EXHIBIT 10.2

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is dated as of May 29, 2003, and is made
and entered into by and between The Wet Seal, Inc., a Delaware corporation (the
“Company”), and Peter D. Whitford (the “Executive”).

 

IN CONSIDERATION of the premises and the mutual covenants set forth below, the
parties hereby agree as follows:

 

  1.   EMPLOYMENT

 

The Company hereby agrees to employ Executive as the Chief Executive Officer of
the Company (the “CEO”) and Executive hereby accepts such employment upon the
terms and conditions set forth below.

 

  2.   TERM AND PLACE OF PERFORMANCE

 

The term of this Agreement shall begin on June 30, 2003 (the “Effective Date”),
and, unless sooner terminated as provided herein, shall end on the third (3rd)
anniversary thereof (the “Initial Term”); provided, that, upon the third
anniversary of the Effective Date, the term shall be automatically extended for
two (2) additional years (the “Extension Period”) unless either party provides
ninety (90) days advance written notice not to renew the term prior to the date
that it would be automatically renewed (the Initial Term or the Extension
Period, as the case may be, the “Term”). The Term may be sooner terminated by
either party in accordance with the provisions of Section 5 below. The period
during which Executive is an employee of the Company is referred to herein as
the “Employment Period.” The principal place of employment of Executive shall be
at the Company’s headquarters in Foothill Ranch, California (or at such other
locations within the thirty-five (35) mile radius of its current location as it
may be relocated); provided, that, Executive shall be required to travel on
Company business during the Term.

 

  3.   COMPENSATION

 

3.1 Base Compensation. For the services to be rendered by Executive under this
Agreement, Executive shall be entitled to receive, commencing as of the
Effective Date, salary at the annual rate of Seven Hundred Fifty Thousand
Dollars ($750,000) (“Base Compensation”) payable in accordance with the
Company’s customary payroll practices. The Compensation Committee of the Board
of Directors (the “Committee”) shall review Executive’s Base Compensation
annually and may make adjustments in accordance with the compensation practices
and guidelines of the Company; provided, that, the Base Compensation shall not
be reduced without Executive’s written consent during the Term. Notwithstanding
the foregoing, Executive’s Base Compensation shall increase to $775,000 per
annum after the first anniversary of the Effective Date and shall increase to
$810,000 per annum after the second anniversary of the Effective Date; provided,
that, in either case, Executive is still then employed.

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3.2 Performance Bonus. For each full fiscal year of the Company during the Term,
the Committee shall establish a target earnings per share (“EPS”) projection
(“Target EPS”) and a maximum EPS projection (“Maximum EPS”) for the Company for
such fiscal year. For purposes hereof, EPS shall be the EPS as reported to the
Company’s shareholders on a fully diluted basis. If less than Target EPS is
achieved for a fiscal year, Executive shall receive no bonus; if Target EPS is
achieved for a fiscal year, Executive shall receive a bonus equal to 50% of Base
Compensation (the “Target Bonus”); and, in lieu of the Target Bonus, if at least
Maximum EPS is achieved for a fiscal year, Executive shall receive a bonus of
125% of Base Compensation (the “Maximum Bonus”, and any such bonus payable under
this Section 3.2, the “Performance Bonus”). If EPS achieved for any fiscal year
exceeds Target EPS, but is less than Maximum EPS, the Performance Bonus shall be
a percentage of Base Compensation between 50% and 125%, calculated on a straight
line basis, as corresponds to the relative achievement of EPS between Target EPS
and Maximum EPS. Notwithstanding the foregoing, for the 2003 fiscal year, (i)
for purposes of the Performance Bonus, Base Compensation shall equal the Base
Compensation paid to Executive during the 2003 fiscal year, not to exceed
$437,500 and (ii) Target EPS and Maximum EPS shall be based solely on the sum of
the EPS reported by the Company to its shareholders, on a fully diluted basis,
for the third and fourth fiscal quarters of the 2003 fiscal year, with a Target
EPS for such quarters equal to $0.33 and Maximum EPS equal to $0.65. The amount
of the Performance Bonus for the 2003 fiscal year shall be pro-rated to reflect
the portion of the 2003 fiscal year that Executive was employed by the Company
based on the number of days Executive was employed by the Company during the
2003 fiscal year over the number of days in the Company’s 2003 fiscal year. For
example, assuming (x) that Target EPS is achieved for the 2003 fiscal year, (y)
Executive is paid $437,500 of Base Compensation during the 2003 fiscal year and
(z) Executive was employed for seven (7) full months during the 2003 fiscal
year, then Executive shall be eligible to be paid a Performance Bonus of
$127,604 for the 2003 fiscal year. The Performance Bonus shall be paid within
ninety (90) days following the date that the Committee has certified that a
Performance Bonus is payable with respect to such fiscal year provided Executive
is employed by the Company on the date bonuses are customarily paid. Commencing
with the 2004 fiscal year, payment of the Performance Bonus shall be contingent
upon the Company attaining shareholder approval of such bonus arrangement such
that if paid, the Performance Bonus shall constitute qualified performance-based
compensation for purposes of Section 162(m) of the Internal Revenue Code of
1986, as amended (the “Code”). The Company shall use its best efforts to attain
shareholder approval of such Performance Bonus.

