Exhibit 10.3

SUBORDINATION AGREEMENT
DATED AS OF DECEMBER 31, 2004

        WHEREAS, THE WET SEAL, INC., (the “Lead Borrower”), THE WET SEAL RETAIL,
INC., (“Wet Seal Retail”), WET SEAL CATALOG, INC. (“Wet Seal Catalog”), WET SEAL
GC, INC., (the “Facility Guarantor” and collectively, with the Lead Borrower,
Wet Seal Retail and Wet Seal Catalog, the “Merchant”)), and FLEET RETAIL GROUP,
INC., as administrative agent and collateral agent for all of the first lien
lenders (the “First Lien Agent”), and the other first lien lenders party thereto
have entered into an Amended and Restated Credit Agreement, dated as of
September 22, 2004 (as amended from time to time, the “Loan Agreement”).

        WHEREAS, the Merchant, S.A.C. CAPITAL ASSOCIATES, LLC, as administrative
agent and collateral agent for all second lien lenders (the “Second Lien Agent”)
and the other second lien lenders party thereto have entered into that certain
Credit Agreement, dated as of November 9, 2004 (as amended from time to time,
the “Second Lien Loan Agreement”).

        WHEREAS, the Merchant and Hilco Merchant Resources, LLC (the “Agent”)
are parties to that certain Agency Agreement, dated as of December 31, 2004
(substantially in the form attached hereto as Exhibit A, the “Agency
Agreement”).

        WHEREAS, the Merchant and the Agent are parties to that certain Security
Agreement, dated as of December 31, 2004 (substantially in the form attached
hereto as Exhibit B, the “Security Agreement”), pursuant to which the Merchant
granted the Agent a security interest in the Merchandise and Proceeds relating
to the Merchant’s retail store locations identified on Exhibit 1A attached
hereto (collectively, the “Collateral”).

        NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and other and valuable consideration, the receipt and
sufficiency of which are acknowledged by the parties hereto, the parties hereto
agree as follows:

    1.        Capitalized terms used but not otherwise defined herein shall have
the meanings ascribed thereto in the Agency Agreement. The following terms shall
have the following meanings:

  “Intervening Secured Claims”. Any secured claims to the extent secured by
valid and non avoidable liens, pledges, encumbrances, charges or security
interests against the Collateral which are junior to either of the Senior Liens
(as defined below) existing as of the date hereof and which have priority over
the liens granted the Agent and which are not disclosed on Schedule 3.3 to the
Security Agreement.

  “Priming Secured Claims”. Any secured claims of holders of Permitted
Encumbrances (as defined in the Loan Agreement and the Second Lien Loan
Agreement) which are secured by liens senior in priority to both Senior Liens
(as defined below).

  “Priority Secured Claims”. Priming Secured Claims and Intervening Secured
Claims.

  “Senior Lenders”. Those lenders party to the Loan Agreement and those lenders
party to the Second Lien Loan Agreement.

  “Senior Lien Agents”. The First Lien Agent and the Second Lien Agent.

    2.        Notwithstanding the time, date, manner or order of grant,
attachment or perfection thereof, the First Lien Agent and the Second Lien Agent
hereby subordinate their prior liens in the Collateral (the “Senior Liens”) to
the lien granted by the Merchant to the Agent in the Collateral pursuant to the
Security Agreement and Section 16.12 of the Agency Agreement (the “Agent’s
Lien”), except that the Agent’s Lien in the Collateral shall be junior to the
Senior Liens in the Collateral to the extent of the unpaid amount of the
Guaranteed Amount, reimbursement of Expenses paid by the Merchant and the
Recovery Amount, if any (collectively, the “Remaining Agent Payments”).

    3.        In the event that either of the First Lien Agent, the Second Lien
Agent or the Agent exercises any of their respective rights under their
respective security agreements with the Merchant, the proceeds from any secured
party sales relating to the Collateral (the “Liquidation Proceeds”) shall be
payable as follows: (a) first to the First Lien Agent and the Second Lien Agent
(in accordance with the provision of the Senior Intercreditor Agreement (as
defined below)), solely to the extent of any remaining balance of the Guaranteed
Amount and reimbursement of Expenses paid by the Merchant, (b) second to the
Agent in the amount of the Agent’s Fee, if any, (c) third, to the First Lien
Agent and the Second Lien Agent (in accordance with the provision of the Senior
Intercreditor Agreement), in the amount of the Recovery Amount, if any and (d),
fourth, any remainder Liquidation Proceeds, to the Agent. At such time and
solely to the extent that there are no unpaid amounts due from the Merchant on
account of the Loan Agreement and the Second Lien Loan Agreement, as and where
applicable, then payments required to be made to the First Lien Agent and the
Second Lien Agent as set forth above shall be made instead to the Merchant. The
First Lien Agent and the Second Lien Agent shall not be entitled to any lien in
and to the Liquidation Proceeds or apply same to any other amounts due and owing
directly or indirectly by the Merchant on account of the Loan Agreement or the
Second Lien Loan Agreement after payment of the Remaining Agent Payments.

