Document:

Second Amendment to Amended and Restated Credit Agreement

 Exhibit 10.1 
  
 SECOND AMENDMENT TO 
 AMENDED AND RESTATED CREDIT AGREEMENT 
  
 This Second Amendment to Amended and Restated Credit Agreement (the “Second Amendment”) is made as of the 14th day of January, 2005 by and among 
  
 THE WET SEAL, INC., a Delaware corporation, having its principal place of business at 26972 Burbank, Foothill Ranch,
California 92610, as Lead Borrower for the Borrowers, being: 
  
 said WET SEAL, INC., 
  
 WET SEAL
CATALOG, INC., a Delaware corporation, having its principal place of business at 26972 Burbank, Foothill Ranch, California 92610; and 
  
 THE WET SEAL RETAIL, INC., a Delaware corporation, having its principal place of business at 26972 Burbank, Foothill Ranch, California 92610; and

  
 WET SEAL GC, INC., a Virginia corporation, having its
principal place of business at 26972 Burbank, Foothill Ranch, California 92610, as Facility Guarantor; and 
  
 the REVOLVING CREDIT LENDERS party hereto; and 
  
 BACK BAY CAPITAL FUNDING LLC, as Term Lender, a Delaware limited liability company with offices at 40 Broad Street, Boston, Massachusetts 02109; and

  
 FLEET RETAIL GROUP, INC., as Administrative Agent and
Collateral Agent for the Lenders, a Delaware corporation, having its principal place of business at 40 Broad Street, Boston, Massachusetts 02109; and 
  
 FLEET NATIONAL BANK, as Issuing Bank, a national banking association having a place of business at 100 Federal Street, Boston, Massachusetts 02110;

  
 in consideration of the mutual covenants herein contained and benefits to be
derived herefrom. 
  
 WITNESSETH 
  
 WHEREAS, the Lead Borrower, the Borrowers, the Lenders, the Administrative
Agent and Collateral Agent, the Term Lender and the Issuing Bank entered into an Amended and Restated Credit Agreement dated as of September 22, 2004, as amended by a First Amendment to Amended and Restated Credit Agreement dated November 9, 2004,
and as further amended by an Amended and Restated First Amendment to Amended and Restated Credit Agreement dated as of December 13, 2004 (as further amended and in effect, the “Credit Agreement”); and 
  
 WHEREAS, the parties desire to amend the terms and conditions of the Credit
Amendment as set forth herein. 

 NOW THEREFORE, it is hereby agreed as follows: 
  

	1.	Definitions. All capitalized terms used herein and not otherwise defined shall have the same meaning herein as in the Credit Agreement. 

  

	2.	Amendment to Article I. The definition of each of Intercreditor Agreement, SAC Credit Agreement, SAC Loan Documents, Securities Purchase Agreement, Securities Purchase
Documents, and Subordination Agreement is hereby revised to mean and refer to each of such documents, as amended, restated or otherwise modified and in effect from time to time. 

  

	3.	Amendment to Article I. The definition of Convertible Notes contained in Section 1.01 of the Credit Agreement is hereby amended to read as follows: 

 
 “Convertible Notes” means the Notes
(whether “ Notes” (as defined in the Securities Purchase Agreement as in effect on December 13, 2004) or any convertible notes issued in replacement of the Notes in accordance with the terms of the Securities Purchase Agreement), made
payable by the Lead Borrower, in an aggregate principal amount equal to $56,000,000 (plus capitalized expenses and interest and other amounts due thereon), issued pursuant to the Indenture. 
  

	4.	Amendment to Article V. Section 5.01(f) of the Credit Agreement is hereby amended to read as follows: 

  
 (f) Daily, a certificate in the form of Exhibit E (a
“Borrowing Base Certificate”) showing the Borrowing Base and Term Loan Borrowing Base as of the close of business on the immediately preceding day, which Borrowing Base Certificate shall reflect, among other things, the roll forward
of the Inventory from the prior day and the prior day’s cash receipts, each Borrowing Base Certificate to be certified as complete and correct on behalf of the Borrowers by a Financial Officer of the Lead Borrower; provided however, based upon
the most recently delivered Borrowing Base Certificate, if minimum Excess Availability is not less than the aggregate of (i) the then applicable Minimum Required Excess Availability, and (ii) $10,000,000, the roll forward of Inventory may be
furnished on a weekly basis; 
  

	5.	Amendment to Article V. The provisions of Article V of the Credit Agreement are hereby amended by the addition of the following Section 5.16: 

  
 5.16. Funding of Convertible Notes. On or before
January 14, 2005 the Lead Borrower shall have received at least $26,000,000 of net cash proceeds from the issuance of the Convertible Notes, and on or before January 18, 2005 the Lead Borrower shall have received at least an additional amount of
$26,000,000 of net cash proceeds from the issuance of the Convertible Notes, totaling minimum net cash proceeds of $52,000,000. 
  

