SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant : [ ]

Check the appropriate box:
[ ] Preliminary Proxy Statement

[ ] Confidential, for use of the Commission
only (as permitted by Rule 14a-6(e)(2)).

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material under Rule 14a-12

WHITEHALL JEWELLERS, INC.
---------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

N/A
-----
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

WHITEHALL JEWELLERS, INC.
155 North Wacker Drive
Suite 500
Chicago, Illinois 60606

May 10, 2002

Dear Stockholder:

You are cordially invited to attend the 2002 annual meeting of stockholders
of Whitehall Jewellers, Inc., a Delaware corporation, to be held at 10:00 a.m.
(local time) on Tuesday, June 11, 2002, at The Standard Club, 320 South
Plymouth, Chicago, Illinois 60604.

The formal notice of the meeting, the proxy statement and the 2001 annual
report are enclosed. The matters to be considered at the meeting are described
in the accompanying proxy statement. Regardless of your plans for attending in
person, it is important that your shares be represented at the meeting.
Therefore, please complete, sign, date and return the enclosed proxy card in the
enclosed self-addressed, postage prepaid envelope. This will enable you to vote
on the business to be transacted whether or not you attend the meeting.

We hope that you can attend the 2002 annual meeting of stockholders.

Sincerely,

/s/ Hugh Patinkin

Hugh M. Patinkin
Chairman, Chief Executive Officer and
President

WHITEHALL JEWELLERS, INC.
155 North Wacker Drive
Suite 500
Chicago, Illinois 60606

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 11, 2002

To the Stockholders of

WHITEHALL JEWELLERS, INC.

The 2002 annual meeting of stockholders of Whitehall Jewellers, Inc., a
Delaware corporation, will be held at 10:00 a.m. (local time) on Tuesday, June
11, 2002, at The Standard Club, 320 South Plymouth Court, Chicago, Illinois
60604 for the following purposes:

1. to elect two (2) Class III directors;

2. to approve the amendment and restatement of Whitehall's Restated
Certificate of Incorporation;

3. to approve Whitehall's Employee Stock Purchase Plan;

4. to approve an amendment to Whitehall's 1997 Long-Term Incentive Plan;
and

5. to transact such other business as may properly come before the annual
meeting or any adjournments thereof.

Your attention is directed to the accompanying proxy statement. Whether or
not you plan to attend the meeting in person, you are urged to complete, sign,
date and return the enclosed proxy card in the enclosed self-addressed, postage
prepaid envelope. If you attend the meeting and wish to vote in person, you may
withdraw your proxy and vote your shares in person.

This Notice of annual meeting of stockholders is first being sent to
stockholders on or about May 10, 2002.

By Order of the Board of Directors,

/s/ JOHN R. DESJARDINS

/s/ John R. Desjardins
John R. Desjardins
Executive Vice President and Secretary
May 10, 2002

WHITEHALL JEWELLERS, INC.
155 North Wacker Drive
Suite 500
Chicago, Illinois 60606

PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 11, 2002

GENERAL INFORMATION

This proxy statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Whitehall Jewellers, Inc., a Delaware
corporation, for use at the 2002 annual meeting of stockholders to be held at
10:00 a.m. (local time) on Tuesday, June 11, at The Standard Club, 320 South
Plymouth Court, Chicago, Illinois 60604.

The Board of Directors has fixed the close of business on April 26, 2002,
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the annual meeting. On April 26, 2002, Whitehall had outstanding
(i) 14,717,344 shares of common stock, par value $.001 per share, and (ii) 142
shares of Class B common stock, par value $1.00 per share. A list of
stockholders of record entitled to vote at the annual meeting will be available
for inspection by any stockholder, for any purpose germane to the meeting,
during normal business hours, for a period of 10 days prior to the meeting, at
the office of Whitehall located at 155 North Wacker Drive, Suite 500, Chicago,
Illinois 60606.

Whether or not you plan to attend the annual meeting, please complete,
sign, date and return the enclosed proxy card in the enclosed self-addressed,
postage prepaid envelope. The proxies will vote your shares according to your
instructions. If you return a properly signed and dated proxy card but do not
mark a choice on one or more items, your shares will be voted in accordance with
the recommendation of the Board of Directors as set forth in this proxy
statement. The proxy card gives authority to the proxies to vote your shares in
their discretion on any other matter properly presented at the annual meeting.

You may revoke your proxy at any time prior to voting at the annual meeting
by delivering written notice to the Secretary of Whitehall, by submitting a
subsequently dated proxy or by attending the annual meeting and voting in person
at the annual meeting.

This proxy statement is first being sent or given to stockholders on or
about May 10, 2002.

VOTING INFORMATION

Each holder of outstanding shares of common stock is entitled to one vote
for each share of common stock held in that holder's name with respect to all
matters on which holders of common stock are entitled to vote at the annual
meeting. Each holder of outstanding shares of Class B common stock is entitled
to 35.4208 votes for each share of Class B common stock held in that holder's
name with respect to all matters on which holders of Class B common stock are
entitled to vote at the annual meeting. Except as otherwise required by law, the
holders of shares of common stock and Class B common stock shall vote together
and not as separate classes. At the annual meeting, a holder of common stock or
Class B common stock may,

- with respect to the election of the Class III directors, vote FOR the
election of the director nominees or WITHHOLD authority to vote for such
director nominees;

- with respect to the proposal to approve the amendment and restatement of
Whitehall's Restated Certificate of Incorporation described herein, (i)
vote FOR approval, (ii) vote AGAINST approval or (iii) ABSTAIN from
voting on the proposal;

- with respect to the proposal to approve Whitehall's Employee Stock
Purchase Plan described herein, (i) vote FOR approval, (ii) vote AGAINST
approval or (iii) ABSTAIN from voting on the proposal; and

- with respect to the proposal to amend Whitehall's 1997 Long-Term
Incentive Plan described herein, (i) vote FOR approval, (ii) vote AGAINST
approval or (iii) ABSTAIN from voting on the proposal.

All properly executed and unrevoked proxies received in the accompanying
form in time for the annual meeting will be voted in the manner directed
therein. If no direction is made on a proxy, the proxy will be voted FOR the
election of the named director nominees to serve as Class III directors, FOR
approval of the proposal to approve the amendment and restatement of Whitehall's
Restated Certificate of Incorporation, FOR approval of Whitehall's Employee
Stock Purchase Plan and FOR approval of the amendment to Whitehall's 1997
Long-Term Incentive Plan. The proxy card gives authority to the proxies to vote
your shares in their discretion on any other matter properly presented at the
annual meeting. If a proxy indicates that all or a portion of the votes
represented by that proxy are not being voted with respect to a particular
matter, the non-votes will not be considered present and entitled to vote on
that matter, although the votes may be considered present and entitled to vote
on other matters and will count for purposes of determining the presence of a
quorum. A quorum will be present if a majority of the voting power with respect
to the shares of common stock and Class B common stock combined are represented
in person or by proxy at the annual meeting.

The election of the Class III directors requires the affirmative vote of a
plurality of votes cast by the holders present in person or represented by proxy
and entitled to vote on such matter at the annual meeting. Accordingly, if a
quorum is present at the annual meeting, the persons receiving the greatest
number of votes by the holders will be elected to serve as the Class III
directors. Withholding authority to vote for a nominee and non-votes with
respect to the election of directors will not affect the outcome of the election
of directors.

Assuming a quorum is present at the annual meeting, approval of the
proposal to amend and restate Whitehall's Restated Certificate of Incorporation
requires the affirmative vote by a majority of the holders of the voting power
entitled to vote on such matter at the annual meeting. Both a vote to abstain
and a non-vote with respect to the proposal to amend and restate Whitehall's
Restated Certificate of Incorporation will be treated as votes against that
proposal.

Assuming a quorum is present at the annual meeting, approval of Whitehall's
Employee Stock Purchase Plan and approval of the amendment to Whitehall's 1997
Long-Term Incentive Plan require the affirmative vote of a majority of the votes
cast by the holders present in person or represented by proxy and entitled to
vote on such matters at the annual meeting. A vote to abstain from voting on
either of these proposals will be treated as a vote against such proposal.
Non-votes with respect to either of these proposals will not affect the
determination of whether such proposals are approved.

PROPOSAL 1

ELECTION OF DIRECTORS

Whitehall's business is managed under the direction of its Board of
Directors. The Board of Directors is presently composed of seven directors,
divided into three classes. At the annual meeting, two Class III directors will
be elected to serve until the annual meeting in the year 2005, or until their
successors are duly elected and qualified. The nominees for election as Class
III directors are identified below. In the event the nominees, each of whom has
expressed an intention to serve if elected, fail to stand for election, the
persons named in the proxy presently intend to vote for a substitute nominee
designated by the Board of Directors.

NOMINEES

The following persons, if elected at the annual meeting, will serve as
Class III directors until the annual meeting in the year 2005, or until their
successors are elected and qualified.

CLASS III DIRECTORS -- TERM SCHEDULED TO EXPIRE IN 2002

Mr. Matthew M. Patinkin, age 44, joined Whitehall in 1979 and has served as
its Executive Vice President, Operations and as a director since 1989.

Mr. Richard K. Berkowitz, age 60, has served as a director of Whitehall
since 1998. He retired from Arthur Andersen, L.L.P. in August 1998 after serving
21 years as a partner. Prior to his retirement, Mr. Berkowitz served as head of
Arthur Andersen's tax division in Miami, Florida. Mr. Berkowitz has been
associated with Entente Investment, Inc. and was a member of the Advisory Board
of Security Plastics, Inc. Mr. Berkowitz is Chairman of the Audit Committee and
a member of the Compensation Committee.

THE BOARD OF DIRECTORS OF WHITEHALL RECOMMENDS
VOTES "FOR" THE NOMINEES FOR CLASS III DIRECTORS.

OTHER DIRECTORS

The following persons are currently directors of Whitehall whose terms will
continue after the annual meeting.

CLASS I DIRECTORS -- TERM SCHEDULED TO EXPIRE IN 2003

Mr. Hugh M. Patinkin, age 51, has served as President and Chief Executive
Officer of Whitehall since 1989 and was elected its Chairman in February 1996.
He has served as a director from 1979 to 1988 and from 1989 to the present. He
joined Whitehall as its Assistant Secretary in 1979. Prior thereto he practiced
law with the firm of Sidley & Austin.

Mr. Norman J. Patinkin, age 75, has served as a director of Whitehall since
1989. In 2001, he retired as the Chief Executive Officer of United Marketing
Group, L.L.C., but remains on its Board of Directors. United Marketing Group
operates telemarketing services, motorclubs, travel clubs and direct response
merchandise programs for large corporations.

Mr. Daniel H. Levy, age 58, is the Chairman and Chief Executive Officer of
Donnkenny, Inc., a designer, manufacturer and marketer of women's apparel, and
has served as a director of Whitehall since January 7, 1997 (and had served as a
director from March 1996 until May 1996). Mr. Levy served as Chairman and Chief
Executive Officer of Best Products Co. Inc., a large discount retailer of
jewelry and brand name hardline merchandise, from April 1996 until January 1997.
Prior to such time, Mr. Levy was a Principal for LBK Consulting from 1994 until
1996. Mr. Levy served as Chairman and Chief Executive Officer of Conran's during
1993. Prior to such time, Mr. Levy was Vice Chairman and Chief Operating Officer
for Montgomery Ward & Co. from 1991 until 1993. Mr. Levy is a member of the
Audit Committee and the Compensation Committee.

Messrs. Hugh M. Patinkin and Matthew M. Patinkin are brothers. Mr. Norman
J. Patinkin is a first cousin, once removed, of Messrs. Hugh and Matthew
Patinkin.

CLASS II DIRECTORS -- TERM SCHEDULED TO EXPIRE IN 2004

Mr. John R. Desjardins, age 51, joined Whitehall in 1979 and has served as
Executive Vice President and Secretary and as a director of Whitehall since
1989. He also served as Treasurer of Whitehall from 1989 through October 1998.
Previously, he worked as a certified public accountant with Deloitte & Touche
L.L.P.

Mr. Jack A. Smith, age 66, has served as a director of Whitehall since July
1996. Mr. Smith is the former Chairman of the Board of The Sports Authority,
Inc., a national sporting goods chain, which he founded in 1987. Prior to
founding The Sports Authority, Mr. Smith served as Chief Operating Officer of
Herman's Sporting Goods and held various executive management positions with
major national retailers, including Sears & Roebuck, Montgomery Ward & Co. and
Jefferson Stores. Mr. Smith serves on the Board of Directors of Darden
Restaurants, Inc., Beverages & More! and National Wholesale Liq. Mr. Smith is
Chairman of the Compensation Committee and a member of the Audit Committee

MEETINGS AND COMMITTEES

The Board of Directors of Whitehall held five meetings during fiscal 2001.
No director attended fewer than 75% of the total number of meetings of the Board
of Directors and its committees on which he served during fiscal 2001.

The Board of Directors does not presently have a formal nominating
committee.

The Audit Committee recommends the firm to be appointed as independent
accountants to audit financial statements and to perform services related to the
audit, reviews the scope and results of the audit with the independent
accountants, reviews with management and the independent accountants Whitehall's
year-end operating results and considers the adequacy of the internal accounting
procedures. The Audit Committee presently consists of Messrs. Richard K.
Berkowitz (Chairman), Daniel H. Levy and Jack A. Smith. The Audit Committee held
nine meetings in fiscal 2001.

The Board of Directors has determined that all members of the audit
committee are independent within the meaning of the listing standards of The New
York Stock Exchange and have no relationship to Whitehall that may interfere
with their independence from management and Whitehall.

The Audit Committee operates under a written charter adopted by the Board
of Directors which is included in this proxy statement as Exhibit I.

The Compensation Committee, which presently consists of Messrs. Jack A.
Smith (Chairman), Daniel H. Levy and Richard K. Berkowitz, reviews and
recommends the compensation arrangements for all officers, approves such
arrangements for other senior level employees, and administers and takes such
other action as may be required in connection with certain compensation and
incentive plans of Whitehall (including the grant of stock options and other
stock based awards). The Compensation Committee held four meetings in fiscal
2001. Whitehall's By-Laws require that the Compensation Committee consists of
non-employee directors.

COMPENSATION OF DIRECTORS

Non-employee directors receive compensation of $3,750 per fiscal quarter.
In addition, as of February 7, 2002, non-employee directors are entitled to
receive $1,000 for each meeting of the Board of Directors attended and committee
chairmen and members are entitled to receive $300 and $200, respectively, for
each committee meeting attended. Directors who are officers or employees of
Whitehall receive no compensation for serving as directors. All directors are
reimbursed for out-of-pocket expenses incurred in connection with attendance at
meetings of the Board of Directors and meetings of committees of the Board of
Directors.

Under Whitehall's 1998 Non-Employee Director Stock Option Plan, each
non-employee director of Whitehall may elect to receive nonqualified stock
options at the beginning of each fiscal quarter in lieu of receiving the
quarterly directors' fees of $3,750 described above. The per share exercise
price of all such options is or will be equal to the fair market value of the
common stock on the date of grant, and such options vest or will vest at the end
of the fiscal quarter in which they are granted.

As permitted under Whitehall's 1997 Long-Term Incentive Plan, each
non-employee director is and will be granted a restricted stock award each year
as of the Audit Certification Date (as defined below). Such
4

award entitles and will entitle each non-employee director to receive an amount
of restricted common stock equal to $10,000 divided by the fair market value of
such common stock on the applicable Audit Certification Date, rounded down to
the nearest whole share. The restriction period (that is, the period in which
the common stock subject to the award may not be sold, transferred, assigned,
pledged, hypothecated or otherwise encumbered or disposed of) relating to each
such award is and will be one year from the date of grant. The "Audit
Certification Date" is the date each year on which Whitehall's independent
public accountants deliver an opinion to Whitehall as to its yearly audit of the
financial statements of Whitehall.

On February 23, 2001, each non-employee director was granted a nonqualified
option to purchase 5,000 shares of common stock. The per share exercise price of
all such options is equal to the fair market value of the common stock on
February 23, 2001 and such options vest with respect to one-third of the options
on the first, second and third anniversaries of the date of grant.

Pursuant to the terms of Whitehall's 1996 Long-Term Incentive Plan and the
1997 Long-Term Incentive Plan, Mr. Norman Patinkin was granted a one-time
nonqualified option to purchase 15,000 shares of common stock upon the
consummation of Whitehall's initial public offering on May 7, 1996. All of the
remaining non-employee directors who are currently directors were also granted a
one-time nonqualified option to purchase 15,000 shares of common stock when each
was first elected or began to serve as a non-employee director. Each of the 1996
Long-Term Incentive Plan and the 1997 Long-Term Incentive Plan have been amended
to delete the provisions which entitle each non-employee director to an
automatic grant of a nonqualified option to purchase 15,000 shares of common
stock on the date on which he or she is first elected or begins to serve as a
non-employee director. However, each such plan provides that non-employee
directors may be granted stock based awards at the discretion of the
Compensation Committee, with the approval of the Board of Directors, to advance
the interests of Whitehall by attracting and retaining well-qualified directors
and Whitehall may grant such awards from time to time for such purpose.

EXECUTIVE OFFICERS

The following sets forth certain information with respect to the executive
officers of Whitehall who are not identified above under "Election of
Directors -- Nominees" and "-- Other Directors."

Mr. Lynn D. Eisenheim, age 50, joined Whitehall in 1991 as its Executive
Vice President, Merchandising. He has 27 years of experience in the jewelry
business having served with Zale Corporation (where he served as Executive Vice
President, Merchandising immediately prior to joining Whitehall) and Service
Merchandise Co.

Mr. Manny A. Brown, age 46, joined Whitehall in 1997 as its Executive Vice
President, Operations. Mr. Brown was employed from 1986 through 1997 by Foster
Medical Corporation which was later acquired by Abbey Home Healthcare and then
merged with Homedco to create Apria Healthcare. Mr. Brown held various sales and
operations management positions with Apria Healthcare including Executive Vice
President, East Operations and Senior Vice President, Central Operations. Mr.
Brown was employed by FMC Corporation from 1980 through 1985 in various sales
management and marketing positions. Mr. Brown was employed by American Brands
from 1978 through 1980 in various sales management positions.

Mr. Jon H. Browne, age 47, joined Whitehall in January 2000, as Executive
Vice President and currently holds the title of Executive Vice President, Chief
Financial Officer and Treasurer. He has over 24 years of experience in the
retail industry having served as the Chief Executive Officer of Chernin's Shoes,
Inc., a large format family shoe retailer, from November 1998 until August of
1999. Prior to serving as the Chief Executive Officer of Chernin's Shoes, Mr.
Browne served as its Chief Administrative Officer from May 1996 until October of
1998. Chernin's Shoes filed a petition for bankruptcy under Chapter 11 of the
Bankruptcy Code in the Northern District of Illinois, Eastern Division, on May
10, 1999.

PROPOSAL 2

AMEND AND RESTATE WHITEHALL'S RESTATED CERTIFICATE OF INCORPORATION

On April 4, 2002 the Board of Directors of Whitehall approved, subject to
stockholder approval, an amendment and restatement of Whitehall's Restated
Certificate of Incorporation.

Generally, the proposed amendments to the Restated Certificate of
Incorporation provide for the removal of certain provisions that relate or refer
to Whitehall's initial public offering which took place on May 7, 1996. These
provisions, among other things, provide for the common stock split effected
immediately prior to the initial public offering and the delay of certain rights
of and restrictions on each of Whitehall, the Board of Directors and the
stockholders of Whitehall until the consummation of the initial public offering.
These provisions became unnecessary upon the consummation of Whitehall's initial
public offering and the Board of Directors believes that it is desirable to
remove them in order to simplify Whitehall's Restated Certificate of
Incorporation. The removal of those provisions and the accompanying language
referring thereto will not affect the rights of any stockholder.

The Board of Directors recommends amending and restating Whitehall's
present Restated Certificate of Incorporation in the form attached hereto as
Exhibit II to this proxy statement. The form of Second Restated Certificate of
Incorporation attached hereto as Exhibit II incorporates all amendments to
Whitehall's present Restated Certificate of Incorporation, including the
Certificate of Designations of Series A Junior Participating Preferred Stock
which was filed on May 2, 1996. Although the summary set forth above describes
the material terms of the amendments to the Restated Certificate of
Incorporation, it does not purport to fully or completely describe the
amendments to the Restated Certificate of Incorporation. Stockholders are urged
to review the Second Restated Certificate of Incorporation attached hereto as
Exhibit II.

THE BOARD OF DIRECTORS OF WHITEHALL RECOMMENDS VOTES "FOR" THE
PROPOSAL TO AMEND AND RESTATE THE RESTATED CERTIFICATE OF INCORPORATION.

PROPOSAL 3

APPROVAL OF WHITEHALL'S EMPLOYEE STOCK PURCHASE PLAN

Whitehall's stockholders are being asked to act upon a proposal to approve
the adoption by the Board of Directors of Whitehall's Employee Stock Purchase
Plan (the "ESPP"). The ESPP was adopted by the Board of Directors on September
10, 2001 and became effective on October 1, 2001. The ESPP permits eligible
employees to elect to have a portion of their compensation salary withheld for
purchases of Whitehall's common stock at a price discounted from the fair market
value of the common stock. If the proposal is approved by the stockholders of
Whitehall, the ESPP will be qualified as an Employee Stock Purchase Plan under
section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). If
the stockholders do not approve the ESPP by September 10, 2002, the ESPP will
cease to be effective on such date. Regardless of whether the ESPP qualifies as
an employee stock purchase plan under section 423 of the Code, it is Whitehall's
present intention that the provisions of the ESPP will be administered,
interpreted and construed in a manner consistent with the requirements of
section 423 of the Code. The complete text of the ESPP is set forth in Exhibit
III to this proxy statement and stockholders are urged to review it together
with the following information.

Purpose. The purpose of the ESPP is to provide employees of Whitehall and
its subsidiaries added incentive to remain employed by Whitehall and to
encourage increased efforts to promote the best interests of Whitehall and its
subsidiaries by permitting eligible employees to purchase shares of Whitehall's
common stock at below-market prices. Whitehall believes that the ESPP is an
important employee benefit that assists it in its efforts to attract, retain and
motivate valuable employees.

Number of Shares. The maximum number of shares of Whitehall's common stock
that may be purchased under the ESPP is 500,000 shares, subject to adjustment in
the event of certain changes to Whitehall's capital structure, as provided in
the ESPP. These shares may be treasury shares, authorized and unissued shares,
shares purchased for participants in the open market on an exchange or in
negotiated transactions or any combination thereof.

Administration. A committee appointed by the Board of Directors is
responsible for the administration of the ESPP. In addition to the power to
amend or terminate the ESPP, the committee has full power and authority to: (i)
interpret and administer the ESPP and any instrument or agreement entered into
under the ESPP; (ii) establish such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the ESPP;
and (iii) make any other determination and take any other action that the
committee deems necessary or desirable for administration of the ESPP. Decisions
of the committee are final, conclusive and binding upon all persons, including
Whitehall, each participant and each other employee of Whitehall. The ESPP is
required to be administered so as to ensure all participants have the same
rights and privileges as are provided by section 423(b)(5) of the Code.

Eligibility. Participation in the ESPP is open to each employee of
Whitehall or its subsidiaries who satisfies all of the following conditions: (i)
the employee's customary employment is for more than 20 hours per week; (ii) the
employee's customary employment is for more than 5 months per calendar year and
(iii) the employee has been continuously employed by Whitehall or a subsidiary
of Whitehall for at least 6 consecutive months (an "eligible employee"). No
right to purchase common stock will accrue under the ESPP in favor of any person
who is not an eligible employee as of the first day of a "purchase period." A
purchase period is a three-month period beginning on each October 1, January 1,
April 1 and July 1, each commencing on or after the effective date of the ESPP
and prior to the termination of the ESPP. Approximately, 1,600 employees were
eligible to participate in the ESPP as of April 1, 2002.

