Employment Agreement


 Exhibit 10.1 
 EMPLOYMENT AGREEMENT 
 THIS EMPLOYMENT AGREEMENT (this
“Agreement”) is dated as of November 19, 2009, and is made and entered into by and between The Wet Seal, Inc., a Delaware corporation (the “Company”), and Sharon Hughes
(“Executive”) (collectively, the “Parties”). 
 WHEREAS, Executive is currently
engaged by the Company as an independent contractor; and 
 WHEREAS, the Parties desire for Executive to serve the Company in
the capacity as an officer and employee. 
 NOW, THEREFORE, 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 President and Chief Merchandise Officer of the Company’s Arden B Division and
Executive hereby accepts such employment upon the terms and conditions set forth below. In accordance therewith, Executive shall cease to be treated as an independent contractor of the Company and the Parties acknowledge and agree that neither the
Company nor any of its affiliates have any further obligations to Executive in her capacity as an independent contractor, including, without limitation, for the payment of any fees or compensation. 
 2. TERM AND PLACE OF PERFORMANCE 
 The term of this Agreement shall begin on November 23, 2009 (the “Effective Date”), and, unless sooner terminated as provided herein, shall end on November 23, 2012 (the
“Term”). The Term may be sooner terminated by either party in accordance with the provisions of Section 5. 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 fifty (50) mile radius of its current location as it may be relocated); provided, that, Executive shall be required to travel from time to time on the business of the Company
during the Term. 
 3. COMPENSATION 
 3.1 Base Compensation. For the services to be rendered by Executive under this Agreement during the Term, Executive shall be entitled to receive, commencing as of the Effective Date, salary at the
annual rate of Four Hundred Fifty Thousand Dollars ($450,000) (the “Base Compensation”), less all applicable tax withholdings by the Company; provided, that, commencing as of the first anniversary of the
Effective Date through the end of the Term, Executive’s Base Compensation shall be increased to Four Hundred Eighty-Five Thousand Dollars ($485,000), less all applicable tax withholdings. The Base Compensation shall be payable in accordance
with the Company’s customary payroll practices. The Compensation Committee of the Board of Directors of the Company (the “Committee”) shall review Executive’s Base Compensation annually and may make adjustments to
increase but not decrease such Base Compensation, in accordance with the compensation practices and guidelines of the Company. 
  

 1 







 3.2 Annual Bonus. During the Term, subject to the achievement of performance
objectives pre-determined by the Committee, Executive shall be eligible to receive annual bonus compensation (pro-rated for partial fiscal years during the Term) targeted at fifty percent (50%) of Base Compensation and with a maximum annual
bonus compensation opportunity (pro-rated for partial fiscal years during the Term) of up to one hundred percent (100%) of Executive’s Base Compensation. In order to earn any annual bonus for a fiscal year, Executive must be employed by
the Company on the date the Company pays such annual bonuses. 
 3.3 Retention Bonus. Provided that Executive is employed
by the Company through the first anniversary of the Effective Date, Executive shall be entitled to receive a retention bonus equal to One Hundred Thousand Dollars ($100,000) (the “Retention Bonus”), less all applicable tax
withholdings by the Company. The Retention Bonus shall be paid to Executive in a lump sum payment within thirty (30) days of April 1, 2010; provided, that, Executive is employed by the Company on such date; provided,
further, however, if Executive’s employment is terminated by the Company for Cause (as defined below) or by Executive without Good Reason prior to the first anniversary of the Effective Date, Executive must promptly repay a
portion of the Retention Bonus to the Company in an amount equal to the Retention Bonus multiplied by a fraction, the numerator of which is the number of days remaining until the first anniversary of the Effective Date following termination of
employment and the denominator of which is three hundred sixty-five (365). The Company shall have the right to offset the portion of the Retention Bonus that Executive is obligated to repay the Company against any and all amounts the Company owes
Executive, including, but not limited to, Base Compensation, bonuses and severance payments. In addition, if the Company must resort to legal action to collect any amounts due from Executive pursuant to this subsection 3.3, in addition to such
amounts, Executive shall be liable for all reasonable attorneys’ fees, collection fees and court costs. 
 3.4
Options. Pursuant to and subject to the terms of The Wet Seal Inc. 2005 Stock Incentive Plan, as amended and/or restated from time to time (the “Plan”), on the Effective Date, Executive shall be awarded an option to
purchase 85,000 shares of Class A common stock of the Company (“Common Stock”) in accordance with the stock option agreement attached hereto as Exhibit A, as may be amended and/or restated from time to time (the
“Stock Option Agreement”). 
 3.5 Performance Shares. Pursuant to and subject to the terms of the
Plan, on the Effective Date, Executive shall be awarded 54,000 shares of Common Stock, all of which shall be subject to the performance-based vesting terms and conditions set forth in the Performance Share Award Agreement attached hereto as
Exhibit B, as may be amended and/or restated from time to time (the “Award Agreement”). 
 3.6
Vacation. During the Term, Executive shall be entitled to three (3) weeks of paid vacation per year to be used and accrued in accordance with the Company’s vacation policy as it may be established from time to time. 
  

 2 







 3.7 Benefits. During the Term, 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.

 3.8 Expenses. While Executive is employed by the Company hereunder, the Company shall reimburse Executive for all
reasonable and necessary out-of-pocket business, travel and entertainment expenses incurred by Executive in the performance of her duties and responsibilities hereunder, subject to the Company’s normal policies and procedures for expense
verification and documentation. 
 3.9 Automobile Perquisite. During the Term, the Company shall provide Executive with a
luxury sedan automobile for her use and shall provide customary insurance coverage for such automobile. The Company shall also pay for all reasonable maintenance costs, including gasoline, repairs and service for such automobile. 
 3.10 Taxes. The Parties understand and agree that in the event that any of the non-cash benefits provided for under this Agreement
result in taxable income to Executive under any applicable law, then the Company is expressly authorized to withhold from any cash payments to be made to Executive under this Agreement (or otherwise) the amount the Company is required to withhold
under any such applicable law. 
 4. POSITION AND DUTIES 
 4.1 Position. Executive shall serve as the President and Chief Merchandise Officer of the Company’s Arden B Division (the
“Position”) and shall report to the Company’s Chief Executive Officer. Executive shall perform duties consistent with her title and the Position and any other reasonably related duties consistent with the Position. Any
individual who assumes the Position is considered a 16(b) officer of the Company and is subject to all insider trading policies, blackout periods and fiduciary responsibilities associated with the Position. 
 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 work exclusively for the Company during the Term and shall devote such time, attention and energies to the business of the Company
as are reasonably necessary to satisfy Executive’s required responsibilities and duties hereunder. Executive shall perform the duties assigned to her to the best of Executive’s ability and in the best interests of the Company. 