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	6.	Amendment to Article VI. Section 6.01(i) of the Credit Agreement is hereby amended to read as follows: 

  
 (i) Indebtedness owing to the SAC Agents and the SAC Lenders
under the SAC Loan Documents (the “SAC Indebtedness”). Except as set forth below, the Borrowers shall not make any payments on the SAC Loan (other than the payment of counsel fees described in Section 9(c) of the Intercreditor Agreement,
and the accrual of (A) payment in kind or capitalized interest, (B) capitalized expenses, and (C) all other amounts due thereon, which amounts are all to be capitalized) unless and until (i) all Obligations have been repaid in full in cash, except
for those Letter of Credit Outstandings described in (ii), below, (ii) the Borrowers have deposited cash into the Cash Collateral Account in an amount equal to 103% of the Letter of Credit Outstandings at such time, and (iii) any obligations of the
Swingline Lender, the Issuing Bank, or any Revolving Credit Lender to make any loans or to provide any financial accommodations pursuant to this Agreement have been terminated. Except for the amendments and modifications permitted in accordance with
the terms of the Intercreditor Agreement, the Borrowers shall not hereafter effect or permit any amendments or modifications to any SAC Loan Documents without the prior written consent of the Administrative Agent and the Term Lender. Upon
satisfaction of the following requirements, the Borrowers shall from time to time be permitted to repay Obligations under the SAC Credit Agreement, in increments of not less than $2,000,000.00, on the last Business Day of any month, commencing March
31, 2005: 
  
 (A) The Lead Borrower shall furnish
the Administrative Agent (i) within 10 Business Days’ of receipt of written notice from SAC of SAC’s intent to terminate, pursuant to the terms of Section 2.17 of the SAC Credit Agreement, a copy of such notice of termination, or (ii) 10
Business Days’ notice of its desire to repay the SAC Loan. 
  
 (B) No Event of Default is then occurring; and 
  
 (C) After giving effect to the amount of the SAC Loan to be repaid and on a pro forma basis for the next 6 month period, based upon
delivery by the Lead Borrower of a business plan reasonably satisfactory to the Administrative Agent and the Term Lender, in their reasonable discretion, the Borrower shall have minimum Excess Availability of not less than the aggregate of (i) the
then applicable Minimum Required Excess Availability, and (ii) $10,000,000. 
  

	7.	Amendment to Article VI. Section 6.01(j) of the Credit Agreement is hereby amended to read as follows: 

  
 (j) Indebtedness owing to the holders of the Convertible
Notes in an aggregate principal amount not to exceed $56,000,000 (plus capitalized expenses and interest and plus all Subordinated Debt Fees (as defined in the Subordination Agreement) and other amounts due thereon) in the aggregate under the
Securities Purchase 

  

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Documents. Except for the conversion of the Convertible Notes into shares of Class A Common Stock of the Lead Borrower in accordance with the terms of the
Convertible Notes, the Borrowers shall not make any payments on the Convertible Notes or under the Securities Purchase Documents (other than the payment of Subordinated Debt Fees, and the accrual of (A) payment in kind or capitalized interest, (B)
capitalized expenses, and (C) all other amounts due thereon, which amounts are all to be capitalized) unless and until (i) all Obligations have been repaid in full in cash, except for those Letter of Credit Outstandings described in (ii), below,
(ii) the Borrowers have deposited cash into the Cash Collateral Account in an amount equal to 103% of the Letter of Credit Outstandings at such time, and (iii) any obligations of the Swingline Lender, the Issuing Bank, or any Revolving Credit Lender
to make any loans or to provide any financial accommodations pursuant to this Agreement have been terminated. Except for the amendments and modifications permitted in accordance with the terms of the Subordination Agreement, the Borrowers shall not
hereafter effect or permit any amendments or modifications to any of the Securities Purchase Documents without the prior written consent of the Administrative Agent and the Term Lender, which shall not be unreasonably withheld or delayed.

  

	8.	Amendment to Article VI. The provisions of Article VI of the Credit Agreement are hereby amended by the addition of the following subsection at the end of Section 6.06(b):

  
 (c) Notwithstanding anything to
the contrary contained in this Agreement, the Loan Parties may pay any principal of and/or interest or other amounts owing on the SAC Loan under the SAC Credit Agreement by issuing to the SAC Lenders equity interests, or instruments convertible into
or exchangeable or exercisable for such equity interests, in the Loan Parties in lieu of any such payment in cash; provided, however that any such equity interest (other than the Class A Common Stock of the Lead Borrower), or instrument convertible
into or exchangeable or exercisable for such equity interests, shall have no rights for the receipt of any cash payments (other than the right to cash payments made to all holders of the Class A Common Stock of the Lead Borrower, which cash payments
are subject to restrictions on payment contained in this Agreement) of any kind prior to the termination of this Agreement unless, prior to the making of any such payment, the Loan Parties have satisfied the provisions of subsections (B) and (C) of
Section 6.01(i). 
  

	9.	Amendment to Article VII. Section 7.01(r) of the Credit Agreement is hereby amended to read as follows: 

  
 (r) the occurrence of any Event of Default under the SAC Loan or SAC Loan
Documents, whether or not SAC has exercised, or is permitted to exercise, any of its rights and remedies on account thereof. 
  