No employee can acquire rights to purchase common stock under the ESPP if
(i) immediately after receiving such rights, such employee would own 5% or more
of the total combined voting power or value of all classes of stock of Whitehall
or any subsidiary of Whitehall, including any stock attributable to the employee
under section 424(d) of the Code or (ii) for any calendar year the right would
permit the employee's aggregate rights to purchase stock under all employee
stock purchase plans of Whitehall and its subsidiary corporations, within the
meaning of section 424(f) of the Code, exercisable during such calendar year to

accrue at a rate which exceeds $25,000 of fair market value of such stock for
that calendar year. Rights acquired under the ESPP are not transferable and may
be exercised only by a participant.

Participation and Purchases. To enroll in the ESPP, an eligible employee
must make a request to Whitehall or its designated agent at the time and in the
manner specified by the committee, specifying the amount of payroll deductions
to be applied to the compensation paid to the employee. Payroll deductions must
be a whole percentage amount, unless otherwise determined by the committee, of
the participant's compensation, before withholding or other deductions, paid to
him or her during the applicable purchase period, provided, that, the deduction
for each pay period may not be less than $20 and may not be more than the amount
or percentage determined by the committee. Payroll deductions will be made for
each participant in accordance with the participant's request until the
participant's participation in the ESPP terminates, the participant's payroll
deductions are suspended, the participant's request is revised or the ESPP
terminates. A participant may change the amount of his or her payroll deduction
effective as of the first day of any purchase period by directing Whitehall or
its designated agent at the time and in the manner specified by the committee. A
participant may elect at any time and in the manner specified by the committee
to suspend his or her payroll deductions under the ESPP, provided this election
is received by Whitehall or its designated agent prior to the date specified by
the committee for suspension of payroll deductions.

Payroll deductions for each participant will be credited to a "purchase
account" established on behalf of the participant on the books of the
participant's employer or such employer's designated agent. As of the first
business day of the month immediately following the end of each purchase period
(the "exercise date"), the amount in each participant's purchase account will be
applied to the purchase of the number of shares of Whitehall's common stock
determined by dividing such amount by the purchase price (as described below)
for the purchase period. No interest will accrue at any time for any amount
credited to a purchase account of a participant. The purchase price per share of
common stock for any purchase period will be 90% of the fair market value of a
share of common stock on the exercise date for such purchase period.

A participant will be issued a certificate for his or her shares of common
stock when the participant's participation in the ESPP has been terminated, the
ESPP is terminated or upon request, but in the last case, only in denominations
of at least 25 shares.

Termination of Participation. A participant's participation in the ESPP
will automatically terminate upon the participant's death or termination of
employment with Whitehall or its subsidiaries or when the participant otherwise
ceases to be an eligible employee. Upon any terminating event, Whitehall will
deliver to the participant or his or her legal representative, as the case may
be, the cash credited to his or her purchase account on the date of the
termination, and, as soon as practicable after such termination, one or more
certificates for the number of whole shares of common stock held for his or her
benefit and the cash equivalent for any fractional share so held.

Change in Control. In the event of certain acquisitions of 25% or more the
Whitehall's common stock, a change in the majority of the Board of Directors of
Whitehall, subject to certain exceptions, the approval by stockholders of a
reorganization, merger or consolidation, unless Whitehall's stockholders receive
50% or more or the stock and combined voting power of the surviving corporation,
or the approval by the stockholders of a complete liquidation or dissolution,
the then current purchase period will end, and the committee, in its sole
discretion, will direct that the cash credited to all participants' purchase
accounts either be applied to purchase shares of common stock or be returned to
participants and, in either event, the ESPP will immediately thereafter
terminate.

Amendment and Termination of the ESPP. The Board or the committee may amend
the ESPP from time to time in any respect for any reason; provided, however, no
such amendment may (i) materially adversely affect any purchase rights
outstanding under the ESPP during the purchase period in which such amendment is
to be effected; (ii) increase the maximum number of shares of common stock which
may be purchased under the ESPP; (iii) decrease the purchase price of a share of
common stock for any purchase period below 85% of the fair market value on the
exercise date or (iv) adversely affect the qualification of the ESPP under
section 423 of the Code.

Whitehall, by action of the Board of Directors or the committee, may
terminate the ESPP at any time. In any event, without any action being required,
the ESPP will terminate when the maximum number of shares of common stock to be
sold under the ESPP has been purchased. Termination will not impair any rights
which under the ESPP will have vested on or prior to the date of termination.

FEDERAL INCOME TAX CONSEQUENCES

The following is a brief description of the United States federal income
tax consequences of participation in the ESPP. Whitehall intends that the ESPP
qualify under section 423 of the Code as an employee stock purchase plan. The
tax consequences of participating in the ESPP will depend upon whether the ESPP
is qualified as an employee stock purchase plan under section 423 of the Code.
This qualification is contingent on the ESPP being approved by the stockholders
of Whitehall within twelve months of its adoption by the Board of Directors on
September 10, 2001. If this proposal is approved by stockholders of Whitehall,
the ESPP will be a qualified employee stock purchase plan. If Whitehall does not
obtain the necessary stockholder approval, then the ESPP will be a nonqualified
employee stock purchase plan until September 10, 2002, upon which time the ESPP
will cease to be effective. The different tax treatments for a qualified
employee stock purchase plan and a nonqualified employee stock purchase plan are
set forth below.

Qualified Employee Stock Purchase Plan. Under section 423 of the Code, an
eligible employee who elects to participate in the ESPP will not realize any
taxable income at the time common stock is purchased under the ESPP for the
employee.

If a participant disposes of shares of common stock purchased under the
ESPP two years or more after the exercise date on which the shares were
purchased, the participant will recognize compensation taxable as ordinary
income, and subject to income tax withholding, in the amount of the lesser of
(i) the excess of the fair market value of the shares at the time of disposition
over the purchase price and (ii) 10% of the fair market value of the shares on
the exercise date on which the shares were purchased. The participant's cost
basis in the shares of common stock will be increased by the amount of such
ordinary compensation income. In addition, the participant will recognize
long-term capital gain equal to the excess, if any, of the amount realized on
such disposition over the cost basis in the shares, as so increased. In the
event that the amount realized from such disposition is less than the purchase
price, the participant will recognize long-term capital loss in the amount of
the difference between the purchase price and the amount realized.

If a participant disposes of shares of common stock purchased under the
ESPP within two years after the exercise date on which the shares were purchased
(a "disqualifying disposition"), the participant will recognize compensation
taxable as ordinary income, and subject to income tax withholding, in the amount
of the excess of the fair market value of the shares on the exercise date on
which the shares are purchased over the purchase price of the shares. The
participant's cost basis in the shares will be increased by the amount of such
ordinary compensation income. If the amount realized upon such disposition
exceeds the participant's cost basis in the shares of common stock, as so
increased, the participant will recognize capital gain in the amount of the
difference between the amount realized and the adjusted cost basis. In the event
the amount realized is less than the cost basis in the shares of common stock,
as so increased, the participant will recognize capital loss from the
disposition in the amount of the difference between the adjusted cost basis and
the amount realized.

If a participant dies while holding shares of common stock purchased under
the ESPP, regardless of how long the shares were held, compensation taxable as
ordinary income must be recognized in the taxable year of the participant's
death in the amount of the lesser of (i) the excess of the fair market value of
the shares at the time of the participant's death over the purchase price and
(ii) 10% of the fair market value of the shares on the exercise date on which
the shares were purchased. The cost basis of the shares of common stock will be
increased by the amount of ordinary income recognized.

Whitehall will not be entitled to a deduction for any excess of the fair
market value of the shares of common stock over the purchase price, except to
the extent the participant recognizes ordinary compensation income upon a
disqualifying disposition.

Under current tax law, gain on capital assets held for one year or less is
treated as "short-term" capital gain and gain on certain capital assets held for
more than one year is treated as "long-term" capital gain. The tax rate imposed
on long-term capital gains generally cannot exceed 20% (10% for income taxed at
the rate of 15%). The Code imposes special limitations on the amount of capital
loss that can be deducted in a taxable year.

Nonqualified Employee Stock Purchase Plan. If the ESPP is a nonqualified
employee stock purchase plan, then the ESPP will not be treated as a
tax-advantaged plan and generally participants in the ESPP will realize taxable
ordinary income at the time the common stock is purchased under the ESPP in an
amount equal to the excess of the fair market value of the shares on the
exercise date over the purchase price. In that case, Whitehall will be entitled
to a corresponding deduction equal to the amount recognized by the participant
as ordinary taxable income.

When the participant later sells the shares of common stock or otherwise
disposes of the shares in a taxable disposition, the participant generally will
recognize an additional gain or loss equal to the difference between the value
of the shares at the time of purchase and the price at which the shares are
sold. The sale of shares will be treated as a capital gain or loss, which will
be either long-term or short-term depending on whether the participant held the
shares for more than one year. Whitehall will not be entitled to a deduction at
that time.

NEW PLAN BENEFITS

The benefits that might be received by employees under the ESPP cannot be
determined because the benefits depend on the degree of participation by
employees and the trading price of the common stock in future purchase periods.

THE BOARD OF DIRECTORS RECOMMENDS VOTES "FOR" THE APPROVAL OF
WHITEHALL'S EMPLOYEE STOCK PURCHASE PLAN.

PROPOSAL 4

AMENDMENT TO WHITEHALL'S 1997 LONG-TERM INCENTIVE PLAN

The Board of Directors approved Whitehall's 1997 Long-Term Incentive Plan
(the "1997 Plan") on February 24, 1997. The 1997 Plan was then submitted to and
approved by Whitehall's stockholders at the 1997 annual meeting. The Board of
Directors approved an amendment to the 1997 Plan which was approved by
Whitehall's stockholders at the 1999 Annual Meeting for the purpose of (i)
qualifying certain grants of options as incentive stock options within the
meaning of section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and (ii) permitting future stock options, stock appreciation rights and
certain stock awards granted under the 1997 Plan to qualify as "qualified
performance-based" compensation under section 162(m) of the Code. The Board of
Directors approved an amendment to the 1997 Plan which was approved by
Whitehall's stockholders at the 2000 annual meeting which increased the number
of shares of common stock reserved for issuance under the 1997 Plan from
1,500,000 to 2,100,000.

The Board of Directors of Whitehall has approved an amendment to the 1997
Plan which would increase the number of shares of common stock reserved for
issuance under the 1997 Plan from 2,100,000 to 2,500,000. If the 1997 Plan, as
amended, is not approved by the stockholders, the terms of the 1997 Plan, as
currently in effect and as previously approved by the stockholders, will remain
in effect. The descriptions below are qualified in their entirety by reference
to the 1997 Plan, which is included as Exhibit IV to this proxy statement.

The purposes of the 1997 Plan are to align the interests of Whitehall's
stockholders and the recipients of awards under the 1997 Plan by increasing the
proprietary interest of the recipients in Whitehall's growth and success and to
advance the interests of Whitehall by attracting and retaining non-employee
directors, officers and other key employees and to motivate these individuals to
act in the long-term best interests of Whitehall's stockholders. The Board of
Directors believes that the ability to grant stock options is a critical tool,
together with the ESPP, in its hiring and retention of highly qualified
employees.

DESCRIPTION OF THE 1997 PLAN, AS AMENDED

General. Under the 1997 Plan, Whitehall may grant incentive stock options
or nonqualified options, stock appreciation rights ("SARs"), bonus stock awards
which are vested upon grant, stock awards which may be subject to a restriction
period or specified performance measures or both, and performance shares, as
described below. A total of 2,100,000 shares of common stock have been reserved
for issuance under the 1997 Plan, of which 150,000 shares have been reserved for
bonus stock awards and stock awards subject to a restriction period or
performance measures or both, subject to adjustment in the event of a stock
split, stock dividend or other changes in capital structure. As of January 31,
2002, 1,649,882 shares were subject to outstanding stock options. In addition,
as of January 31, 2002, 1,120,836 shares were subject to outstanding stock
options granted under Whitehall's other stock option plans. No awards may be
made under the 1997 Plan after February 24, 2007. All non-employee directors and
approximately 1,600 employees are eligible to participate in the 1997 Plan. The
maximum number of shares of common stock with respect to which options, SARs,
bonus stock awards, stock awards subject to a restriction period or performance
measures or both, performance share awards or a combination thereof, may be
granted during any calendar year to any participant in the 1997 Plan is 300,000,
subject to adjustment in the event of a stock split, stock dividend or other
change in capital structure.

Administration. The 1997 Plan is currently administered by the Compensation
Committee. Subject to the terms of the 1997 Plan, the Compensation Committee is
authorized to select eligible non-employee directors, officers and other key
employees for participation in the 1997 Plan and to determine the form, amount
and timing of each award to those persons and, if applicable, the number of
shares of common stock, the number of SARs and the number of performance shares
subject to the awards granted thereunder, the exercise price or base price
associated with the award, the time and conditions of exercise, and all other
terms and conditions of the award.

The Compensation Committee may delegate some or all of its power and
authority under the 1997 Plan to the Chief Executive Officer or other executive
officers of Whitehall as it deems appropriate; provided, however, that the
Compensation Committee may not delegate its power and authority with regard to
the
11

selection for participation in the 1997 Plan of an officer or other person
subject to section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or decisions concerning the timing, pricing or amount of an
award to an officer or other person, and no delegation may be made with respect
to the grant of an award to a "covered employee" within the meaning of section
162(m) of the Code.

Any grants of awards under the 1997 Plan to non-employee directors must be
approved by the Board of Directors.

Effective Date, Termination and Amendment. The 1997 Plan became effective
on February 24, 1997 and will terminate on February 24, 2007, unless terminated
earlier by the Board of Directors. The Board of Directors generally may amend
the 1997 Plan at any time except that, without the approval of the stockholders
of Whitehall, no amendment may, among other things, (i) reduce the minimum
purchase price of a share of common stock subject to an option or base price of
an SAR, (ii) eliminate the restriction contained in the 1997 Plan against
repricing the exercise price or base price of any award granted under the 1997
Plan, or (iii) extend the term of the 1997 Plan.

Employee Stock Options. Options granted to employees under the 1997 Plan
may be incentive stock options or nonqualified options. The purchase price of
shares of common stock purchasable upon exercise of an option will be determined
by the Compensation Committee at the time of grant, but may not be less than
100% of the fair market value of the shares of common stock on the date of
grant. The aggregate fair market value, determined as of the date the option is
granted, of the stock with respect to which incentive stock options are
exercisable for the first time by the optionee in any calendar year, under the
1997 Plan and any other incentive stock option plan of Whitehall, may not exceed
$100,000. Incentive stock options granted under the 1997 Plan may not be
exercised after ten years from the date of grant. In the case of any eligible
employee who owns or is deemed to own stock possessing more than 10% of the
total combined voting power of all classes of stock of Whitehall, the exercise
price of any incentive stock options granted under the 1997 Plan may not be less
than 110% of the fair market value of the common stock on the date of grant, and
the exercise period may not exceed five years from the date of grant. Options
granted under the 1997 Plan are not transferable by the optionee other than by
will or under the laws of descent and distribution except that, if the optionee
dies prior to exercising his option, the estate of the deceased optionee may
exercise all options in full until the expiration of one year from the date of
death or, if earlier, the termination of the option.

Non-Employee Director Options. The 1997 Plan provides that non-employee
directors may be granted nonqualified options to purchase shares of common stock
at the discretion of the Compensation Committee, subject to approval by the
Board of Directors, to advance the interests of Whitehall by attracting and
retaining well qualified directors. The per share exercise price of the options
will be equal to the fair market value of the common stock on the date of grant
of the option.

Stock Appreciation Rights. SARs granted under the 1997 Plan may be granted
in tandem with, or by reference to, an option or may be free-standing SARs. The
period for the exercise of an SAR and the base price of an SAR will be
determined by the Compensation Committee, but the base price may not be less
than 100% of the fair market value of a share of common stock on the date of
grant of the SAR. The exercise of an SAR entitles the holder to receive, subject
to withholding taxes, shares of common stock, which may be restricted stock,
cash or a combination thereof with a value equal to the difference between the
fair market value of the common stock on the exercise date and the base price of
the SAR.

Bonus Stock and Restricted Stock Awards. The 1997 Plan provides for the
grant of bonus stock awards, which are vested upon grant. The 1997 Plan also
provides for stock awards which may be subject to a restriction period
("restricted stock"). An award of restricted stock may be subject to specified
performance measures (see "Performance Measures" below) for the applicable
restriction period or may require the holder to remain continuously employed by,
or in the service of, Whitehall for the applicable restriction period. The terms
of restricted stock and performance goals will be determined by the Compensation
Committee. With respect to the maximum amount of compensation that can be paid
to the Chief Executive Officer or Whitehall's four most highly compensated
officers in the form of restricted stock awards subject to performance measures,
in addition to the limit of 300,000 shares with respect to which all awards may
be granted to any of those employees, the 1997 Plan provides that the fair
market value of the number of shares of common stock subject to performance
measures that is granted to any one of these employees may not

exceed $2,000,000 (i) at the time of grant in the case of a stock award subject
to performance measures or (ii) in the case of a restricted stock award subject
to performance measures, on the earlier of the date on which the performance
measures are satisfied and the date the holder makes an election to recognize
income in respect of the restricted stock. Unless otherwise specified in the
agreement with respect to a particular restricted stock award, the holder of a
restricted stock award will have all the rights as a stockholder of Whitehall,
including, but not limited to, voting rights and the right to receive dividends.
Shares of restricted stock will be non-transferable and subject to forfeiture if
the holder does not remain continuously in the employment or service of
Whitehall during the restriction period or, if the restricted stock is subject
to performance measures, if the performance measures are not attained during the
restriction period. Subject to the change in control provisions of the 1997 Plan
and unless otherwise specified in the agreement with respect to a particular
restricted stock award, in the event of a termination of employment or service
for any reason, the portion of a restricted stock award which is then subject to
a restriction period will be forfeited and canceled.

Performance Share Awards. The 1997 Plan also provides for the grant of
performance shares. Each performance share is a right, contingent upon the
attainment of performance measures within a specified performance period, to
receive one share of common stock, which may be restricted stock, or the fair
market value of the performance share in cash. The terms of performance share
awards and performance goals will be determined by the Compensation Committee.
Performance shares will be non-transferable and subject to forfeiture if the
specified performance measures are not attained during the applicable
performance period. Subject to the change in control provisions of the 1997 Plan
and unless otherwise specified in the agreement with respect to a particular
performance share award, in the event of termination of employment for any
reason, the portion of a performance share award which is then subject to a
performance period will generally be forfeited and canceled.

Performance Measures. Performance measures that can be used by the
Compensation Committee in establishing performance goals for restricted stock
awards or performance share awards can be based on any of the following
criteria: the attainment by a share of common stock of a specified fair market
value for a specified period of time, earnings per share, return to
stockholders, including dividends, return on equity, earnings of Whitehall,
revenues, market share, cash flows or cost reduction goals, or any combination
of the foregoing.

Prohibition Against Repricing Awards. Under the 1997 Plan, the exercise
price or base price, as the case may be, of any award granted thereunder may not
be changed without stockholder approval.

Change in Control. In the event of certain acquisitions of 25% or more of
the common stock, a change in the majority of the Board of Directors, subject to
certain exceptions, the approval by stockholders of a reorganization, merger or
consolidation, unless Whitehall's stockholders receive 50% or more of the stock
and combined voting power of the surviving company, or the approval by
stockholders of a complete liquidation or dissolution, all options will become
immediately exercisable and all awards will be "cashed-out" by Whitehall,
except, in the case of a merger or similar transaction in which the stockholders
receive publicly traded common stock, outstanding awards will be substituted for
similar rights to acquire a proportionate number of shares of common stock
received in the merger or similar transaction.

FEDERAL INCOME TAX CONSEQUENCES

The following is a brief description of the United States federal income
tax consequences of awards made under the 1997 Plan.

Stock Options. A participant will not recognize any income upon the grant
of a stock option, and Whitehall will not be allowed a deduction for federal
income tax purposes at that time. A participant will recognize compensation
taxable as ordinary income, and subject to income tax withholding, upon exercise
of a nonqualified stock option equal to the excess of the fair market value,
determined as of the date of exercise, of the shares purchased over their
exercise price, and Whitehall will be entitled to a corresponding deduction. A
participant will not recognize income, except for purposes of the alternative
minimum tax, upon exercise of an incentive stock option. If the shares acquired
by exercise of an incentive stock option are held for the longer of two years
from the date the option was granted or one year from the date the shares were
transferred, any gain

or loss arising from a subsequent disposition of the shares will be taxed as
long-term capital gain or loss, and Whitehall will not be entitled to any
deduction. If, however, the shares are disposed of within the above-described
period, then in the year of the disposition the participant generally will
recognize compensation taxable as ordinary income equal to the excess of the
lesser of (i) the amount realized upon the disposition and (ii) the fair market
value of the shares on the date of exercise over the exercise price, and
Whitehall will be entitled to a corresponding deduction.

SARs. A participant will not recognize any taxable income upon the grant of
the SARs, and Whitehall will not be allowed a deduction for federal income tax
purposes at that time. A participant will recognize compensation taxable as
ordinary income, and subject to income tax withholding, upon exercise of an SAR
equal to the fair market value, determined as of the date of exercise, of any
shares delivered and the amount of cash paid by Whitehall upon the exercise, and
Whitehall will be entitled to a corresponding deduction.

Bonus Stock. A participant will recognize compensation taxable as ordinary
income, and subject to income tax withholding, in respect of awards of shares of
bonus stock at the time the shares are transferred in an amount equal to the
then fair market value of the shares and Whitehall will be entitled to a
corresponding deduction, except to the extent the limit of section 162(m) of the
Code applies.

Restricted Stock. A participant will not recognize taxable income at the
time of the grant of shares of restricted stock, and Whitehall will not be
entitled to a tax deduction at that time, unless the participant makes an
election to be taxed at the time restricted stock is granted. If the election is
made, the participant will recognize taxable income equal to the excess of the
fair market value of the shares on the date of grant over the amount, if any,
paid for the shares. If the election is not made, the participant will recognize
taxable income at the time the restrictions lapse in an amount equal to the
excess of the fair market value of the shares at that time over the amount, if
any, paid for the shares. The amount of ordinary income recognized by a
participant by making the above-described election or upon the lapse of the
restrictions is deductible by Whitehall as compensation expense, except to the
extent the limit of section 162(m) of the Code applies. Whitehall is permitted
to take that deduction in its taxable year in which ends the taxable year in
which the employee recognizes the taxable income. In addition, a participant
receiving dividends with respect to restricted stock for which the
above-described election has not been made and prior to the time the
restrictions lapse will recognize taxable compensation, subject to income tax
withholding, rather than dividend income, in an amount equal to the dividends
paid, and Whitehall will be entitled to a corresponding deduction, except to the
extent the limit of section 162(m) of the Code applies.

Performance Shares. A participant will not recognize taxable income upon
the grant of performance shares and Whitehall will not be entitled to a tax
deduction at that time. Upon the settlement of performance shares, the
participant will recognize compensation taxable as ordinary income, and subject
to income tax withholding, in an amount equal to the fair market value of any
shares delivered and any cash paid by Whitehall, and Whitehall will be entitled
to a corresponding deduction, except to the extent the limit of section 162(m)
of the Code applies.

See "Executive Officer Compensation Report by the Compensation Committee"
for a description of section 162(m) of the Code.

NEW PLAN BENEFITS

Neither the number of shares of common stock subject to awards that may be
granted under the 1997 Plan in fiscal 2002, nor the dollar value of such
benefits, is determinable. The number of shares of common stock which are
subject to awards granted during fiscal 2001 to each of the executive officers
named in the Summary Compensation Table is set forth in that table. The number
of shares of common stock which are subject to awards granted during fiscal 2001
to the executives of Whitehall as a group (6 persons), non-executive directors
and non-executive officer employees is 355,000, 39,024 and 75,825, respectively.