 

3.3 Automobile. During the Employment Period, the Company shall provide
Executive with the use of, and provide general maintenance for, a 2002
Mercedes-Benz Silver CL-Class automobile (or an automobile of comparable value
at the discretion of the Company). The Company shall also pay for appropriate
automobile insurance, as it shall determine, in its discretion, with respect to
such automobile.

 

3.4 Vacation. During the Employment Period, Executive shall be entitled to four
(4) weeks of paid vacation per year to be used and accrued in accordance with
the Company’s policy as it may be established from time to time. In addition,
Executive shall receive other paid time-off in accordance with the Company’s
policies for senior executives as they may exist from time to time.

 

3.5 Welfare, Pension and Incentive Benefit Plans. During the Employment Period,

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Executive shall be entitled to participate in such employee benefit plans and
insurance programs offered by the Company to its employees generally, or which
it may adopt from time to time for its employees generally, in accordance with
the eligibility requirements for participation therein.

 

3.6 SERP. The Company and Executive agree to use good faith efforts to establish
a non-qualified supplemental executive retirement plan for Executive as soon as
administratively possible following the Effective Date.

 

3.7 Stock Options.

 

(a) On the Effective Date or as soon as administratively practicable thereafter,
the Company shall grant Executive stock options to acquire 300,000 shares of the
Company’s Class A common stock, $0.10 par value per share (the “Option”) under
such terms and conditions as provided for under the Company’s Amended and
Restated 1996 Long-Term Incentive Plan (the “Stock Option Plan”) which are not
inconsistent with clause (ii) below. To the maximum extent permitted under the
Code, the Options are intended to qualify as “incentive stock options” under
Section 422 of the Code.

 

(b) The Option described in clause (i) above shall be granted subject to the
following terms and conditions: (A) the Option shall be granted under the
Company’s Stock Option Plan; (B) the exercise price per share of each Option
shall be equal to the greater of the 30-day trailing average price of the common
stock from the date of grant or the closing price on the date of grant; (C) the
Option shall be vested as to 33 1/3% of the shares subject to the Option on the
first anniversary of the date of grant and as to an additional 33 1/3% of the
shares subject to the Option on the second and third anniversaries of the date
of grant; provided, that, the Option shall cease to vest upon the termination of
Executive’s employment; (D) the Option shall be exercisable for the ten year
period following the date of grant; provided, that, upon the termination of
Executive’s employment, the Option shall remain exercisable only for the period
as provided in the Stock Option Plan or the Stock Option Agreement (as defined
below), depending on the circumstances of such termination; and (E) each Option
shall be evidenced by, and subject to, a stock option agreement whose terms and
conditions are consistent with the terms hereof (the “Stock Option Agreement”).

 

(c) During the Employment Period, Executive shall be eligible to be granted
performance shares and additional options consistent with grants made to other
senior executives, in all cases, as determined by the Committee in its sole
discretion.