4.3 Compliance with Policies. Executive shall observe all Company policies and all rules and regulations adopted by the Company in
connection with the conduct of its business, and shall render services in a competent, conscientious and professional manner and as instructed by the Company in all matters, including those involving artistic taste and judgment. 
 5. TERMINATION; TERMINATION BENEFITS 
 5.1 Due to Death or Disability. If Executive dies during the Term, Executive’s employment and this Agreement shall terminate as of the date of her death. The Company also may terminate
Executive due to Executive’s “Disability”, as defined

  

 3 







 
below, at any time following the Effective Date, upon written notice to Executive, unless prohibited by law. 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, as determined in the reasonable judgment of the Company, 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 Executive’s employment without “Cause” (as
defined below) at any time following the Effective Date, subject only to compliance by the Company with the provisions of Section 5.6 hereof. 
 5.3 By the Company for “Cause”. The Company may terminate Executive’s employment for “Cause” at any time. For purposes of this Agreement, “Cause”
shall mean: 
 (a) Executive’s commission of, conviction of, or plea of guilty or nolo contendere to, (i) any
felony or (ii) any other crime involving the Company; 
 (b) Executive’s commission of any act of theft, embezzlement
or misappropriation against the Company; 
 (c) Any gross neglect, malfeasance or nonfeasance of Executive in the performance of
the services contemplated hereunder, when such conduct causes or has the likelihood of causing material economic or reputational harm to the Company; 
 (d) A material breach of this Agreement by Executive; 
 (e) Any willful misconduct
or unethical behavior related to Executive’s duties hereunder or insubordination by Executive; 
 (f) Any sexual or other
harassment by Executive of any employee, independent contractor or customer of the Company; and/or 
 (g) Executive’s use
of illegal drugs or abuse of alcohol or legally prescribed drugs. 
 5.4 By Executive For Good Reason. Executive may
terminate her employment for Good Reason as defined below. In the event Executive seeks to terminate her employment for Good Reason, Executive shall provide thirty (30) days written notice to the Company setting forth Executive’s intention
to terminate her employment with the Company within ten (10) business days following the occurrence of the event giving rise to such notice. The Company shall have the opportunity to cure the “Good Reason” within thirty (30) days
of the Company’s receipt of the written notice from Executive. For purposes of this Agreement, “Good Reason” shall mean relocating Executive’s place of work, or the executive offices of the Company, to a location more than
fifty (50) miles from the site of the Company’s offices as of the date of this Agreement. 
  

 4 







 5.5 Resignation. Executive may voluntarily terminate her employment at any time
following the Effective Date upon sixty (60) days written notice to the Company. 
 5.6 Termination Payment.

 (a) Amount. 
 (i) In the event that Executive’s employment is terminated pursuant to Sections 5.1 through 5.5, Executive shall continue to render services to the Company pursuant to this Agreement until the date
of termination (“Termination Date”) and shall continue to receive compensation and payment for any unreimbursed expenses incurred, accrued but unpaid Base Compensation and other accrued employee benefits as provided in this
Agreement, through the Termination Date. In the event Executive’s employment is terminated without “Cause” pursuant to Section 5.2, or Executive terminates her employment for “Good Reason” pursuant to Section 5.4,
in each case if the Termination Date is within the first three years of the Effective Date, and subject to subpart (c) below, Executive shall receive severance pay in an amount equal to one times Executive’s Base Compensation, in equal
bimonthly installments paid over a period of twelve (12) months (the “Severance Period”) with the first installment to be paid on the later of the Company’s first regular pay date after the Termination Date or the
tenth (10th) day after Executive’s execution of the release described in Section 5.6(c) below. Each installment of the severance pay shall be deemed a separate payment for the purposes of Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”). Notwithstanding the foregoing, if all or any portion of the severance payments due under this Section 5.6(a) are determined to be “nonqualified deferred compensation” subject
to Section 409A of the Code, and the Company determines that Executive is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code and the regulations and other guidance issued thereunder, then such severance
payments (or portion thereof) shall commence no earlier than the first day of the seventh month following the month in which Executive’s termination of employment occurs (with the first such payment being a lump sum equal to the aggregate
severance payments Executive would have received during such six-month period if no such payment delay had been imposed). For purposes of this Section 5.6(a)(i), “termination of employment” shall mean Executive’s “separation
from service” as defined in Section 1.409A-1(h) of the Final Treasury Regulations promulgated under Section 409A of the Code, including the default presumptions thereof. 
 (ii) If Executive is terminated (x) without Cause (or Executive terminates her employment for Good Reason) on or after
the third anniversary of the Effective Date or (y) for any other reason during or after the Term, then Executive shall not receive any severance payments. 
 (iii) Except as provided in this Section 5.6, Executive shall not be entitled to any other payments in connection with
her employment and/or the termination thereof, and shall have no further right to receive compensation or other

  

 5 







 
consideration from the Company or have any other remedy whatsoever against the Company, as a result of the termination of this Agreement or the termination of Executive. In no way does severance
payment include any unearned, ineligible bonus compensation. 
 (b) Benefits. In the event Executive’s employment is
terminated, the Executive may timely elect to continue healthcare coverage through COBRA. 
 (c) Separation Agreement and
General Release. 
 (i) Separation Agreement. To be eligible to receive severance pay under Section 5.5(b),
Executive must execute and deliver (and not revoke, if a revocation period is required by law) a separation agreement, in a form acceptable to the Company, within twenty-one (21) days following the Termination Date containing all provisions
required by the Company, including but not limited to (A) a provision reducing Executive’s severance pay by any income earned by Executive, whether as an employee, independent contractor or otherwise, for services performed by Executive,
during the Severance Period; (B) a confidentiality provision prohibiting disclosure by Executive; (C) a provision prohibiting disparagement of the Company by Executive; and (D) a non-admission of liability by the Company provision.
The Company shall deliver such separation agreement within five (5) business days following the Termination Date. 
 (ii)
Release. Notwithstanding any other provision of this Agreement to the contrary, Executive acknowledges and agrees that any and all severance payments to which Executive is entitled under Section 5.5(b) are conditional upon, and subject
to, Executive first executing a valid waiver and release of all claims that Executive may have against the Company, its subsidiaries and affiliates (and their respective officers and directors) in a form substantially similar to that attached hereto
as Exhibit C, subject to changes as may be warranted to be made to such release to preserve the intent thereof for changes in applicable laws; provided, that, if Executive fails to execute (or revokes) such waiver and release of
all claims within twenty-one (21) days following the Termination Date, the Company shall have no obligation to provide the severance payments contemplated under Section 5.5(b). The Company shall deliver an execution copy of such release
within five (5) business days following the Termination Date. 
 6. NON-SOLICITATION 
 Executive acknowledges that by virtue of Executive’s position as the President and Chief Merchandise Officer of the Company’s Arden
B division, and Executive’s employment hereunder, she 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 as follows: 
 (a) During the Term, Executive will not
engage (either directly or indirectly, as shareholder, partner, officer, director, consultant, employee or otherwise) in any enterprise, nor perform any services of any kind whatsoever for or provide any financial assistance to any enterprise, in
the retail clothing business other than through the Company or its subsidiaries and their successors. 
  

