EXHIBIT 10.5

 

WAIVER AND CONSENT

 

This waiver and consent (the “Waiver”) is entered into as of April 29, 2005, by
and among The Wet Seal, Inc., a Delaware corporation (the “Company”) and the
buyers listed on the Schedule of Buyers attached hereto as Exhibit A (each, a
“Buyer” and, collectively, the “Buyers”). Unless otherwise defined herein or the
context otherwise requires, capitalized terms used herein and defined in the
Securities Purchase Agreement shall be used herein as therein defined.

 

THE PARTIES TO THIS AGREEMENT enter into this waiver on the basis of the
following facts, intentions and understanding:

 

A. The Company and the Buyers entered into that certain Securities Purchase
Agreement, dated as of April 29, 2005 (the “Securities Purchase Agreement”),
and, upon the terms and subject to the conditions of the Securities Purchase
Agreement, the Company has agreed to issue and sell to the Buyers an aggregate
of (i) Twenty-Four Thousand Six Hundred (24,600) shares of the Company’s Series
C Convertible Preferred Stock, $0.01 par value per share, issued pursuant to the
Company’s Certificate of Designations, Preferences and Rights of Series C
Convertible Preferred Stock related thereto, which shall be convertible into
shares of Class A Common Stock of the Company, $0.10 par value per share (the
“Common Stock”), and (ii) Warrants to purchase in the aggregate up to Seven
Million Five Hundred Thousand (7,500,000) shares of Common Stock. In addition,
the Buyers have agreed to exercise their Series A Warrants (as defined in the
Securities Purchase Agreement) and a portion of their Series B Warrants (as
defined in the Securities Purchase Agreement) for up to Three Million Three
Hundred Fifty-Nine Thousand Nine Hundred and Ninety-Seven (3,359,997) shares of
Common Stock.

 

B. In accordance with Section 7(b) of the Securities Purchase Agreement, the
parties hereto have agreed that, other than the Security Documents which shall
be effective on the Escrow Date in accordance with their respective terms, each
of the documents required to be delivered pursuant to Section 7(a) of the
Securities Purchase shall be executed and delivered by the appropriate parties
on April 29, 2005 (the “Escrow Date”) and, except for the documents listed on
Schedule 1 to the Securities Purchase Agreement, are dated as of the Escrow
Date, to be held in escrow by Akin Gump Strauss Hauer & Feld LLP and Schulte
Roth & Zabel LLP, and all actions required to be undertaken pursuant to Section
7(a) shall be completed, as the case may be, on or prior to the Escrow Date (the
“Escrow Conditions”).

 

C. The Company desires that each Buyer waive each of the conditions to Closing
set forth in Sections 7(a) (including, but not limited to, Section 7(a)(x)
thereof), except for Sections 7(a)(i) and (xi), which shall constitute the only
remaining conditions to each Buyer’s obligation to purchase the Preferred
Shares, the Warrants and the Closing Exercise Shares on the Closing Date.

 

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

 

  1. The Company hereby certifies to each Buyer that as of the date hereof the
Escrow Conditions have been met.

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  2. Each Buyer hereby waives each of the conditions to Closing set forth in
Section 7(a) (including, but not limited to, Section 7(a)(x)), except for
Sections 7(a)(i) and (xi), which shall constitute the only remaining conditions
to each Buyer’s obligation to purchase the Preferred Shares, the Warrants and
the Closing Exercise Shares on the Closing Date.

 

  3. The parties hereto hereby acknowledge and agree that Deloitte & Touche LLP,
the Company’s independent auditors, may rely on this Waiver.

 

  4. Each party represents and warrants that this Waiver has been duly and
validly authorized, executed and delivered on behalf of the undersigned and
shall constitute the legal, valid and binding obligations of the undersigned
enforceable against such party in accordance with its terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.

 

  5. This Waiver shall be effective as of April 29, 2005 and shall remain
effective provided that the documents held in escrow pursuant to Section 7(b) of
the Securities Purchase Agreement are released to the Buyers on the Closing
Date.

 

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

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  7. Except for the waiver set forth in Section 2 above, nothing herein shall be
deemed to amend or waive any Transaction Documents or any of the Securities.