 

3.8 Sign-on Bonus. On or following the Effective Date and after the submission
by Executive of an accounting of the fair market value of the compensatory stock
options Executive forfeited as a result of his resignation from his immediately
prior employer, Executive shall receive a sign-on bonus in an amount equal to
such forfeited amount, not to exceed $200,000.

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  4.   POSITION AND DUTIES

 

4.1 Position and Duties. Executive shall serve as the Chief Executive Officer of
the Company and shall report to the Board of Directors of the Company (the
“Board”). Executive shall have those powers and duties customarily associated
with the office of Chief Executive Officer and as provided for in the By-Laws of
the Company, at all times, subject to the direction and control of the Company’s
Board and such other powers and duties as may be assigned by the Board.

 

4.2 Devotion of Time and Effort. Executive shall use Executive’s good faith,
best efforts and judgment (a) in performing Executive’s duties required
hereunder and (b) to act in the best interests of the Company. Executive shall
devote all of his business time, attention and energies to the business of the
Company to satisfy Executive’s required responsibilities and duties hereunder.

 

  5.   TERMINATION

 

5.1 Due to Death or Disability. If Executive dies during the Employment Period,
Executive’s employment shall terminate as of the date of his death. The Company
may terminate Executive if he becomes “disabled,” as defined below, upon written
notice to Executive. Such termination shall not be a breach of this Agreement.
For purposes of this Agreement, the term “Disability” shall mean a physical or
mental incapacity as a result of which Executive becomes unable to continue the
proper performance of Executive’s duties hereunder for ninety (90) consecutive
days or one-hundred twenty (120) non-consecutive days in any three hundred
sixty-five (365) day period, or, if this provision is inconsistent with any
applicable law, for such period or periods as permitted by law.

 

5.2 By the Company Without “Cause”. The Company may terminate this Agreement
without Cause (as hereinafter defined) at any time following the Effective Date
upon written notice to Executive. Such termination shall not be a breach of this
Agreement.

 

5.3 By the Company For Cause. The Company may terminate Executive’s employment
for Cause at any time by providing Executive written notice of its intent to
terminate him for Cause which sets forth in reasonable detail the Company’s
basis for such termination. Such termination shall not be a breach of this
Agreement. For purposes of this Agreement, Cause shall mean:

 

(a) Executive’s continued failure to perform his duties with the Company (other
than any such failure resulting from his incapacity due to physical or mental
illness) after a written demand for substantial performance is delivered to
Executive which identifies the manner in which the Board believes that Executive
has not performed his duties;

 

(b) Executive’s indictment (or equivalent under applicable law) with respect to,
conviction of, or plea of guilty or nolo contendere to, a felony or any other
comparable crime under applicable law or Executive’s incarceration with respect
to any crime;

 

(c) Executive’s commission of any act of theft, embezzlement or misappropriation
against the Company or any other act which in the reasonable opinion of the
Board would prevent him from effectively performing his duties hereunder;

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(d) Executive’s misconduct, gross neglect or malfeasance in the performance of
the services contemplated hereunder where such conduct causes or has the
likelihood of causing economic or reputational harm to the Company;

 

(e) Executive’s material breach of this Agreement or Executive’s willful
misconduct or unethical behavior related to Executive’s duties hereunder or
insubordination by Executive;

 

(f) Executive’s breach of any written or otherwise known Company policy or
standard of conduct including, without limitation, sexual or other harassment by
Executive or Executive’s use of illegal drugs or abuse of alcohol or legally
prescribed drugs; and/or

 

(g) Breach of a representation made by Executive hereunder, including, without
limitation, the representations in Section 15 of this Agreement.

 

If the Board has reasonable belief that Executive has committed any of the acts
described above, it may suspend Executive (with or without pay) while it
investigates whether it has or could have Cause to terminate Executive. The
Company may terminate Executive for Cause prior to the completion of its
investigation; provided, that, if it is ultimately determined that Executive has
not committed an act which would constitute Cause, Executive, at the option of
the Board, shall be reinstated effective as of the date of suspension or shall
be treated as if he were terminated without Cause.

