February 1, 2006 To the Board of Directors Whitehall Jewellers, Inc. 155 N. Wacker Drive Chicago, Il 60606 To the Board of Directors:

February 1, 2006

To the Board of Directors
Whitehall Jewellers, Inc.
000 X. Xxxxxx Xxxxx
Xxxxxxx, Xx 00000

To the Board of Directors:

Whitehall Jewellers, Inc. (“Whitehall” or the “Company”) has entered into a Securities Purchase Agreement (“SPA”) with PWJ Lending LLC, PWJ Funding LLC and Xxxxxxxx Opportunity Fund, L.P. (“Xxxxxxxx”). The transactions contemplated by the Transaction Documents (as defined in the SPA) are hereinafter referred to as the Prentice Transaction. On or about December 2, 2005, Newcastle Partners initiated an unsolicited offer for all the outstanding shares of the Company (“Initial Tender Offer”), and subsequently revised its offer (“Tender Offer”). The Board of Directors engaged Xxxx & Xxxxxx, LLC (“Duff & Xxxxxx”) as its independent financial advisor in connection with the Tender Offer and any other unsolicited offers that may arise to provide advice regarding whether the Tender Offer and related transactions is more favorable, from a financial point of view, to the Company, its stockholders and creditors, taken as a whole, than the Prentice Transaction (“Superior Proposal”), as outlined in Section 4(u)(ii), 4(u)(vi) and 4(u)(vii)(1) of the SPA. On January 23, 2006, Xxxx & Xxxxxx rendered its opinion that the proposal made by Newcastle in its proposal letter dated January 24, 2006 (the “Proposed Newcastle Transaction”) was a Superior Proposal.

On February 1, 2006 during a 10-business-day “match” period provided for under the SPA, the Company received a revised proposal from Prentice (the “Revised Prentice Transaction”). Duff & Xxxxxx, in its continuing role as financial advisor to the Company, was asked to determine whether the Proposed Newcastle Transaction was a Superior Proposal to the Revised Prentice Transaction (as defined below). This opinion supersedes the opinion filed as Xxxxx XXX to the Schedule 14D-9 filed by the Company on February 13, 2006.

Description of the Revised Prentice Transaction

The Revised Prentice Transaction involves an Agreement and Plan of Merger (the “Agreement”) by and among the Company; Prentice Capital Management, LP, a Delaware limited partnership (“Parent”); Xxxxxxxx; WJ Holding Corp., a Delaware corporation and affiliate of Parent and Xxxxxxxx (“Holdco”); and WJ Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Holdco (“Purchaser”). The respective Boards of Directors of Holdco, Purchaser and the Company deem it advisable and in the best interests of their respective stockholders, and in the case of the Company, its creditors, that Holdco acquire the Company upon the terms and

1

subject to the conditions provided for in the Agreement which includes: (i) Purchaser agreeing to purchase and acquire all shares of the issued and outstanding common stock, par value $0.001 per share (the “Common Stock”), of the Company for $1.60 per share of Common Stock pursuant to a tender offer, and subsequent thereto, a merger by which each share not tendered or owned by Parent, Xxxxxxxx or their affiliates shall be cancelled and exchanged for the right to receive $1.60; (ii) PWJ Lending LLC, a Delaware limited liability company (“PWJ Lending”), Xxxxxxxx and the Company will amend, and restate in its entirety, a term loan previously extended to the Company in the principal amount of $30,000,000 (the “Initial Loan”), (iii) PWJ Lending and Xxxxxxxx will also make an additional term loan to the Company in the aggregate principal amount of $20,000,000 The financing terms and other proposed transactions described above as agreed to by and between the Company and Parent and Xxxxxxxx represent the Revised Prentice Transaction.

Scope of Analysis

In connection with this Opinion, we have made such reviews, analyses and inquiries, as we have deemed necessary and appropriate under the circumstances. Our due diligence with regards to the Revised Prentice Transaction included, but was not limited to, the items summarized below.

In connection with this Opinion, we have considered various drafts of the relevant documents. In instances where Xxxx & Xxxxxx relied upon draft documents, the Company and its legal advisors represented that such drafts were substantially similar to the final, executed copies. Below is a representative listing of the various documents considered:

	1.		The Agreement, dated as of February 1, 2006, by and among the Company, Parent, Xxxxxxxx, Holdco, and Purchaser (Draft as of January 31, 2006);
	2.		Amended and Restated Term Loan Credit Agreement, made as of February 1, 2006, by and among the Company, the Lenders and PWJ Lending (Draft as of February 1, 2006);
	3.		Acknowledgement, Consent and Reaffirmation by Guarantor of the Amended and Restated Term Loan Credit Agreement, dated as of February 1, 2006, by and among the Company, the Lenders, and PWJ Lending (Draft as of January 31, 2006);
	4.		Financial projections provided by management;
	5.		Presentation to Bank Group, prepared by Whitehall Jewellers and FTI Consulting, Inc. dated December 12, 2005;
	6.		Tender Offer Statements, filed by Newcastle Partners L.P. (“Newcastle”) with the Securities and Exchange Commission; and
	7.		Various press releases and other public disclosure documents issued by Prentice Capital and Whitehall Jewellers.