	10.	Conditions to Effectiveness. This Second Amendment shall not be effective until each of the following conditions precedent have been fulfilled to the satisfaction of the
Administrative Agent, the Term Lender and the Revolving Credit Lender: 

  

	 	a.	This Second Amendment shall have been duly executed and delivered by the Borrowers, the Facility Guarantor, the Administrative Agent, the Term Lender and the Revolving Credit
Lender. The Administrative Agent shall have received a fully executed copy hereof and of each other document required hereunder. 

  

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	 	b.	No Default or Event of Default shall have occurred and be continuing both before and immediately after giving effect to the execution of this Second Amendment.

  

	 	c.	The Borrowers shall have paid to the Administrative Agent and the Term Lender an amendment fee in the aggregate amount of $125,000. 

  

	 	d.	An amendment to the Intercreditor Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Term Lender shall have been executed and delivered by
SAC and the Loan Parties. 

  

	 	e.	The Bridge Subordination Agreement to be entered into between, among others, SAC and The Bank of New York as Trustee and Collateral Agent, shall be in form and substance reasonably
satisfactory to the Administrative Agent and the Term Lender. 

  

	 	f.	The Borrowers and the Facility Guarantor shall have provided such additional instruments and documents to the Administrative Agent as the Administrative Agent and its counsel may
have reasonably requested. 

  

	11.	Consent to Amendment of SAC Loan Documents. Notwithstanding anything to the contrary contained in the Credit Agreement, or in Paragraph 3.2 of the Intercreditor Agreement, as
of the effective date of this Second Amendment, the Agent, for and on behalf of the Lenders, hereby consents to the amendment of the SAC Loan Documents as of the date of this Second Amendment. This is a one time consent with respect to the foregoing
transactions only and shall not obligate the Agent or any Lender to consent to any other transactions similar or dissimilar to the foregoing transactions or to establish a course of conduct. 

  

	12.	Consent to Amendment of Definition of Minimum Required Excess Availability. Notwithstanding that the Administrative Agent and the Term Lender have not determined that the
business plan furnished to them by the Borrowers is satisfactory, the Administrative Agent and the Term Lender have agreed that effective upon receipt of all amounts referenced in Section 5.16, the definition of “Minimum Required Excess
Availability” shall be amended to read as follows: 

  
 “Minimum Required Excess Availability” means Excess Availability at all times of not less than the greater of (i) fifteen percent (15%) of the greater of the Borrowing Base or the Term Loan Borrowing
Base, at any time of calculation, or (ii) (A) $7,500,000, or (B) if the test for Excess Availability is being applied during the period from December 20 through January 20, Excess Availability shall not fall below $11,000,000 for three (3)
consecutive days or more during such period. 
  

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	13.	Certain Waivers. Each of the Administrative Agent, the Collateral Agent, Swingline Lender, Revolving Credit Lender, Term Lender and Issuing Bank acknowledge and agree to
waive any rights they may have under Section 7.01(p) of the Credit Agreement or any other provisions of the Credit Agreement or any other Loan Document in connection with the transactions contemplated under (a) the Agency Agreement dated as of
December 31, 2004 by and between Hilco Merchant Resources, LLC (“Hilco”), the Loan Parties, (b) the Security Agreement dated as of December 31, 2004 between Hilco and the Loan Parties, and (c) the Subordination Agreement dated as of
December 31, 2004 by and among the Loan Parties, the Administrative Agent, and the SAC Agents. 

  

	14.	Miscellaneous. 

  

	 	a.	Except as provided herein, all terms and conditions of the Credit Agreement and the other Loan Documents remain in full force and effect. The Loan Parties hereby ratify, confirm,
and reaffirm all of the representations, warranties and covenants therein contained. 

  

	 	b.	The Loan Parties hereby acknowledge and agree that they have no offsets, defenses, claims, or counterclaims against the Agents or any Lender, or any of their respective officers,
directors, employees, attorneys, representatives, predecessors, successors, or assigns with respect to the Loan Documents, the Obligations, or otherwise, and that if the Loan Parties now have, or ever did have, any offsets, defenses, claims, or
counterclaims against the Agents or any Lender, or any of their respective officers, directors, employees, attorneys, representatives, predecessors, successors, or assigns, whether known or unknown, at law or in equity, all of them are hereby
expressly WAIVED, and the Loan Parties hereby RELEASE the Agents and each Lender, and each of their respective officers, directors, employees, attorneys, representatives, predecessors, successors, and assigns from any liability
therefor. 

  

	 	c.	The Borrowers shall pay all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent and the Term Lender in connection with this Second Amendment, including,
without limitation, all reasonable attorneys’ fees. 

  

	 	d.	This Second Amendment may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered, shall be an original, and
all of which together shall constitute one instrument. 

  

	 	e.	This Second Amendment expresses the entire understanding of the parties with respect to the matters set forth herein and supersedes all prior discussions or negotiations hereon.

  

	 	f.	By executing this Second Amendment, the undersigned Facility Guarantor hereby consents to the Second Amendment to Credit Agreement and acknowledges that its Guarantee remains in
full force and effect. 

  

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 IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be executed and their seals
to be hereto affixed as the date first above written. 
  

			
	 THE WET SEAL, INC.

