WHITEHALL JEWELLERS INC
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND GOLD CONSIG
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>c91623exv10w1.txt
<DESCRIPTION>SECOND AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND GOLD CONSIGNMENT AGREEMENT
<TEXT>
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           SECOND AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING
                     CREDIT AND GOLD CONSIGNMENT AGREEMENT


         THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT
AND GOLD CONSIGNMENT AGREEMENT (this "Amendment") is entered into as of the 31st
day of January, 2005 by and among the banks that are or may from time to time
become parties hereto (individually a "Bank" and collectively, the "Banks"),
LASALLE BANK NATIONAL ASSOCIATION, a national banking association, as
administrative agent ("Administrative Agent") and collateral agent, ABN AMRO
BANK N.V., as syndication agent, JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as
documentation agent, and WHITEHALL JEWELLERS, INC., a Delaware corporation (the
"Borrower").

                              W I T N E S S E T H:
                               - - - - - - - - - -

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

         WHEREAS, the Borrower and the Banks have agreed to further amend the
Agreement to, among other items, (i) add an additional reserve in the amount of
$15,000,000 to the Borrowing Base (as defined in the Agreement) and (ii) amend
certain financial and reporting covenants, all in accordance with the terms and
conditions of this Amendment.

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

         1. Incorporation of the Agreement. All capitalized terms which are not
defined hereunder shall have the same meanings as set forth in the Agreement,
and the Agreement, to the extent not inconsistent with this Amendment, is
incorporated herein by this reference as though the same were set forth in its
entirety. To the extent any terms and provisions of the Agreement are
inconsistent with the amendments set forth in Paragraph 2 below, such terms and
provisions shall be deemed superseded hereby. Except as specifically set forth
herein, the Agreement shall remain in full force and effect and its provisions
shall be binding on the parties hereto.

         2. Amendment of the Agreement.

                  (a) The first sentence contained within the definition of the
term "Borrowing Base" is hereby amended and restated to read as follows:

                  At the relevant time of reference thereto, an amount
         determined by the Administrative Agent by reference to the most recent
         Borrowing Base Report delivered to the Banks and the Agents pursuant to
         ss.10.4(f), which is equal to the sum of (a) the lesser of (i)
         sixty-five percent (65%) of the net book value

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         (determined on an average cost basis at lower of cost or market) of
         Eligible Inventory and (ii) the sum of (A) sixty percent (60%) of the
         net book value (determined on an average cost basis at lower of cost or
         market) of Eligible Inventory minus the Fair Market Value of Precious
         Metal contained in Eligible Inventory, plus (B) 90% of the Fair Market
         Value of the Precious Metal contained in Eligible Inventory; minus (b)
         the Inventory Shrink Reserve; minus (c) the Layaway Reserve; plus (d)
         85% of Eligible Accounts Receivable; minus (e) an additional Reserve in
         the amount of $15,000,000 (which $15,000,000 Reserve may only be
         amended at the direction of the Required Banks).

                  (b) Section 8.4(f) of the Agreement is hereby amended and
restated to read as follows:

                  (f) within five (5) Business Days following the end of each
         calendar week, or at such earlier time as the Administrative Agent may
         reasonably request, a Borrowing Base Report setting forth the Borrowing
         Base as at the end of such calendar week or other date so requested by
         the Administrative Agent. In addition to the foregoing, within ten (10)
         Business Days after the end of each calendar month or at such earlier
         time as the Administrative Agent may reasonably request (i) a Borrowing
         Base Report setting forth the Borrowing Base as at the end of such
         calendar month or other date so requested by the Administrative Agent,
         (ii) a Consigned Precious Metal Report setting forth (1) the amount of
         the Consigned Precious Metal and Borrower's Precious Metal as of the
         end of such calendar month or other date so requested by the
         Administrative Agent, and (2) a calculation of the Consignment Advance
         Rate Percentage multiplied by the Fair Market Value of the sum of (y)
         Borrower's Precious Metal plus (z) Consigned Precious Metal as of the
         end of such calendar month or other date so requested by the Agents,
         and (iii) a Monthly Inventory Report, in each case together with
         supporting schedules and documentation, with each such Borrowing Base
         Report and Consigned Precious Metal Report to be accompanied by a
         certification by the Controller, Senior Vice President of Finance or
         the principal financial or accounting officer of the Borrower that the
         information contained therein is true and accurate in all respects;

                  (c) Section 10.1 of the Agreement is hereby amended and
restated to read as follows:

                  10.1 Fixed Charge Coverage Ratio. The Borrower will not
         permit, for any period of four consecutive fiscal quarters, the ratio
         of (a) the sum of (i) Consolidated EBITDA for such period plus (ii)
         Consolidated Minimum Store Rent for such period to (b) the sum of (i)
         Consolidated Minimum Store Rent for such period plus (ii) Consolidated
         Cash Interest Expense for such period, to be less than (x) 1.00:1.00
         measured at January 31, 2005 and (y) 1.25:1.00 at the end of each
         fiscal quarter thereafter. Notwithstanding the foregoing, for purposes
         of calculating EBITDA, the Borrower may exclude (i) any cash or
         non-cash charges arising from the application of the Financial
         Accounting Standard Board's Statement No. 5 and (ii) upon approval of
         the Administrative Agent, a deduction




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         for cash and non-cash expenses incurred by the Borrower for legal,
         accounting and consultant's fees and expenses arising from the Capital
         Factors Lawsuit and the resulting SEC inquiry and the U.S. Attorney
         investigation associated therewith.