 

5.4 By Executive For Good Reason. Executive may terminate this Agreement for
Good Reason (as defined below) within thirty (30) days after the occurrence of
an event giving rise to such Good Reason event by providing thirty (30) days
written notice to the Company describing the claimed event or circumstance and
setting forth Executive’s intention to terminate his employment with the
Company; provided, that, the Company has not substantially cured such event
within such notice period.. For purposes of this Agreement, “Good Reason” shall
mean the Company’s material breach of any of its material obligations hereunder.
Such termination shall not be a breach of this Agreement.

 

5.5 By Executive Without Good Reason. Executive may terminate this Agreement
without Good Reason by providing at least one-hundred twenty (120) days written
notice to the Company. Such termination shall not be a breach of this Agreement.

 

5.6 Expiration of the Employment Period. Executive’s employment shall
automatically terminate upon expiration of the Term unless the parties agree to
extend the Term or continue the employment relationship “at will.”
Notwithstanding the foregoing, if either party provides the notice to the other
not to renew the Initial Term, the Employment Period shall terminate on
expiration of the Initial Term. Such termination shall not be a breach of this
Agreement.

 

5.7 Termination Payment.

 

(a) Amount. In the event that Executive’s employment is terminated pursuant to
Sections 5.1 through 5.6, Executive shall continue to render services to the
Company

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pursuant to this Agreement until his date of death or the date of termination
(“Termination Date”) and shall continue to receive compensation and payment for
any unreimbursed expenses incurred and other accrued employee benefits as
provided in this Agreement, through the Termination Date. If requested by the
Board of Directors, effective on the Termination Date, Executive shall resign
all directorships and officerships he then holds with the Company and its
affiliates. Subject to Section 5.7(c) below, in the event Executive’s employment
is terminated pursuant to Section 5.2 or 5.4, Executive shall be entitled to
receive, as severance for such termination: (i) continued payment of his Base
Compensation for the remainder of the Initial Term, or, if such event occurs
during the Extension Period, for the remainder of the Extension Period (the
“Severance Period”) and (ii) at the time the Company pays annual bonuses, a
prorated portion of his Performance Bonus for the fiscal year of termination;
provided, that, at the time such bonuses are determined with respect to such
fiscal year, the Committee concludes that Executive would have been entitled to
a Performance Bonus pursuant to Section 3.2 hereof had he remained employed by
the Company until the date that such fiscal year’s bonus, if any, would be
payable. Except as provided in this Section 5.7, from and after the Termination
Date, Executive shall not be entitled to any other payments in connection with
his employment and/or the termination thereof, and shall have no further right
to receive compensation or other consideration from the Company or have any
other remedy whatsoever against the Company as a result of the termination of
this Agreement, the Employment Period or the termination of Executive’s
employment. Executive shall have a duty of mitigation and shall be subject to
right of offset with respect to any compensation received by Executive on or
after the termination of his employment.

 

(b) Benefits. In the event Executive’s employment is terminated pursuant to
Section 5.2 or 5.4 and Executive timely elects to continue healthcare coverage
through COBRA, subject to subpart (c) below, the Company shall pay that portion
of the COBRA premium equal to the difference between the COBRA premium and
Executive’s monthly contribution towards healthcare benefits that was in effect
as of the Termination Date. The Company shall make such payments during the
Severance Period so long as Executive continues to timely pay Executive’s
portion of the COBRA premium and is eligible to continue COBRA benefits (the
“Severance Benefits”).

 

(c) Release. To be eligible to receive severance and Severance Benefits under
this Section 5.7, Executive must execute and deliver (and not revoke, if a
revocation period is required by law) a release of all claims against the
Company and any of its parents, subsidiaries, affiliates, shareholders, members,
partners, investors, officers, directors, agents and employees in a form
acceptable to the Company.

 

  6.   NON-SOLICITATION

 

Executive acknowledges that by virtue of Executive’s position as CEO of the
Company, and Executive’s employment hereunder, he will have advantageous
familiarity with, and knowledge about, the Company and will be instrumental in
establishing and maintaining goodwill between the Company and its customers,
which goodwill is the property of the Company. Therefore, Executive agrees that
during Executive’s employment and for a twelve (12) month period commencing from
the Termination Date, Executive will not on behalf of himself, or any other
person or entity, solicit, take away, hire, employ or endeavor to employ any of
the employees of the Company who hold the position of Vice President or above.