THE BOARD OF DIRECTORS RECOMMENDS VOTES "FOR" THE APPROVAL OF
THE AMENDMENT TO THE COMPANY'S 1997 LONG-TERM INCENTIVE PLAN.

EXECUTIVE COMPENSATION AND OTHER INFORMATION

EXECUTIVE COMPENSATION

Summary Compensation. The following summary compensation table sets forth
certain information concerning compensation for services rendered in all
capacities awarded to, earned by or paid to Whitehall's Chief Executive Officer
and the other named executive officers during the years ended January 31, 2002,
2001 and 2000.

SUMMARY COMPENSATION TABLE

<Table>
<Caption>
Annual Compensation Long-Term Compensation Awards
------------------------------- ---------------------------------------------------
Awards Payouts
------------------------ -----------------------
Year Restricted Shares
ended Stock Underlying LTIP All Other
Name and Principal Position Jan. 31 Salary Bonus Awards(1) Options Payouts Compensation
- --------------------------- ------- -------- -------- ---------- ---------- ------- ------------

Hugh M. Patinkin............. 2002 $425,000 $224,250 $56,062 200,000 -- --
Chairman, Chief Executive 2001 $423,154 -- -- 300,000 -- --
Officer and President 2000 $383,654 $308,000 $76,998 260,062 -- --
John R. Desjardins........... 2002 $305,000 $125,050 $31,262 20,000 -- --
Executive Vice President 2001 $304,366 -- -- -- -- --
and Secretary 2000 $289,423 $232,000 $58,003 108,176 -- --
Matthew M. Patinkin.......... 2002 $270,000 $110,700 $27,675 20,000 -- --
Executive Vice President, 2001 $269,154 -- -- 10,000 -- --
Operations 2000 $249,423 $200,000 $50,002 79,886 -- --
Manny A. Brown............... 2002 $250,000 $102,500 $25,625 25,000 -- --
Executive Vice President, 2001 $247,616 -- -- 5,000 -- --
Operations 2000 $229,423 $184,000 $45,991 47,131 -- --
Lynn D. Eisenheim............ 2002 $225,000 $ 92,250 $23,062 20,000 -- --
Executive Vice President, 2001 $224,154 -- -- -- -- --
Merchandising 2000 $204,423 $164,000 $41,003 42,498 -- --
</Table>

- -------------------------
(1) Each of Whitehall's Chief Executive Officer and the other named executive
officers received awards of restricted stock on February 29, 2000 and March
11, 2002 in the following respective amounts: Mr. H. Patinkin, 3,936 and
3,840 shares; Mr. Desjardins, 2,965 and 2,141 shares; Mr. M. Patinkin, 2,556
and 1,896 shares; Mr. Brown, 2,351 and 1,755 shares; and Mr. Eisenheim,
2,096 and 1,580 shares. The restrictions on the shares lapse in three equal
annual installments on the first, second and third anniversaries of the
dates of each of the grants. Dividends or other distributions, if paid on
shares of common stock generally, will be paid with respect to the
restricted shares.

General Information Regarding Options. The following tables shows
information regarding stock options held by the executive officers named in the
Summary Compensation Table.

OPTION GRANTS IN FISCAL 2001

<Table>
<Caption>
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL GRANT DATE
OPTIONS OPTIONS GRANTED EXERCISE EXPIRATION PRESENT
NAME GRANTED(1) TO EMPLOYEES PRICE DATE VALUE(2)
- ---- ---------- --------------- -------- ---------- ----------

Hugh M. Patinkin........................ 200,000 46.42% $7.97 2/23/11 $851,280
John R. Desjardins...................... 20,000 4.64% $7.97 2/23/11 $ 85,128
Matthew M. Patinkin..................... 20,000 4.64% $7.97 2/23/11 $ 85,128
Manny A. Brown.......................... 25,000 5.80% $7.97 2/23/11 $106,410
Lynn D. Eisenheim....................... 20,000 4.64% $7.97 2/23/11 $ 85,128
</Table>

- -------------------------
(1) The stock options for the named executive officers vest with respect to 33%
of the options on the first, second and third anniversaries of the date of
the grant and are exercisable until the tenth anniversary of the date of the
grant.

(2) The Black-Scholes option pricing model was chosen to estimate the Grant Date
Present Value of the options set forth in this table. Whitehall's use of
this model should not be construed as an endorsement of its accuracy of
valuing options. All stock option valuation models, including the
Black-Scholes model, require a prediction about the future movement of the
stock price. The following assumptions were made for purposes of calculating
the Grant Date Present Value: risk-free interest rate of 5.1%; expected
dividend yield of 0%; expected option life of seven years; and expected
stock price volatility of 44%. The real value of the options in this table
depends upon the actual performance of Whitehall's common stock during the
applicable period.

OPTION EXERCISES IN FISCAL 2001 AND FISCAL YEAR END OPTION VALUES

<Table>
<Caption>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN THE
OPTIONS AS OF MONEY OPTIONS AS OF
SHARES JANUARY 31, 2002 JANUARY 31, 2002
ACQUIRED ---------------------------- ----------------------------
NAME ON EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------------- ----------- ------------- ----------- -------------

Hugh M. Patinkin....... -- -- 612,596 616,718 $5,192,273 $2,213,000
John R. Desjardins..... -- -- 272,678 110,147 $2,817,691 $ 221,300
Matthew M. Patinkin.... -- -- 271,297 93,238 $2,817,691 $ 221,300
Manny A. Brown......... -- -- 102,856 64,276 $1,051,186 $ 276,625
Lynn D. Eisenheim...... -- -- 57,010 58,748 $ 553,997 $ 221,300
</Table>

EMPLOYMENT AGREEMENTS

As described below, Whitehall has entered into severance agreements with
each of Hugh M. Patinkin, Chairman, Chief Executive Officer and President, dated
May 7, 1996; John R. Desjardins, Executive Vice President and Secretary, dated
May 7, 1996; Matthew M. Patinkin, Executive Vice President, Operations, dated
May 7, 1996; Manny A. Brown, Executive Vice President, Operations, dated March
17, 1997; and Lynn D. Eisenheim, Executive Vice President, Merchandising, dated
November 1, 2000 (originally dated May 7, 1996).

Employment Agreements with Named Executive Officers. The agreements provide
for certain payments after a "change of control." A "change of control" is
defined under the agreements to include (i) an acquisition by a third party
(excluding certain affiliates of Whitehall) of beneficial ownership of at least
25% of the outstanding shares of common stock, (ii) a change in a majority of
the incumbent Board of Directors and (iii) merger, consolidation or sale of
substantially all of Whitehall's assets if Whitehall's stockholders do not

continue to own at least 60% of the equity of the surviving or resulting entity.
Pursuant to these agreements the employees will receive certain payments and
benefits if they terminate employment voluntarily six months after a "change of
control," or earlier if they terminate for "good reason," as defined in the
agreements (such as certain changes in duties, titles, compensation, benefits or
work locations) or if they are terminated by Whitehall after a change of
control, other than for "cause," as so defined. The severance agreements also
provide for certain payments absent a change of control if they terminate
employment for "good reason" or if they are terminated by Whitehall, other than
for "cause". Their payment will equal 2.5 times (1.5 times if a change of
control has not occurred) their highest salary plus bonus over the five years
preceding the change of control, together with continuation of health and other
insurance benefits for 30 months (18 months if a change of control has not
occurred). The severance agreements also provide for payment of bonus for any
partial year worked at termination of employment equal to the higher of (x) the
employee's average bonus for the immediately preceding two years and (y) 50% of
the maximum bonus the employee could have earned in the year employment
terminates, pro rated for the portion of the year completed. To the extent any
payments to any of the five senior executives under these agreements would
constitute an "excess parachute payment" under section 280G(b)(1) of the Code,
the payments will be "grossed up" for any excise tax payable under such section,
so that the amount retained after paying all federal income taxes due would be
the same as such person would have retained if such section had not been
applicable.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

All compensation decisions for the Chief Executive Officer and each of the
other executive officers named in the Summary Compensation Table are currently
made by the Compensation Committee of the Board of Directors. The Compensation
Committee consists of Messrs. Jack A. Smith (Chairman), Daniel H. Levy and
Richard K. Berkowitz. Each member of the Compensation Committee is a
non-employee director who has not previously been an officer or employee of
Whitehall.

EXECUTIVE OFFICER COMPENSATION REPORT BY THE COMPENSATION COMMITTEE

This report is submitted by the Compensation Committee of the Board of
Directors.

Executive compensation consists of both annual and long-term compensation.
Annual compensation consists of a base salary and bonus. Long-term compensation
is generally provided through awards under the 1996 Long-Term Incentive Plan and
the 1997 Long-Term Incentive Plan.

The Compensation Committee's approach to annual base salary is to offer
competitive salaries in comparison with market practices. The base salary of
each officer is set at a level considered to be appropriate in the judgment of
the Compensation Committee based on an assessment of the particular
responsibilities and performance of the officer taking into account the
performance of Whitehall, other comparable companies, the retail jewelry
industry, the economy in general and such other factors as the Compensation
Committee may deem relevant. The comparable companies considered by the
Compensation Committee may include companies included in the peer group index
discussed below and/or other companies in the sole discretion of the
Compensation Committee. No specific measures of Whitehall's performance or other
factors are considered determinative in the base salary decisions of the
Compensation Committee. Instead, substantial judgment is used and all of the
facts and circumstances are taken into consideration by the Compensation
Committee in its executive compensation decisions.

In addition to base salary, the Chief Executive Officer and each of the
other executive officers named in the Summary Compensation Table above were
eligible to participate in Whitehall's Management Bonus Program during fiscal
2001. Under this bonus program, each executive officer was entitled to receive a
cash bonus (not to exceed 100% of base salary) and a restricted stock bonus (not
to exceed 25% of base salary)
17

based on the net income of Whitehall before extraordinary items. The fiscal 2001
bonuses approved by the Compensation Committee for the Chief Executive Officer
and the other named executive officers are reported under "Summary Compensation
Table." The Chief Executive Officer received a car allowance during fiscal 2001.

The executive officers are eligible to participate in the 1996 Long-Term
Incentive Plan and the 1997 Long-Term Incentive Plan. Each of the 1996 Long-Term
Incentive Plan and the 1997 Long-Term Incentive Plan is administered by the
Compensation Committee. Subject to certain restrictions, the Chief Executive
Officer of Whitehall also has the power to grant options under the 1996
Long-Term Incentive Plan and the 1997 Long-Term Incentive Plan. Subject to the
terms of the plans, the Compensation Committee (and the Chief Executive Officer
with respect to non-executive officer employees) is authorized to select
eligible directors, officers and other key employees for participation in the
plans and to determine the number of shares of common stock subject to the
awards granted thereunder, the exercise price, if any, the time and conditions
of exercise, and all other terms and conditions of the awards. The purposes of
the plans are to align the interests of Whitehall's stockholders and the
recipients of grants under the plans by increasing the proprietary interest of
the recipients in Whitehall's growth and success and to advance the interests of
Whitehall by attracting and retaining officers and other key employees. The
terms and the size of the option grants to each executive officer will vary from
individual to individual in the discretion of the Compensation Committee. No
specific factors are considered determinative in the grants of options to
executive officers by the Compensation Committee. Instead, all of the facts and
circumstances are taken into consideration by the Compensation Committee in its
executive compensation decisions. Grants of options are based on the judgment of
the members of the Compensation Committee considering the total mix of
information.

Section 162(m) of the Code. Section 162(m) of the Code generally limits to
$1 million the amount that a publicly held corporation is allowed each year to
deduct for the compensation paid to each of the corporation's chief executive
officer and the corporation's four most highly compensated officers other than
the chief executive officer, subject to certain exceptions. One such exception
is "qualified performance-based" compensation. Compensation attributable to a
stock option or a stock appreciation right is "qualified performance-based
compensation" if all of the following conditions are satisfied: (i) the grant or
award is made by a compensation committee consisting solely of two or more
"outside directors"; (ii) the plan under which the option or right is granted
states the maximum number of shares with respect to which options or rights may
be granted during a specified period to any individual; (iii) under the terms of
the option or right, the amount of compensation the employee could receive is
based solely upon an increase in the value of the stock after the date of grant
or award; and (iv) the material terms of the plan under which the option or
right is granted are disclosed to the publicly held corporation's stockholders
and approved by them before any compensation under the plan is paid.
Compensation attributable to either stock awards subject to performance measures
or performance shares is "qualified performance-based" compensation if all of
the following requirements are satisfied: (i) the compensation is paid solely on
account of the attainment of one or more preestablished, objective performance
goals; (ii) the award is made by a compensation committee consisting solely of
two or more "outside directors;" (iii) the compensation committee certifies in
writing prior to payment of the compensation that the performance goals and
other material terms were in fact satisfied; and (iv) the material terms of the
performance goal under which the compensation is to be paid is disclosed to and
subsequently approved by the publicly held corporation's stockholders before any
compensation is paid. Such material terms include the employees eligible to
receive the compensation, a description of the business criteria on which the
performance goal is based and either the maximum amount of compensation that
could be paid to any employee or the formula used to calculate the amount of
compensation to be paid to the employee if the performance goal is attained.

The Compensation Committee consists solely of "outside directors," as
defined for purposes of section 162(m) of the Code. The employees eligible to
receive awards under the 1997 Long-Term Incentive Plan and the 1996 Long-Term
Incentive Plan, the business criteria on which the performance goal may be based
and the maximum compensation that can be paid if a performance goal is attained
is described in each of the 1996 Long-Term Incentive Plan and 1997 Long-Term
Incentive Plans, respectively. In addition, the 1996 Long-Term Incentive Plan
and the 1997 Long-Term Incentive Plan were each approved by the

stockholders of Whitehall at the 2000 annual meeting. Due to these and other
reasons, Whitehall does not believe that the $1 million deduction limitation
should have any effect on it in the near future. If the $1 million deduction
limitation is expected to have any effect on Whitehall in the future, Whitehall
will consider ways to maximize the deductibility of executive compensation,
while retaining the discretion it deems necessary to compensate executive
officers in a manner commensurate with performance and the competitive
environment for executive talent.

THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS

Jack A. Smith (Chairman)
Daniel H. Levy
Richard K. Berkowitz

PERFORMANCE GRAPH

The rules of the Securities and Exchange Commission require each public
company to include a performance graph comparing the cumulative total
stockholder return on the company's common stock for the five preceding fiscal
years, or such shorter period as the registrant's class of securities has been
registered with the Securities and Exchange Commission, with the cumulative
total returns of a broad equity market index and a peer group or similar index.
The common stock traded on The Nasdaq Stock Market under the symbol "WHJI" from
May 2, 1996 through January 26, 2000. On January 27, 2000, the common stock
began trading on the New York Stock Exchange under the symbol "JWL."
Accordingly, the performance graph included in this proxy statement shows the
period from January 31, 1997 through the last trading day of the fiscal year
which was January 31, 2002.

The following chart graphs the performance of the cumulative total return
to stockholders (stock price appreciation plus dividends) between January 31,
1997 and January 31, 2002 in comparison to The New York Stock Exchange Market
Index and an index (the "Jewelry Stores Peer Group Index" or "JSPGI"). The
retail jewelry store companies comprising the JSPGI are companies traded on The
Nasdaq Stock Market, The New York Stock Exchange, The American Stock Exchange or
over-the-counter who have listed their companies' SIC code as 5944 -- Jewelry
Store. These companies include Whitehall, Dallas Gold and Silver Exchange, Inc.,
Finlay Enterprises, Inc., Friedman's Inc., Impulse Media Technologies Inc.,
Little Switzerland, Inc., Reeds Jewelers, Inc., Samuels Jewelers, Inc., SGD
Holdings, Ltd., Signet Group PLC, Tangible Asset Galleries, Inc., Tiffany & Co.
and Zale Corporation.

COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG WHITEHALL JEWELLERS, INC., THE JEWELRY STORES PEER GROUP INDEX
AND THE NEW YORK STOCK EXCHANGE MARKET INDEX

PERFORMANCE CHART
- ---------------
Assumes $100 invested on January 31, 1997 in Whitehall's common stock, The
Jewelry Stores Peer Group Index, and The NYSE Market Index. Cumulative total
return assumes reinvestment of dividends.

<Caption>
1/31/97 1/31/98 1/31/99 1/31/00 1/31/01 1/31/02

Whitehall Jewellers, Inc. 100.00 161.23 153.49 339.94 116.45 217.56
The Jewelry Peer Group Index 100.00 122.20 148.77 269.42 268.80 290.40
NYSE Market Index 100.00 125.40 150.52 156.27 169.42 150.02
</Table>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial
ownership of Whitehall's common stock as of April 26, 2002, by (i) each person
who is known by Whitehall to own beneficially more than 5% of the outstanding
shares of common stock, (ii) each director of Whitehall, (iii) each of the
executive officers named in the Summary Compensation Table and (iv) all
directors and executive officers of Whitehall as a group.

<Table>
<Caption>
Amount of
Beneficial Percent
Name of Beneficial Owner(1) Ownership of Class(2)
--------------------------- ---------- -----------

5% Stockholders
Wasatch Advisors, Inc.(3)................................... 1,645,044 11.2%
150 Social Hall Avenue
Salt Lake City, UT 84111
Myron Kaplan(4)............................................. 1,386,200 9.4%
P.O. Box 385
Leonia, NJ 07605
Westport Asset Management, Inc.(5).......................... 1,328,900 9.0%
253 Riverside Avenue
Westport, CT 06880
William Blair & Company, L.L.C.(6).......................... 1,224,090 8.3%
222 West Adams
Chicago, IL 60606
Directors and Executive Officers
Hugh M. Patinkin(7)......................................... 1,958,887 12.5%
Matthew M. Patinkin(8)...................................... 954,844 6.3%
John R. Desjardins(9)....................................... 704,996 4.7%
Lynn D. Eisenheim(10)....................................... 164,100 1.1%
Manny A. Brown(11).......................................... 113,754 *
Norman J. Patinkin(12)...................................... 62,927 *
Jack A. Smith(13)........................................... 39,748 *
Richard K. Berkowitz(14).................................... 36,921 *
Daniel H. Levy(15).......................................... 36,880 *
All executive officers and directors as a group (10
persons).................................................. 4,019,925 24.0%
</Table>

- -------------------------
* Less than 1%.

(1) Except as set forth in the footnotes to this table, the persons named in
the table above have sole voting and investment power with respect to all
shares shown as beneficially owned by them.

(2) Applicable percentage of ownership is based on 14,717,344 shares of common
stock outstanding on April 26, 2002. Where indicated in the footnotes, this
table also includes common stock issuable pursuant to stock options
exercisable within 60 days of the filing of this proxy statement.

(3) Share information based solely on information contained on a Schedule
13G/A, dated February 14, 2002, filed with the Securities and Exchange
Commission. This Schedule 13G/A indicates that Wasatch Advisors, Inc. has
sole voting and investment power with respect to the reported shares.

(4) Share information based solely on information contained on a Schedule
13G/A, dated January 29, 2002, filed with the Securities and Exchange
Commission. This Schedule 13G/A indicates that Myron M. Kaplan has sole
voting and investment power with respect to the reported shares.

(5) Share information based solely on information contained on a Schedule
13G/A, dated February 15, 2002, filed with the Securities and Exchange
Commission. This Schedule 13G/A indicates that Westport Asset Management,
Inc., an investment adviser registered under section 203 of the Investment
Advisers Act of 1940, has sole voting and investment power with respect to
149,250 of the reported shares, shared voting power with respect to
1,064,650 of the reported shares and shared investment power with respect
to 1,179,650 of the reported shares. This Schedule 13G/A indicates that
Westport Asset Management, Inc. disclaims beneficial ownership of such
shares and disclaims the existence of a group.

(6) Share information based solely on information contained on a Schedule 13G,
dated February 15, 2002, filed with the Securities and Exchange Commission.
This Schedule 13G indicates that William Blair & Company, L.L.C., a broker
or dealer registered under section 15 of the Securities Exchange Act of
1934, as amended, and an investment advisor registered under section 203 of
the Investment Advisors Act of 1940, has sole voting and investment power
with respect to the reported shares.

(7) Includes 995,981 shares of common stock issuable pursuant to presently
exercisable stock options or stock options which will become exercisable
within 60 days of this proxy statement. Includes 388,440 shares
beneficially owned by Hugh M. Patinkin, which shares are held by MJSB
Investment Partners, L.P., a Delaware limited partnership, U/A/D 10/28/97
of which Hugh H. Patinkin is the sole managing agent of the partnership.
Includes 54,677 shares held by Hugh M. Patinkin, Mark A. Patinkin, Matthew
M. Patinkin, Douglas M. Patinkin and Nicholas M. Patinkin, as Trustees of
the Patinkin 1994 Grandchildren's Trust U/A/D 11/18/94, with respect to
which shares Hugh M. Patinkin, Mark A. Patinkin, Matthew M. Patinkin,
Douglas M. Patinkin and Nicholas M. Patinkin share voting and investment
power. Includes 1,312 shares of restricted stock granted on February 29,
2000, which restrictions lapse on March 1, 2003. Includes 3,840 shares of
restricted stock granted on March 11, 2002, which restrictions lapse in
three equal annual installments on March 11, 2003, March 11, 2004 and March
11, 2005. The mailing address of Hugh M. Patinkin is c/o Whitehall
Jewellers, Inc., 155 North Wacker Drive, Suite 500, Chicago, Illinois
60606.

(8) Includes 347,869 shares of common stock issuable pursuant to presently
exercisable stock options or stock options which will become exercisable
within 60 days of this proxy statement. Includes 185,208 shares
beneficially owned by Matthew M. Patinkin, which shares are held by Robin
J. Patinkin and Debra Soffer, as Trustees of the Matthew M. Patinkin 1994
Family Trust U/A/D 12/19/94. Robin J. Patinkin and Debra Soffer have shared
investment power with respect to such shares. Includes 24,969 shares held
by Matthew M. Patinkin and Robin J. Patinkin, as Trustees of various trusts
for the benefit of their children. Includes 13,281 shares held by Robin J.
Patinkin, as Trustee of various trusts for the benefit of the children of
Matthew M. Patinkin and Robin J. Patinkin, with respect to which shares
Matthew M. Patinkin disclaims beneficial ownership because Robin J.
Patinkin has sole voting and investment power with respect to such shares.
Includes 54,677 shares held by Hugh M. Patinkin, Mark A. Patinkin, Matthew
M. Patinkin, Douglas M. Patinkin and Nicholas M. Patinkin, as Trustees of
the Patinkin 1994 Grandchildren's Trust U/A/D 11/18/94, with respect to
which shares Hugh M. Patinkin, Mark A. Patinkin, Matthew M. Patinkin,
Douglas M. Patinkin and Nicholas M. Patinkin share voting and investment
power. Includes 852 shares of restricted stock granted on February 29,
2000, which restrictions lapse on March 1, 2003. Includes 1,896 shares of
restricted stock granted on March 11, 2002, which restrictions lapse in
three equal annual installments on March 11, 2003, March 11, 2004 and March
11, 2005. The mailing address of Matthew M. Patinkin is c/o Whitehall
Jewellers, Inc., 155 North Wacker Drive, Suite 500, Chicago, Illinois
60606.

(9) Includes 369,492 shares of common stock issuable pursuant to presently
exercisable stock options or stock options which will become exercisable
within 60 days of this proxy statement. Includes 33,248 shares beneficially
owned by John R. Desjardins, which shares are held by Cheryl Desjardins and
Stephen Kendig, as Trustees of the John R. Desjardins 1995 Family Trust
U/A/D 12/28/95. Cheryl Desjardins and Stephen Kendig have shared investment
power with respect to such shares. Shares beneficially owned by Mr.
Desjardins include shares allocated to his account in the ESOP (12,440
shares), as to which he shares voting power with the ESOP. The ESOP has
sole investment power with respect to such shares. Includes 988 shares of
restricted stock granted on February 29, 2000, which
23

restrictions lapse on March 1, 2003. Includes 2,141 shares of restricted stock
granted on March 11, 2002, which restrictions lapse in three equal annual
installments on March 11, 2003, March 11, 2004 and March 11, 2005. The mailing
address of John R. Desjardins is c/o Whitehall Jewellers, Inc., 155 North
Wacker Drive, Suite 500, Chicago, Illinois 60606.