Additionally, in connection with this Opinion, we have:

	1.		Participated on numerous conference calls with the Board of Directors;
	2.		Participated in conversations with, and considered information provided by, representatives of Parent;

2

	3.		Considered certain financial and other information relating to Whitehall that was publicly available or furnished to us by the Company, including budgets and pro-forma financial projections;
	4.		Met with members of Xxxxxxxxx’s management to discuss the business, operations, historical financial results and future prospects of the Company;
	5.		Considered the financial terms of certain recent acquisitions of companies in businesses similar to those of Whitehall;
	6.		Performed discounted cash flow analyses of Whitehall, based on pro forma financial projections prepared by the Company;
	7.		Analyzed the market pricing of Whitehall relative to the overall market and the relevant market segment, including market multiple comparisons, market pricing history, and a discounted cash flow analysis; and
	8.		Considered such other information, financial studies, analyses and investigations and financial, economic and market criteria as we deemed relevant and appropriate for purposes of this Opinion.

Duff & Xxxxxx also took into account its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation, in general, and with respect to similar transactions, in particular. Duff & Xxxxxx did not make any independent evaluation, appraisal or physical inspection of the Company’s solvency or of any specific assets or liabilities (contingent or otherwise). This Opinion should not be construed as a valuation opinion, credit rating, solvency opinion, an analysis of the Company’s credit worthiness or otherwise as tax advice or as accounting advice. In addition, Xxxx & Xxxxxx is not expressing any opinion as to the market price or value of any publicly-traded shares after completion of the Proposed Transaction. In addition, Xxxx & Xxxxxx has not made, and assumes no responsibility to make, any representation, or render any opinion, as to any legal matter. The Company has been advised by counsel as to legal matters. Xxxx & Xxxxxx was advised by its own counsel as to legal matters.

In preparing its forecasts, performing its analysis and rendering its Opinion with respect to the Revised Prentice Transaction, Xxxx & Xxxxxx (i) relied upon the accuracy, completeness, and fair presentation of all information, data, advice, opinions and representations obtained from public sources or provided to it from private sources, including Company management, and did not attempt to independently verify such information, (ii) assumed that any estimates, evaluations and projections furnished to Duff & Xxxxxx were reasonably prepared and based upon the last currently available information and good faith judgment of the person furnishing the same, and (iii) assumed that the final versions of all documents reviewed by us in draft form conform in all material respects to the drafts reviewed. Duff & Xxxxxx’ Opinion further assumes that information supplied and representations made by Company management are substantially accurate regarding the Company and the Revised Prentice Transaction.

In our analysis and in connection with the preparation of this Opinion, Xxxx & Xxxxxx has made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the Revised Prentice Transaction. Xxxx & Xxxxxx has also assumed that all of the

3

conditions required to implement the Revised Prentice Transaction will be satisfied and that the Revised Prentice Transaction will be completed in accordance with the Agreement.

The basis and methodology for this Opinion have been designed specifically for the express purposes of the Board of Directors of the Company and may not translate to any other purposes.

To the extent that any of the foregoing assumptions or any of the facts on which this Opinion is based proves to be untrue in any material respect, this Opinion cannot and should not be relied upon.

Xxxx & Xxxxxx has prepared this Opinion effective as of February 1, 2006. The Opinion is necessarily based upon market, economic, financial and other conditions as they exist and can be evaluated as of such date, and Duff & Xxxxxx disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting the Opinion which may come or be brought to the attention of Xxxx & Xxxxxx after the date hereof. Notwithstanding and without limiting the foregoing, in the event that there is any change in any fact or matter affecting the Opinion after the date hereof and prior to the completion of the Revised Prentice Transaction, Xxxx & Xxxxxx reserves the right to change, modify or withdraw the Opinion.

This letter should not be construed as creating any fiduciary duty on Xxxx & Xxxxxx’ part to any party.

This Opinion is solely for consideration of the Revised Prentice Transaction and may not be used for any other purpose without our prior written consent, except that this Opinion may be included in its entirety in any filing made by the Company with the Securities and Exchange Commission in respect of the Revised Prentice Transaction and you may summarize or otherwise reference the existence of this Opinion in such documents provided that any such summary or reference language shall be subject to prior approval by Xxxx & Xxxxxx. This Opinion is not a recommendation as to how any stockholder should vote or act with respect to any matters relating to the Revised Prentice Transaction, or whether to proceed with the Revised Prentice Transaction or any related transaction, nor does it indicate that the consideration paid is the best possible attainable under any circumstances.

Conclusion

Based upon and subject to limitations set forth herein, Xxxx & Xxxxxx is of the opinion that Revised Prentice Transaction is more favorable, from a financial point of view, to the Company, its stockholders and creditors, taken as a whole, than the Proposed Newcastle Transaction.

Respectfully submitted,

4