 6 







 (b) During the Term, and for a period of one (1) year following the end of the Term,
Executive will not, either for herself or for any other person or entity, directly or indirectly (i) solicit, induce, recruit or encourage any of the Company’s employees to terminate their relationship with the Company, and/or
(ii) attempt to solicit, induce, recruit or encourage any of the Company’s employees to terminate their relationship with the Company; provided, however, that this restriction shall apply for one (1) year following the
termination of Executive’s employment, in the event Executive’s employment is terminated prior to the end of the Term pursuant to, and in accordance with, Sections 5.1 through 5.5. 
 (c) Executive acknowledges that any violation of any provision of this Section 6 by Executive will cause irreparable damages 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 of any
provision of this Section 6 by Executive, 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 of this Section 6 by
Executive. 
 (d) It is the desire and intent of the Parties that the provisions of this Section 6 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 this Section 6 shall be adjudicated to be invalid or unenforceable, this Section 6
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 this Section 6 in the particular jurisdiction in which such adjudication is made. It is expressly agreed that the arbitrator in any arbitration hereunder shall have the authority to modify this Section 6 if
necessary to render it enforceable, in such manner as to preserve as much as possible the Parties’ original intentions, as expressed herein, with respect to the scope hereof. 
 7. CONFIDENTIALITY/TRADE SECRETS 
 7.1 Executive specifically agrees that Executive will not at any time, whether during or subsequent to the Term, 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 or trade secrets of any kind, nature or description
concerning any matters affecting or relating to the business of the Company (the “Proprietary Information”), including (a) all information, design or software programs (including object codes and source codes),
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, (b) buying habits
or practices of any of its customers or vendors, (c) the Company’s marketing methods, sales activities, promotion, credit and financial data and related information, (d) the Company’s costs or sources of materials, (e) the
prices it obtains or has obtained or at which it sells or has sold its products or services, (f) lists or other written records used in the Company’s business, (g) compensation

  

 7 







 
paid to employees and other terms of employment, or (h) 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 to use or divulge except in furtherance of Executive’s duties at the Company any confidential or proprietary information of any customer of the Company to which Executive may obtain access during
the Term. 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 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 (collectively,
“Inventions”). 
 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 of which the conception or making involves the use of the Company’s time, facilities, equipment, personnel, supplies or trade secret information. 
 8.3 Executive agrees to sign at the request of the Company any instrument necessary 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 







 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: (i) to the business of the employer or (ii) 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 Sections 12 through 14 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 Sections 12 through 14 by Executive, in addition to any other rights at law or in equity, Executive agrees that the Company will be entitled to seek 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

 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 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. 
  

 9 







 12. COPYRIGHT 
 Executive agrees that any work prepared by Executive 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 prepared by Executive for the Company 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. COMPANY’S AND EXECUTIVE’S DUTIES ON TERMINATION 
 In the event of termination of Executive’s employment pursuant to Section 5, 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. 
 14. NON-DISPARAGEMENT 
 During the Term, for any reason, neither Executive nor her agents, on the one hand, nor the Company, or its senior executives or the Board, on the other hand, shall directly or indirectly issue or
communicate any public statement, or statement likely to become public, that maligns, denigrates or disparages the other (including, in the case of communications by Executive or her agents, any of the Company’s officers, directors or
employees). The foregoing shall not be violated by truthful responses to legal process or governmental inquiry or by private statements to any of the Company’s officers, directors or employees; provided, that, in the case of
Executive, such statements are made in the course of carrying out her duties pursuant to this Agreement. 
 15. SEVERANCE
PAYMENTS 
 In addition to the foregoing, and not in any way in limitation of any right or remedy otherwise available to the
Company, if Executive violates any of Sections 6 through 9, or Sections 12 through 14 hereof, any severance payments then or thereafter due from the Company to Executive shall be terminated immediately and the Company’s obligation to pay, and
Executive’s right to receive, such severance payments shall terminate and be of no further force or effect. 
  

 10 







 16. 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 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. 
 17. REPRESENTATIONS AND WARRANTIES 
 17.1 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, as follows: 
 (a) Executive has the legal capacity and
right to execute and deliver this Agreement and to perform her obligations contemplated hereby, and this Agreement has been duly executed by Executive; 
 (b) the execution, delivery and performance of this Agreement by Executive does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any
agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject; 
 (c) Executive is not a party to or bound by any employment agreement, consulting agreement, non-compete agreement, non-solicitation agreement, fee for services agreement, confidentiality agreement or similar agreement with any other person;

 (d) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a legal, valid
and binding obligation of Executive, enforceable in accordance with its terms; and 
 (e) Executive understands that the
Company will rely upon the accuracy and truth of the representations and warranties of Executive set forth herein and Executive consents to such reliance. 
 17.2 If it is determined that Executive is in breach or has breached any of the representations and warranties set forth herein, the Company shall have the right to terminate Executive’s employment
for Cause under Section 5.3. 
 18. ARBITRATION 
 Any controversy arising out of or relating to this Agreement, its enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection with any of its provisions, or any other controversy arising out of Employee’s employment with the Company or the termination of Employee’s employment with the Company, including, but not limited to, any

  