(10) Includes 100,759 shares of common stock issuable pursuant to presently
exercisable stock options or stock options which will become exercisable
within 60 days of this proxy statement. Shares beneficially owned by Mr.
Eisenheim include shares allocated to his account in the ESOP (3,350
shares) as to which he shares voting power with the ESOP. The ESOP has sole
investment power with respect to such shares. Includes 698 shares of
restricted stock granted on February 29, 2000, which restrictions lapse on
March 1, 2003. Includes 1,580 shares of restricted stock granted on March
11, 2002, which restrictions lapse in three equal annual installments on
March 11, 2003, March 11, 2004 and March 11, 2005. The mailing address of
Lynn D. Eisenheim is c/o Whitehall Jewellers, Inc., 155 North Wacker Drive,
Suite 500, Chicago, Illinois 60606.

(11) Includes 110,466 shares of common stock issuable pursuant to presently
exercisable stock options or stock options which will become exercisable
within 60 days of this proxy statement. Includes 750 shares owned by Marcy
Brown, Mr. Brown's wife, in her self directed IRA account, with respect to
which shares Manny A. Brown disclaims beneficial ownership. Includes 783
shares of restricted stock granted on February 29, 2000, which restrictions
lapse on March 1, 2003. Includes 1,755 shares of restricted stock granted
on March 11, 2002, which restrictions lapse in three equal annual
installments on March 11, 2003, March 11, 2004 and March 11, 2005. The
mailing address of Manny A. Brown is c/o Whitehall Jewellers, Inc., 155
North Wacker Drive, Suite 500, Chicago, Illinois 60606.

(12) Includes 41,968 shares of common stock issuable pursuant to presently
exercisable stock options or stock options which will become exercisable
within 60 days of this proxy statement. Includes 685 shares of restricted
common stock which may not be sold or transferred until after March 11,
2003. The mailing address of Norman J. Patinkin is c/o United Marketing
Group, L.L.C., 5724 North Pulaski, Chicago, Illinois 60647.

(13) Includes 18,414 shares of common stock issuable pursuant to presently
exercisable stock options or stock options which will become exercisable
within 60 days of this proxy statement. Includes 685 shares of restricted
common stock which may not be sold or transferred until after March 11,
2003. The mailing address for Jack A. Smith is 2875 NE 191st Street, Suite
402, Aventura, Florida 33180.

(14) Includes 29,087 shares of common stock issuable pursuant to presently
exercisable stock options or stock options which will become exercisable
within 60 days of this proxy statement. Includes 685 shares of restricted
common stock which may not be sold or transferred until after March 11,
2003. The mailing address for Richard K. Berkowitz is 3782 El Prado Blvd.,
Coconut Grove, Florida 33133

(15) Includes 29,046 shares of common stock issuable pursuant to presently
exercisable stock options or stock options which will become exercisable
within 60 days of this proxy statement. Includes 685 shares of restricted
common stock which may not be sold or transferred until after March 11,
2003. The mailing address for Daniel H. Levy is c/o Donnkenny, Inc., 1411
Broadway, New York, New York 10019.

SECTION 16 REPORTS

Section 16(a) of the Securities and Exchange Act of 1934, as amended, and
the rules and regulations thereunder require Whitehall's directors and executive
officers and persons who are deemed to own more than ten percent of the common
stock, to file certain reports with the Securities and Exchange Commission with
respect to their beneficial ownership of common stock. The reporting persons are
also required to furnish Whitehall with copies of all section 16 reports they
file.

Based solely on a review of the forms it has received and on written
representations from certain reporting persons that no such forms were required
for them, Whitehall believes that during fiscal 2001 all section 16 filing
requirements applicable to its directors, executive officers and greater than
10% beneficial owners were complied with by such persons.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Whitehall provides certain office services to Double P Corp., PDP LLC and
CBN LLC or other companies, from time to time, which own and operate primarily
mall-based snack food stores, and in which Messrs. H. Patinkin, Desjardins and
M. Patinkin own a majority equity interest. For these services, Double P Corp.
pays Whitehall $500 per month. Messrs. H. Patinkin, Desjardins and M. Patinkin
spend a limited amount of time providing services to Double P Corp., PDP LLC and
CBN LLC. In several cases Whitehall and Double P Corp. have reached joint
agreements to divide and separately lease contiguous mall space. Whitehall and
Double P Corp. concurrently negotiated separately with the landlord to reach
such a joint agreement. Since Whitehall's initial public offering, Whitehall's
policy has required that the terms of any such leases must be approved by a
majority of Whitehall's outside directors. Whitehall and Double P Corp. may
conduct from time to time similar lease negotiations in the future.

REPORT BY THE AUDIT COMMITTEE

This report is submitted by the Audit Committee of the Board of Directors.

Audited Financial Statements. The Audit Committee has reviewed and
discussed the audited financial statements for the year ended January 31, 2002
with Whitehall's management and PricewaterhouseCoopers LLP, Whitehall's
independent auditors. The Audit Committee has also discussed with
PricewaterhouseCoopers LLP the matters required to be discussed by Statement on
Auditing Standards No. 61, "Communication with Audit Committees."

The Audit Committee has also received and reviewed the written disclosures
and the letter from PricewaterhouseCoopers LLP required by Independence Standard
No. 1 "Independence Discussion with Audit Committees" and has discussed with
PricewaterhouseCoopers LLP their independence.

The Audit Committee of the Board of Directors has considered whether the
provision by PricewaterhouseCoopers LLP of non-audit services is compatible with
maintaining the independence of PricewaterhouseCoopers LLP.

Based on the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the financial statements referred to
above be included in Whitehall's annual report on Form 10-K for the year ended
January 31, 2002.

THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
Richard K. Berkowitz(Chairman)
Daniel H. Levy
Jack A. Smith

FEES PAID TO PRICEWATERHOUSECOOPERS LLP

AUDIT FEES

PricewaterhouseCoopers LLP billed Whitehall aggregate fees of $193,000 for
professional services rendered for the audit of Whitehall's annual financial
statements for fiscal year 2001 and for reviews of the financial statements
included in Whitehall's quarterly reports on Form 10-Q for the first three
quarters of fiscal 2001.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

PricewaterhouseCoopers LLP did not render any financial information systems
design or implementation services to Whitehall in fiscal 2001.

ALL OTHER FEES

PricewaterhouseCoopers LLP billed Whitehall aggregate fees of $128,531 for
other professional services rendered in fiscal 2001, including professional
services primarily in connection with tax preparation, tax consultation, and
employee benefit plan audits.

INDEPENDENT PUBLIC ACCOUNTANTS

Representatives of PricewaterhouseCoopers LLP who served as Whitehall's
independent public accountants for the last fiscal year, are expected to be
present at the annual meeting and will have an opportunity to make a statement
and to respond to appropriate questions raised by stockholders at the annual
meeting or submitted in writing prior thereto.

STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING

The Securities and Exchange Commission and Whitehall's by-laws establish
advance notice procedures for stockholder proposals to be brought before any
annual meeting of stockholders, including proposed nominations of persons for
election to the Board of Directors. Under SEC rules, proposals to be considered
for inclusion in the proxy statement for the 2003 annual meeting must be
received no later than January 10, 2003. Any proposal submitted must be in
compliance with Rule 14a-8 of Regulation 14A of the Securities and Exchange Act
of 1934, as amended. Whitehall's by-laws set forth additional requirements and
procedures regarding the submission by stockholders of matters for consideration
at the annual meeting, including a requirement that such proposals be given to
the secretary in writing not later than 90 calendar days in advance of the
anniversary date of the release of Whitehall's proxy statement to stockholders
in connection with the preceding year's annual meeting. Accordingly, a
shareholder proposal intended to be considered at the 2003 annual meeting must
be received by the secretary prior to February 9, 2003. All proposals and
nominations should be directed to Whitehall Jewellers, Inc., 155 North Wacker
Drive, Suite 500, Chicago, Illinois 60606, Attention: Secretary.

EXPENSES OF SOLICITATION

Your proxy is solicited by the Board of Directors and its agents and the
cost of solicitation will be paid by Whitehall officers, directors and regular
employees of Whitehall, acting on its behalf, may also solicit proxies by
telephone, facsimile transmission or personal interview. Whitehall will, at its
expense, request brokers and other custodians, nominees and fiduciaries to
forward proxy soliciting material to the beneficial owners of shares of record
by such persons. Whitehall has retained Georgeson Shareholder Communications,
Inc. to aid in the solicitation of proxies for a fee of $5,500 plus reasonable
out-of-pocket expenses.

ANNUAL REPORT ON FORM 10-K

WHITEHALL WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 2002, INCLUDING THE FINANCIAL
STATEMENTS AND THE SCHEDULES THERETO, UPON THE WRITTEN REQUEST OF ANY
STOCKHOLDER AS OF THE RECORD DATE, AND WILL PROVIDE COPIES OF THE EXHIBITS TO
THE REPORT UPON PAYMENT OF A REASONABLE FEE THAT WILL NOT EXCEED WHITEHALL'S
REASONABLE EXPENSES INCURRED IN CONNECTION THEREWITH. REQUESTS FOR SUCH
MATERIALS SHOULD BE DIRECTED TO WHITEHALL JEWELLERS, INC., 155 NORTH WACKER
DRIVE, SUITE 500, CHICAGO, ILLINOIS 60606, TELEPHONE (312) 782-6800, ATTENTION:
JOHN R. DESJARDINS.

OTHER BUSINESS

It is not anticipated that any matter will be considered by the
stockholders other than those set forth above, but if other matters are properly
brought before the annual meeting, the persons named in the proxy will vote in
accordance with their best judgment.

By order of the Board of Directors,

/s/ Hugh Patinkin

Hugh M. Patinkin
Chairman, Chief Executive Officer and
President

ALL STOCKHOLDERS ARE URGED TO SIGN, DATE
AND MAIL THEIR PROXIES PROMPTLY.

EXHIBIT I

CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF WHITEHALL JEWELLERS, INC.

I. PURPOSE

The primary purpose of the Audit Committee is to assist the Board of
Directors (the "Board") of Whitehall Jewellers, Inc. (the "Company") in
fulfilling its oversight responsibilities with respect to financial reports and
other financial information. In this regard, the Audit Committee is to:

1. Serve as an independent and objective body to monitor the Company's
financial reporting process and internal control systems;

2. Serve, together with the Board, as the ultimate authority to which
the independent auditor (the "Independent Auditor") and internal auditing
("Internal Audit") are accountable, and have, together with the Board, the
ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the Independent Auditor (or to nominate the
Independent Auditor to be proposed for shareholder approval in any proxy
statement);

3. Review the audit efforts of the Independent Auditor and Internal
Audit; and

4. Provide an open avenue of communication among the Independent
Auditor, financial and senior management, Internal Audit, and the Board.

II. COMPOSITION AND EXPERTISE

1. Members of the Audit Committee shall meet the independence and
experience requirements of the New York Stock Exchange and any other market
or markets, if any, on which the securities of the Company or any of its
subsidiaries are traded. Determinations as to whether a particular director
satisfies the requirements for membership on the Audit Committee will be
made by the Board.

2. The members of the Audit Committee shall be elected by the Board at
the annual organizational meeting of the Board and shall serve until their
successors shall have been duly elected and qualified. Unless a Chair is
designated by the full Board, the members of the Audit Committee may elect
a Chair by majority vote.

III. DUTIES AND RESPONSIBILITIES

The Audit Committee shall:

Documents/Reports Review

1. Review the adequacy of this Charter at least annually and at such other
intervals as the Audit Committee or the Board determines.

2. Review and discuss with management prior to its public issuance, the
audited and quarterly financial statements.

3. Review reports to management prepared by the Independent Auditor or
Internal Audit and any responses to the same by management.

INDEPENDENT AUDITOR

4. Review and recommend to the Board: (i) the selection of the Independent
Auditor to audit the books, records and accounts of the Company, and (ii) the
approval of the fees and other compensation of the Independent Auditor.

5. Review and discuss with the Independent Auditor all significant
relationships that the auditor and its affiliates have with the Company and its
affiliates in order to evaluate the auditor's independence. The Audit Committee
shall: (i) request, receive and review on a periodic basis, a formal written
statement from the Independent Auditor delineating all relationships between the
Independent Auditor and the company,

I-1

(ii) discuss with the Independent Auditor any disclosed relationships or
services that may impact the objectivity and independence of the Independent
Auditor and (iii) recommend that the Board of Directors take appropriate action
in response to the Independent Auditor's report to satisfy itself of the
Independent Auditor's independence.

FINANCIAL REPORTING PROCESS

6. Consider whether the provision by the Independent Auditor of non-audit
services, if any, is compatible with maintaining the Independent Auditor's
independence from the Company and management.

7. Review the financial reporting processes and audit controls, both
internal and external, based on consultation with the Independent Auditor and
Internal Audit.

8. Review the Independent Auditor's judgment about the quality and
appropriateness of accounting principles as applied in financial reporting.

9. Consider and, if appropriate, recommend to the Board significant changes
to auditing and accounting principles and practices as suggested by the
Independent Auditor, management or Internal Audit.

Process Improvement

10. Review reports to the Audit Committee by each of management, the
Independent Auditor and Internal Audit regarding any significant judgments made
in management's preparation of financial statements and the view of each as to
the appropriateness of such judgments.

11. Review with each of management, the Independent Auditor and Internal
Audit any significant difficulties encountered during the course of each audit.

12. Review any significant disagreement among management, the Independent
Auditor and Internal Audit in connection with the preparation of the financial
statements.

13. Review with the Independent Auditor, Internal Audit and management the
extent to which changes or improvements in financial or accounting practices and
internal controls, as approved by the Audit Committee, have been implemented.

Other

14. Annually prepare a report to shareholders as required by the Securities
and Exchange Commission.

15. Keep a record of the acts and proceedings of the Audit Committee and
report thereon to the Board periodically or whenever requested to do so.

16. Review, with the Company's counsel, legal compliance matters or any
legal matter that could have a significant impact on the organization's
financial statements.

17. Perform such other activities, consistent with this Charter, the
Company's Articles of Incorporation, By-laws and governing law, as the Audit
Committee or the Board deems necessary or appropriate.

18. While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the Independent Auditor. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, among management, the Independent Auditor or Internal
Audit or to assure compliance with laws and regulations.

Adopted: June 6, 2001

I-2

EXHIBIT II

SECOND RESTATED CERTIFICATE OF INCORPORATION
OF WHITEHALL JEWELLERS, INC.
(INCORPORATED ON NOVEMBER 20, 1947)

WHITEHALL JEWELLERS, INC., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:

FIRST: Pursuant to Section 245 and 242 of the General Corporation Law
of the State of Delaware (the "Delaware Law"), the Restated Certificate of
Incorporation and all amendments thereto of WHITEHALL JEWELLERS, INC., a
Delaware corporation (the "Corporation"), is hereby restated and amended to
read in its entirety as follows:

"SECOND RESTATED CERTIFICATE OF INCORPORATION"

FIRST: The name of the Corporation is WHITEHALL JEWELLERS, INC. The
name under which the Corporation was originally incorporated was MARKS
BROS. JEWELERS, INC.

SECOND: The address of the registered office of the Corporation in
the State of Delaware is 1209 Orange Street, City of Wilmington, County
of New Castle. The name of the registered agent of the Corporation at
such address is The Corporation Trust Company.

THIRD: The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the
State of Delaware.

FOURTH: The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 62,026,026 of which
60,000,000 shares shall be Common Stock with a par value of $0.001 per
share (the "Common Stock"); of which 26,026 shall be Class B Common
Stock with a par value of $1.00 per share (the "Class B Common Stock");
and of which 2,000,000 shares shall be Preferred Stock with a par value
of $0.001 per share, issuable in series (the "Preferred Stock"),
consisting of 309,183 shares of Series A Junior Participating Preferred
Stock with a par value of $0.001 per share.

The designations and the powers, preferences and rights of the capital
stock and the qualifications, limitations or restrictions thereof are as
follows:

A. COMMON STOCK PROVISIONS

1. Voting Rights. Except as otherwise required by law or expressly
provided herein, the holder of each share of Common Stock shall have one
vote on each matter submitted to a vote of the stockholders of the
Corporation.

2. Dividend Rights. Subject to provisions of law and preferences of
the Class B Common Stock and any Preferred Stock and except as otherwise
provided herein, the holders of the Common Stock shall be entitled to
receive dividends at such times and in such amounts as may be determined by
the Board of Directors of the Corporation.

3. Liquidation Rights. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, after
payment or provision for payment of the debts and other liabilities of the
Corporation and the preferential amounts to which the holders of any
Preferred Stock and Class B Common Stock shall be entitled upon
liquidation, the holders of Common Stock and holders of Class B Common
Stock shall be entitled to share ratably in the remaining assets of the
Corporation.

B. CLASS B COMMON STOCK PROVISIONS

1. Voting Rights. Except as otherwise required by law, each share of Class
B Common Stock shall entitle the holder thereof to 35.42083833 votes on each
matter submitted to a vote of the stockholders of the

II-1

Corporation. Except as otherwise required by law, the holders of shares of
Common Stock and Class B Common Stock shall vote together and not as separate
classes.

2. Dividends. (a) The holders of shares of Class B Common Stock shall be
entitled to receive dividends at the rate of $130.00 per annum per share, if and
when declared payable by the Board of Directors, from funds legally available
therefor, subject to the limitation set forth below. Such dividends shall be
payable each Class B Year (as defined below) commencing March 4, 1988 for a
period of eight (8) years (the "Class B Period") to holders of record on the
respective dates fixed for the purpose by the Board of Directors in advance of
payment of each dividend. A "Class B Year" shall be defined as the 365 day
period commencing March 4, 1988 and each 365 (or, where appropriate, 366) day
period commencing on each succeeding March 4 to and including March 4, 1995.
Dividends with respect to shares of Class B Common Stock shall accrue from the
date of issue thereof; provided, however, that in no event shall the aggregate
amount of all accrued unpaid dividends be in excess of the then outstanding
aggregate unpaid principal amount of the Trust Loans (as defined in the Secured
Term Loan Agreement dated as of March 9, 1988 between the Corporation and Marks
Bros. Jewelers, Inc. Employee Stock Ownership Trust, as amended by Amendment of
Secured Term Loan Agreement dated as of November 6, 1989 and as further amended
by Second Amendment to Secured Term Loan Agreement dated as of October 31,
1992), nor shall accrued unpaid dividends with respect to any share of Class B
Common Stock be in excess of an amount equal to the then outstanding aggregate
unpaid principal amount of such Trust Loans divided by an amount equal to the
number of shares of Class B Common Stock outstanding at such time. Subject to
the foregoing, if dividends shall not have been paid, or declared and set apart
for payment, upon all outstanding shares of Class B Common Stock at the
aforesaid rate, such deficiency shall be cumulative in full (and thereby
accumulate). Accumulation of dividends on the Class B Common Stock shall not
bear interest. The dividend described in this Subparagraph (a) is hereinafter
referred to as the "Preferential Cumulative Dividends."

(b) No dividend or distribution, whether in cash, stock or other property,
shall be paid on any date on or in respect of the Common Stock unless and until
a dividend that is proportionately of equal or greater amount or value per share
has been paid on such date in respect of the Class B Common Stock. No dividend
or distribution (other than distributions or dividends in the form of stock or
the right to receive or acquire stock) shall be paid on any date on or in
respect of the Common Stock unless all dividends accumulated and unpaid as of
said date on the Class B Common Stock shall have been paid.

3. Liquidation Rights. Upon the dissolution, liquidation or winding up of
the Corporation, whether voluntary or involuntary, the holders of the Class B
Common Stock shall be entitled to receive out of the assets of the Corporation
available for distribution to stockholders before any payment or declaration and
setting apart for payment of any amount shall be made in respect of the Common
Stock, an amount equal to the Preferential Cumulative Dividends accumulated and
unpaid thereon to the date fixed for final distribution in such dissolution,
liquidation or winding up (the "Class B Preferred Amount"). For purposes of this
Subsection 3, the merger (except for a merger in which the Corporation is the
surviving corporation and the holders of at least a majority of the voting power
of the Corporation prior to such merger hold at least a majority of the voting
power of the Corporation after such merger) or consolidation of the Corporation
or the sale of all or substantially all of the Corporation's assets shall be
deemed to a liquidation, dissolution or winding up of the Corporation. If upon
any liquidation, dissolution or winding up of the Corporation, whether voluntary
or involuntary, the assets to be distributed to the stockholders of the
Corporation shall be insufficient to permit the payment to holders of Class B
Common Stock of the full preferential amount provided in this Subsection 3, then
the assets of the Corporation available for such distribution shall be
distributed ratably among the holders of Class B Common Stock according to the
amounts which would be payable in respect of the shares of such stock held by
them upon distribution if all amounts payable on or with respect to such shares
were paid in full. After the payment to the holders of the Class B Common Stock
of the full preferential amount provided for this Subsection 3, the holders of
the Class B Common Stock shall be entitled to share ratably with the Common
Stock in the remaining assets of the Corporation.

4. Status of Acquired Shares. Shares of Class B Common Stock which shall at
any time be redeemed, purchased or otherwise acquired by the Corporation shall
not be reissued and all such shares of Class B Common Stock shall be retired.
II-2

B. PREFERRED STOCK

1. Authorization. The Board of Directors of the Corporation is authorized
to issue the Preferred Stock in one or more series at such time or times and for
such consideration or considerations as the Board of Directors may determine.
Each series shall be so designated as to distinguish the shares thereof from the
shares of all other series and classes. Except as otherwise provided in this
Second Restated Certificate of Incorporation, different series of Preferred
Stock shall not be construed to constitute different classes of shares for the
purpose of voting by classes.

2. Provisions. The Board of Directors is expressly authorized to fix and
determine as to each series established:

(a) the maximum number of shares to constitute such series and the
distinctive designation thereof;

(b) the dividend rate, if any, on the shares of such series, the
conditions and dates upon which such dividends shall be payable, the
preference or relation which such dividends shall bear to the dividends
payable on any other class or classes or on any other series of capital
stock, and whether such dividends shall be cumulative or noncumulative;

(c) whether the shares of such series shall be subject to redemption
by the Corporation or by the holders thereof and, if made subject to
redemption, the times, prices and other terms and conditions of such
redemption;

(d) the rights of the holders of shares of such series upon the
liquidation, dissolution or winding up of the Corporation;

(e) whether or not the shares of such series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to and
manner in which any such retirement or sinking fund shall be applied to the
purchase or redemption of the shares of such series for retirement or to
other corporate purposes and the terms and provisions relative to the
operation thereof;

(f) the terms and conditions on which shares may be converted or
exchanged; if the shares of such series are issued with the privilege of
conversion or exchange;

(g) whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the terms of
such voting rights;

(h) the limitations and restrictions, if any, to be effective while
any shares of such series are outstanding upon the payment of dividends or
making of other distributions on, and upon the purchase, redemption or
other acquisition by the Corporation of, Common Stock or any other class or
classes of capital stock of the Corporation ranking junior to the shares of
such series either as to dividends or upon liquidation;

(i) the conditions or restrictions, if any, upon the creation of
indebtedness of the Corporation or upon the issue of any additional capital
stock (including additional shares of such series or of any other series or
of any other class) ranking on a parity with or prior to the shares of such
series as to dividends or upon liquidation; and

(j) such other preferences, powers, qualifications, rights and
privileges, all as the Board of Directors may deem advisable and are not
inconsistent with law and the provisions of this Second Restated
Certificate of Incorporation.

Such preferences, powers, relative participating, optional or other special
rights and qualifications, limitations or restrictions thereof shall be stated
in a resolution or resolutions adopted by the Board of Directors to create such
series, and a certificate of said resolution or resolutions (a "Certificate of
Designation") shall be filed in accordance with the General Corporation Law of
the State of Delaware.