		
	 By:
	 	 /s/ Douglas C. Felderman

	 Name:
	 	 Douglas C. Felderman

	 Title:
	 	 EVP + CFO

	
	 THE WET SEAL RETAIL, INC.

		
	 By:
	 	 /s/ Douglas C. Felderman

	 Name:
	 	 Douglas C. Felderman

	 Title:
	 	 Secretary + Treasurer

	
	 WET SEAL CATALOG, INC.

		
	 By:
	 	 /s/ Douglas C. Felderman

	 Name:
	 	 Douglas C. Felderman

	 Title:
	 	 Secretary + Treasurer

	
	 WET SEAL GC, INC.

		
	 By:
	 	 /s/ Douglas C. Felderman

	 Name:
	 	 Douglas C. Felderman

	 Title:
	 	 Secretary + Treasurer

  

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	FLEET RETAIL GROUP, INC.,
	As Administrative Agent, Collateral Agent, as Swingline Lender and as Revolving Credit Lender
		
	By:	 	 /s/ Daniel T. Platt

	Name:	 	Daniel T. Platt
	Title:	 	Director
	
	BACK BAY CAPITAL FUNDING, LLC, as Term Lender
		
	By:	 	 /s/ Kristen M. O’Connor

	Name:	 	 Kristen M. O’Connor

	Title:	 	 Managing Director

	
	FLEET NATIONAL BANK, as Issuing Bank
		
	By:	 	 /s/ Daniel Platt

	Name:	 	Daniel Platt
	Title:	 	Director

  

 8First Amendment to Credit Agreement

  
 Exhibit 10.2

  
 EXECUTION COPY 
  
 FIRST AMENDMENT TO CREDIT AGREEMENT 
  
 This First Amendment to the Credit Agreement (the “First
Amendment”) is made as of the 14th day of January, 2005 by and among: 
  
 THE WET SEAL, INC., a Delaware corporation, having its principal place of
business at 26972 Burbank, Foothill Ranch, California 92610, as Lead Borrower for the Borrowers, being: 
  
 said WET SEAL, INC., 
  
 WET SEAL CATALOG, INC., a Delaware corporation, having its principal place of business at 26972 Burbank, Foothill Ranch, California 92610; and 

 
 THE WET SEAL RETAIL, INC., a Delaware corporation, having its principal
place of business at 26972 Burbank, Foothill Ranch, California 92610; and 
  
 WET SEAL GC, INC., a Virginia corporation, having its principal place of business at 26972 Burbank, Foothill Ranch, California 92610, as Facility Guarantor; and 
  
 the LENDERS party hereto; and 
  
 S.A.C. CAPITAL ASSOCIATES, LLC, a limited liability company organized under
the laws of Anguilla, as Administrative Agent and Collateral Agent (collectively the “Agents”) for the Lenders; 
  
 in consideration of the mutual covenants herein contained and benefits to be derived herefrom. 
  
 WITNESSETH 
  
 WHEREAS, the Lead Borrower, the other Borrowers, the Lenders and the Agents entered into a Credit Agreement dated as of November 9, 2004 (as amended,
restated or otherwise modified and in effect from time to time, the “Credit Agreement”); and 
  
 WHEREAS, the parties desire to amend certain of the terms and conditions of the Credit Agreement as are set forth herein. 
  
 NOW THEREFORE, it is hereby agreed as follows: 
  

	1.	Definitions. All capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement. 

  

	2.	Amendment to Article I. 

  

	 	a.	The definition of “Change in Control” in Section 1.01 of the Credit Agreement is hereby amended by the addition of the following at the end thereof:

  
 “Approval of less than
one-half of the members of the board of directors by individuals not approved in accordance with the terms provided for in subsection (a) above, shall not constitute a Change in Control hereunder.” 
  

	 	b.	The definition of “Interest Payment Date” in Section 1.01 of the Credit Agreement is hereby deleted in its entirety. 

  

	 	c.	The definition of “Maturity Date” in Section 1.01 of the Credit Agreement is hereby amended by deleting such definition in its entirety and substituting the following in
lieu thereof: 

  
 “Maturity
Date” has the meaning set forth in Section 2.17. 
  

	 	d.	Section 1.01 of the Credit Agreement is hereby amended by adding the following definitions in appropriate alphabetical order: 

  
 “Base Interest Rate” means a per annum rate
(computed on the basis of the actual number of days elapsed over a year of 360 days) equal to (a) during the period from the Closing Date through and including July 31, 2005, 25%, and (b) thereafter, 30%. 
  
 “Base Interest Rate Payment Date” has the
meaning set forth in Section 2.09(b). 
  
 “Bridge Subordination Agreement” means the Subordination Agreement, dated as of January 14, 2005 (as amended, restated or otherwise modified and in effect from time to time), entered into among the Collateral Agent (as
defined in the Indenture), on behalf of the Agents and the Lenders, the Trustee under the Indenture, the investors from time to time designated as “Buyers” under the Securities Purchase Agreement, and the Lead Borrower. 
  
 “Convertible Note Indebtedness” has the
meaning set forth in Section 6.01(j). 
  