 11 







 
state or federal statutory claims, shall be submitted to arbitration in Orange County, California, before a sole arbitrator selected from Judicial Arbitration and Mediation Services, Inc., Orange
County, California, or its successor (“JAMS”), or if JAMS is no longer able to supply the arbitrator, such arbitrator shall be selected from the American Arbitration Association, and shall be conducted in accordance with the
provisions of California Code of Civil Procedure §§ 1280 et seq. as the exclusive forum for the resolution of such dispute; provided, however, that provisional injunctive relief may, but need not, be sought by either party to
this Agreement in a court of law while arbitration proceedings are pending, and any provisional injunctive relief granted by such court shall remain effective until the matter is finally determined by the arbitrator. Final resolution of any dispute
through arbitration may include any remedy or relief which the arbitrator deems just and equitable, including any and all remedies provided by applicable state or federal statutes. The Company shall bear all administrative costs of any arbitration
initiated under this Section 18, including any filing fees and arbitrator fees. At the conclusion of the arbitration, the arbitrator shall issue a written decision that sets forth the essential findings and conclusions upon which the
arbitrator’s award or decision is based. Any award or relief granted by the arbitrator hereunder shall be final and binding on the Parties hereto and may be enforced by any court of competent jurisdiction. The Parties acknowledge and agree that
they are hereby waiving any rights to trial by jury in any action, proceeding or counterclaim brought by either of the Parties against the other in connection with any matter whatsoever arising out of or in any way connected with this Agreement. The
arbitrator shall award reasonable attorney’s fees (including reasonable disbursements) to the party that the arbitrator has determined to be the prevailing party in such arbitration. Except as may be necessary to enter judgment upon the award
or to the extent required by applicable law, all claims, defenses and proceedings (including, without limiting the generality of the foregoing, the existence of the controversy and the fact that there is an arbitration proceeding) shall be treated
in a confidential manner by the arbitrator, the Parties and their counsel, and each of their agents, employees and all others acting on behalf of or in concert with them. Without limiting the generality of the foregoing, no one shall divulge to any
third party or person not directly involved in the arbitration the contents of the pleadings, papers, orders, hearings, trials, or awards in the arbitration, except as may be necessary to enter judgment upon an award as required by applicable law.
Any court proceedings relating to the arbitration hereunder, including, without limiting the generality of the foregoing, to prevent or compel arbitration or to confirm, correct, vacate or otherwise enforce an arbitration award, shall be filed under
seal with the court, to the extent permitted by law. 
 19. GENERAL PROVISIONS 
 19.1 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. 
  

 12 







 19.2 Notices. 
 (a) All notices, requests, demands or other communications that are required or may be given under this Agreement shall be in writing and
shall be given by personal delivery, by certified or registered United States mail (postage prepaid, return receipt requested), by a nationally recognized overnight delivery service for next day delivery, or by facsimile transmission, as follows (or
to such other address as any party may give in a notice given in accordance with the provisions hereof): 
 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, 
 [            ] 
 with a copy to: 
 Her lawyer 
 (b) All notices, requests or other communications will be effective and deemed given only as follows:
(i) if given by personal delivery, upon such personal delivery, (ii) if sent by certified or registered mail, on the fifth business day after being deposited in the United States mail, (iii) if sent for next day delivery by overnight
delivery service, on the date of delivery as confirmed by written confirmation of delivery, and (iv) if sent by facsimile, upon the transmitter’s confirmation of receipt of such facsimile transmission, except that if such confirmation is
received after 5:00 p.m. (in the recipient’s time zone) on a business day, or is received on a day that is not a business day, then such notice, request or communication will not be deemed effective or given until the next succeeding business
day. Notices, requests and other communications sent in any other manner, including by electronic mail, will not be effective. 
 19.3 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. 
 19.4 Amendment; Waiver. 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. 
 19.5 Entire Agreement. This Agreement (and the Exhibits attached hereto) sets forth the entire agreement of the Parties hereto in
respect of the subject matter contained herein and shall supersede 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. 
  

 13 







 19.6 Withholding. All payments hereunder shall be subject to any required withholding
of federal, state and local taxes pursuant to any applicable law or regulation. 
 19.7 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. 
 19.8 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. 
 19.9 Additional Covenant. Notwithstanding anything herein to the
contrary, this Agreement is intended to be interpreted and applied so that the payment of the benefits set forth herein either shall either be exempt from the requirements of Section 409A of the Code, or shall comply with the requirements of
such provision. In no event may Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement or otherwise which constitutes a “deferral of compensation” within the meaning of
Section 409A of the Code. All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A of the Code. To the extent that any reimbursements pursuant to
this Agreement or otherwise are taxable to Executive, any reimbursement payment due to Executive shall be paid to Executive on or before the last day of Executive’s taxable year following the taxable year in which the related expense was
incurred; provided, that, Executive has provided the Company written documentation of such expenses in a timely fashion and such expenses otherwise satisfy the Company’s expense reimbursement policies. Reimbursements pursuant to
this Agreement or otherwise are not subject to liquidation or exchange for another benefit and the amount of such reimbursements that Executive receives in one taxable year shall not affect the amount of such reimbursements that Executive receives
in any other taxable year. Notwithstanding any of the foregoing to the contrary, the Company and their respective officers, directors, employees or agents make no guarantee that this Agreement complies with, or is exempt from, the provisions of
Section 409A of the Code and none of the foregoing shall have any liability for the failure of this Agreement to comply with, or be exempt from, the provisions of Code Section 409A. The Parties hereto agree to make such amendments from
time to time to the terms and conditions of this Agreement as are necessary to ensure that this Agreement complies with the terms of Section 409A of the Code and any regulation or other official guidance promulgated thereunder. 
 [SIGNATURE PAGE FOLLOWS] 
  

 14 







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

			
	THE WET SEAL, INC.
		
	By:	 	 /s/ Edmond S. Thomas

		 	Name: Edmond S. Thomas
		 	Title: President and Chief Executive Officer
	
	 /s/ Sharon Hughes

	Sharon Hughes








 Exhibit A 
 THE WET SEAL, INC. 
 2005 STOCK INCENTIVE PLAN 

 STOCK OPTION AGREEMENT 
 This Stock Option Agreement (this “Agreement”) is made and entered into as of November 19, 2009 by and between The Wet Seal, Inc., Delaware corporation (the
“Company”), and Sharon Hughes (“Participant”). Capitalized terms not defined herein will have the meaning ascribed to them in the Company’s 2005 Stock Incentive Plan, as amended and/or restated
from time to time (the “Plan”) 
  

					
	Total Option Shares:	  		 	85,000
			
	Exercise Price Per Share:	  		 	[            ]1
			
	Date of Grant:	  		 	[            ], 2009
			
	Expiration Date:	  		 	[            ], 2014
			
	Type of Stock Option	  		 	
	(Check One):	  	[    ]	 	Incentive Stock Option, to the maximum extent permissible
		  	[X]	 	Nonqualified Stock Option

 1. Grant of Option. The Company hereby grants to Participant an option (this
“Option”) to purchase the total number of shares of Common Stock of the Company set forth above as Total Option Shares (the “Shares”) at the Exercise Price Per Share, subject to all of the terms and
conditions of this Agreement and the Plan. 
 2. Exercise Period. 
 2.1. Provided Participant continues to provide Continuous Service to the Company or any Subsidiary, this Option will become vested and
exercisable with respect to 33 1/3% of the Shares on each of the next three (3) anniversaries of the Date of Grant until this Option is 100% vested, subject to Executive’s Continuous Service with the Company on each of those vesting dates.
Except as provided in this Agreement, unvested Shares will not be exercisable on or after Participant’s termination of Continuous Service (“Termination Date”) and will immediately terminate on such Termination Date.

  

	1	 Calculated based on the greater of (a) the closing price on the date of grant and (b) the 30 trading-day average closing price ending on and
including the date of grant. 