3. Liquidation, Dissolution or Winding Up. Except as otherwise set forth in
this Second Restated Certificate of Incorporation, in the event of any
liquidation, dissolution or winding up of the Corporation, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made
II-3

to or set apart for the holders of any class or classes of capital stock of the
Corporation ranking junior to the Preferred Stock upon liquidation, the holders
of the shares of the Preferred Stock shall be entitled to receive payment at the
rate fixed in the resolution or resolutions adopted by the Board of Directors
providing for the issue of such series, plus (if dividends on shares of such
series of Preferred Stock shall be cumulative) an amount equal to all dividends
(whether or not earned or declared) accumulated to the date of final
distribution to such holders; but they shall be entitled to no further payment.
If, upon any liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation, or the proceeds thereof, distributable among the
holders of the shares of the Preferred Stock shall be insufficient to pay in
full the preferential amount aforesaid, then such assets, or the proceeds
thereof, shall be distributed among such holders ratably in accordance with the
respective amounts which would be payable on such shares if all amounts payable
thereon were paid in full.

4. Voting Rights. Except as shall be otherwise stated and expressed herein
or in the resolution or resolutions of the Board of Directors providing for the
issue of any series and except as otherwise required by law, the holders of
shares of Preferred Stock shall have, with respect to such shares, no right or
power to vote on any question or in any proceeding or to be represented at, or
to receive notice of, any meeting of stockholders.

5. Series A Junior Participating Preferred Stock.

5.1 Designation of Series; Number of Shares. A total of 309,183 shares of
the Corporation's Preferred Stock shall be designated the "Series A Junior
Participating Preferred Stock" (the "Series A Preferred Stock"). Such number of
authorized shares may be increased or decreased, from time to time, by
resolution or resolutions of the Board of Directors; provided, however, that no
such decrease shall reduce the number of authorized shares of the Series A
Preferred Stock to a number less than the number of shares of the Series A
Preferred Stock then outstanding, plus the number of shares of the Series A
Preferred Stock then reserved for issuance upon the exercise of any outstanding
options, warrants or rights or the exercise of any conversion or exchange
privilege contained in any outstanding security issued by the Corporation.

5.2. Dividends and Distributions.

(a) Subject to the rights of the holders of shares of any other series of
the Preferred Stock (or shares of any other class of capital stock of the
Corporation) ranking senior to the Series A Preferred Stock with respect to
dividends, the holders of shares of the Series A Preferred Stock, in preference
to the holders of shares of Common Stock, the Class B Common Stock and of any
other class of capital stock of the Corporation ranking junior to the Series A
Preferred Stock with respect to dividends, shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds legally available
therefor, quarterly dividends payable in cash on the first day of March, June,
September, and December in each year (each such date being a "Dividend Payment
Date"), commencing on the first Dividend Payment Date after the initial issuance
of a share or fractional share of the Series A Preferred Stock, in an amount per
share (rounded to the nearest whole cent) equal to 150 times the aggregate per
share amount of all cash dividends, plus 150 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions (other
than a dividend payable in shares of Common Stock or a distribution in
connection with the subdivision of the outstanding shares of Common Stock, by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Dividend Payment Date or, with respect to the first
Dividend Payment Date, since the initial issuance of a share or fractional share
of the Series A Preferred Stock. The multiple of 150 (the "Dividend Multiple")
set forth in the preceding sentence shall be adjusted from time to time as
hereinafter provided in this paragraph (a). In the event that the Corporation
shall at any time after the effective date of this Second Restated Certificate
of Incorporation (i) declare or pay any dividend on the Common Stock payable in
shares of Common Stock or (ii) effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then, in each such case, the
Dividend Multiple thereafter applicable to the determination of the amount of
dividends per share which the holders of shares of the Series A Preferred Stock
shall be entitled to receive shall be the Dividend Multiple in effect
immediately prior to such event multiplied by a fraction, the numerator of which
shall be the number of shares of Common

II-4

Stock outstanding immediately after such event and the denominator of which
shall be the number of shares of Common Stock that were outstanding immediately
prior to such event.

(b) The Board of Directors shall declare, out of funds legally available
therefor, a dividend or distribution on the Series A Preferred Stock, as
provided in paragraph (a) of this Section 5.2, immediately after it has declared
a dividend or distribution on the Common Stock (other than a dividend payable in
shares of Common Stock).

(c) Dividends shall begin to accrue and be cumulative on the outstanding
shares of the Series A Preferred Stock from the Dividend Payment Date next
preceding the date of issuance of such shares, unless such date of issuance
shall be prior to the record date for the first Dividend Payment Date, in which
case dividends on such shares shall begin to accrue and be cumulative from the
date of issuance of such shares, or unless such date of issuance shall be after
the close of business on the record date with respect to any Dividend Payment
Date and on or prior to such Dividend Payment Date, in which case dividends on
such shares shall begin to accrue and be cumulative from such Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
shares of the Series A Preferred Stock in an amount less than the total amount
of dividends then accrued shall be allocated pro rata among such shares. The
Board of Directors may fix a record date for the determination of the holders of
shares of the Series A Preferred Stock entitled to receive payment of any
dividend or distribution declared thereon, which record date shall be not more
than the number of days prior to the date fixed for such payment permitted by
applicable law.

5.3 Voting Rights. In addition to any other voting rights required by
applicable law, the holders of shares of the Series A Preferred Stock shall have
the following voting rights:

(a) Each share of the Series A Preferred Stock shall entitle the
holder thereof to 150 votes on all matters submitted to a vote of the
stockholders of the Corporation. The multiple of 150 (the "Voting
Multiple") set forth in the preceding sentence shall be adjusted from time
to time as hereinafter provided in this paragraph (a). In the event that
the Corporation shall at any time after the effective date of this Second
Restated Certificate of Incorporation (i) declare or pay any dividend on
the Common Stock payable in shares of Common Stock or (ii) effect a
subdivision, combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then, in each such case, the Voting Multiple
thereafter applicable to the determination of the number of votes per share
to which the holders of shares of the Series A Preferred Stock shall be
entitled shall be the Voting Multiple in effect immediately prior to such
event multiplied by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which shall be the number of shares of Common Stock that
were outstanding immediately prior to such event.

(b) Except as otherwise provided in this Section 5, in any Certificate
of Designations establishing another series of the Preferred Stock (or any
series of any other class of capital stock of the Corporation) or by
applicable law, the holders of the Series A Preferred Stock, the holders of
the Common Stock and the holders of any other class of capital stock of the
Corporation having general voting rights shall vote together as a single
class on all matters submitted to a vote of the stockholders of the
Corporation.

(c) Except as otherwise provided in this Section 5 or by applicable
law, the holders of the Series A Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the extent
provided in paragraph (b) of this Section 5.3) for the taking of any
corporate action.

5.4. Certain Restrictions.

(a) Whenever dividends or other distributions payable on the Series A
Preferred Stock as provided in Section 5 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not

II-5

declared, on outstanding shares of the Series A Preferred Stock shall have been
paid in full, the Corporation shall not:

(i) declare or pay dividends, or make any other distributions, on any
shares of any class of capital stock of the Corporation ranking junior
(either as to dividends or upon liquidation, dissolution or winding up of
the Corporation) to the Series A Preferred Stock;

(ii) declare or pay dividends, or make any other distributions, on any
shares of any class of capital stock of the Corporation ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up of
the Corporation) with the Series A Preferred Stock, except dividends paid
ratably on the Series A Preferred Stock and all such parity stock on which
dividends are accrued and unpaid in proportion to the total amounts to
which the holders of all such shares are then entitled;

(iii) redeem, purchase or otherwise acquire for consideration any
shares of any class of capital stock of the Corporation ranking junior
(either as to dividends or upon liquidation, dissolution or winding up of
the Corporation) to the Series A Preferred Stock, except that the
Corporation may at any time redeem, purchase or otherwise acquire any
shares of such junior stock in exchange for other shares of any class of
capital stock of the Corporation ranking junior (both as to dividends and
upon dissolution, liquidation or winding up of the Corporation) to the
Series A Preferred Stock; or

(iv) purchase or otherwise acquire for consideration any shares of the
Series A Preferred Stock or any shares of any class of capital stock of the
Corporation ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up of the Corporation) with the Series
A Preferred Stock, or redeem any shares of such parity stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to the holders of all such shares
upon such terms and conditions as the Board of Directors, after taking into
consideration the respective annual dividend rates and the other relative
powers, preferences and rights of the respective series and classes of such
shares, shall determine in good faith will result in fair and equitable
treatment among the respective holders of shares of all such series and
classes.

(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of any class of
capital stock of the Corporation unless the Corporation could, under paragraph
(a) of this Section 5.4, purchase or otherwise acquire such shares at such time
and in such manner.

5.5. Reacquired Shares. Any shares of the Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after such purchase or acquisition. All
such canceled shares shall thereupon become authorized and unissued shares of
Preferred Stock and may be reissued as part of any new series of the Preferred
Stock, subject to the conditions and restrictions on issuance set forth in this
Second Restated Certificate of Incorporation of the Corporation, as amended from
time to time, in any Certificate of Designations establishing another series of
the Preferred Stock (or any series of any other class of capital stock of the
Corporation) or in any applicable law.

5.6. Liquidation, Dissolution or Winding Up. Upon any liquidation (whether
voluntary or otherwise), dissolution or winding up of the Corporation, no
distribution shall be made (a) to the holders of shares of any class of capital
stock of the Corporation ranking junior (either as to dividends or upon
liquidation, dissolution or winding up of the Corporation) to the Series A
Preferred Stock unless, prior thereto, the holder of each outstanding share of
the Series A Preferred Stock shall have received an amount equal to the accrued
and unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, plus an amount equal to an aggregate amount, subject to
adjustment as hereinafter provided in this Section 5.6, equal to 150 times the
aggregate per share amount to be distributed to the holders of the Common Stock
or (b) to the holders of shares of any class of capital stock of the Corporation
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up of the Corporation) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. In the event that
the Corporation shall at any time after the effective date of this Second
Restated Certificate

II-6

of Incorporation (a) declare or pay any dividend on the Common Stock payable in
shares of Common Stock or (b) effect a subdivision, combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then, in each such case, the aggregate amount
per share which the holders of shares of the Series A Preferred Stock shall
thereafter be entitled to receive pursuant to clause (a)(ii) of the preceding
sentence shall be the aggregate amount per share in effect pursuant to such
clause immediately prior to such event multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding immediately
after such event and the denominator of which shall be the number of shares of
Common Stock that were outstanding immediately prior to such event.

5.7. Consolidation, Merger, etc. In the event that the Corporation shall be
a party to any consolidation, merger, combination or other transaction in which
the outstanding shares of Common Stock are converted or changed into or
exchanged for other capital stock, securities, cash or other property, or any
combination thereof, then, in each such case, each share of the Series A
Preferred Stock shall at the same time be similarly converted or changed into or
exchanged for an aggregate amount, subject to adjustment as hereinafter provided
in this Section 5.7, equal to 150 times the aggregate amount of capital stock,
securities, cash and/or other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is being converted or changed
or exchanged. In the event that the Corporation shall at any time after the
effective date of this Second Restated Certificate of Incorporation (a) declare
or pay any dividend on the Common Stock payable in shares of Common Stock or (b)
effect a subdivision, combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then, in each such case, the aggregate amount per share which the holders
of shares of the Series A Preferred Stock shall thereafter be entitled to
receive pursuant to the preceding sentence shall be the aggregate amount per
share in effect pursuant to such sentence immediately prior to such event
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that were outstanding
immediately prior to such event.

5.8. No Redemption. The shares of the Series A Preferred Stock shall not be
redeemable at any time.

5.9. Rank. Unless otherwise provided in the Certificate of Designations
establishing another series of the Preferred Stock, the Series A Preferred Stock
shall rank, as to the payment of dividends and the making of any other
distribution of assets of the Corporation, senior to the Common Stock and Class
B Common Stock, but junior to all other series of the Preferred Stock.

5.10. Amendments. This Second Restated Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences and rights of the Series A Preferred Stock so as
to adversely affect any thereof without the affirmative vote of the holders of
at least two-thirds of the outstanding shares of the Series A Preferred Stock,
voting separately as a single class.

5.11. Fractional Shares. Fractional shares of the Series A Preferred Stock
may be issued, but, unless the Board of Directors shall otherwise determine,
only in multiples of one one-hundredth of a share. The holder of any fractional
share of the Series A Preferred Stock shall be entitled to receive dividends,
participate in distributions, exercise voting rights and have the benefit of all
other powers, preferences and rights relating to the Series A Preferred Stock in
the same proportion as such fractional share bears to a whole share.

FIFTH: The Corporation is to have perpetual existence.

SIXTH: The following provisions are included for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its Board of Directors and stockholders:

1. The Board of Directors of the Corporation is expressly authorized
to adopt, amend or repeal the By-laws of the Corporation, subject to any
limitation thereof contained in the By-laws. The stockholders shall also
have the power to adopt, amend or repeal the By-laws of the Corporation;
provided, however, that, in addition to any vote of the holders of any
class or series of capital stock of the Corporation
II-7

required by law or by this Second Restated Certificate of Incorporation,
the affirmative vote of the holders of at least seventy-five percent (75%)
of the voting power of all of the then outstanding shares of the capital
stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required to adopt,
amend or repeal any provision of the By-laws of the Corporation.

2. The stockholders of the Corporation may not take any action by
written consent in lieu of a meeting.

3. Special meetings of stockholders may be called at any time only by
the Chairman of the Board of Directors, the President or a majority of the
Board of Directors. Business transacted at any special meeting of
stockholders shall be limited to matters relating to the purpose or
purposes stated in the notice of meeting.

4. The books of the Corporation may be kept at such place within or
without the State of Delaware as the By-laws of the Corporation may provide
or as may be designated from time to time by the Board of Directors of the
Corporation.

5. Election of directors need not be by written ballot unless the
By-laws of the Corporation so provide.

SEVENTH:

1. Number of Directors. The number of directors which shall constitute the
whole Board of Directors shall be determined by resolution of a majority of the
Board of Directors. The number of directors may be decreased at any time and
from time to time by a majority of the directors then in office, but only to
eliminate vacancies existing by reason of the death, resignation, removal or
expiration of the term of one or more directors. The directors shall be elected
at the annual meeting of stockholders by such stockholders as have the right to
vote on such election. Directors need not be stockholders of the Corporation.

2. Classes of Directors. The Board of Directors shall be divided into three
classes: Class I, Class II and Class III. No one class shall have more than one
director more than any other class.

3. Terms of Office. Each director shall serve for a term ending on the date
of the third annual meeting following the annual meeting at which such director
was elected.

4. Allocation of Directors Among Classes in the Event of Increases or
Decreases in the Number of Directors. In the event of any increase or decrease
in the authorized number of directors, (a) each director then serving as such
shall nevertheless continue as director of the class of which he or she is a
member until the expiration of such director's current term or his or her prior
death, retirement or resignation and (b) the newly created or eliminated
directorships resulting from such increase or decrease shall be apportioned by
the Board of Directors among the three classes of directors so as to ensure that
no one class has more than one director more than any other class. To the extent
possible, consistent with the foregoing, any newly created directorships shall
be added to those classes whose terms of office are to expire at the earliest
dates following such allocation, unless otherwise provided for from time to time
by resolution adopted by a majority of the directors then in office, though less
than a quorum. No decrease in the number of directors constituting the whole
Board of Directors shall shorten the term of an incumbent director.

5. Removal. Any one or more or all of the directors may be removed only
with cause, and then only by the holders of at least a majority of the shares
then entitled to vote at an election of directors.

6. Stockholder Nominations and Introduction of Business, Etc. Advance
notice of stockholder nominations for election of directors and other business
to be brought by stockholders before a meeting of stockholders shall be given in
the manner provided in the By-laws of the Corporation.

EIGHTH: A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (a) for any

II-8

breach of the director's duty of loyalty to the Corporation or its stockholders,
(b) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) under Section 174 of the General
Corporation Law of the State of Delaware, or (d) for any transaction from which
the director derived an improper personal benefit. If the General Corporation
Law of the State of Delaware is amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the General Corporation Law of the State of Delaware, as so
amended. Any repeal or modification of this Article Eighth by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.

NINTH: Each person who is or was a director or officer of the Corporation,
and each person who serves or served at the request of the Corporation as a
director or officer of another enterprise, shall be indemnified by the
Corporation in accordance with, and to the fullest extent authorized by, the
General Corporation Law of Delaware as it may be in effect from time to time.
The right of indemnity provided herein shall not be deemed exclusive of any
other rights to which any person may be entitled under any By-law, agreement,
vote of stockholders or directors, or otherwise. The Corporation may provide
indemnification to any such person, by agreement or otherwise, on such terms and
conditions as the Board of Directors may approve. Any agreement for
indemnification of any director, officer, employee or other person may provide
indemnification rights which are broader or otherwise differ from those set
forth herein. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, amend or
repeal the By-laws of the Corporation regarding the manner and conditions under
which indemnification shall be provided hereunder by the Corporation and the
extent thereof from time to time as deemed appropriate by the Board of Directors
in the best interests of the Corporation.

TENTH: The Board of Directors of the Corporation, when evaluating any offer
of another party to (a) make a tender or exchange offer for any equity security
of the Corporation; (b) merge or consolidate the Corporation with another
Corporation; or (c) purchase or otherwise acquire all or substantially all of
the properties and assets of the Corporation may, in connection with the
exercise of its judgment in determining what is in the best interests of the
Corporation and its stockholders, give due consideration to all factors the
directors deem relevant, including without limitation (i) the effects upon the
employees, suppliers, customers, creditors and others having similar relations
with the Corporation, upon the communities in which the Corporation conducts its
business or on such other constituencies of the Corporation as the Board of
Directors considers relevant under the circumstances; (ii) not only the
consideration being offered (after taking into account taxes) in relation to the
then current market price for the Corporation's outstanding shares of capital
stock, but also the Board of Directors' estimate of the future value of the
Corporation (including the unrealized value of its properties and assets) as an
independent going concern; (iii) the purpose of the Corporation, and any of its
subsidiaries, to provide quality products and services on a long term basis;
(iv) whether the proposed transaction might violate federal or state laws; and
(v) the long-term as well as short-term interests of the Corporation and its
stockholders, including the possibility that such interests may be best served
by the continued independence of the Corporation. If, on the basis of such
factors, the Board of Directors so determines that a proposal or offer to
acquire or merge the Corporation, or to sell its assets, is not in the best
interests of the Corporation, it may reject the proposal or offer. If the Board
of Directors determines to reject any such proposal or sale, the Board of
Directors shall have no obligation to facilitate, to remove any barriers to, or
to refrain from impeding the proposal or offer except as may be required by
applicable law. Except to the extent required by applicable law, the
consideration of any or all of such factors shall not be a violation of the
business judgment rule or of any duty of the directors to the stockholders or a
group of stockholders, even if the directors reasonably determine that any such
factor or factors outweigh the financial or other benefits to the Corporation or
a shareholder or group of stockholders.

ELEVENTH: The Corporation has elected to be governed by Section 203 of the
General Corporation Law of Delaware.

TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Second Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon the stockholders herein are granted subject to this
reservation; provided,
II-9

however, that, in addition to the vote of the holders of any class or series of
stock of the Corporation required by law or by this Second Restated Certificate
of Incorporation, but in addition to any vote of the holders of any class or
series of capital stock of the Corporation required by law, this Second Restated
Certificate of Incorporation or a Certificate of Designation with respect to a
series of Preferred Stock, the affirmative vote of the holders of shares of
voting stock of the Corporation representing at least seventy-five percent (75%)
of the voting power of all of the then outstanding shares of the capital stock
of the Corporation entitled to vote generally in the election of directors,
voting together as a single class, shall be required to (i) reduce or eliminate
the number of authorized shares of any capital stock set forth in Article Fourth
or (ii) amend or repeal or adopt any provision inconsistent with Articles
Fourth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, and this Article Twelfth
of this Second Restated Certificate of Incorporation."

SECOND: The Board of Directors of the Corporation duly adopted,
approved and consented to resolutions, without a meeting pursuant to
Section 141(f) of the Delaware Law, proposing and approving each of the
amendments to the Restated Certificate of Incorporation of the Corporation
included and incorporated in this Second Restated Certificate of
Incorporation and directing that such amendments be submitted to the
stockholders of the Corporation to consider and adopt the same at the
Annual Meeting of Stockholders of the Corporation held on June 11, 2002.

THIRD: Pursuant to Sections 242 and 245 of the Delaware Law, each of
the amendments to the Restated Certificate of Incorporation included and
incorporated in this Second Restated Certificate of Incorporation have been
adopted by a majority of the holders of the voting power of all shares of
capital stock of the Corporation entitled to vote thereon at the Annual
Meeting of Stockholders of the Corporation held on June 11, 2002.

FOURTH: This Second Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of the General Corporation Law of
the State of Delaware.

IN WITNESS WHEREOF, WHITEHALL JEWELLERS, INC. has caused this Certificate
to be signed by its Chairman, Chief Executive Officer and President, and its
corporate seal to be hereunto affixed and attested by its Secretary this day
of , 2002.

WHITEHALL JEWELLERS, INC.

By:
------------------------------------
Hugh M. Patinkin
Chairman, Chief Executive Officer
and President
[SEAL]

ATTEST:

- ---------------------------------------------------------
John R. Desjardins
Secretary

II-10

EXHIBIT III

WHITEHALL JEWELLERS, INC.

EMPLOYEE STOCK PURCHASE PLAN

1. PURPOSE. The purpose of the Whitehall Jewellers, Inc. Employee Stock
Purchase Plan (the "Plan") is to provide employees of Whitehall Jewellers, Inc.,
a Delaware corporation (the "Company"), and its Subsidiary Companies (as defined
below) added incentive to remain employed by such companies and to encourage
increased efforts to promote the best interests of such companies by permitting
eligible employees to purchase shares of common stock, par value $.001 per
share, of the Company ("Common Stock") at below-market prices. The Plan is
intended to qualify as an "employee stock purchase plan" under section 423 of
the Internal Revenue Code of 1986, as amended (the "Code"). For purposes of the
Plan, the term "Subsidiary Companies" shall mean all corporations which are
subsidiary corporations (within the meaning of Section 424(f) of the Code) and
of which the Company is the common parent. The Company and its Subsidiary
Companies that, from time to time, adopt the Plan are sometimes hereinafter
called collectively the "Participating Companies."

2. ELIGIBILITY. Participation in the Plan shall be open to each employee of
the Participating Companies who satisfies all of the following conditions (an
"Eligible Employee"):

(a) such employee's customary employment is for more than 20 hours per
week;

(b) such employee's customary employment is for more than 5 months per
calendar year; and

No right to purchase Common Stock hereunder shall accrue under the Plan in favor
of any person who is not an Eligible Employee as of the first day of a Purchase
Period (as defined in Section 3). Notwithstanding anything contained in the Plan
to the contrary, no Eligible Employee shall acquire a right to purchase Common
Stock hereunder if (i) immediately after receiving such right, such employee
would own 5% or more of the total combined voting power or value of all classes
of stock of the Company or any Subsidiary Company (including any stock
attributable to such employee under section 424(d) of the Code), or (ii) for any
calendar year such right would permit such employee's aggregate rights to
purchase stock under all employee stock purchase plans of the Company and its
Subsidiary Companies exercisable during such calendar year to accrue at a rate
which exceeds $25,000 of fair market value of such stock for such calendar year.

3. EFFECTIVE DATE OF PLAN; PURCHASE PERIODS. The Plan shall become
effective on September 1, 2001 or on such later date as may be specified by the
Committee (as defined in Section 11). The Plan shall cease to be effective
unless, within 12 months before or after the date of its adoption by the Board
of Directors of the Company (the "Board"), it has been approved by the
shareholders of the Company.