 “Convertible Notes” means the Notes (whether “Notes” (as defined in the Securities Purchase Agreement as of the date hereof) or any convertible notes issued in replacement of the Notes in accordance with
the terms thereof), made payable by the Lead Borrower, in an aggregate principal amount equal to $56,000,000 (plus capitalized expenses and interest and other amounts due thereon), issued pursuant to the Indenture. 
  
 “Indenture” means the Indenture, dated as
of January 14, 2005 (as amended, restated or otherwise modified and in effect from time to time), between the Trustee, the Collateral Agent (as defined in the Indenture) and The Wet Seal, Inc., as issuer, pursuant to which the Convertible Notes are
issued. 
  
 “Indenture Security
Documents” means the Security Documents, the Guarantee, the Guarantor Collateral Documents (in each case, as defined in the 

  

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Indenture), and each other security agreement or other instrument or document executed and delivered pursuant to the Indenture to secure any of the
obligations thereunder, in each case as amended, restated or otherwise modified and in effect from time to time. 
  
 “Intercreditor Agreement” means the Intercreditor and Lien Subordination Agreement, dated as of November 9, 2004 (as
amended, restated or otherwise modified and in effect from time to time), entered into between the Agents, on behalf of themselves and the Lenders, and the Working Capital Agents, on behalf of themselves and the Working Capital Lenders. 

 
 “Non-Consenting Lender” has the meaning
provided therefor in Section 9.03. 
  
 “Securities Purchase Agreement” means the Amended and Restated Securities Purchase Agreement, dated as of December 13, 2004 (as amended by the First Amendment, dated as of January 14, 2005, and as further amended, restated
or otherwise modified and in effect from time to time) entered into by and among the Lead Borrower and the initial holders of the Convertible Notes. 
  
 “Securities Purchase Documents” shall mean, collectively, the Securities Purchase Agreement, Indenture (including the
Securities being issued thereunder, as such Securities are defined in the Indenture), the Indenture Security Documents, Series A Warrants, Series B Warrants, Series C Warrants, Series D Warrants, Registration Rights Agreement, any Security Agreement
(each as defined in the Securities Purchase Agreement as in effect on the date hereof), any other Transaction Document and any other certificate, instrument or document contemplated in the Securities Purchase Agreement, in each case as amended,
restated or otherwise modified and in effect from time to time. 
  
 “Senior Subordination Agreement” means the Amended and Restated Subordination Agreement, dated as of January 14, 2005 (as amended, restated or otherwise modified and in effect from time to time),
entered into among the Working Capital Administrative Agent, on behalf of itself and the Working Capital Lenders, the Trustee under the Indenture, the investors from time to time designated as “Buyers” under the Securities Purchase
Agreement, and the Lead Borrower. 
  
 “Supplemental Interest Rate” means a per month rate (computed as of the first day of each calendar month, on the basis of the actual number of days in such calendar month) of (a) during the period from February 1, 2005
through and including February 28, 2005, 1.45%; (b) during the period from March 1, 2005 through and including March 31, 2005, 0.70%; and (c) thereafter, 1.5%. 
  

“Supplemental Interest Rate Payment Date” has the meaning set forth in Section 2.09(b). 
  

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 “Trustee” means The Bank of New York, in its capacity as trustee under
the Indenture. 
  

	3.	Amendment to Article II. The provisions of Article II of the Credit Agreement are hereby amended by: 

  

	 	a.	deleting subsection 2.09 in its entirety and substituting in lieu thereof the following: 

  
 “(a) Subject to Section 2.10, the Term Loan shall bear interest on the principal amount thereof from time to time
outstanding, from the date of the making of such Term Loan until such principal amount is repaid in full, at a rate equal to the sum of (i) the Base Interest Rate and (ii) the Supplemental Interest Rate (collectively, the “Interest
Rate”). 
  
 (b) Interest accrued on the Term Loan at
the Base Interest Rate shall be payable monthly in arrears, on the first Business Day of each month (the “Base Interest Rate Payment Date”), commencing on December 1, 2004, at maturity (whether by acceleration or otherwise), and
after such maturity on demand. Interest payable on the Term Loan at the Supplemental Interest Rate shall be payable monthly in advance, on the first Business Day of each month (the “Supplemental Interest Rate Payment Date”),
commencing on February 1, 2005. Such interest that has accrued during any such period may be capitalized on such Base Interest Rate Payment Date and added to the outstanding principal amount of the Term Loan and such interest that is payable in
advance for any such period may be capitalized on such Supplemental Interest Rate Payment Date and added to the outstanding principal amount of the Term Loan. For purposes of this Agreement and the other Loan Documents, the amounts so capitalized
hereunder shall bear interest in accordance with this Section 2.09 as though such amounts constituted a Term Loan made by the Lenders hereunder. All interest paid (including, without limitation, such interest that has been paid by capitalizing such
interest in accordance with the terms hereof) shall be non-refundable. 
  
 (c) The Borrowers shall repay the entire unpaid balance of the Term Loan (including, without limitation, all capitalized interest thereon) and all accrued and unpaid interest thereon on the Termination Date.”