  

 A-1 







 2.2. This Option will expire on the Expiration Date set forth above or earlier as provided
in this Agreement or the Plan. 
 3. Termination of Continuous Service. 
 3.1. If Participant’s Continuous Service is terminated, this Option will remain exercisable as follows: 
 (a) If Participant’s termination of Continuous Service is due to death, all unvested Shares will terminate and all vested Shares will
be exercisable by Participant’s designated beneficiary, or if none, the person(s) to whom such Participant’s rights under this Option are transferred by will or the laws of descent and distribution for one (1) year following the
Termination Date (but in no event beyond the term of this Option). 
 (b) If Participant’s termination of Continuous
Service is due to Disability (as such term is defined in Participant’s Employment Agreement with the Company dated as of the date hereof (the “Employment Agreement”)), all unvested Shares will terminate and all vested
Shares will be exercisable by Participant for one (1) year following the Termination Date (but in no event beyond the term of this Option). 
 (c) If Participant’s termination of Continuous Service is due to termination for Cause (as such term is defined in the Employment Agreement) or voluntary termination without Good Reason (as such term
is defined in the Employment Agreement) by Participant, the Shares will terminate on the Termination Date, regardless of whether the Shares were then exercisable. 
 (d) If Participant’s termination of Continuous Service is due to any other reason, all unvested Shares will terminate on the Termination Date and all Shares (to the extent exercisable as of the
Termination Date) will be exercisable for a period of three (3) months following such Termination Date (but in no event beyond the term of this Option) and will thereafter terminate. Participant’s status as an employee will not be
considered terminated in the case of leave of absence agreed to in writing by the Company (including but not limited to military and sick leave); provided, that, such leave is for a period of not more than three (3) months or
reemployment upon expiration of such leave is guaranteed by contract or statute. 
 3.2. Nothing in the Plan or this Agreement
will confer on Participant any right to the continuation of service with the Company, or any of its Subsidiaries, or interfere in any way with the right of the Company or its Subsidiaries to terminate her Continuous Service at any time. 

4. Manner of Exercise. 
 4.1. Participant (or in the case of exercise after Participant’s death or Disability, Participant’s executor, administrator, heir or legatee, as the case may be) may exercise this Option by giving written notice of exercise to the
Company in a form approved by the Company specifying the number Shares to be purchased. Such notice must be accompanied by the payment in full of the aggregate exercise price for the Shares to be acquired. The aggregate exercise price for the Shares
may be paid by in the following manner: (a) cash or certified or bank check, (b) surrender of Common Stock held by Participant for at least 6 months prior to exercise

  

 A-2 







 
(or such longer or shorter period as may be required to avoid a charge to earnings for financial accounting purposes) or the attestation of ownership of such shares, in either case, if so
permitted by the Company, (c) if established by the Company, through a “same day sale” commitment from Participant and a broker-dealer selected by the Company that is a member of the National Association of Securities Dealers (an
“NASD Dealer”) whereby Participant irrevocably elects to exercise this Option and to sell a portion of the Shares so purchased sufficient to pay for the total exercise price and whereby the NASD Dealer irrevocably commits
upon receipt of such shares to forward the total exercise price directly to the Company, or (d) by any combination of the foregoing, and, in all instances, to the extent permitted by applicable law. Participant’s subsequent transfer or
disposition of any Shares acquired upon exercise of an Option will be subject to any Federal and state laws then applicable, specifically securities law, and the terms and conditions of the Plan. 
 4.2. Upon (a) exercise of a Nonqualified Stock Option or (b) under any other circumstances determined by the Committee in its sole
discretion, the Company will have the right to require any Participant, and such Participant by accepting the Awards granted under the Plan agrees, to pay to the Company the amount of any Federal, state, local income taxes or other taxes incurred by
reason of the exercise of Option granted hereunder that the Company may be required to withhold with respect thereto. In the event of clauses (a) or (b), Participant will pay to the Company such amount as the Company deems necessary to satisfy
its minimum tax withholding obligation and such payment will be made: (i) in cash, (ii) to the extent authorized by the Committee, having the Company retain shares which would otherwise be delivered upon exercise of this Option,
(iii) to the extent authorized by the Committee, delivering or attesting to ownership of Shares owned by the holder of this Option for at least 6 months prior to the exercise of this Option (or such longer or shorter period as may be required
to avoid a change to earnings for financial accounting purposes), or (iv) any combination of any such methods. For purposes hereof, Shares will be valued at Fair Market Value. 
 5. Issuance of Shares. Except as otherwise provided in the Plan or this Agreement, as promptly as practicable after receipt of such written notification of exercise and full payment of the
Exercise Price and any required income tax withholding, the Company will issue or transfer to Participant the number of Shares with respect to which this Option have been so exercised (less shares withheld in satisfaction of tax withholding
obligations, if any), and will deliver to Participant a certificate or certificates therefor, registered in Participant’s name. 
 6.
Company; Participant. 
 6.1. The term “Company” as used in this Agreement with reference to
Continuous Service will include the Company and its Subsidiary, if any, as appropriate. 
 6.2. Whenever the word
“Participant” is used in any provision of this Agreement under circumstances where the provision should logically be construed to apply to the beneficiaries, the executors, the administrators, or the person or persons to whom
this Option may be transferred by will or by the laws of descent and distribution, the word “Participant” will be deemed to include such person or persons. 
  

 A-3 







 7. Non-Transferability. This Option is not transferable by Participant otherwise than to a
designated beneficiary upon death or by will or the laws of descent and distribution, and are exercisable during Participant’s lifetime only by her. No assignment or transfer of this Option, or of the rights represented thereby, whether
voluntary or involuntary, by operation of law or otherwise (except to a designated beneficiary, upon death, by will or the laws of descent and distribution), will vest in the assignee or transferee any interest or right herein whatsoever, but
immediately upon such assignment or transfer this Option will terminate and become of no further effect. 
 8. Rights as
Shareholder. Participant or a transferee of this Option will have no rights as shareholder with respect to any Shares until he or she will have become the holder of record of such Shares, and no adjustment will be made for dividends or
distributions or other rights in respect of such Shares for which the record date is prior to the date upon which he or she will become the holder of record thereof. 
 9. Adjustments. The Shares into which this Option is exercisable may be adjusted or terminated in any manner as contemplated by the Plan. 
 10. Change of Control. Upon the occurrence of a Change of Control, all Options will become 100% vested and exercisable; provided that,
Participant is then in Continuous Service. 
 11. Compliance with Law. Notwithstanding any of the provisions hereof, Participant
hereby agrees that she will not exercise this Option, and that the Company will not be obligated to issue or transfer any shares to Participant hereunder, if the exercise hereof or the issuance or transfer of such shares will constitute a violation
by Participant or the Company of any provisions of any law or regulation of any governmental authority. Any determination in this connection by the Committee will be final, binding and conclusive. The Company will in no event be obliged to register
any securities pursuant to the Securities Act (as now in effect or as hereafter amended) or to take any other affirmative action in order to cause the exercise of this Option or the issuance or transfer of shares pursuant thereto to comply with any
law or regulation of any governmental authority. 
 12. Notice. Every notice or other communication relating to this Agreement
will be in writing, and will be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided,
that, unless and until some other address be so designated, all notices or communications by Participant to the Company will be mailed or delivered to the Company at its principal executive office, and all notices or communications by the
Company to Participant may be given to Participant personally or may be mailed to her at her address as recorded in the records of the Company. 
 13. Binding Effect. Subject to Section 7 hereof, this Agreement will be binding upon the heirs, executors, administrators and successors of the parties hereto. 
 14. Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of California without regard to
its conflict of law principles. 
  