A "Purchase Period" shall consist of the three month period beginning on
the effective date and each three month period beginning three months, six
months, nine months and twelve months after the effective date as well as the
three month periods beginning on the anniversaries of such three month periods
and prior to termination of the Plan.

4. BASIS OF PARTICIPATION. (A) PAYROLL DEDUCTION. Each Eligible Employee
shall be entitled to enroll in the Plan as of the first day of any Purchase
Period which begins on or after such employee has become an Eligible Employee.

To enroll in the Plan, an Eligible Employee shall make a request to the
Company or its designated agent at the time and in the manner specified by the
Committee, specifying the amount of payroll deduction to be applied to the
compensation paid to the employee by the employee's employer while the employee
is a participant in the Plan. The amount of each payroll deduction specified in
such request for each such payroll period shall be a whole percentage amount,
unless otherwise determined by the Committee, of the participant's compensation
(before withholding or other deductions) paid to him or her during the Purchase
III-1

Period by any of the Participating Companies, provided that the deduction for
each pay period shall not be less than $20 and not more than the amount or
percentage determined by the Committee. Subject to compliance with applicable
rules prescribed by the Committee, the request shall become effective on the
first day of the Purchase Period following the day the Company or its designated
agent receives such request.

Payroll deductions (and any other amount paid under the Plan) shall be made
for each participant in accordance with such participant's request until such
participant's participation in the Plan terminates, such participant's payroll
deductions are suspended, such participant's request is revised or the Plan
terminates, all as hereinafter provided.

A participant may change the amount of his or her payroll deduction
effective as of the first day of any Purchase Period by so directing the Company
or its designated agent at the time and in the manner specified by the
Committee. A participant may not change the amount of his or her payroll
deduction effective as of any date other than the first day of a Purchase
Period, except that a participant may elect to suspend his or her payroll
deduction under the Plan as provided in Section 7.

Payroll deductions for each participant shall be credited to a purchase
account established on behalf of the participant on the books of the
participant's employer or such employer's designated agent (a "Purchase
Account"). As of the first business day of the month immediately following the
end of each Purchase Period (the "Exercise Date"), the amount in each
participant's Purchase Account will be applied to the purchase of the number of
whole shares of Common Stock determined by dividing such amount by the Purchase
Price (as defined in Section 5) for such Exercise Date. No interest shall accrue
at any time for any amount credited to a Purchase Account of a participant.

(B) OTHER METHODS OF PARTICIPATION. The Committee may, in its discretion,
establish additional procedures whereby Eligible Employees may participate in
the Plan by means other than payroll deduction, including, but not limited to,
delivery of funds by participants in a lump sum or automatic charges to
participants' bank accounts. Such other methods of participating shall be
subject to such rules and conditions as the Committee may establish. The
Committee may at any time amend, suspend or terminate any participation
procedures established pursuant to this paragraph without prior notice to any
participant or Eligible Employee.

5. PURCHASE PRICE. The purchase price (the "Purchase Price") per share of
Common Stock hereunder for any Exercise Date (as defined in Section 4) shall be
90% of the fair market value of a share of Common Stock on the Exercise Date. If
such sum results in a fraction of one cent, the Purchase Price shall be
increased to the next higher full cent. For purposes of the Plan, unless
otherwise determined by the Committee, the fair market value of a share of
Common Stock on a given day shall be the closing price of a share of Common
Stock as reported on the New York Stock Exchange on the date as of which such
value is being determined, or, if the New York Stock Exchange is not open for
trading on such date, the fair market value of a share of Common Stock shall be
the closing price of a share of Common Stock on the next preceding date for
which transactions were reported. In no event, however, shall the Purchase Price
be less than the par value of a share of Common Stock.

6. ISSUANCE OF STOCK. The Common Stock purchased by each participant shall
be issued in book entry form and shall be considered to be issued and
outstanding to such participant's credit as of the close of business on the
Exercise Date (as defined in Section 4). A participant will be issued a
certificate for his or her shares of Common Stock when the participant's
participation in the Plan has been terminated in accordance with Section 7, the
Plan is terminated or upon request, but, in the last case, only in denominations
of at least 25 shares. After each Exercise Date, information will be made
available to each participant regarding the entries made to such participant's
Purchase Account, the number of shares of Common Stock purchased and the
applicable Purchase Price.

The Committee may permit or require that shares be deposited directly with
a broker designated by the Committee or to a designated agent of the Company,
and the Committee may use electronic or automated methods of share transfer. The
Committee may require that shares be retained with such broker or agent for a

III-2

designated period of time and/or may establish other procedures to permit
tracking of disqualifying dispositions of such shares.

7. TERMINATION OF PARTICIPATION. (a) Suspension of Payroll Deduction. A
participant may elect at any time and in the manner specified by the Committee
to suspend his or her payroll deduction under the Plan, provided such election
is received by the Company or its designated agent prior to the date specified
by the Committee for suspension of payroll deduction with respect to the
Purchase Period for which such termination is to be effective. Upon any
suspension of participation, the participant's payroll deductions shall cease
and, if the participant elects, the cash credited to such participant's Purchase
Account on the date of such suspension shall be delivered as soon as practicable
to such participant. If the participant does not elect to receive such cash,
such cash shall be applied to the purchase of shares of Common Stock, as
described in Sections 4, 5 and 6 hereof. A participant who elects to suspend
participation in the Plan shall be permitted to resume participation in the Plan
by making a new request at the time and in the manner described in Section 4
hereof.

(b) Termination of Participation. If the participant dies, terminates
employment with the Participating Companies for any reason, or otherwise ceases
to be an Eligible Employee, such participant's participation in the Plan shall
immediately terminate. Upon such terminating event, the cash credited to such
participant's Purchase Account on the date of such termination shall be
delivered promptly to such participant or his or her legal representative, as
the case may be, and certificates for the number of full shares of Common Stock
held for his or her benefit and the cash equivalent for any fractional share so
held shall be delivered to the participant as soon as practicable after such
termination. Such cash equivalent shall be determined by multiplying the
fractional share by the fair market value of a share of Common Stock on the
Exercise Date (as defined in Section 4) immediately preceding such termination,
determined as provided in Section 5.

8. TERMINATION OR AMENDMENT OF THE PLAN. The Company, by action of the
Board or the Committee, may terminate the Plan at any time, in which case notice
of such termination shall be given to all participants, but any failure to give
such notice shall not impair the effectiveness of the termination.

Without any action being required, the Plan shall terminate in any event
when the maximum number of shares of Common Stock to be sold under the Plan (as
provided in Section 12) has been purchased. Such termination shall not impair
any rights which under the Plan shall have vested on or prior to the date of
such termination. If at any time the number of shares of Common Stock remaining
available for purchase under the Plan are not sufficient to satisfy all
then-outstanding purchase rights, the Board or Committee may determine an
equitable basis of apportioning available shares of Common Stock among all
participants.

The Board or the Committee may amend the Plan from time to time in any
respect for any reason; provided, however, no such amendment shall (a)
materially adversely affect any purchase rights outstanding under the Plan with
respect to the Purchase Period in which such amendment is to be effected, (b)
increase the maximum number of shares of Common Stock which may be purchased
under the Plan, (c) decrease the Purchase Price of a share of Common Stock with
respect to any Purchase Period below 85% of the fair market value thereof on the
Exercise Date or (d) adversely affect the qualification of the Plan under
section 423 of the Code.

Upon termination of the Plan, one or more certificates for the number of
full shares of Common Stock held for each participant's benefit and the cash
equivalent of any fractional share so held, determined as provided in Section 7
shall be delivered to such participant as soon as practicable after the Plan
terminates, and, except as otherwise provided in Section 14, the cash, if any,
credited to the such participant's Purchase Account, shall also be distributed
to such participant as soon as practicable after the Plan terminates.

9. NON-TRANSFERABILITY. Rights acquired under the Plan are not transferable
and may be exercised only by a participant.

10. SHAREHOLDER'S RIGHTS. No Eligible Employee or participant shall by
reason of the Plan have any rights of a shareholder of the Company until he or
she shall acquire a share of Common Stock as herein provided.

III-3

11. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a
committee (the "Committee") designated by the Board. In addition to the power to
amend or terminate the Plan pursuant to Section 8, the Committee shall have full
power and authority to: (i) interpret and administer the Plan and any instrument
or agreement entered into under the Plan; (ii) establish such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (iii) make any other determination and take any
other action that the Committee deems necessary or desirable for administration
of the Plan. Decisions of the Committee shall be final, conclusive and binding
upon all persons, including the Company, any participant and any other employee
of the Company.

The Plan shall be administered so as to ensure that all participants have
the same rights and privileges as are provided by section 423(b)(5) of the Code.

12. MAXIMUM NUMBER OF SHARES. The maximum number of shares of Common Stock
which may be purchased under the Plan is 500,000, subject to adjustment as
hereinafter set forth. Shares of Common Stock sold hereunder may be treasury
shares, authorized and unissued shares, shares purchased for participants in the
open market (on an exchange or in negotiated transactions) or any combination
thereof. If the Company shall, at any time after the effective date of the Plan,
change its issued Common Stock into an increased number of shares, with or
without par value, through a stock dividend or a stock split, or into a
decreased number of shares, with or without par value, through a combination of
shares, then, effective with the record date for such change, the maximum number
of shares of Common Stock which thereafter may be purchased under the Plan shall
be the maximum number of shares which, immediately prior to such record date,
remained available for purchase under the Plan proportionately increased, in
case of such stock dividend or stock split, or proportionately decreased in case
of such combination of shares.

13. MISCELLANEOUS. Except as otherwise expressly provided herein, (i) any
request, election or notice under the Plan from an Eligible Employee or
participant shall be transmitted or delivered to the Company or its designated
agent and, subject to any limitations specified in the Plan, shall be effective
when so delivered and (ii) any request, notice or other communication from the
Company or its designated agent that is transmitted or delivered to Eligible
Employees or participants shall be effective when so transmitted or delivered.
The Plan, and the Company's obligation to sell and deliver shares of Common
Stock hereunder, shall be subject to all applicable federal and state laws,
rules and regulations, and to such approval by any regulatory or governmental
agency as may, in the opinion of counsel for the Company, be required.

14. CHANGE IN CONTROL. In the event of any Change in Control of the
Company, as defined below, the then current Purchase Period shall thereupon end,
the Committee, in its sole discretion, shall either direct that the cash
credited to all participants' Purchase Accounts be applied to purchase shares
pursuant to Sections 4, 5 and 6 or that such cash be returned to participants
and the Plan shall immediately thereafter terminate. For purposes of this
Section 14, "Change in Control" shall have the same meaning as the definition of
"Change in Control" set forth in the Whitehall Jewellers, Inc. 1997 Long-Term
Incentive Plan, or any successor plan thereto.

III-4

EXHIBIT IV

WHITEHALL JEWELLERS, INC.

1997 LONG-TERM INCENTIVE PLAN, AS AMENDED

I. INTRODUCTION

1.1 PURPOSES. The purposes of the 1997 Long-Term Incentive Plan (the
"Plan") of Whitehall Jewellers, Inc. (the "Company"), and its subsidiaries from
time to time (individually a "Subsidiary" and collectively the "Subsidiaries"),
are (a) to align the interests of the Company's stockholders and the recipients
of awards under this Plan by increasing the proprietary interest of such
recipients in the Company's growth and success, (b) to advance the interests of
the Company by attracting and retaining officers and other key employees, and
well-qualified persons who are not officers or employees of the Company
("non-employee directors") for service as directors of the Company and (c) to
motivate such employees and non-employee directors to act in the long-term best
interests of the Company's stockholders. For purposes of this Plan, references
to employment by the Company shall also mean employment by a Subsidiary.

1.2 CERTAIN DEFINITIONS.

"AFFILIATE" and "ASSOCIATE" shall have the respective meanings ascribed to
such terms in Rule 12b-2, as in effect on the effective date of this Plan, under
the Exchange Act; provided, however, that no director or officer of the Company
shall be deemed an Affiliate or Associate of any other director or officer of
the Company solely as a result of his or her being a director or officer of the
Company.

"AGREEMENT" shall mean the written agreement evidencing an award hereunder
between the Company and the recipient of such award.

"BENEFICIAL OWNER" (including the terms "BENEFICIALLY OWN" and "BENEFICIAL
OWNERSHIP"), when used with respect to any Person, shall be deemed to include
any securities which:

(a) such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly (determined as provided in Rule
13d-3, as in effect on the effective date of this Plan, under the Exchange
Act);

(b) such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has:

(i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the satisfaction
of any conditions, or both) pursuant to any written or oral agreement,
arrangement or understanding (other than customary agreements with and
among underwriters and selling group members with respect to a bona fide
public offering of securities), upon the exercise of any options,
warrants, rights or conversion or exchange privileges or otherwise;
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or

(ii) the right to vote pursuant to any written or oral agreement,
arrangement or understanding; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to Beneficially Own, any security
otherwise subject to this item (ii) if such agreement, arrangement or
understanding to vote (1) arises solely from a revocable proxy or
consent given to such Person or any of such Person's Affiliates or
Associates in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations under the Exchange Act and (2) is not also then reportable
by such Person on Schedule 13D (or any comparable or successor report
then in effect) under the Exchange Act; or

IV-1

(iii) the right to dispose of pursuant to any written or oral
agreement, arrangement or understanding (other than customary agreements
with and among underwriters and selling group members with respect to a
bona fide public offering of securities); or

(c) are beneficially owned, directly or indirectly, by any other
Person with which such Person or any of such Person's Affiliates or
Associates has any written or oral agreement, arrangement or understanding
(other than customary agreements with and among underwriters and selling
group members with respect to a bona fide public offering of securities)
for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to item (ii) of subparagraph (b) of the first
paragraph of this definition) or disposing of any securities of the
Company.

Notwithstanding the first paragraph of this definition, no director or
officer of the Company shall be deemed to be the "Beneficial Owner" of, or to
"Beneficially Own," shares of Common Stock or other securities of the Company
beneficially owned by any other director or officer of the Company solely as a
result of his or her being a director or officer of the Company.

"BOARD" shall mean the Board of Directors of the Company.

"BONUS STOCK" shall mean shares of Common Stock which are not subject to a
Restriction Period or Performance Measures.

"BONUS STOCK AWARD" shall mean an award of Bonus Stock under this Plan.

"CAUSE" shall mean commission of a felony involving moral turpitude or any
material breach of any statutory or common law duty to the Company or a
Subsidiary involving willful malfeasance.

"CHANGE IN CONTROL" shall have the meaning set forth in Section 6.8(b).

"CODE" shall mean the Internal Revenue Code of 1986, as amended.

"COMMITTEE" shall mean the Committee designated by the Board, consisting of
two or more members of the Board, each of whom shall be (a) a "Non-Employee
Director" within the meaning of Rule 16b-3 under the Exchange Act and (b) an
"outside director" within the meaning of Section 162(m) of the Code, subject to
any transition rules applicable to the definition of outside director.

"COMMON STOCK" shall mean the common stock, $.001 par value, of the
Company.

"COMPANY" has the meaning specified in Section 1.1.

"DIRECTORS OPTIONS" shall have the meaning set forth in Section 5.1.

"DISABILITY" shall mean the inability for a continuous period of at least
six months of the holder of an award to perform substantially such holder's
duties and responsibilities, as determined solely by the Committee.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.

"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.

"EXEMPT PERSON" shall mean each of Hugh M. Patinkin, John R. Desjardins,
Matthew M. Patinkin and each Affiliate thereof.

"FAIR MARKET VALUE" shall mean the average of the high and low transaction
prices of a share of Common Stock as reported on The New York Stock Exchange on
the date as of which such value is being determined, or, if the Common Stock is
listed on another national securities exchange, the average of the high and low
transaction prices of a share of Common Stock on the principal national stock
exchange on which the Common Stock is traded on the date as of which such value
is being determined, or, if there shall be no reported transactions for such
date, on the next preceding date for which transactions were reported; provided,
however, that if Fair Market Value for any date cannot be so determined, Fair
Market Value shall be determined by the Committee by whatever means or method as
the Committee, in the good faith exercise of its discretion, shall at such time
deem appropriate.

IV-2

"FREE-STANDING SAR" shall mean an SAR which is not issued in tandem with,
or by reference to, an option, which entitles the holder thereof to receive,
upon exercise, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of such SARs which are exercised.

"INCENTIVE STOCK OPTION" shall mean an option to purchase shares of Common
Stock that meets the requirements of Section 422 of the Code, or any successor
provision, which is intended by the Committee to constitute an Incentive Stock
Option.

"INCUMBENT BOARD" shall have the meaning set forth in Section 6.8(b)(ii)
hereof.

"MATURE SHARES" shall mean shares of Common Stock for which the holder
thereof has good title, free and clear of all liens and encumbrances and which
such holder either (a) has held for at least six months or (b) has purchased on
the open market.

"NON-EMPLOYEE DIRECTOR" shall mean any director of the Company who is not
an officer or employee of the Company or any Subsidiary (except in the
definition of Committee, in which case "Non-Employee Director" shall have the
meaning set forth in Rule 16b-3 under the Exchange Act).

"NON-STATUTORY STOCK OPTION" shall mean a stock option which is not an
Incentive Stock Option.

"PERFORMANCE MEASURES" shall mean the criteria and objectives, established
by the Committee, which shall be satisfied or met (a) as a condition to the
exercisability of all or a portion of an option or SAR or (b) during the
applicable Restriction Period or Performance Period as a condition to the
holder's receipt, in the case of a Restricted Stock Award, of the shares of
Common Stock subject to such award, or, in the case of a Performance Share
Award, of payment with respect to such award. Such criteria and objectives may
include one or more of the following: the attainment by a share of Common Stock
of a specified Fair Market Value for a specified period of time, earnings per
share, return to stockholders (including dividends), return on equity, earnings
of the Company, revenues, market share, cash flows or cost reduction goals, or
any combination of the foregoing. If the Committee desires that compensation
payable pursuant to any award subject to Performance Measures be "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Code, the Performance Measures shall be established by the Committee no later
than the end of the first quarter of the Performance Period or Restriction
Period, as applicable (or such other time designated by the Internal Revenue
Service).

"PERFORMANCE PERIOD" shall mean any period designated by the Committee
during which the Performance Measures applicable to a Performance Share Award
shall be measured.

"PERFORMANCE SHARE" shall mean a right, contingent upon the attainment of
specified Performance Measures within a specified Performance Period, to receive
one share of Common Stock, which may be Restricted Stock, or in lieu thereof,
the Fair Market Value of such Performance Share in cash.

"PERFORMANCE SHARE AWARD" shall mean an award of Performance Shares under
this Plan.

"PERMANENT AND TOTAL DISABILITY" shall have the meaning set forth in
Section 22(e)(3) of the Code or any successor thereto.

"PERSON" shall mean any individual, firm, corporation, partnership or other
entity, and shall include any successor (by merger or otherwise) of any of the
forgoing.

"RESTRICTED STOCK" shall mean shares of Common Stock which are subject to a
Restriction Period.

"RESTRICTED STOCK AWARD" shall mean an award of Restricted Stock under this
Plan.

"RESTRICTION PERIOD" shall mean any period designated by the Committee
during which the Common Stock subject to a Restricted Stock Award may not be
sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or
disposed of, except as provided in this Plan or the Agreement relating to such
award.

"SAR" shall mean a stock appreciation right which may be a Free-Standing
SAR or a Tandem SAR.

IV-3

"STOCK AWARD" shall mean a Restricted Stock Award or a Bonus Stock Award.

"TANDEM SAR" shall mean an SAR which is granted in tandem with, or by
reference to, an option (including a Non-Statutory Stock Option granted prior to
the date of grant of the SAR), which entitles the holder thereof to receive,
upon exercise of such SAR and surrender for cancellation of all or a portion of
such option, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of shares of Common Stock subject to
such option, or portion thereof, which is surrendered.

"TAX DATE" shall have the meaning set forth in Section 6.5.

"TEN PERCENT HOLDER" shall have the meaning set forth in Section 2.1(a).

1.3 ADMINISTRATION. This Plan shall be administered by the Committee.
Subject to Section 6.1, any one or a combination of the following awards may be
made under this Plan to eligible persons: (a) options to purchase shares of
Common Stock in the form of Incentive Stock Options or Non-Statutory Stock
Options, (b) in the form of Tandem SARs or Free-Standing SARs, (c) Stock Awards
in the form of Restricted Stock or Bonus Stock and (d) Performance Shares. The
Committee shall, subject to the terms of this Plan, select eligible persons for
participation in this Plan and determine the form, amount and timing of each
award to such persons and, if applicable, the number of shares of Common Stock,
the number of SARs and the number of Performance Shares subject to such an
award, the exercise price or base price associated with the award, the time and
conditions of exercise or settlement of the award and all other terms and
conditions of the award, including, without limitation, the form of the
Agreement evidencing the award. The Committee shall, subject to the terms of
this Plan, interpret this Plan and the application thereof, establish rules and
regulations it deems necessary or desirable for the administration of this Plan
and may impose, incidental to the grant of an award, conditions with respect to
the award, such as limiting competitive employment or other activities. All such
interpretations, rules, regulations and conditions shall be conclusive and
binding on all parties.

The Committee may delegate some or all of its power and authority hereunder
to the Chief Executive Officer or other executive officer of the Company as the
Committee deems appropriate; provided, however, that the Committee may not
delegate its power and authority with regard to (a) the grant of an award under
this Plan to any person who is a "covered employee" within the meaning of
Section 162(m) of the Code or who, in the Committee's judgment, is likely to be
a covered employee at any time during the period an award hereunder to such
employee would be outstanding or (b) the selection for participation in this
Plan of an officer or other person subject to Section 16 of the Exchange Act or
decisions concerning the timing, pricing or amount of an award to such an
officer or other person.

No member of the Board of Directors or Committee, and neither the Chief
Executive Officer nor any other executive officer to whom the Committee
delegates any of its power and authority hereunder, shall be liable for any act,
omission, interpretation, construction or determination made in connection with
this Plan in good faith, and the members of the Board of Directors and the
Committee and the President and Chief Executive Officer or other executive
officer shall be entitled to indemnification and reimbursement by the Company in
respect of any claim, loss, damage or expense (including attorneys' fees)
arising therefrom to the full extent permitted by law, except as otherwise may
be provided in the Company's Certificate of Incorporation and/or By-laws, as the
same may be amended or restated from time to time, and under any directors' and
officers' liability insurance that may be in effect from time to time.

A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (a) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (b) acts approved in
writing by a majority of the members of the Committee without a meeting.

Notwithstanding anything to the contrary herein, any grant of awards to a
Non-Employee Director shall require the approval of the Board.

1.4 ELIGIBILITY. Participants in this Plan shall consist of such directors,
officers or other key employees of the Company and its Subsidiaries as the
Committee, in its sole discretion, may select from time to time. The

IV-4

Committee's selection of a person to participate in this Plan at any time shall
not require the Committee to select such person to participate in this Plan at
any other time. Non-Employee Directors shall also be eligible to participate in
this Plan in accordance with Article V.

1.5 SHARES AVAILABLE. Subject to adjustment as provided in Sections 6.7 and
6.8, 2,500,000 shares of Common Stock shall be available under this Plan,
reduced by the sum of the aggregate number of shares of Common Stock (a) that
are issued upon the grant of a Stock Award and (b) which become subject to
outstanding options, including Directors' Options, outstanding Free-Standing
SARs and outstanding Performance Shares. To the extent that shares of Common
Stock subject to an outstanding option (other than in connection with the
exercise of a Tandem SAR), Free-Standing SAR or Performance Share are not issued
or delivered by reason of the expiration, termination, cancellation or
forfeiture of such award or by reason of the delivery or withholding of shares
of Common Stock to pay all or a portion of the exercise price of an award, if
any, or to satisfy all or a portion of the tax withholding obligations relating
to an award, then such shares of Common Stock shall again be available under
this Plan.

Shares of Common Stock to be delivered under this Plan shall be made
available from authorized and unissued shares of Common Stock, or authorized and
issued shares of Common Stock reacquired and held as treasury shares or
otherwise or a combination thereof.