  

	 	b.	deleting Section 2.17 in its entirety and substituting the following in lieu thereof: 

  
 “2.17 Term; Automatic Renewal. 
  
 This Agreement shall continue in full force and effect for a term ending on March 31, 2005 and automatically shall be
renewed for successive one-month periods thereafter, in each case ending on the last Business Day of a calendar month (such date, the “Maturity Date”); provided that, (a) the Administrative Agent, in its sole discretion, may
terminate this Agreement 

  

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effective on the last Business Day of a calendar month by giving the Lead Borrower at least 10 days prior written notice and (b) the Maturity Date shall
occur no later than March 31, 2009. Nothing in this Section 2.17 shall limit any right the Agents or the Lenders have hereunder to take any action, including the termination of the Agents’ and Lender’s obligations, upon the occurrence and
during the continuation of an Event of Default. 
  

	4.	Amendment to Article V. The provisions of Article V of the Credit Agreement are hereby amended by: 

  

	 	a.	(i) deleting the word “and” at the end of clause (k) of Section 5.01, (ii) deleting the period at the end of clause (l) of Section 5.01 and inserting “; and” in
lieu thereof and (iii) inserting the following new clause (m) at the end of Section 5.01: 

  
 “(m) promptly upon receipt thereof, copies of any material notices received by any of the Loan Parties under the Working Capital Loan Documents, the
Senior Subordination Agreement and/or the Securities Purchase Documents.” 
  

	 	b.	inserting the following new Section 5.18 in at the end of Article V: 

  
 “5.18 Funding of Convertible Notes. On or before January 14, 2005, the Lead Borrower shall have received at least $26,000,000 of net cash
proceeds from the issuance of the Convertible Notes, and on or before January 18, 2005 the Lead Borrower shall have received at least an additional amount of $26,000,00 of net cash proceeds from the issuance of the Convertible Notes, totaling
minimum net cash proceeds of $52,000,000.” 
  

	5.	Amendment to Article VI. The provisions of Article VI of the Credit Agreement are hereby amended by: 

  

	 	a.	(i) deleting the word “and” at the end of clause (h) of Section 6.01, (ii) deleting the period at the end of clause (i) of Section 6.01 and inserting “; and” in
lieu thereof and (iii) inserting the following new clause (j) at the end of Section 6.01: 

  
 “(j) Indebtedness owing to the holders of the Convertible Notes, in an aggregate principal amount not to exceed $56,000,000 (plus capitalized
expenses and interest and plus all Subordinated Debt Fees (as defined in the Bridge Subordination Agreement) and all other amounts due thereon, the “Convertible Note Indebtedness”) under the Securities Purchase Documents. Except for
the conversion of the Convertible Notes into shares of Class A Common Stock of the Lead Borrower in accordance with the terms of the Convertible Notes, the Borrowers shall not make any payments on the Convertible Notes or under the Securities
Purchase Documents (other than the payment of Subordinated Debt Fees (as defined in the Bridge Subordination Agreement), and the accrual of (A) payment in kind or capitalized interest, (B) capitalized expenses, and (C) all other 

  

 5 

 
amounts due thereon, which amounts are all to be capitalized) unless and until all Obligations have been repaid in full in cash. Except for the amendments
and modifications permitted in accordance with the terms of the Bridge Subordination Agreement, the Borrowers shall not hereafter effect or permit any amendments or modifications to any of the Securities Purchase Documents without the prior written
consent of the Administrative Agent, which shall not be unreasonably withheld.” 
  

	 	b.	(i) deleting the word “and” at the end of clause (d) of Section 6.02, (ii) deleting the period at the end of clause (e) of Section 6.02 and inserting “; and” in
lieu thereof and (iii) inserting the following new clause (f) at the end of Section 6.02: 

  
 “(f) Liens granted in favor of the Collateral Agent, on behalf of the holders of the Convertible Notes, under the Security Documents to secure the
Convertible Note Indebtedness; provided that such Liens are subject to the Bridge Subordination Agreement.” 
  

	6.	Amendment to Article VII. The provisions of Article VII of the Credit Agreement are hereby amended by: 

  

	 	a.	(i) deleting the word “or” at the end of clause (q) of Section 7.01, (ii) deleting the comma at the end of clause (r) of Section 7.01 and inserting “; or” in
lieu thereof and (iii) inserting the following new clause (s) at the end of Section 7.01: 

  
 “(s) the occurrence of any event giving rise to a Change in Control, as defined under the Convertible Notes, or a Change of Control, as defined in
the Indenture, or the occurrence of any Event of Default, as defined under the Convertible Notes, the Securities Purchase Agreement, or the Indenture, whether or not any holders of the Convertible Notes or the Securities have exercised, or are
permitted to exercise, any of their respective rights and remedies on account thereof.” 
  