 

  8. This Waiver may be executed in two or more identical counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other
party; provided that a facsimile signature shall be considered due execution and
shall be binding upon the signatory thereto with the same force and effect as if
the signature were an original, not a facsimile signature.

 

  9. The obligations of each Buyer under this Waiver and any Transaction
Document are several and not joint with the obligations of any other Buyer, and
no Buyer shall be responsible in any way for the performance of the obligations
of any other Buyer under this Waiver or any Transaction Document. Nothing
contained herein or in any Transaction Document, and no action taken by any
Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Buyers are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated by this
Waiver or the Transaction Documents. Each Buyer confirms that it has
independently participated in the negotiation of the transaction contemplated
hereby with the advice of its own counsel and advisors. Each Buyer, other than
SAC, acknowledges that (i) Schulte Roth & Zabel LLP solely represented SAC in
connection with the transaction contemplated hereby and (ii) SAC did not provide
any advice in connection herewith and such Buyer’s determination to participate
herein was based solely on its own evaluation of the risks and merits of the
investment contemplated hereby. Each Buyer shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights
arising out of this Waiver or out of any other Transaction Documents, and it
shall not be necessary for any other Buyer to be joined as an additional party
in any proceeding for such purpose.

 

[The remainder of this page is intentionally left blank]

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IN WITNESS WHEREOF, the undersigned has executed this Waiver and Consent
effective as of the date set forth above.

 

THE WET SEAL, INC. By:  

/s/ Douglas C. Felderman

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Name:   Douglas C. Felderman Title:   Executive Vice President & Chief Financial
Officer

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IN WITNESS WHEREOF, the undersigned has executed this Waiver and Consent
effective as of the date set forth above.

 

S.A.C. CAPITAL ASSOCIATES, LLC

By: S.A.C. Capital Advisors, LLC

By:  

/s/ Peter Nussbaum

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Name:   Peter Nussbaum Title:   General Counsel

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IN WITNESS WHEREOF, the undersigned has executed this Waiver and Consent
effective as of the date set forth above.

 

PRENTICE CAPITAL PARTNERS QP, LP

By: Prentice Capital GP, LLC, its general partner

By:  

/s/ Charles Phillips

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Name:   Charles Phillips Title:    

 

PRENTICE CAPITAL PARTNERS, LP

By: Prentice Capital GP, LLC, its general partner

By:  

/s/ Charles Phillips

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Name:   Charles Phillips Title:    

 

PRENTICE CAPITAL OFFSHORE, LTD

By: Prentice Capital Management, LP, the Investment Manager

By:  

/s/ Charles Phillips

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Name:   Charles Phillips Title:    

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IN WITNESS WHEREOF, the undersigned has executed this Waiver and Consent
effective as of the date set forth above.

 

GMM CAPITAL, LLC By:  

/s/ Isaac Dabah

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Name:   Isaac Dabah Title:   Director

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IN WITNESS WHEREOF, the undersigned has executed this Waiver and Consent
effective as of the date set forth above.

 

GOLDFARB CAPITAL PARTNERS, LLC By:  

/s/ Morris Goldfarb

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Name:   Morris Goldfarb Title:   Member

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IN WITNESS WHEREOF, the undersigned has executed this Waiver and Consent
effective as of the date set forth above.

 

/s/ Charles Phillips

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Mr. Charles Phillips

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IN WITNESS WHEREOF, the undersigned has executed this Waiver and Consent
effective as of the date set forth above.

 

UBS FINANCIAL SERVICES AS

CUSTODIAN FBO CHARLES G.

PHILLIPS ROLLOVER IRA

By:  

/s/ Charles Phillips

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Name:   Charles Phillips Title:    

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IN WITNESS WHEREOF, the undersigned has executed this Waiver and Consent
effective as of the date set forth above.

 

/s/ Eli Wachtel

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Mr. Eli Wachtel

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IN WITNESS WHEREOF, the undersigned has executed this Waiver and Consent
effective as of the date set forth above.

 

WLSS CAPITAL PARTNERS, LLC By:  

/s/ Wayne S. Miller

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Name:   Wayne S. Miller Title:   Member

 

 

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IN WITNESS WHEREOF, the undersigned has executed this Waiver and Consent
effective as of the date set forth above.