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  7.   CONFIDENTIALITY/TRADE SECRETS

 

7.1 Executive specifically agrees that Executive will not at any time, whether
during or subsequent to the Employment Period, in any fashion, form or manner,
except in furtherance of Executive’s duties at the Company or with the specific
written consent of the Company, either directly or indirectly use, divulge,
disclose or communicate to any person in any manner whatsoever, any confidential
information of any kind, nature or description concerning any matters affecting
or relating to the business of the Company (the “Proprietary Information”),
including (i) all information, formulae, compilations, software programs
(including object codes and source codes), devices, methods, techniques,
drawings, plans, experimental and research work, inventions, patterns, processes
and know-how, whether or not patentable, and whether or not at a commercial
stage related to the Company or any subsidiary thereof, (ii) buying habits or
practices of any of its customers, (iii) the Company’s marketing methods and
related data, (iv) the Company’s costs or sources of materials, (v) the prices
it obtains or has obtained or at which it sells or has sold its products or
services, (vi) lists or other written records used in the Company’s business,
(vii) compensation paid to employees and other terms of employment, or (viii)
any other confidential information of, about or concerning the business of the
Company, its manner of operation, or other confidential data of any kind,
nature, or description (excluding any information that is or becomes publicly
known or available for use through no fault of Executive or as directed by court
order). The parties hereto stipulate that as between them, Proprietary
Information constitutes trade secrets that derive independent economic value,
actual or potential, from not being generally known to the public or to other
persons who can obtain economic value or cause economic harm to the Company from
its disclosure or use and that Proprietary Information is the subject of efforts
which are reasonable under the circumstances to maintain its secrecy and of
which this Section 7.1 is an example, and that any breach of this Section 7.1
shall be a material breach of this Agreement. All Proprietary Information shall
be and remain the Company’s sole property.

 

7.2 Executive agrees to keep confidential and not use or divulge except in
furtherance of Executive’s duties at the Company, any confidential or propriety
information of any customer of the Company to which Executive may obtain access
during the Employment Period. Executive acknowledges and agrees that a breach of
this Section 7.2 shall be a material breach of this Agreement.

 

  8.   INVENTIONS

 

8.1 Executive agrees to disclose promptly to the Company any and all concepts,
designs, inventions, discoveries and improvements related to the Company’s
business (collectively, “Inventions”) that Executive may conceive, discover or
make from the beginning of Executive’s employment with the Company until the
termination thereof; whether such is made solely or jointly with others, whether
or not patentable, of which the conception or making involves the use of the
Company’s time, facilities, equipment, personnel, supplies or trade secret
information.

 

8.2 Executive agrees to assign, and does hereby assign, to the Company (or its
nominee) Executive’s right, title and interest in and to any and all Inventions
that Executive may conceive, discover or make, either solely or jointly with
others, whether or not patentable, from the beginning of Executive’s employment
with the Company until the termination thereof.

 

8.3 Executive agrees to sign at the request of the Company any instrument
necessary

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for the filing and prosecution of patent applications in the United States and
elsewhere, including divisional, continuation, revival, renewal or reissue
applications, covering any Inventions and all instruments necessary to vest
title to such Inventions in the Company (or its nominee). Executive further
agrees to cooperate and assist the Company in preparing, filing and prosecuting
any and all such patent applications and in pursuing or defending any litigation
upon Inventions covered hereby. The Company shall bear all expenses involved in
the prosecution of such patent applications it desires to have filed. Executive
agrees to sign at the request of the Company any and all instruments necessary
to vest title in the Company (or its nominee) to any specific patent application
prepared by the Company and covering Inventions which Executive has agreed to
assign to the Company (or its nominee) pursuant to Section 8.2 above.

 

8.4 The provisions of Sections 8.2 and 8.3 do not apply to any invention which
qualifies fully under the provisions of Section 2870 of the California Labor
Code, which provides in substance that provisions in an employment agreement
providing that an employee shall assign or offer to assign rights in an
invention to his or her employer do not apply to an invention for which no
equipment, supplies, facilities, or trade secret information of the employer was
used and which was developed entirely in the employee’s own time, except for
those inventions that either (a) relate, at the time of conception or reduction
to practice of the invention: (1) to the business of the employer or (2) to the
employer’s actual or demonstrably anticipated research or development, or (b)
result from any work performed by the employee for the employer.