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

         4. Delivery of Documents/Information. Prior to entering into this
Amendment, Administrative Agent shall have received from Borrower the following
fully executed documents, in form and substance satisfactory to Administrative
Agent and each Bank, and all of the transactions contemplated by each such
document shall have been consummated or each condition contemplated by each such
document shall have been satisfied:

                  (a) this Amendment;

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

                  (c) such other documents, certificates and opinions as
Administrative Agent may request.

         5. Reference to the Effect on the Agreement.

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

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

         6. Representations and Warranties of the Borrower. Borrower hereby
represents and warrants to Administrative Agent and the Banks as of the date
hereof as follows:

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

                  (b) The Agreement (as amended by this Amendment) and the other
Loan Documents constitute legal, valid and binding obligations enforceable in
accordance with their terms by Administrative Agent and the Banks against
Borrower, and Borrower expressly reaffirms each of its obligations under the
Agreement (as amended by this Amendment) and each of the other Loan Documents,
including, without limitation, the Borrower's Liabilities. Borrower further
expressly acknowledges and agrees that Administrative Agent has a valid, duly



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perfected, first priority and fully enforceable security interest in and lien
against each item of Collateral except as otherwise set forth in the Agreement.
Borrower agrees that it shall not dispute the validity or enforceability of the
Agreement (as it was stated before and after this Amendment) or any of the other
Loan Documents or any of its respective obligations thereunder, or the validity,
priority, enforceability or extent of Administrative Agent's security interest
in or lien against any item of Collateral, in any judicial, administrative or
other proceeding;

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

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

         7. Fees and Expenses. The Borrower agrees to pay on demand all costs,
fees and expenses of or incurred by the Administrative Agent in connection with
the evaluation, negotiation, preparation, execution and delivery of this
Amendment and the other instruments and documents executed and delivered in
connection with the transactions described herein (including the filing or
recording thereof), including, but not limited to, the reasonable fees and
expenses of counsel for the Administrative Agent, search fees and taxes payable
in connection with this Amendment and any future amendments to the Agreement. In
addition, the Borrower agrees to pay to Administrative Agent, for the benefit of
the Banks, a closing fee of $150,000 upon the execution and delivery of this
Amendment by the Banks which fee shall be fully earned and non-refundable as of
the date of this Amendment.

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

                            [SIGNATURE PAGE FOLLOWS]




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      (SECOND AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND
                   GOLD CONSIGNMENT AGREEMENT SIGNATURE PAGE)


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

                                     WHITEHALL JEWELLERS, INC.


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


                                     LASALLE BANK NATIONAL
                                     ASSOCIATION, for itself and as
                                     Administrative Agent for the Banks


                                     By:  /s/ Robert Barnhard
                                        --------------------------------------
                                     Name: Robert Barnhard
                                          ------------------------------------
                                     Title: Senior Vice President - Group Head
                                           -----------------------------------


                                     JPMORGAN CHASE BANK, NATIONAL
                                     ASSOCIATION, individually
                                     and as Documentation Agent


                                     By:  /s/ Michael Stevenson
                                        --------------------------------------
                                     Name: Michael Stevenson
                                          ------------------------------------
                                     Title: Vice President
                                           -----------------------------------


                                     ABN AMRO BANK N.V., individually and
                                     as Syndication Agent


                                     By:  /s/ Jeffrey Sarfaty
                                        --------------------------------------
                                     Name: Jeffrey Sarfaty
                                          ------------------------------------
                                     Title: Vice President
                                           -----------------------------------

                                     By:  /s/ Frederick G. Jennings
                                        --------------------------------------
                                     Name: Frederick G. Jennings
                                          ------------------------------------
                                     Title: Vice President
                                           -----------------------------------



<PAGE>
      (SECOND AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND
              GOLD CONSIGNMENT AGREEMENT SIGNATURE PAGE, CONTINUED)


                                     FLEET RETAIL GROUP, INC., as a Bank


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


                                     SOVEREIGN BANK, as a Bank


                                     By:  /s/ Irene A. Ogarek
                                        --------------------------------
                                     Name: Irene A. Ogarek
                                          ------------------------------
                                     Title: Vice President
                                           -----------------------------





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