith or was frivolous. In the event of an action instituted by or in
the name of the Company under this Agreement to enforce or interpret any of the
terms of this Agreement, the Indemnitee shall be entitled to be paid all
Expenses incurred by Indemnitee in defense of such action (including costs and
expenses incurred with respect to Indemnitee counterclaims and cross-claims made
in such action), and shall be entitled to the advancement of Expenses with
respect to such action, unless, as a part of such action, a court having
jurisdiction over such action determines that each of Indemnitee's material
defenses to such action was made in bad faith or was frivolous.

      14.   Notice. All notices and other communications required or permitted
hereunder shall be in writing and shall be effective upon the earlier of receipt
or (a) five (5) days after deposit with the U.S. Postal Service or other
applicable postal service, if delivered by first class mail, postage prepaid,
(b) upon delivery, if delivered by hand, (c) one business day after the business
day of deposit with Federal Express or similar overnight courier, freight
prepaid, or (d) one business day after the day of delivery by facsimile
transmission, if deliverable by facsimile transmission, with copy by first class
mail, postage prepaid, and shall be addressed if to Indemnitee at the
Indemnitee's address as set forth beneath the Indemnitee's signature to this
Agreement, and if to the Company at the address of its principal corporate
offices (attention: Secretary) or at such other address as such party may
designate by ten days' advance written notice to the other party hereto.

      15.   Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.

      16.   Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitations, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.

      17.   Choice of Law. This Agreement shall be governed by and its
provisions construed and enforced in accordance with the laws of the State of
Delaware, as applied to contracts between

                                      -10-
<PAGE>

Delaware residents, entered into and to be performed entirely within the State
of Delaware, without regard to the conflict of laws principles thereof.

      18.   Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

      19.   Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in writing
signed by all parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.

      20.   Integration and Entire Agreement. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.

      21.   No Construction as Employment Agreement. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries.

                                      -11-
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                                    WHITEHALL JEWELLERS, INC.
                                    a Delaware corporation

                                    By: /s/ Steven J. Pulley
                                        ---------------------------------
                                        Steven J. Pulley
                                    Title: Chairman

                                    /s/ Beryl Raff
                                    -----------------------------------
                                    Beryl Raff
                                    Address: 6422 Aberdeen
                                             Dallas, Texas

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