	7.	Amendment to Article IX. The provisions of Article IX of the Credit Agreement are hereby amended by deleting Section 9.03 of the Credit Agreement in its entirety and
substituting the following in lieu thereof: 

  
 “9.03 Non-Consenting Lender. Notwithstanding anything to the contrary in Section 9.02, if, in connection with any proposed amendment, waiver or consent requiring the Consent of all Lenders, the consent of the Required Lenders is
obtained, but the consent of other Lenders is not obtained (any such Lender whose Consent is not obtained being referred to as a “Non-Consenting Lender”), then S.A.C. Capital Associates, LLC shall have the right (but not the
obligation) to purchase from the Non-Consenting Lenders, and the Non-Consenting Lenders agree that they shall sell, all the Non-Consenting Lenders’ Term Loans for an amount equal to the principal balances thereof and all accrued interest
thereon and any and all other amounts then due in connection therewith, if any, with respect thereto 

  

 6 

 
through the date of sale pursuant to one or more Assignment and Acceptance(s), without premium or discount.” 
  

	8.	Hilco Consent. The Agent and the Lenders hereby acknowledge that certain letter agreement, dated as of December 31, 2004 (the “Hilco Consent”), pursuant to
which the Agent and each Lender at the time party to the Credit Agreement consented to the Subordination Agreement, dated as of December 31, 2004, among Hilco Merchant Resources, LLC, Fleet Retail Group, Inc., as First Lien Agent (as defined
therein), and S.A.C. Capital Associates, LLC, as Second Lien Agent (as defined therein) and each of the transactions contemplated thereby. Each of the Agent and the Lenders hereby reaffirms such Hilco Consent, pursuant to Section 9.02(b) of the
Credit Agreement. 

  

	9.	Conditions to Effectiveness. This First Amendment shall not be effective until each of the following conditions precedent have been fulfilled to the satisfaction of the
Administrative Agent: 

  

	 	a.	The Administrative Agent shall have received a fully executed copy of the following documents, together with each other document required thereby: 

  

	 	1.	This First Amendment, duly executed and delivered by the Borrowers, the Facility Guarantor, the Agents and the Lenders; 

  

	 	2.	The second amendment to the Working Capital Credit Agreement, in form and substance reasonably satisfactory to the Administrative Agent, duly executed and delivered by the
Borrowers, the Facility Guarantor, the Working Capital Administrative Agent and the Working Capital Lenders; 

  

	 	3.	The second amendment to the Working Capital Credit Agreement shall have become effective in accordance with its terms; 

  

	 	4.	The first amendment to the Working Capital Intercreditor Agreement, in form and substance reasonably satisfactory to the Administrative Agent, duly executed by the Working Capital
Administrative Agent and the Administrative Agent; 

  

	 	5.	The first amendment to the Working Capital Intercreditor Agreement shall have become effective, in accordance with its terms; 

  

	 	6.	The Bridge Subordination Agreement, in form and substance reasonably satisfactory to the Administrative Agent, duly executed and delivered by the Trustee, the Collateral Agent, and
the Lead Borrower; 

  

	 	7.	The Senior Subordination Agreement, in form and substance reasonably satisfactory to the Administrative Agent, duly executed and delivered by the Trustee, the Working Capital
Administrative Agent, and the Lead Borrower; and 

  

 7 

	 	8.	Such replacement Notes or new Notes, as applicable, evidencing the Term Loan under the Credit Agreement, as the Administrative Agent may request, duly executed and delivered by the
Borrowers to the Administrative Agent for delivery to the Lenders. 

  

	 	b.	No Default or Event of Default shall have occurred and be continuing both before and immediately after giving effect to the execution of this First Amendment and, except to the
extent set forth on Schedule 1 hereto, all representations and warranties made in the Credit Agreement are true and correct as of the date hereof, except to the extent that they refer specifically to an earlier date, in which case they are true and
correct as of such earlier date. 

  

	 	c.	The Borrowers and the Facility Guarantor shall have provided such additional instruments and documents to the Administrative Agent as the Administrative Agent and its counsel may
reasonably request. 

  

	10.	Miscellaneous. 

  

	 	a.	Except as provided herein, all terms and conditions of the Credit Agreement and the other Loan Documents remain in full force and effect. The Loan Parties hereby ratify, confirm,
and reaffirm all of the representations, warranties and covenants therein contained. 

  

	 	b.	Upon receipt of any additional intellectual property search results which reflect intellectual property owned by any of the Loan Parties not subject to an existing Intellectual
Property Security Agreement executed in favor of the Collateral Agent, the Loan Parties shall, to the extent delivered to the Working Capital Agent, execute and deliver to the Collateral Agent such additional amendments and/or Intellectual Property
Security Agreements as were delivered to the Working Capital Agent or as may otherwise be reasonably requested by the Collateral Agent. 

  

	 	c.	The Loan Parties hereby acknowledge and agree that they have no offsets, defenses, claims, or counterclaims against the Agents or any Lender, or any of their respective officers,
directors, employees, attorneys, representatives, predecessors, successors, or assigns with respect to the Loan Documents, the Obligations, or otherwise, and that if the Loan Parties now have, or ever did have, any offsets, defenses, claims, or
counterclaims against the Agents or any Lender, or any of their respective officers, directors, employees, attorneys, representatives, predecessors, successors, or assigns, whether known or unknown, at law or in equity, all of them are hereby
expressly WAIVED, and the Loan Parties hereby RELEASE the Agents and each Lender, and each of their respective officers, directors, employees, attorneys, representatives, predecessors, successors, and assigns from any liability
therefor. 