 

  9.   SHOP RIGHTS

 

The Company shall also have a perpetual, royalty-free, non-exclusive right to
use in its business, and to make, use, license and sell products, processes
and/or services derived from any inventions, discoveries, designs, improvements,
concepts, ideas, works of authorship, whether or not patentable, including
processes, methods, formulae, techniques or know-how related thereto, that are
not within the scope of “Inventions” as defined above, but which are conceived
or made by Executive during regular working hours or with the Company’s
facilities, equipment, personnel, supplies or trade secret information.

 

  10.   INJUNCTIVE RELIEF

 

Executive acknowledges that any violation of any provision of Sections 6 through
9 and 13 hereof by Executive will cause irreparable damage to the Company, that
such damages will be incapable of precise measurement and that, as a result, the
Company will not have an adequate remedy at law to redress the harm which such
violations will cause. Therefore, in the event of any violation or threatened
violation of any provision of Sections 6 through 9 and 13 by Executive, in
addition to any other rights at law or in equity, Executive agrees that the
Company will be entitled to injunctive relief including, but not limited to,
temporary and/or permanent restraining orders to restrain any violation or
threatened violation of such Sections by Executive.

 

  11.   BLUE PENCIL

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It is the desire and intent of the parties that the provisions of Section 6
through 9 hereof shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any portion of Sections 6 through 9 hereof shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended either to conform to such restrictions as the court or arbitrator may
allow, or to delete therefrom or reform the portion thus adjudicated to be
invalid and unenforceable, such deletion or reformation to apply only with
respect to the operation of such Section in the particular jurisdiction in which
such adjudication is made. It is expressly agreed that any court or arbitrator
shall have the authority to modify any provision of Sections 6 through 9 if
necessary to render it enforceable, in such manner as to preserve as much as
possible the parties’ original intentions, as expressed therein, with respect to
the scope thereof.

 

  12.   COPYRIGHT

 

Executive agrees that any work prepared for the Company that is eligible for
copyright protection under any U.S. or foreign law shall be a work made for hire
and ownership of all copyrights (including all renewals and extensions therein)
shall vest in the Company. In the event any such work is deemed not to be a work
made for hire for any reason, Executive hereby irrevocably grants, transfers and
assigns all right, title and interest in such work and all copyrights in such
work and all renewals and extensions thereof to the Company, and agrees to
provide all assistance reasonably requested by the Company in the establishment,
preservation and enforcement of its copyright in such work, such assistance to
be provided at the Company’s expense, but without any additional compensation to
Executive. Executive agrees to and does hereby irrevocably waive all moral
rights with respect to the work developed or produced hereunder, including any
and all rights of identification of authorship and any and all rights of
approval, restriction or limitation on use or subsequent modifications.

 

  13.   EXECUTIVE’S DUTIES ON TERMINATION

 

In the event of termination of Executive’s employment pursuant to Section 5
hereof, Executive agrees to deliver promptly to the Company all Proprietary
Information which is or has been in Executive’s possession or under Executive’s
control. Upon termination of Executive’s employment by the Company for any
reason whatsoever and at any earlier time the Company so requests, Executive
will deliver to the custody of the person designated by the Company all
originals and copies of such documents and other property of the Company in
Executive’s possession, under Executive’s control or to which Executive may have
access. Executive acknowledges and agrees that he will not defame or publicly
criticize the services, business, integrity, veracity or personal or
professional reputation of the Company or any of its officers, directors,
partners, employees, affiliates, or agents thereof in either a professional or
personal manner either during the Employment Period or thereafter.

 

  14.   INDEMNIFICATION

 

The Company shall indemnify, defend and hold Executive harmless from and against
any and all causes of action, claims, demands, liabilities, damages, costs and
expenses of any nature whatsoever (collectively, “Damages”) directly or
indirectly arising out of or related to Executive’s discharging Executive’s
duties hereunder on behalf of the Company and/or its respective subsidiaries and
affiliates to the fullest extent permitted by law.