To the extent required by Section 162(m) of the Code and the rules and
regulations thereunder, the maximum number of shares of Common Stock with
respect to which options or SARs, Stock Awards or Performance Share Awards, or a
combination thereof may be granted during any calendar year to any person shall
be 300,000 subject to adjustment as provided in Section 6.7.

II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

2.1 STOCK OPTIONS. The Committee may, in its discretion, grant options to
purchase shares of Common Stock to such eligible persons as may be selected by
the Committee. Each option, or portion thereof, that is not an Incentive Stock
Option, shall be a Non-Statutory Stock Option. Each Incentive Stock Option shall
be granted within ten years of the effective date of this Plan. To the extent
that the aggregate Fair Market Value (determined as of the date of grant) of
shares of Common Stock with respect to which options designated as Incentive
Stock Options are exercisable for the first time by a participant during any
calendar year (under this Plan or any other plan of the Company, or any parent
or Subsidiary) exceeds the amount (currently $100,000) established by the Code,
such options shall constitute Non-Statutory Stock Options.

Options shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:

(a) Number of Shares and Purchase Price. To the extent required, the number
of shares of Common Stock subject to an option shall be determined by the
Committee. The purchase price per share of Common Stock purchasable upon
exercise of the option shall be determined by the Committee; provided, however,
that the purchase price per share of Common Stock purchasable upon exercise of
an Option shall not be less than 100% of the Fair Market Value of a share of
Common Stock on the date of grant of such option; provided, further, that if an
Incentive Stock Option shall be granted to any person who, at the time such
option is granted, owns capital stock possessing more than ten percent of the
total combined voting power of all classes of capital stock of the Company (or
of any parent or Subsidiary) (a "Ten Percent Holder"), the purchase price per
share of Common Stock shall be the price (currently 110% of Fair Market Value)
required by the Code in order to constitute an Incentive Stock Option.

(b) Option Period and Exercisability. The period during which an option may
be exercised shall be determined by the Committee; provided, however, that no
Incentive Stock Option shall be exercised later than ten years after its date of
grant; provided, further, that if an Incentive Stock Option shall be granted to
a Ten Percent Holder, such option shall not be exercised later than five years
after its date of grant. The Committee may, in its discretion, establish
Performance Measures which shall be satisfied or met as a condition to the grant
of an option or to the exercisability of all or a portion of an option. The
Committee shall determine whether an option shall become exercisable in
cumulative or non-cumulative installments and in part or in full
IV-5

at any time. An exercisable option, or portion thereof, may be exercised only
with respect to whole shares of Common Stock, except that if the remaining
option then exercisable is for less than a whole share, such remaining amount
may be exercised.

(c) Method of Exercise. An option may be exercised (i) by giving written
notice to the Company specifying the number of whole shares of Common Stock to
be purchased and accompanied by payment therefor in full (or arrangement made
for such payment to the Company's satisfaction) either (1) in cash, (2) by
delivery of Mature Shares having a Fair Market Value, determined as of the date
of exercise, equal to the aggregate purchase price payable by reason of such
exercise, (3) by authorizing the Company to withhold whole shares of Common
Stock which would otherwise be delivered upon exercise of the option having a
Fair Market Value, determined as of the date of exercise, equal to the aggregate
purchase price payable by reason of such exercise, (4) in cash by a
broker-dealer acceptable to the Company to whom the optionee has submitted an
irrevocable notice of exercise or (5) a combination of (1), (2) and (3), in each
case to the extent set forth in the Agreement relating to the option, (ii) if
applicable, by surrendering to the Company any Tandem SARs which are canceled by
reason of the exercise of the option and (iii) by executing such documents as
the Company may reasonably request. The Committee shall have sole discretion to
disapprove of an election pursuant to any of clauses (2)-(5). Any fraction of a
share of Common Stock which would be required to pay such purchase price shall
be disregarded and the remaining amount due shall be paid in cash by the
optionee. No certificate representing Common Stock shall be delivered until the
full purchase price therefor has been paid.

(d) Additional Options. The Committee shall have the authority to include
in any Agreement relating to an option a provision entitling the optionee to an
additional option in the event such optionee exercises the option represented by
such option Agreement, in whole or in part, by delivering previously owned whole
shares of Common Stock in payment of the purchase price in accordance with this
Plan and such Agreement. Any such additional option shall be for a number of
shares of Common Stock equal to the number of delivered shares, shall have a
purchase price determined by the Committee in accordance with this Plan, shall
be exercisable on the terms and subject to the conditions set forth in the
Agreement relating to such additional option.

2.2 STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, grant
SARs to such eligible persons as may be selected by the Committee. The Agreement
relating to an SAR shall specify whether the SAR is a Tandem SAR or a
Free-Standing SAR.

SARs shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:

(a) Number of SARs and Base Price. The number of SARs subject to an award
shall be determined by the Committee. Any Tandem SAR related to an Incentive
Stock Option shall be granted at the same time that such Incentive Stock Option
is granted. The base price of a Tandem SAR shall be the purchase price per share
of Common Stock of the related option. The base price of a Free-Standing SAR
shall be determined by the Committee; provided, however, that such base price
shall not be less than 100% of the Fair Market Value of a share of Common Stock
on the date of grant of such SAR.

(b) Exercise Period and Exercisability. The Agreement relating to an award
of SARs shall specify whether such award may be settled in shares of Common
Stock (including shares of Restricted Stock) or cash or a combination thereof.
The period for the exercise of an SAR shall be determined by the Committee;
provided, however, that no Tandem SAR shall be exercised later than the
expiration, cancellation, forfeiture or other termination of the related option.
The Committee may, in its discretion, establish Performance Measures which shall
be satisfied or met as a condition to the exercisability of an SAR. The
Committee shall determine whether an SAR may be exercised in cumulative or
non-cumulative installments and in part or in full at any time. An exercisable
SAR, or portion thereof, may be exercised, in the case of a Tandem SAR, only
with respect to whole shares of Common Stock and, in the case of a Free-Standing
SAR, only with respect to a whole number of SARs. If an SAR is exercised for
shares of Restricted Stock, a certificate or certificates representing such
Restricted Stock shall be issued in accordance with Section 3.2(c) and the
holder of such Restricted Stock shall have such rights of a stockholder of the
Company as determined pursuant to
IV-6

Section 3.2(d). Prior to the exercise of an SAR for shares of Common Stock,
including Restricted Stock, the holder of such SAR shall have no rights as a
stockholder of the Company with respect to the shares of Common Stock subject to
such SAR.

(c) Method of Exercise. A Tandem SAR may be exercised (i) by giving written
notice to the Company specifying the number of whole SARs which are being
exercised, (ii) by surrendering to the Company any options which are canceled by
reason of the exercise of the Tandem SAR and (iii) by executing such documents
as the Company may reasonably request. A Free-Standing SAR may be exercised (i)
by giving written notice to the Company specifying the whole number (or if the
remaining SAR then exercisable is for less then one whole share, such remaining
amount) of SARs which are being exercised and (ii) by executing such documents
as the Company may reasonably request.

2.3 TERMINATION OF EMPLOYMENT OR SERVICE WITH THE COMPANY.

(a) Disability. Subject to paragraph (f) below and Section 6.8, and unless
otherwise specified in the Agreement relating to an option or SAR, as the case
may be, if the employment or service with the Company of the holder of an option
or SAR terminates by reason of Disability, each option and SAR held by such
holder shall be exercisable only to the extent that such option or SAR, as the
case may be, is exercisable on the effective date of such holder's termination
of employment or service and may thereafter be exercised by such holder (or such
holder's legal representative or similar person) until and including the
earliest to occur of (i) the date which is three months (or such other period as
set forth in the Agreement relating to such option or SAR) after the effective
date of such holder's termination of employment or service and (ii) the
expiration date of the term of such option or SAR.

(b) Retirement. Subject to paragraph (f) below and Section 6.8, and unless
otherwise specified in the Agreement relating to an option or SAR, as the case
may be, if the employment or service with the Company of the holder of an option
or SAR terminates by reason of retirement on or after age 65 with the consent of
the Company, each option and SAR held by such holder shall be exercisable only
to the extent that such option or SAR, as the case may be, is exercisable on the
effective date of such holder's termination of employment or service and may
thereafter be exercised by such holder (or such holder's legal representative or
similar person) until and including the earliest to occur of (i) the date which
is six months (or such other period as set forth in the Agreement relating to
such option or SAR) after the effective date of such holder's termination of
employment or service and (ii) the expiration date of the term of such option or
SAR.

(c) Death. Subject to paragraph (f) below and Section 6.8, and unless
otherwise specified in the Agreement relating to an option or SAR, as the case
may be, if the employment or service with the Company of the holder of an option
or SAR terminates by reason of death, each option and SAR held by such holder
shall be exercisable only to the extent that such option or SAR, as the case may
be, is exercisable on the date of such holder's death, and may thereafter be
exercised by such holder's executor, administrator, legal representative,
beneficiary or similar person, as the case may be, until and including the
earliest to occur of (i) the date which is one year (or such other period as set
forth in the Agreement relating to such option or SAR) after the date of death
and (ii) the expiration date of the term of such option or SAR.

(d) Other Termination. If the employment or service with the Company of the
holder of an option or SAR is terminated by the Company for Cause, each option
and SAR held by such holder shall terminate automatically on the effective date
of such holder's termination of employment or service.

Subject to paragraph (f) below and Section 6.8, and unless specified in the
Agreement relating to an option or SAR, as the case may be, if the employment or
service with the Company of the holder of an option or SAR terminates for any
reason other than Disability, retirement on or after age 65 with the consent of
the Company, death or Cause, each option and SAR held by such holder shall be
exercisable only to the extent that such option or SAR is exercisable on the
effective date of such holder's termination of employment or service and may
thereafter be exercised by such holder (or such holder's legal representative or
similar person) until and including the earliest to occur of (i) the date which
is three months (or such other period as set forth in the Agreement relating to
such option or SAR) after the effective date of such holder's termination of
employment or service and (ii) the expiration date of the term of such option or
SAR.

IV-7

(e) Death Following Termination of Employment or Service. Subject to
paragraph (f) below and Section 6.8, and unless otherwise specified in the
Agreement relating to an option or SAR, as the case may be, if the holder of an
option or SAR dies during the three-month period following termination of
employment or service by reason of Disability, or if the holder of an option or
SAR dies during the three-month period following termination of employment or
service by reason of retirement on or after age 65 with the consent of the
Company, or if the holder of an option or SAR dies during the three-month period
following termination of employment or service for any reason other than
Disability or retirement on or after age 65 with the consent of the Company (or,
in each case, such other period as set forth in the Agreement relating to such
option or SAR), each option and SAR held by such holder shall be fully
exercisable and may thereafter be exercised by the holder's executor,
administrator, legal representative, beneficiary or similar person, as the case
may be, until and including the earliest to occur of (i) the date which is one
year (or such other period as set forth in the Agreement relating to such option
or SAR) after the date of death and (ii) the expiration date of the term of such
option or SAR.

(f) Termination of Employment or Service -- Incentive Stock
Options. Subject to Section 6.8 and unless otherwise specified in the Agreement
relating to the option, if the employment or service with the Company of a
holder of an incentive stock option terminates by reason of Permanent and Total
Disability (as defined in Section 22(e)(3) of the Code), each incentive stock
option held by such optionee shall be exercisable only to the extent that such
option is exercisable on the effective date of such optionee's termination of
employment or service by reason of Permanent and Total Disability, and may
thereafter be exercised by such optionee (or such optionee's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is three months (or such other period no longer than one year
as set forth in the Agreement relating to such option) after the effective date
of such optionee's termination of employment or service by reason of Permanent
and Total Disability and (ii) the expiration date of the term of such option.

Subject to Section 6.8 and unless otherwise specified in the Agreement
relating to the option, if the employment or service with the Company of a
holder of an Incentive Stock Option terminates by reason of death, each
Incentive Stock Option held by such optionee shall be exercisable only to the
extent that such option is exercisable on the date of such optionee's death and
may thereafter be exercised by such optionee's executor, administrator, legal
representative, beneficiary or similar person until and including the earliest
to occur of (i) the date which is one year (or such shorter period as set forth
in the Agreement relating to such option) after the date of death and (ii) the
expiration date of the term of such option.

If the employment or service with the Company of the optionee of an
Incentive Stock Option is terminated by the Company for Cause, each Incentive
Stock Option held by such optionee shall terminate automatically on the
effective date of such optionee's termination of employment or service.

Subject to Section 6.8 and unless otherwise specified in the Agreement
relating to the option, if the employment or service with the Company of a
holder of an Incentive Stock Option terminates for any reason other than
Permanent and Total Disability, death or Cause, each Incentive Stock Option held
by such optionee shall be exercisable only to the extent such option is
exercisable on the effective date of such optionee's termination of employment
or service, and may thereafter be exercised by such holder (or such holder's
legal representative or similar person) until and including the earliest to
occur of (i) the date which is three months after the effective date of such
optionee's termination of employment or service and (ii) the expiration date of
the term of such option.

If the holder of an Incentive Stock Option dies during the three-month
period following termination of employment or service by reason of Permanent and
Total Disability (or such shorter period as set forth in the Agreement relating
to such option), or if the holder of an Incentive Stock Option dies during the
three-month period following termination of employment or service for any reason
other than Permanent and Total Disability, death or Cause, each Incentive Stock
Option held by such optionee shall be exercisable only to the extent such option
is exercisable on the date of the optionee's death and may thereafter be
exercised by the optionee's executor, administrator, legal representative,
beneficiary or similar person until and including the

IV-8

earliest to occur of (i) the date which is one year (or such shorter period as
set forth in the Agreement relating to such option) after the date of death and
(ii) the expiration date of the term of such option.

III. STOCK AWARDS

3.1 STOCK AWARDS. The Committee may, in its discretion, grant Stock Awards
to such eligible persons as may be selected by the Committee. Subject to
adjustment as provided in Sections 6.7 and 6.8 of this Plan, the aggregate
number of shares of Common Stock available under this Plan pursuant to all Stock
Awards shall not exceed 150,000 of the aggregate number of shares of Common
Stock available under this Plan. The Agreement relating to a Stock Award shall
specify whether the Stock Award is a Restricted Stock Award or Bonus Stock
Award.

3.2 TERMS OF STOCK AWARDS. Stock Awards shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable.

(a) Number of Shares and Other Terms. The number of shares of Common Stock
subject to a Restricted Stock Award or Bonus Stock Award and the Performance
Measures (if any) and Restriction Period applicable to a Restricted Stock Award
shall be determined by the Committee.

(b) Vesting and Forfeiture. The Agreement relating to a Restricted Stock
Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of the
shares of Common Stock subject to such award (i) if specified Performance
Measures are satisfied or met during the specified Restriction Period or (ii) if
the holder of such award remains continuously in the employment or service of
the Company during the specified Restricted Period and for the forfeiture of the
shares of Common Stock subject to such award (x) if specified Performance
Measures are not satisfied or met during the specified Restriction Period or (y)
if the holder of such award does not remain continuously in the employment or
service of the Company during the specified Restriction Period.

Bonus Stock Awards shall not be subject to any Performance Measures or
Restriction Periods.

(c) Share Certificates. During the Restriction Period, a certificate or
certificates representing a Restricted Stock Award shall be registered in the
holder's name and may bear a legend, in addition to any legend which may be
required pursuant to Section 6.6, indicating that the ownership of the shares of
Common Stock represented by such certificate is subject to the restrictions,
terms and conditions of this Plan and the Agreement relating to the Restricted
Stock Award. All such certificates shall be deposited with the Company, together
with stock powers or other instruments of assignment (including a power of
attorney), each endorsed in blank with a guarantee of signature if deemed
necessary or appropriate, which would permit transfer to the Company of all or a
portion of the shares of Common Stock subject to the Restricted Stock Award in
the event such award is forfeited in whole or in part. Upon termination of any
applicable Restriction Period (and the satisfaction or attainment of applicable
Performance Measures), or upon the grant of a Bonus Stock Award, in each case
subject to the Company's right to require payment of any taxes in accordance
with Section 6.5, a certificate or certificates evidencing ownership of the
requisite number of shares of Common Stock shall be delivered to the holder of
such award.

(d) Rights with Respect to Restricted Stock Awards. Unless otherwise set
forth in the Agreement relating to a Restricted Stock Award, and subject to the
terms and conditions of a Restricted Stock Award, the holder of such award shall
have all rights as a stockholder of the Company, including, but not limited to,
voting rights, the right to receive dividends and the right to participate in
any capital adjustment applicable to all holders of Common Stock; provided,
however, that a distribution with respect to shares of Common Stock, other than
a distribution in cash, shall be deposited with the Company and shall be subject
to the same restrictions as the shares of Common Stock with respect to which
such distribution was made.

(e) Awards to Certain Executive Officers. Notwithstanding any other
provision of this Article III, and only to the extent necessary to ensure the
deductibility of the award to the Company, the Fair Market Value of the number
of shares of Common Stock subject to a Stock Award granted to a "covered
employee" within the

IV-9

meaning of Section 162(m) of the Code shall not exceed $2,000,000 (i) at the
time of grant in the case of a Stock Award granted upon the attainment of
Performance Measures or (ii) in the case of a Restricted Stock Award with
Performance measures which shall be satisfied or met as a condition to the
holder's receipt of the shares of Common Stock subject to such award, on the
earlier of (x) the date on which the Performance Measures are satisfied or met
and (y) the date the holder makes an election under Section 83(b) of the Code.

3.3 TERMINATION OF EMPLOYMENT OR SERVICE. Subject to Section 6.8 and unless
otherwise set forth in the Agreement relating to a Restricted Stock Award, if
the employment or service with the Company of the holder of such award
terminates, the portion of such award which is subject to a Restriction Period
shall terminate as of the effective date of such holder's termination of
employment or service shall be forfeited and such portion shall be canceled by
the Company.

IV. PERFORMANCE SHARE AWARDS

4.1 PERFORMANCE SHARE AWARDS. The Committee may, in its discretion, grant
Performance Share Awards to such eligible persons as may be selected by the
Committee.

4.2 TERMS OF PERFORMANCE SHARE AWARDS. Performance Share Awards shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as the
Committee shall deem advisable.

(a) Number of Performance Shares and Performance Measures. The number of
Performance Shares subject to any award and the Performance Measures and
Performance Period applicable to such award shall be determined by the
Committee.

(b) Vesting and Forfeiture. The Agreement relating to a Performance Share
Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of such
award, if specified Performance Measures are satisfied or met during the
specified Performance Period, and for the forfeiture of such award, if specified
Performance Measures are not satisfied or met during the specified Performance
Period.

(c) Settlement of Vested Performance Share Awards. The Agreement relating
to a Performance Share Award (i) shall specify whether such award may be settled
in shares of Common Stock (including shares of Restricted Stock) or cash or a
combination thereof and (ii) may specify whether the holder thereof shall be
entitled to receive, on a current or deferred basis, dividend equivalents, and,
if determined by the Committee, interest on any deferred dividend equivalents,
with respect to the number of shares of Common Stock subject to such award. If a
Performance Share Award is settled in shares of Restricted Stock, a certificate
or certificates representing such Restricted Stock shall be issued in accordance
with Section 3.2(c) and the holder of such Restricted Stock shall have such
rights of a stockholder of the Company as determined pursuant to Section 3.2(d).
Prior to the settlement of a Performance Share Award in shares of Common Stock,
including Restricted Stock, the holder of such award shall have no rights as a
stockholder of the Company with respect to the shares of Common Stock subject to
such award.

4.3 TERMINATION OF EMPLOYMENT OR SERVICE. Subject to Section 6.8 and unless
otherwise set forth in the Agreement relating to a Performance Share Award, if
the employment or service with the Company of the holder of such award
terminates, the portion of such award which is subject to a Performance Period
on the effective date of such holder's termination of employment or service
shall be forfeited and such portion shall be canceled by the Company.

V. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS

5.1 ELIGIBILITY. Each Non-Employee Director shall be granted options to
purchase shares of Common Stock in accordance with this Article V (collectively
"Directors Options"). All options granted under this Article V shall constitute
Non-Statutory Stock Options.

IV-10

5.2 GRANTS OF STOCK OPTIONS. Each Non-Employee Director may be granted
Non-Statutory Stock Options in the discretion of the Committee (subject to
approval by the Board).

5.3 TERMINATION OF DIRECTORSHIP.

(a) Disability. Subject to Section 6.8, if the holder of an option granted
pursuant to this Article V ceases to be a director of the Company by reason of
Disability, each such option held by such holder shall be exercisable only to
the extent that such option is exercisable on the effective date of such
holder's ceasing to be a director and may thereafter be exercised by such holder
(or such holder's guardian, legal representative or similar person) until the
earliest to occur of the (i) date which is three months after the effective date
of such holder's ceasing to be a director and (ii) the expiration date of the
term of such option.

(b) Retirement. Subject to Section 6.8, if the holder of an option granted
pursuant to this Article V ceases to be a director of the Company on or after
age 65, each such option held by such holder shall be exercisable only to the
extent that such option is exercisable on the effective date of such holder's
ceasing to be a director and may thereafter be exercised by such holder (or such
holder's legal representative or similar person) until the earliest to occur of
the (i) date which is three months after the effective date of such holder's
ceasing to be a director and (ii) the expiration date of the term of such
option.

(c) Death. Subject to Section 6.8, if the holder of an option granted
pursuant to this Article V ceases to be a director of the Company by reason of
death, each such option held by such holder shall be fully exercisable and may
thereafter be exercised by such holder's executor, administrator, legal
representative, beneficiary or similar person, as the case may be, until the
earliest to occur of the (i) date which is one year after the date of death and
(ii) the expiration date of the term of such option.

(d) Other Termination. Subject to Section 6.8, if the holder of an option
granted pursuant to this Article V ceases to be a director of the Company for
any reason other than Disability, retirement on or after age 65 or death, each
such option held by such holder shall be exercisable only to the extent such
option is exercisable on the effective date of such holder's ceasing to be a
director and may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until the earliest to occur of the (i) date
which is three months after the effective date of such holder's ceasing to be a
director and (ii) the expiration date of the term of such option.

(e) Death Following Termination of Directorship. Subject to Section 6.8, if
the holder of an option granted pursuant to this Article V dies during the
three-month period following such holder's ceasing to be a director of the
Company by reason of Disability, or if such a holder dies during the three-month
period following such holder's ceasing to be a director of the Company on or
after age 65, or if such a holder dies during the three-month period following
such holder's ceasing to be a director for any reason other than by reason of
Disability or retirement on or after age 65, each such option held by such
holder shall be exercisable only to the extent that such option is exercisable
on the date of the holder's death and may thereafter be exercised by the
holder's executor, administrator, legal representative, beneficiary or similar
person, as the case may be, until the earliest to occur of the (i) date one year
after the date of death and (ii) the expiration date of the term of such option.

5.4 DIRECTORS OPTIONS. Each Directors Option shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee shall
deem advisable:

(a) Option Period and Exercisability. If at any time prior to the time that
a Directors Option becomes exercisable, a Non-Employee Director shall no longer
be a member of the Board, such Directors Option shall become void and of no
further force or effect.

(b) Purchase Price. The purchase price for the shares of Common Stock
subject to any Directors Option shall be equal to 100% of the Fair Market Value
of a share of Common Stock on the date of grant of such Directors Option. Such
Directors Options shall be exercisable in accordance with Section 2.1(c).

(c) Restrictions on Transfer. Directors Options shall be subject to the
transfer restrictions and other provisions of Section 6.4.
IV-11

(d) Expiration. Each Directors Option which has become exercisable pursuant
to Section 5.4(a), to the extent not theretofore exercised, shall expire on the
first to occur of (i) the date which is three months after the first date on
which the Non-Employee Director shall no longer be a member of the Board or the
Board of Directors of a Subsidiary and (ii) the tenth anniversary of the date of
grant of such option; provided, however, that if the Non-Employee Director shall
die within such three-month period following the date on which he shall have
ceased to serve as such a director, such option may be exercised at any time
within the one-year period following the date of death to the extent not
theretofore exercised (but in no event later than the tenth anniversary of the
date of grant).