 

SMITHFIELD FIDUCIARY LLC By:  

/s/ Scott M. Wallace

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Name:   Scott M. Wallace Title:   Authorized Signatory

 

[WAIVER AND CONSENT]

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IN WITNESS WHEREOF, the undersigned has executed this Waiver and Consent
effective as of the date set forth above.

 

D.B. ZWIRN SPECIAL

OPPORTUNITIES FUND, L.P.

By: D.B. ZWIRN PARTNERS LLC, its

general partner

By:  

/s/ Daniel B. Zwirn

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Name:   Daniel B. Zwirn Title:   Managing Member

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IN WITNESS WHEREOF, the undersigned has executed this Waiver and Consent
effective as of the date set forth above.

 

D.B. ZWIRN SPECIAL

OPPORTUNITIES FUND, LTD.

By: D.B. ZWIRN & CO., L.P., its trading Manager By:  

/s/ Daniel B. Zwirn

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Name:   Daniel B. Zwirn Title:   Managing Member

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IN WITNESS WHEREOF, the undersigned has executed this Waiver and Consent
effective as of the date set forth above.

 

RIVERVIEW GROUP, LLC By: Millennium Holding Group, L.P., By:   Millennium
Management, L.L.C. By:  

/s/ Dave Nolan

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Name:   Dave Nolan Title:   Executive Vice President

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EXHIBIT A TO WAIVER

SCHEDULE OF BUYERS

 

NAME OF BUYERS                            

S.A.C. Capital Associates, LLC

c/o S.A.C. Capital Advisors, LLC

72 Cummings Point Road

Stamford, Connecticut 06902

Attention: General Counsel

Facsimile: (203) 890-2393

Residence: Anguila

Prentice Capital Partners QP, LP

c/o Prentice Capital Management, LP

623 Fifth Avenue

32nd Floor New York, NY 10022

Attention: Michael Zimmerman

Charles Phillips

Facsimile: 212-756-1464

Prentice Capital Partners, LP

c/o Prentice Capital Management, LP

623 Fifth Avenue

32nd Floor New York, NY 10022

Attention: Michael Zimmerman

Charles Phillips

Facsimile: 212-756-1464

Prentice Capital Offshore, Ltd

c/o Prentice Capital Management, LP

623 Fifth Avenue

32nd Floor New York, NY 10022

Attention: Michael Zimmerman

Charles Phillips

Facsimile: 212-756-1464

GMM Capital, LLC

111 West 40th Street

20th Floor New York, NY 10018

Goldfarb Capital Partners LLC

21 Fairway Drive

Mamaroneck, NY 10543

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NAME OF BUYERS                                                 

 

Mr. Charles Phillips

777 Park Avenue

New York, NY 10021

UBS Financial Services as Custodian FBO

Charles G. Phillips Rollover IRA

777 Park Avenue

New York, NY 10021

Mr. Eli Wachtel

7 Shaw Road

Scarsdale, NY 10583

WLSS Capital Partners, LLC

c/o Wayne Miller

1365 York Avenue

Apt. 26B

New York, NY 10021

Smithfield Fiduciary LLC

c/o Highbridge Capital Management, LLC

9 West 57th Street

27th Floor

New York, NY 10019

Attention: Ari J. Storch

                    Adam J. Chill

Facsimile: (212) 751-0755

Telephone: (212) 287-4720

Residence: Cayman Islands

D.B. Zwirn Special Opportunities Fund, L.P

c/o D.B. Zwirn & Co., L.P.

745 Fifth Avenue, 18th Floor New York, New York 10151

Phone: (646) 720-9100

Fax: (646) 720-9000

Attention: Daniel B. Zwirn

                    Perry A. Gruss

Residence: Cayman Islands

D.B. Zwirn Special Opportunities Fund, Ltd.

c/o D.B. Zwirn & Co., L.P.

745 Fifth Avenue, 18th Floor New York, New York 10151

Phone: (646) 720-9100

Fax: (646) 720-9000

Attention: Daniel B. Zwirn

                  Perry A. Gruss

Residence: Cayman Islands

Riverview Group, LLC

666 Fifth Avenue, 8th floor

New York, New York 10103

Attention: Daniel Cardella

Facsimile: (212) 977-1667

Telephone: (212) 841-4100

Residence: Delaware