 A-4 







 15. Plan. The terms and provisions of the Plan are incorporated herein by reference, and
Participant hereby acknowledges receiving a copy of the Plan. In the event of a conflict or inconsistency between the discretionary terms and provisions of the Plan and the provisions of this Agreement, this Agreement will govern and control.

 16. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon
and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon Participant and Participant’s beneficiaries, executors, administrators and the
person or persons to whom this Agreement may be transferred by will or the laws of descent or distribution. 
 17.
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. 
 [SIGNATURE PAGE FOLLOWS] 
  

 A-5 







 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in triplicate by
its duly authorized representative and Participant has executed this Agreement in triplicate, effective as of the Date of Grant. 
  

							
	THE WET SEAL, INC.	 		 	PARTICIPANT
				
	By:	 	  
	 		 	  

		 	Name: Edmond S. Thomas	 		 	Sharon Hughes
		 	Title: President and Chief Executive Officer	 		 	







 Exhibit B 
 PERFORMANCE SHARE AWARD AGREEMENT 
 THIS PERFORMANCE
SHARE AWARD AGREEMENT (this “Agreement”), made as of November 23, 2009 (the “Effective Date”), by and between The Wet Seal, Inc. (the
“Company”) and Sharon Hughes (the “Participant”), evidences the granting by the Company of stock awards of Performance Shares (as defined below) to the Participant and the
Participant’s acceptance of the Performance Shares. All capitalized terms not defined herein shall have the meaning ascribed to them in The Wet Seal, Inc. 2005 Stock Incentive Plan, as amended and as further amended and/or restated from time to
time (the “Plan”). 
 The Company and the Participant agree as follows: 
 1. Performance Shares Grants. 
 1.1 The Company hereby grants as of the date hereof to the Participant an award of 54,000 shares of the Company’s Class A common stock, $0.10 par value per share (the “Common Stock”). The first 27,000
shares of such 54,000 shares of the Common Stock is herein called the “Tranche 1 Shares” and the second 27,000 shares of such 54,000 shares of the Common stock is herein called the “Tranche 2 Shares”
(collectively with the Tranche 1 Shares, the “Performance Shares”). The Performance Shares shall be subject to the performance-based vesting terms and conditions set forth in Section 2.1. 
 1.2 The Performance Shares shall be evidenced by book-entry registration with the Company’s transfer agent, subject to such
stop-transfer orders and other terms deemed appropriate by the Compensation Committee of the Board of Directors of the Company (the “Committee”) to reflect the restrictions applicable to such Performance Shares.
Notwithstanding the foregoing, if any certificate is issued in respect of the Performance Shares at the sole discretion of the Committee, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such Performance Shares, substantially in the following form: 
 “THE TRANSFERABILITY OF THIS CERTIFICATE AND THE CLASS A COMMON STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) CONTAINED IN THE AWARD AGREEMENT DATED AS OF NOVEMBER
[    ], 2009, ENTERED INTO BETWEEN THE REGISTERED OWNER AND THE WET SEAL, INC.” 
 If a certificate is issued
with respect to any Performance Shares, the Committee may require that the certificate evidencing such Performance Shares be held in custody by the Company until the restrictions thereon shall have lapsed and that the Participant shall have
delivered a stock power, endorsed in blank, relating to the Performance Shares covered by such award. At the expiration of the restrictions, the Company shall instruct the transfer agent to release the Performance Shares from the restrictions
applicable to such Performance Shares, subject to the terms of the Plan and applicable law or, in the event that a certificate has been issued, redeliver to the Participant (or his or her legal representative, beneficiary or heir) share certificates
for the shares deposited with it without any

  

 B-1 







 
legend, except as otherwise provided by the Plan, this Agreement or applicable law. During the period following the grant of the respective Performance Shares hereunder, the Participant shall
have the right to receive dividends on and to vote the respective Performance Shares while they are subject to restriction, except as otherwise provided in the Plan. If the Performance Shares are forfeited, in whole or in part, the Participant will
assign, transfer and deliver any evidence of the Performance Shares to the Company and cooperate with the Company to reflect such forfeiture. By accepting these Performance Shares, the Participant acknowledges that the Company does not have an
adequate remedy in damages for the breach by the Participant of the conditions and covenants set forth in this Agreement and agrees that the Company is entitled to and may obtain an order or a decree of specific performance against the Participant
issued by any court having jurisdiction. 
 1.4 The issuance of the Performance Shares is made in consideration of the services
rendered to the Company by the Participant. The Company and the Participant acknowledge that the Performance Shares are issued pursuant to the authority of the Board of Directors. The Company is issuing the Performance Shares pursuant to the terms
and conditions of the Plan. 
 1.5 Except as provided in the Plan or this Agreement, prior to vesting as provided in
Section 3 of this Agreement, the Performance Shares will be forfeited by the Participant and all of the Participant’s rights to such Performance Shares shall immediately terminate without any payment or consideration by the Company, in the
event of any sale, assignment, transfer, hypothecation, pledge or other alienation of such Performance Shares made or attempted, whether voluntary or involuntary, and if involuntary whether by process of law in any civil or criminal suit, action or
proceeding, whether in the nature of an insolvency or bankruptcy proceeding or otherwise. 
 2. Vesting. 
 2.1 Vesting of Performance Shares. 
 (a) (i) On or following the first anniversary of the Effective Date, but not later than the the period set forth in Section 2.1(c), 13,500 of the Tranche 1 Shares shall vest if, at any time following
the Effective Date through the second anniversary thereof (the “Tranche 1 Vesting Period”), the weighted average closing price of the Company’s Class A Common Stock for any trailing 20 trading days (the
“20-Day Average”) equals or exceeds $4.19 per share (the “Tranche 1 Base Price”); and 
 (ii) on or following the first anniversary of the Effective Date, but not later than the period set forth in Section 2.1(c), the remaining 13,500 of the Tranche 1 Shares shall vest if, at any time
during the Tranche 1 Vesting Period, the 20-Day Average equals or exceeds 120% of the Tranche 1 Base Price. 
 For the avoidance of doubt, if
the 20-Day Average equals or exceeds 120% of the Tranche 1 Base Price at any time during the Tranche 1 Vesting Period, 100% of the Performance Shares in Tranche 1 shall vest. 
 (b) (i) On the second anniversary of the Effective Date, 13,500 of the Tranche 2 Shares shall vest if, at any time following the first
anniversary of the Effective Date through the second anniversary thereof (the “Tranche 2 Vesting Period”), the 20-Day Average equals or exceeds $6.03 per share (the “Tranche 2 Base Price”); and