  

 8 

	 	d.	The Borrowers shall promptly pay all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent in connection with this First Amendment, including, without
limitation, all reasonable attorneys’ fees. 

  

	 	e.	This First Amendment may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered, shall be an original, and all
of which together shall constitute one instrument. Delivery of an executed counterpart of this First Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart. 

  

	 	f.	This First Amendment shall be governed by, and construed in accordance with, the laws of the State of New York. 

  

	 	g.	This First Amendment shall be binding upon, and inure to the benefit of the successors and assigns of the parties hereto. 

  

	 	h.	This First Amendment expresses the entire understanding of the parties with respect to the matters set forth herein and supersedes all prior discussions or negotiations hereon. This
First Amendment may not be amended, modified or otherwise changed without the mutual agreement in writing of the parties hereto. 

  

	 	i.	Each of the Loan Parties hereto (on behalf of all Loan Parties) hereby (a) acknowledges and consents to this First Amendment, (b) confirms and agrees that each Loan Document to
which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects except that on and after the date of this First Amendment all references in any such Loan Document to “the Credit
Agreement”, the “Agreement”, “thereto”, “thereof”, “thereunder” or words of like import referring to the Credit Agreement shall mean the Credit Agreement as amended by this Amendment, and (c) confirms and
agrees that to the extent that any such Loan Document purports to assign or pledge to any Agent for the ratable benefit of the Lenders, or to grant to any Agent for the ratable benefit of the Lenders a security interest in or Lien on, any collateral
as security for the obligations of any Loan Party from time to time existing in respect of the Credit Agreement (as amended hereby) and the Loan Documents, such pledge, assignment and/or grant of the security interest or Lien is hereby ratified and
confirmed in all respects. Nothing herein shall be deemed to entitle any Loan Party to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document in similar or different circumstances. 

  

 9 

  
 IN WITNESS WHEREOF, the
parties hereto have caused this First Amendment to be executed and their seals to be hereto affixed as the date first above written. 
  

			
	THE WET SEAL, INC.
		
	By:	 	 /s/ Douglas C. Felderman

			
	 Name:
	 	 Douglas C. Felderman

			
	 Title:
	 	 EVP + CFO

			
	
	THE WET SEAL RETAIL, INC.
		
	By:	 	 /s/ Douglas C. Felderman

			
	 Name:
	 	 Douglas C. Felderman

			
	 Title:
	 	 Secretary + Treasurer

			
	
	WET SEAL CATALOG, INC.
		
	By:	 	 /s/ Douglas C. Felderman

			
	 Name:
	 	 Douglas C. Felderman

			
	 Title:
	 	 Secretary + Treasurer

			
	
	WET SEAL GC, INC.
		
	By:	 	 /s/ Douglas C. Felderman

			
	 Name:
	 	 Douglas C. Felderman

			
	 Title:
	 	 Secretary + Treasurer

  

  

			
	S.A.C. CAPITAL ASSOCIATES, LLC,
	as Administrative Agent, Collateral Agent,
	and a Lender
		
	 By:
	 	 S.A.C. Capital Advisors, LLC

		
	 By:
	 	  /s/ Peter Nussbaum

			
	 Name:
	 	 Peter Nussbaum

	 Title:
	 	 General Counsel

  

  

			
	 GMM CAPITAL, LLC,
 as a Lender

		
	 By:
	 	 /s/ Dabah Isaac

	 Name:
	 	 Dabah Isaac

	 Title:
	 	 

  

  

			
	 GOLDFARB CAPITAL PARTNERS LLC,
 as a Lender

		
	 By:
	 	 /s/ Morris Goldfarb

	 Name:
	 	 Morris Goldfarb

	 Title:
	 	 Mbr

  

  

	
	
	 /s/ Charles Phillips

	 Mr. Charles Phillips, as a Lender

  

  

			
	 SMITHFIELD FIDUCIARY LLC,
 as a Lender

		
	 By:
	 	 /s/ Adam J. Chill

	 Name:
	 	 Adam J. Chill

	 Title:
	 	 Authorized Signatory

  

  

			
	 D.B. ZWIRN SPECIAL OPPORTUNITIES
 FUND, L.P.,
 as a Lender

		
	 By:
	 	 D.B. Zwirn Partners LLC,
its general partner

		
	 By:
	 	 /s/ Daniel B. Zwirn

	 Name:
	 	 Daniel B. Zwirn

	 Title:
	 	 Managing Member

  

  

			
	 D.B. ZWIRN SPECIAL OPPORTUNITIES
 FUND, LTD,
 as a Lender

		
	 By:
	 	 D.B. Zwirn & Co., L.P.,
its trading manager

		
	 By:
	 	 /s/ Daniel B. Zwirn

	 Name:
	 	 Daniel B. Zwirn

	 Title:
	 	 Managing Member

  

  

			
	 RIVERVIEW GROUP, LLC,
 as a Lender

		
	By:	 	 /s/ Terry Feency

			
	 Name:
	 	 Terry Feency

	 Title:
	 	 COO

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