GENERAL

6.1 EFFECTIVE DATE AND TERM OF PLAN. This Plan became effective on February
24, 1997 and will terminate on February 24, 2007 unless terminated earlier by
the Board. Termination of this Plan shall not affect the terms or conditions of
any award granted prior to termination. Awards hereunder may be made at any time
prior to the termination of this Plan, provided that no award may be made after
February 24, 2007.

6.2 AMENDMENTS. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of stockholder approval required by applicable law,
rule or regulation including Section 162(m) of the Code; provided, however, that
no amendment shall be made without stockholder approval if such amendment would
(a) reduce the minimum purchase price in the case of an option or the base price
in the case of an SAR, (b) effect any change inconsistent with Section 422 of
the Code, (c) extend the term of this Plan or (d) eliminate or have the effect
of eliminating the provision set forth in Section 6.12. No amendment may impair
the rights of a holder of an outstanding award without the consent of such
holder.

6.3 AGREEMENT. Each award under this Plan shall be evidenced by an
Agreement setting forth the terms and conditions applicable to such award. No
award shall be valid until an Agreement is executed by the Company and the
recipient of such award and, upon execution by each party and delivery of the
Agreement to the Company, such award shall be effective as of the effective date
set forth in the Agreement.

6.4 NON-TRANSFERABILITY OF STOCK OPTIONS, SARS AND PERFORMANCE SHARES. No
option, SAR or Performance Share shall be transferable other than (i) by will,
the laws of descent and distribution or pursuant to beneficiary designation
procedures approved by the Company or (ii) as otherwise set forth in the
Agreement relating to such award. Each option, SAR or Performance Share may be
exercised or settled during the participant's lifetime only by the holder or the
holder's legal representative or similar person. Except as permitted by the
second preceding sentence, no option, SAR or Performance Share may be sold,
transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed
of (whether by operation of law or otherwise) or be subject to execution,
attachment or similar process. Upon any attempt to so sell, transfer, assign,
pledge, hypothecate, encumber or otherwise dispose of any option, SAR or
Performance Share, such award and all rights thereunder shall immediately become
null and void.

6.5 TAX WITHHOLDING. The Company shall have the right to require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash pursuant to an award made hereunder, payment by the holder of such award of
any Federal, state, local or other taxes which may be required to be withheld or
paid in connection with such award. An Agreement may provide that (i) the
Company shall withhold whole shares of Common Stock which would otherwise be
delivered to a holder, having an aggregate Fair Market Value determined as of
the date the obligation to withhold or pay taxes arises in connection with an
award (the "Tax Date"), or withhold an amount of cash which would otherwise be
payable to a holder, in the amount necessary to satisfy any such obligation or
(ii) the holder may satisfy any such obligation by any of the following means:
(1) a cash payment to the Company, (2) delivery to the Company of Mature Shares
having an aggregate Fair Market Value, determined as of the Tax Date, equal to
the amount necessary to satisfy any such obligation, (3) authorizing the Company
to withhold whole shares of Common Stock which would otherwise be delivered
having an aggregate Fair Market Value, determined as of the Tax Date, or
withhold an amount of cash which would otherwise be payable to a holder, to the
amount necessary to satisfy any such obligation, (4) in the case of the exercise
of an option, a cash payment by a broker-dealer acceptable to the Company to
whom the optionee has submitted an irrevocable notice of exercise or (5) any
combination of
IV-12

(1), (2) and (3), in each case to the extent set forth in the Agreement relating
to the award; provided, however, that the Committee shall have sole discretion
to disapprove of an election pursuant to any of clauses (2)-(5). An Agreement
may provide for shares of Common Stock to be delivered or withheld having an
aggregate Fair Market Value in excess of the minimum amount required to be
withheld. Any fraction of a share of Common Stock which would be required to
satisfy such an obligation shall be disregarded and the remaining amount due
shall be paid in cash by the holder.

6.6 RESTRICTIONS ON SHARES. Each award made hereunder shall be subject to
the requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the delivery of shares
thereunder, such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of Common Stock
delivered pursuant to any award made hereunder bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

6.7 ADJUSTMENT. Except as provided in Section 6.8, in the event of any
stock split, stock dividend, recapitalization, reorganization, merger,
consolidation, combination, exchange of shares, liquidation, spin-off or other
similar change in capitalization or event, or any distribution to holders of
Common Stock other than a regular cash dividend, the number and class of
securities available under this Plan, the number and class of securities subject
to each outstanding option and the purchase price per security, the number of
securities subject to each option to be granted to Non-Employee Directors
pursuant to Article V, the terms of each outstanding SAR, the number and class
of securities subject to each outstanding Stock Award, and the terms of each
outstanding Performance Share shall be appropriately adjusted by the Committee,
such adjustments to be made in the case of outstanding options and SARs without
an increase in the aggregate purchase price or base price. The decision of the
Committee regarding any such adjustment shall be final, binding and conclusive.
If any such adjustment would result in a fractional security being (a) available
under this Plan, such fractional security shall be disregarded, or (b) subject
to an award under this Plan, the Company shall pay the holder of such award, in
connection with the first vesting, exercise or settlement of such award, in
whole or in part, occurring after such adjustment, an amount in cash determined
by multiplying (i) the fraction of such security (rounded to the nearest
hundredth) by (ii) the excess, if any, of (1) the Fair Market Value on the
vesting, exercise or settlement date over (2) the exercise or base price, if
any, of such award.

6.8 CHANGE IN CONTROL.

(a) (i) Notwithstanding any provision in this Plan or any Agreement, in the
event of a Change in Control pursuant to Section (b)(iii) or (iv) below, (1) all
outstanding options and SARs shall immediately become exercisable in full, (2)
the Restriction Period applicable to any outstanding Restricted Stock Award
shall lapse, (3) the Performance Period applicable to any outstanding
Performance Share shall lapse and (4) the Performance Measures applicable to any
outstanding Restricted Stock Award (if any) and to any outstanding Performance
Share shall be deemed to be satisfied at the maximum level. If, in connection
with such Change in Control, holders of Common Stock receive solely shares of
common stock that are registered under Section 12 of the Exchange Act, there
shall be substituted for each share of Common Stock available under this Plan,
whether or not then subject to an outstanding award, the number and class of
shares into which each outstanding share of Common Stock shall be converted
pursuant to such Change in Control. If, in connection with such Change in
Control, holders of Common Stock receive solely cash and shares of common stock
that are registered under Section 12 of the Exchange Act, each outstanding award
shall be surrendered to and canceled by the Company, and the holder shall
receive, within ten days of the occurrence of such Change in Control, a
proportionate amount of cash in the manner provided in Section (a)(ii) below,
and there shall be substituted for the award surrendered a similar award
reflecting a proportionate number of the class of shares into which each
outstanding share of Common Stock shall be converted to such Change in Control.
In the event of any such substitution, the proportion of cash and common stock,
the purchase price per share in the case of an option and the base price in the
case of an SAR, and any other terms of outstanding awards
IV-13

shall be appropriately adjusted by the Committee, such adjustments to be made in
the case of outstanding options and SARs without an increase in the aggregate
purchase price or base price; provided, that, the proportion of cash and common
stock substituted for outstanding awards shall reflect the approximate
proportion of cash and common stock received by holders of Common Stock in such
Change in Control. If, in connection with a Change in Control, holders of Common
Stock receive any portion of the consideration in a form other than cash or
shares of common stock that are registered under Section 12 of the Exchange Act,
each share of Common Stock available under this Plan, whether or not then
subject to an outstanding award, shall be substituted or surrendered for such
proportion of common stock, cash or other consideration as shall be determined
by the Committee pursuant to Section 6.7.

(ii) Notwithstanding any provision in this Plan or any Agreement, in the
event of a Change in Control pursuant to Section (b)(i) or (ii) below, or in the
event of a Change in Control pursuant to Section (b)(iii) or (iv) below in
connection with which the holders of Common Stock receive cash, each outstanding
award shall be surrendered to the Company by the holder thereof, and each such
award shall immediately be canceled by the Company, and the holder shall
receive, within ten days of the occurrence of a Change in Control pursuant to
Section (b)(i) or (ii) below or within ten days of the approval of the
stockholders of the Company contemplated by Section (b)(iii) or (iv) below, a
cash payment from the Company in an amount equal to (1) in the case of an
option, the number of shares of Common Stock then subject to such option,
multiplied by the excess, if any, of the greater of (A) the highest per share
price offered to stockholders of the Company in any transaction whereby the
Change in Control takes place or (B) the Fair Market Value of a share of Common
Stock on the date of occurrence of the Change in Control, over the purchase
price per share of Common Stock subject to the option; (2) in the case of a
Free-Standing SAR, the number of shares of Common Stock then subject to such
SAR, multiplied by the excess, if any, of the greater of (A) the highest per
share price offered to stockholders of the Company in any transaction whereby
the Change in Control takes place or (B) the Fair Market Value of a share of
Common Stock on the date of occurrence of the Change in Control, over the base
price of the SAR; and (3) in the case of a Restricted Stock Award or Performance
Share Award, the number of shares of Common Stock or the number of Performance
Shares, as the case may be, then subject to such award, multiplied by the
greater of (A) the highest per share price offered to stockholders of the
Company in any transaction whereby the Change in Control takes place or (B) the
Fair Market Value of a share of Common Stock on the date of occurrence of the
Change in Control. In the event of a Change in Control, each Tandem SAR shall be
surrendered by the holder thereof and shall be canceled simultaneously with the
cancellation of the related option. Except as may be provided in an Agreement
relating to an award, the Company may, but is not required to, cooperate with
any person who is subject to Section 16 of the Exchange Act to assure that any
cash payment in accordance with the foregoing to such person is made in
compliance with Section 16 and the rules and regulations thereunder.

(b) "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 25% 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 (excluding any acquisition resulting from the exercise of an
exercise, conversion or exchange privilege unless the security being so
exercised, converted or exchanged was acquired directly from the Company),
(B) any acquisition by the Company, (C) any acquisition by an employee
benefit plan (or related trust) sponsored or maintained by the Company or
any corporation controlled by the Company, (D) any acquisition by an Exempt
Person or (E) any acquisition by any corporation pursuant to a transaction
which complies with clauses (1), (2) and (3) of subsection (iii) of this
Section 6.8(b); provided, further, that for purposes of clause (2), if any
Person (other than an Exempt Person, the Company or any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company) shall become the Beneficial Owner of
50% or more of the Outstanding Company Common Stock or 50% or more of the
Outstanding Company Voting Securities by reason of an

IV-14

acquisition by the Company, and such Person shall, after such acquisition
by the Company, become the Beneficial Owner of any additional shares of the
Outstanding Company Common Stock or any additional Outstanding Company
Voting Securities and such Beneficial Ownership is publicly announced, such
additional Beneficial Ownership shall constitute a Change in Control;

(ii) individuals who, as of the effective date hereof, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of such Board; provided, that, any
individual who becomes a director of the Company subsequent to the
effective date hereof whose election, or nomination for election by the
Company's stockholders, was approved by the vote of at least a majority of
the directors then comprising the Incumbent Board shall be deemed a member
of the Incumbent Board; and provided, further, that any individual who was
initially elected as a director of the Company as a result of an actual or
threatened solicitation by a Person or a group for the purpose of opposing
a solicitation by any other Person or group with respect to the election or
removal of directors shall not be deemed a member of the Incumbent Board;

(iii) 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) in 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 an
Exempt Person; 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

(iv) approval by the stockholders of the Company of a plan of complete
liquidation or dissolution of the Company.

Notwithstanding anything to the contrary herein, no Change of Control shall
be deemed to have taken place as a result of the issuance of shares of Common
Stock by the Company or the sale of shares of Common Stock by its stockholders
in connection with the Company's initial public offering.

6.9 NO RIGHT OF PARTICIPATION OR EMPLOYMENT/SERVICE. No person shall have
any right to participate in this Plan. Neither this Plan nor any award made
hereunder shall confer upon any person any right to continued employment or
service by the Company, any Subsidiary or any affiliate of the Company or affect
in any manner the right of the Company, any Subsidiary or any affiliate of the
Company to terminate the employment or service of any person at any time without
liability hereunder.

6.10 RIGHTS AS STOCKHOLDER. No person shall have any right as a stockholder
of the Company with respect to any shares of Common Stock or other equity
security of the Company which is subject to an award hereunder unless and until
such person becomes a stockholder of record with respect to such shares of
Common Stock or equity security.
IV-15

6.11 GOVERNING LAW. This Plan, each award hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflicts of laws.

6.12 REPRICING AWARDS. The exercise price or base price, as the case may
be, of any award granted hereunder shall not be changed after the date of grant
of such award without the affirmative vote of a majority of the voting power of
the shares of capital stock of the Company represented at a meeting in which the
change to such exercise price or base price is considered for approval.

IV-16

Whitehall Jewellers, Inc. is pleased to announce that registered shareholders
now have an innovative and secure means of accessing and managing their
registered accounts on-line. This easy-to-use service is only an click away at:

INTERNET ACCESS IS HERE!

In order to access your account and request your temporary password (or PIN),
you will need your Social Security number and Issue ID (151710). Please click on
the mail new password tab and follow the instructions and a temporary password
will be mailed to your address of record. If you have any questions about using
this service, please contact us at:

http://www.gateway.equiserve.com

1-800-733-5001

------------------

DETACH HERE

WHITEHALL JEWELLERS, INC.

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING, JUNE 11, 2002

P The undersigned hereby appoints Hugh M. Patinkin and John R.
Desjardins, and each of them, as proxies, each with the power of
substitution, and hereby authorizes them to vote all shares of Common Stock
and/or Class B Common Stock which the undersigned is entitled to vote at
R the 2002 Annual Meeting of Stockholders of Whitehall Jewellers, Inc. (the
"Company"), to be held at the Standard Club, 320 S. Plymouth Court,
Chicago, Illinois, 60604 on Tuesday, June 11, 2002 at 10:00 a.m. (local
O time), and at any adjournments or postponements thereof (1) as hereinafter
specified upon the proposals listed on the reverse side and as more
particularly described in the Company's Proxy Statement and (2) in their
discretion upon such other matters as may properly come before the meeting.
X
The undersigned hereby acknowledges receipt of: (1) Notice of Annual
Meeting of Stockholders of the Company, (2) accompanying Proxy Statement,
and (3) Annual Report of the Company for the fiscal year ended January 31,
Y 2002.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED
TO SIGN AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE SO THAT YOUR
STOCK MAY BE REPRESENTED AT THE MEETING.

- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------

WHITEHALL JEWELLERS, INC.
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940

May 10, 2002

Dear Stockholder:

You are cordially invited to attend the 2002 Annual Meeting of Stockholders
to be held at 10:00 a.m. (local time) on Tuesday, June 11, 2002 at the
Standard Club, 320 S. Plymouth Court, Chicago, IL 60604. Detailed
information as to the business to be transacted at the meeting is contained
in the accompanying Notice of Annual Meeting and Proxy Statement.

Regardless of whether you plan to attend the meeting, it is important that
your shares be voted. Accordingly, we ask that you sign and return your
proxy as soon as possible in the envelope provided. If you plan to attend
the meeting, please mark the appropriate box on the proxy.

Sincerely,

/s/ John R. Desjardins

John R. Desjardins
Secretary

DETACH HERE

PLEASE MARK |
[X] VOTES AS IN |
THIS EXAMPLE. -----

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES IN PROPOSAL 1 AND A VOTE FOR PROPOSALS 2 - 4.

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO THE
ELECTION OF ANY DIRECTOR OR ANY PROPOSAL SPECIFIED BELOW, THIS PROXY WILL BE VOTED FOR SUCH ELECTION OF DIRECTOR(S) AND FOR SUCH
PROPOSAL(S).

1. Election of Directors. FOR AGAINST ABSTAIN
NOMINEES: (01) Matthew M. Patinkin and (02) Richard K. Berkowitz 2. Approve Amendment and Restatement of [ ] [ ] [ ]
Whitehall's Restated Certificate of
Incorporation.
FOR WITHHELD
ALL [ ] [ ] FROM ALL 3. Approve Whitehall's Employee Stock [ ] [ ] [ ]
NOMINEES NOMINEES Purchase Plan.

[ ] 4. Approve the Amendment to Whitehall's [ ] [ ] [ ]
---------------------------------------------- 1997 Long-Term Incentive Plan.
For all nominees except as noted above
5. In their discretion, the proxies are authorized to vote
upon any other business that may properly come before the
meeting.

MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]

Please sign exactly as name appears hereon. Joint owners
should each sign. Executors, administrators, trustees,
guardians or other fiduciaries should give full title as
such. If signing for a corporation, please sign the full
corporate name by a duly authorized officer.

Signature: Date: Signature: Date:
----------------------------- --------------------------- ------------------------- ---------------------

U.S. TRUST COMPANY, N.A.

U.S. TRUST

NOTICE TO PARTICIPANTS IN THE
WHITEHALL JEWELLERS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN

Dear ESOP Participant:

Enclosed with this notice is the 2001 Annual Report of Whitehall Jewellers,
Inc. (f/k/a Marks Bros. Jewelers, Inc.) (the "Company") and a Proxy Statement
that describes the Annual Meeting of Stockholders to be held on June 11, 2002
(the "Annual Meeting"). The Proxy Statement has been prepared by the Board of
Directors of the Company in connection with the business to be transacted at the
Annual Meeting. THE ITEMS TO BE PRESENTED AT THE ANNUAL MEETING ARE IMPORTANT
AND ARE DESCRIBED IN THE PROXY MATERIALS BEING ENCLOSED WITH THIS NOTICE. You
should read the Proxy Statement carefully before completing your voting
instruction card.

DIRECTIONS TO THE TRUSTEE

According to plan records, you are a participant and have shares of
Whitehall Jewellers, Inc. Common Stock ("Shares") allocated to your account in
the Marks Bros. Jewelers, Inc. Employee Stock Ownership Plan (the "ESOP"). Only
U.S. Trust Company, N.A. as trustee (the "Trustee") of the ESOP can vote the
Shares held by the ESOP. However, under the terms of the ESOP, you, as a
participant in the ESOP, are entitled to instruct the Trustee how to vote the
Shares in your account.

Enclosed with this notice is a confidential voting instruction card which
is provided to you for the purpose of instructing the Trustee how to vote your
Shares on the matters described in the Proxy Statement. Your vote on these
matters is important. Please take the time to complete the voting instruction
card and return it to the Trustee. You may instruct the Trustee to vote for,
against, or to abstain from voting on such matters. If you do not provide
instructions to the Trustee, your Shares will be voted by the Trustee in its
discretion.

CONFIDENTIALITY

Your voting instructions are strictly confidential. How you vote (or
whether you vote) will not be revealed, directly or indirectly, to any officer,
employee, or director of the Company or to anyone else, except as otherwise
required by law. You should, therefore, feel completely free to instruct the
Trustee to vote your Shares in the manner you think best.

VOTING DEADLINE

Because of the time required to tabulate voting instructions from
participants before the Annual Meeting, the Trustee must establish a cut-off
date for receiving your instruction cards. The cut-off date established by the
Trustee is 5:00 P.M. Eastern Time on June 5, 2002. The Trustee cannot ensure
that instruction cards received after the cut-off date will be tabulated.
Therefore, it is important that you act promptly and return your instruction
card by June 5, 2002, in the envelope provided for your convenience. If the
Trustee does not receive timely instructions from you with respect to your
Shares, the Trustee will vote such Shares in its discretion. EquiServe has been
retained by the Company to serve as Agent to tally your voting instructions.

If you are a direct stockholder of Whitehall Jewellers, Inc., you will
receive, under separate cover, proxy solicitation materials including a proxy
card. The proxy card you receive under separate cover, if you own shares other
than those in your ESOP account, CANNOT be used to direct the voting of shares
held by the ESOP.

FURTHER INFORMATION

If you have questions regarding your voting rights, the voting instruction
card or the confidentiality of your vote, you should contact the Trustee at
(800) 535-3093 between 9:00 A.M. and 4:00 P.M. Pacific Time (11:00 A.M. and 6:00
P.M. Central Time), Monday through Friday.

Your ability to instruct the Trustee how to vote your Shares is an
important part of your rights as an ESOP participant. Please consider the
enclosed materials carefully and then furnish your voting instructions promptly.

May 10, 2002 U.S. Trust Company, National Association
as Trustee of the
WHITEHALL JEWELLERS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN

DETACH HERE

WHITEHALL JEWELLERS, INC.

VOTING INSTRUCTIONS FOR THE ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE ESOP TRUSTEE

P The undersigned participant in the WHITEHALL JEWELERS, INC. EMPLOYEE
STOCK OWNERSHIP PLAN does hereby instruct the ESOP Trustee to vote at the
Annual Meeting of Stockholders of Whitehall Jewellers, Inc. (the "Company")
to be held June 11, 2002, (the "Annual Meeting"), and at all adjournments
R or postponements thereof, all the shares of Common Stock of the Company in
the undersigned's ESOP account, on the matters set out on the reverse side
of this card and described in the Proxy Statement and, in its discretion,
on any other business which may properly come before the Annual Meeting.
O
This card must be properly completed, signed, dated, and returned in
the envelope provided to be received by EquiServe, the tabulator, by 5:00
P.M. Eastern Time on June 5, 2002. If your voting instructions are not
X timely received, the Trustee will vote your shares in its discretion. If
this card is not received by 5:00 P.M. Eastern Time on June 5, 2002, the
Trustee cannot ensure that your voting instructions will be tabulated. If
Y you sign, date and return this card but do not specifically instruct the
Trustee how to vote, the Trustee will vote your shares in accordance with
the recommendations of the Board of Directors. Your voting instructions to
the Trustee are confidential as explained in the accompanying Notice to
Plan Participants.

PLEASE SPECIFY YOUR VOTING INSTRUCTIONS, SIGN, DATE AND MAIL THIS
VOTING INSTRUCTION CARD PROMPTLY IN THE ENVELOPE PROVIDED.

- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------

WHITEHALL JEWELLERS, INC.
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940

DETACH HERE

PLEASE MARK |
[X] VOTES AS IN |
THIS EXAMPLE. -----

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES IN PROPOSAL 1 AND A VOTE FOR PROPOSALS 2 - 4.

1. Election of Directors. FOR AGAINST ABSTAIN
NOMINEES: (01) Matthew M. Patinkin and (02) Richard K. Berkowitz 2. Approve Amendment and Restatement [ ] [ ] [ ]
of Whitehall's Restated Certificate
of Incorporation.

3. Approve Whitehall's Employee Stock [ ] [ ] [ ]
FOR WITHHELD MARK HERE Purchase Plan.
ALL [ ] [ ] FROM ALL [ ] IF YOU PLAN
NOMINEES NOMINEES TO ATTEND 4. Approve the Amendment to Whitehall's [ ] [ ] [ ]
THE MEETING 1997 Long-Term Incentive Plan.

[ ] [ ] MARK HERE
-------------------------------------- FOR ADDRESS
For all nominees except as noted above CHANGE AND
NOTE BELOW

As a participant in the Plan, I hereby acknowledge receipt of
the Notice to Plan Participants and the accompanying Proxy
Statement relating to the Annual Meeting of Stockholders of
Whitehall Jewellers, Inc. and I hereby instruct the Trustee to
vote all shares of the Company common stock in my account as I
have indicated above. If I sign, date and return this card but
do not specifically instruct the Trustee how to vote, I
understand that the Trustee will vote the shares credited to my
account in accordance with the recommendations of the Board of
Directors.

Please sign exactly as name appears hereon. Joint owners should
each sign. Executors, administrators, trustees, guardians or
other fiduciaries should give full title as such. If signing
for a corporation, please sign the full corporate name by a
duly authorized officer.

Signature: Date: Signature: Date:
----------------------------- --------------------------- ------------------------- ---------------------