  

 B-2 







 (ii) on the second anniversary of the Effective Date, the remaining 13,500 of the Tranche 2
Shares shall vest if, at any time during the Tranche 2 Vesting Period the 20-Day Average equals or exceeds 120% of the Tranche 2 Base Price. 
 For the avoidance of doubt, if the 20-Day Average equals or exceeds 120% of the Tranche 2 Base Price at any time during the Tranche 2 Vesting Period, 100% of the Performance Shares in Tranche 2 shall vest. 
 (c) If any of the Performance Shares granted hereunder are still outstanding as of the second anniversary of the Effective Date and have not
otherwise vested after giving effect to the vesting provisions of clauses (a) and (b) above as of 4:00 p.m. (local time in New York on such date), the unvested Performance Shares shall automatically be forfeited without the payment of any
consideration to the Participant. 
 (e) If the Participant ceases to be in Continuous Service of the Company at any time and
for any reason prior to the vesting of the Performance Shares or notifies the Company of her intention to cease her continuing service, all unvested Performance Shares that are still outstanding upon such termination of employment shall
automatically be forfeited without the payment of any consideration to the Participant upon such cessation of service. 
 (f)
Notwithstanding the terms set forth in the Plan and/or any other stockholder-approved equity incentive plan, none of the Performance Shares will be subject to accelerated vesting thereunder. 
 3. Company; Participant. 
 3.1 The term “Company” as used in this Agreement with reference to service shall include the Company and its Affiliates, as appropriate.  
 3.2 Whenever the word “Participant” is used in any provision of this Agreement under circumstances where the
provision should logically be construed to apply to the beneficiaries, the executors, the administrators, or the person or persons to whom the Performance Shares may be transferred by will or by the laws of descent and distribution, the word
“Participant” shall be deemed to include such person or persons. 
 4. Adjustments. The Performance Shares may be
adjusted as provided for in Section 12 of the Plan and the Committee shall not exercise any discretion under Section 10.4 of the Plan to reduce Participant’s Performance Shares hereunder. 
 5. Compliance with Law. Notwithstanding any of the provisions hereof, the Company will not be obligated to issue or transfer any Performance Shares
to the Participant hereunder, if the exercise thereof or the issuance or transfer of such Performance Shares shall constitute a violation by the Participant or the Company of any provisions of any law or regulation of any governmental authority. Any
determination in this connection by the Committee shall be final, binding and conclusive. The Company shall take all appropriate steps, including, to the extent necessary, the filing of an appropriate registration statement at its sole expense, such
that Participant may sell the Performance Shares upon the lapse of the restrictions set forth herein, subject to the Company’s insider trading policies. 
  

 B-3 







 6. No Right to Continued Service. Nothing in this Agreement or in the Plan shall confer upon the
Participant any right to continue in the service of the Company or shall interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to terminate the services of or discharge the Participant at any time for
any reason whatsoever, with or without cause. Except as provided herein, the Participant acknowledges and agrees that the continued vesting of the Performance Shares is premised upon Executive’s provision of future services to the Company and
the Performance Shares shall not accelerate upon her termination of Continuous Service for any reason. 
 7. Representations and Warranties
of the Participant. The Participant represents and warrants to the Company that: 
 7.1 The Participant acknowledges that
there may be adverse tax consequences upon the vesting of the Performance Shares or disposition of the Performance Shares once vested, and that the Participant should consult a tax adviser prior to such time. 
 7.2 The Participant agrees to sign such additional documentation as may reasonably be required from time to time by the Company. 

8. Taxes. 
 8.1 The
Participant agrees that, subject to Section 8.2 below, no later than the date as of which the respective restrictions on each of the Performance Shares shall lapse with respect to all or any of the Performance Shares, as the case may be,
covered by this Agreement, the Participant shall pay to the Company (by check or wire transfer) any federal, state or local income and employment taxes of any kind required by law to be withheld, if any, with respect to the Performance Shares for
which the restrictions shall lapse; provided, that the Participant may elect to satisfy this withholding obligation by having the Company withhold from the Participant the number of Performance Shares, as applicable, having a Fair Market Value equal
to the tax withholding obligation in respect of the Performance Shares that vest (but no more than the minimum amount of shares required to be withheld by the Company that can be satisifed through the withholding of the shares). The Company shall,
to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to the Participant any federal, state or local taxes of any kind required by law to be withheld with respect to the Performance Shares. 

8.2 With respect to each grant of Performance Shares hereunder, if the Participant properly elects (within thirty (30) days of the
grant date of such Performance Shares) to include in gross income for federal income tax purposes an amount equal to the Fair Market Value of such Performance Shares as of the date on which such Performance Shares were granted pursuant to
Section 83(b) of the Code, the Participant shall pay to the Company, or make other arrangements satisfactory to the Committee to pay to the Company in the year of such grant, any federal, state or local taxes required to be withheld with
respect to such Performance Shares. If the Participant fails to make such payments, the Company or its affiliates shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to the Participant any
federal, state or local taxes of any kind required by law to be withheld with respect to such Performance Shares. 
  

 B-4 







 9. Notice. All notices, requests, demands or other communications that are required or may be given
under this Agreement shall be in writing and shall be given by personal delivery, by certified or registered United States mail (postage prepaid, return receipt requested), by a nationally recognized overnight delivery service for next day delivery,
or by facsimile transmission, as follows (or to such other address as any party may give in a notice given in accordance with the provisions hereof): 
 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, 
 [            ] 
 with a copy to: 
 Her lawyer 
 All notices, requests or other communications will be effective and deemed given only as follows: (i) if given by
personal delivery, upon such personal delivery, (ii) if sent by certified or registered mail, on the fifth business day after being deposited in the United States mail, (iii) if sent for next day delivery by overnight delivery service, on
the date of delivery as confirmed by written confirmation of delivery, (iv) if sent by facsimile, upon the transmitter’s confirmation of receipt of such facsimile transmission, except that if such confirmation is received after 5:00 p.m.
(in the recipient’s time zone) on a business day, or is received on a day that is not a business day, then such notice, request or communication will not be deemed effective or given until the next succeeding business day. Notices, requests and
other communications sent in any other manner, including by electronic mail, will not be effective. 
 10. Governing Law. This Agreement
shall be construed and interpreted in accordance with the laws of the State of California without regard to its conflict of law principles. 
 [SIGNATURE PAGE FOLLOWS] 
  

 B-5 







 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written. 
  