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  15.   EXECUTIVE’S REPRESENTATIONS

 

Executive hereby represents and warrants to the Company, and Executive
acknowledges that the Company has relied on such representations and warranties
in employing Executive and entering into this Agreement, that (a) he has the
right to enter into this Agreement, (b) the provisions of this Agreement and the
performance hereof by Executive do not violate any other contracts or agreements
to which he is a party and that would adversely affect his ability to perform
his obligations hereunder, and (c) he will not enter into any agreement, either
oral or written, that would adversely affect his ability to perform his
obligations hereunder. If it is determined that Executive is in breach or has
breached any of the representations set forth herein, the Company shall have the
right to terminate Executive’s employment for Cause.

 

  16.   ARBITRATION; LEGAL FEES

 

Subject to Section 10 hereof, any controversy, dispute or claim arising out of
or relating to this Agreement or breach thereof shall first be attempted to be
settled through good faith negotiation. If the dispute cannot be settled through
negotiation, the parties agree to attempt in good faith to settle the dispute by
mediation administered by JAMS for resolution in Orange County, California. If
the parties are unsuccessful at resolving the dispute through mediation, the
parties agree to binding arbitration for resolution in Orange County,
California, administered by JAMS pursuant to its Employment Arbitration Rules &
Procedure and subject to JAMS Policy on Employment Arbitration Minimum Standards
of Procedural Fairness. Judgment on the award may be entered in any court having
jurisdiction. Each party shall pay all its own expenses relating to any such
dispute, mediation and/or arbitration, including, but not limited to, its own
legal fees and expenses regardless of outcome. Joint expenses relating to such
dispute, mediation or arbitration shall be borne equally among the parties.

 

/s/ PDW

P.D.W.

 

  17.   GENERAL PROVISIONS

 

17.1 Assignment, Binding Effect. Neither the Company nor Executive may assign,
delegate or otherwise transfer this Agreement or any of their respective rights
or obligations hereunder without the prior written consent of the other party,
except that the Company may assign this Agreement to its successors (including
any purchaser of its assets), and affiliates, parent or subsidiary corporations.
This Agreement shall be binding upon and inure to the benefit of any permitted
successors or assigns of the parties and the heirs, executors, administrators
and/or personal representatives of Executive.

 

17.2 Notices. All notices, requests, demands or other communications that are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given when received if personally delivered, when
transmitted if transmitted by telecopy, electronic or digital transmission
method with electronic confirmation of receipt, the day after it is sent, if
sent for next-day delivery to a domestic address by recognized overnight
delivery service (e.g. FedEx); and upon receipt, if sent by certified or
registered mail, return receipt requested. In each case notice shall be sent to:

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If to the Company

 

Vice President, Human Resources

The Wet Seal, Inc.

26972 Burbank

Foothill Ranch, CA 92610

Facsimile No.: (949) 699-4722

 

If to Executive

 

Peter D. Whitford

[Insert Address]

 

17.3 Governing Law. This Agreement is governed by, and is to be construed and
enforced in accordance with, the laws of California without regard to principles
of conflicts of laws.

 

17.4 Amendment. No provisions of this Agreement may be amended, modified or
waived unless such amendment or modification is agreed to in writing signed by
Executive and by a duly authorized officer selected at such time by the Board,
and such waiver is set forth in writing and signed by the party to be charged.

 

17.5 Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto in respect of such subject matter. Any
prior agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and canceled as of the date hereof.

 

17.6 Withholding. All payments hereunder shall be subject to any required
withholding of federal, state and local taxes pursuant to any applicable law or
regulation.

 

17.7 Severability. The paragraphs and provisions of this Agreement are
severable. If any paragraph or provision is found to be unenforceable, the
remaining paragraphs and provisions will remain in full force and effect.

 

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

 

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the date first written above.

 

THE WET SEAL, INC.

By:

 

/s/ IRVING TEITELBAUM

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Title:

 

Chairman of the Board

 

/s/ PETER D. WHITFORD

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Peter D. Whitford