    4.        The agreements of the First Lien Agent and the Second Lien Agent
contained herein are subject to (i) the payment of the Initial Guaranty Payment
to the Merchant’s account with the First Lien Agent, Bank of America A/C
#939-285-4427 ABA #011-000-138 Ref: Wet Seal Collateral A/C (the “First Lien
Agent Account”), (b) the First Lien Agent’s receipt of the Agent Letter of
Credit and (c) the Agent’s agreement to pay to the First Lien Agent Account the
Remaining Agent Payments.

    5.        (a) To the extent that the Initial Guaranty Payment exceeds the
actual Guaranteed Amount due under the Agency Agreement, and to the extent that
the First Lien Agent and/or the Second Lien Agent receive any portion of the
Initial Guaranty Payment, upon receipt of evidence of such over payment the
First Lien Agent and the Second Lien Agent, as the case may be, shall pay such
excess amounts to the Agent.

               (b) In the event the Merchant fails to satisfy and discharge in
full any Priority Secured Claim or fails to establish an escrow, in each case,
in accordance with Section 8.6 of the Agency Agreement, the Agent may offset
against the Remaining Agent Payments (without duplication of amounts paid or
escrowed by the Merchant in accordance with Section 8.6 of the Agency Agreement
on account of Priority Secured Claims) amounts required to satisfy and discharge
such Priority Secured Claims in full. If the Priming Secured Claims exceed the
Remaining Agent Payments (the amount of such excess, the “Priming Claim
Shortfall Amount”), and if and only if the First Lien Agent and the Second Lien
Agent would be liable under applicable law to the holder of such Priming Secured
Claim for any deficiency on account of such Priming Secured Claim, the First
Lien Agent and the Second Lien Agent, as applicable, shall pay to the Agent, the
Priming Claim Shortfall Amount, up to an amount not to exceed the portion of the
Guaranteed Amount received by the First Lien Agent and/or the Second Lien Agent,
as applicable, so long as the First Lien Agent and Second Lien Agent have
received evidence of the amount, extent and validity of the Priming Secured
Claims. Nothing herein shall be implied as an agreement or consent by the First
Lien Agent or the Second Lien Agent for reimbursements in connection with any
Intervening Secured Claims.

    6.        Subject to the conditions contained herein, each of the First Lien
Agent and the Second Lien Agent consent to the Merchant entering into the Agency
Agreement and the Security Agreement and waive any requirements that the
Guaranteed Amount and the Remaining Agent Payments be applied to permanently
reduce the loans outstanding under the Loan Agreement and Second Loan Agreement
or require the establishment of reserves against the borrowing base as required
by the terms of the Intercreditor and Lien Subordination Agreement dated
November 9, 2004 among the First Lien Agent, the Second Lien Agent and the
Merchant (the “Senior Intercreditor Agreement”). In addition, (a) the First Lien
Agent hereby consents to any actions taken by the Second Lien Agent pursuant to
and expressly contemplated by this Agreement which contravene the Senior
Intercreditor Agreement and (b) the Second Lien Agent hereby consents to any
actions taken by the First Lien Agent pursuant to and expressly contemplated by
this Agreement which contravene the Senior Intercreditor Agreement.

    7.        The Agent acknowledges and agrees that, except to the extent
expressly provided in Paragraph 1 hereof, the First Lien Agent and the Second
Lien Agent have a prior lien on assets of the Merchant. The Merchant hereby
agrees that it has not and will not grant to the Agent, and the Agent hereby
agrees that it has not and will not take or receive, a security interest in any
assets of the Merchant other than the Collateral.

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THE AGENT: HILCO MERCHANT RESOURCES, LLC

By: /s/ Eric W. Kaup        Name: Eric W. Kaup        Title: Asst. Gen. Counsel,
Member

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THE FIRST LIEN AGENT: FLEET RETAIL GROUP, INC., as First Lien Agent

By: /s/ James R. Dore        Name: James R. Dore        Title: Managing Director

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THE SECOND LIEN AGENT:

S.A.C. CAPITAL ASSOCIATES, LLC,
as Second Lien Agent

By S.A.C. CAPITAL ADVISORS, LLC,

By: /s/ Peter Nussbaum        Name: Peter Nussbaum        Title: General Counsel

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MERCHANT:

THE WET SEAL, INC.

By: /s/ Douglas C. Felderman       Name: Douglas C. Felderman       Title: EVP,
CFO

THE WET SEAL RETAIL, INC.

By: /s/ Douglas C. Felderman       Name: Douglas C. Felderman       Title:
Secretary

WET SEAL CATALOG, INC.

By: /s/ Douglas C. Felderman       Name: Douglas C. Felderman       Title:
Secretary

WET SEAL GC, INC.

By: /s/ Douglas C. Felderman       Name: Douglas C. Felderman       Title:
Secretary