					
	THE WET SEAL, INC.
		
	By:	 	  

		 	Name: Edmond S. Thomas
		 	Title: President and Chief Executive Officer
	
	PARTICIPANT
	
	  

	Sharon Hughes








 Exhibit C 
 Form of Waiver and Release of Claims 
 (the
“Release”) 
 1. Termination of Employment. Sharon Hughes
(“Executive”) acknowledges that her last day of employment with The Wet Seal, Inc. and any of its affiliates (the “Company”) is
[            ] (the “Termination Date”). 
 2. Full Release. For the consideration set forth in the Separation Agreement, by and between the Company and Executive, dated as of [            ] (the
“Separation Agreement”) and for other fair and valuable consideration therefor, Executive, for herself, her heirs, executors, administrators, successors and assigns (hereinafter collectively referred to as the
“Releasors”), hereby fully releases and discharges the Company, its parents, subsidiaries, affiliates, insurers, successors, and assigns, and their respective officers, directors, employees, and agents (all such persons,
firms, corporations and entities being deemed beneficiaries hereof and are referred to herein as the “Company Entities”) from any and all actions, causes of action, claims, obligations, costs, losses, liabilities, damages and
demands of whatsoever character, whether or not known, suspected or claimed, which the Releasors have, from the beginning of time through the date of this Release, against the Company Entities arising out of or in any way related to
(i) Executive’s employment or termination or (ii) Executive’s Employment Agreement with the Company, dated as of [            ], 2009 as amended and/or restated from
time to time (the “Employment Agreement”); provided, however, that this shall not be a release with respect to any amounts and benefits owed to Executive pursuant to the Employment Agreement upon termination of
employment, vested benefits under employee benefit plans of the Company, or Executive’s right to indemnification as provided in Section 16 of the Employment Agreement. 
 3. Waiver of Rights Under Other Statutes. Executive understands that this Release waives all claims and rights Executive may
have under certain federal, state and local statutory and regulatory laws, as each may be amended from time to time, including but not limited to, the Age Discrimination in Employment Act (including the Older Workers Benefit Protection Act)
(“ADEA”), Title VII of the Civil Rights Act; the Employee Retirement Income Security Act of 1974; the Equal Pay Act; the Rehabilitation Act of 1973; the Americans with Disabilities Act; the Worker Adjustment and Retraining
Notification Act; the California Fair Employment and Housing Act, the California Family Rights Act, California law regarding Relocations, Terminations, and Mass Layoffs, the California Labor Code; and all other statutes, regulations, common law, and
other laws in any and all jurisdictions (including, but not limited to, California) that in any way relate to Executive’s employment or the termination of her employment. 
 4. Informed and Voluntary Signature. No promise or inducement has been made other than those set forth in this Release. This
Release is executed by Executive without reliance on any representation by the Company or any of its agents. Executive states that she is fully competent to manage her business affairs and understands that she may be waiving legal rights by signing
this Release. Executive hereby acknowledges that she has carefully read this Release and has had the opportunity to thoroughly discuss the terms of this Release with legal counsel of her choosing. Executive hereby acknowledges that she fully
understands the terms of this Release and its final and binding effect and that she affixes her signature hereto voluntarily and of her own free will. 






 5. Waiver of Rights Under the Age Discrimination Act.
Executive understands that this Release waives all of her claims and rights under the ADEA. The waiver of Executive’s rights under the ADEA does not extend to claims or rights that might arise after the date this Release is executed. The monies
to be paid to Executive are in addition to any sums to which Executive would be entitled without signing this Release. For a period of seven (7) days following execution of this Release, Executive may revoke the release contained in this
paragraph only, relating to claims arising under the ADEA, by a written document received by the Chief Executive Officer of the Company no later than 11:59 p.m. of the seventh (7th) day following Executive’s execution of this Release. The Release will not be effective until said
revocation period has expired. Executive acknowledges that she has been given up to twenty-one (21) days to decide whether to sign this Release. Executive has been advised to consult with an attorney prior to executing this Release and has been
given a full and fair opportunity to do so. 
 6. Waiver Of Civil Code Section 1542. It is the intention of
the parties in signing this Release that it should be effective as a bar to each and every claim, demand and cause of action stated above, whether known or unknown. In furtherance of this intention, Executive hereby expressly waives any and all
rights and benefits conferred upon Executive by the provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE and expressly consents that this Release shall be given full force and effect according to each and all of its express terms and provisions,
including those relating to unknown and unsuspected claims, demands and causes of action, if any, as well as those relating to any other claims, demands and causes of action referred to above. SECTION 1542 provides: 
 “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” 
 7. Miscellaneous. 
 (a) This Release shall be governed in all respects by the laws of the State of
California without regard to the principles of conflict of law. 
 (b) In the event that any one or more of the provisions of
this Release is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby. Moreover, if any one or more of the provisions contained in this
Release is held to be excessively broad as to duration, scope, activity or subject, such provisions will be construed by limiting and reducing them so as to be enforceable to the maximum extent compatible with applicable law. 






 (c) This Release may be executed in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same instrument. 
 (d) The paragraph headings used in this
Release are included solely for convenience and shall not affect or be used in connection with the interpretation of this Release. 
 (e) This Release supersedes the Employment Agreement with the exception of the provisions of the Employment Agreement relating to obligations of the Company and the Executive that survive the termination of the Employment Agreement (the
“Surviving Provisions”). This Release, the Surviving Provisions and the Separation Agreement represent the entire agreement between the parties with respect to the subject matter hereto and may not be amended except in a
writing signed by the Company and Executive. If any dispute should arise under this Release, it shall be settled in accordance with the terms of Section 18 of the Employment Agreement. 
 (f) This Release shall be binding on the executors, heirs, administrators, successors and assigns of Executive and the successors and
assigns of Company and shall inure to the benefit of the respective executors, heirs, administrators, successors and assigns of the Company Entities and the Releasors. 
 [SIGNATURE PAGE FOLLOWS] 






 IN WITNESS WHEREOF, the parties hereto have executed this Release on
[            ]. 
  

					
	THE WET SEAL, INC.
		
	By:	 	  

		 	Name: Edmond S. Thomas
		 	Title: President and Chief Executive Officer
	
	  

	 Sharon Hughes