Document:

Employment Agreement

 EXHIBIT 10.2 
  
 EMPLOYMENT AGREEMENT 
  
 THIS EMPLOYMENT AGREEMENT (“Agreement”) is made as of August 25, 2003 between The Wet Seal, Inc., a Delaware corporation, whose executive
offices are located at 26972 Burbank, Foothill Ranch, California 92610 (“Company”), and Allan D. Haims (“Employee”), with respect to the following: 
  
 A. Company desires to employ Employee and Employee desires to be employed by Company. 
  
 NOW, THEREFORE, the parties agree as follows: 
  
 1. Position and Employment Period. 
  
 Effective August 25, 2003 (the “Effective Date”) Company shall
employ Employee as President of the Wet Seal division of Company (the “Position”), and Employee shall accept such employment, on the terms and conditions set forth herein. The term of Employee’s employment with Company shall commence
on the Effective Date and shall terminate on August 25, 2006, unless terminated sooner by either party in accordance with the provisions of Section 3 below (the “Employment Period”); provided that Company will give Employee at least 120
days prior written notice before August 25, 2006 if Company desires to negotiate for an extension of the Employment Period. The principal place of employment of Employee shall be at the Company’s headquarters as set forth above (or at such
other location within the 35-mile radius of its current location as it may be relocated); provided that Employee may be required to travel on Company business during the Employment Period. 
  
 1.1. Duties. 
  
 Employee shall have the powers and shall perform the services and duties as
may from time to time be decided upon by Company that are customarily associated with the Position. Employee shall comply with Company’s policies and rules, as they may be in effect from time to time during the term of Employee’s
employment with Company, notice of which has been provided to Employee in writing. Employee further agrees that, except in accordance with Company’s personnel policies covering employee vacations, leaves and reasonable periods of illness or
other incapacitation, Employee shall devote all of Employee’s business time and services to the business and interest of Company; provided that Employee may devote such time that the Employee deems appropriate for managing his own investment
portfolio and may be a member of the Board of Directors of non-profit, civic or charitable organizations so long as it does not materially interfere or conflict with the Position. Employee shall perform the duties assigned to Employee to the best of
Employee’s ability and in the best interests of Company. 
  

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 1.2. Reporting. 
  
 Employee will report directly to the Chief Executive Officer of the Company (“CEO”). The following employees will
report directly to Employee: General Merchandise Manager, Vice President—Planning and Allocation, Vice President—Design, Vice President—Store Operations, Vice President—Marketing, and other employees as designated by Company.

  
 1.3. Representations, Warranties and Certain Covenants.
 
  
 Employee represents and warrants to Company that (i)
Employee has the right to enter into this Agreement and is under no obligations or commitments, whether contractual or otherwise, that are inconsistent with Employee’s obligations under this Agreement, and (ii) the provisions of this Agreement
and the performance hereof by Employee do not violate any other contracts or agreements to which Employee is a party and that would adversely affect Employee’s ability to perform Employee’s obligations hereunder. Employee will not enter
into any agreement, either oral or written, that will adversely affect his ability to perform Employee’s obligations hereunder, and Employee will not use or disclose, in connection with Employee’s employment with Company, any trade secrets
or other proprietary information or intellectual property in which Employee or any other individual, corporation, partnership, limited liability company, trust, association or other entity (each, a “Person”) other than Company has any
right, title or interest. 
  
 Company represents and warrants to
Employee that (1) Company has the right to enter into this Agreement and is under no obligations or commitments, whether contractual or otherwise, that are inconsistent with its obligations under this Agreement and (2) the provisions of this
Agreement and the performance hereof by Company do not violate any other contracts or agreements to which Company is a party and that would adversely affect Company’s ability to perform its obligations hereunder. 
  
 2. Compensation.  
  
 In consideration of the services to be rendered by Employee under this
Agreement: 
  
 2.1. Base Compensation. 

 
 Company shall pay to Employee a base annual salary of Three Hundred
Ninety-five Thousand Dollars ($395,000) (“Base Salary”), payable in twenty-six (26) bi-weekly equal installments of Fifteen Thousand, One Hundred Ninety-two Dollars and Thirty-one Cents ($15,192.31) in accordance with Company’s
customary payroll practices. The Board of Directors of Company (the “Board”) shall review Employee’s Base Salary annually and may make increases thereto in accordance with the compensation practices and guidelines of the Company.
Regardless of the foregoing, the Base Salary then in effect will be increased by at least 5% each year, with the effective date of the increase for a particular year to be the date that Company generally implements salary raises for its executive
officers in the ordinary course during that year (but in no event later than May 1 of each year). 
  

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 2.2. Annual Bonus. 
  
 Provided that Employee is employed as of the end of the Company’s fiscal year (January 31 of each year), Employee shall
be eligible to receive a bonus (“Annual Bonus”) in an amount up to 50% of Employee’s then Base Salary, with the actual amount of the Annual Bonus for such year determined based on the same earnings per share formula used to calculate
bonuses for other executive officers at Company, unless otherwise agreed by Company and Employee in writing. The Annual Bonus will be pro rated based on the number of days Employee was employed during such fiscal year and will be paid in a lump sum
within 90 days of the end of such fiscal year. The Board (or a committee thereof) may increase the amount of any Annual Bonus in its sole discretion. Employee shall not be eligible for an Annual Bonus under this provision if Employee is not employed
as of the end of the fiscal year for which it is awarded. 
  
 2.3. Stock Options. 
  
 (a) Subject to the
approval of the Board and pursuant to and subject to the terms of the Company’s stock option plan(s), as soon as practical after the Effective Date Company will grant Employee options to purchase one hundred thousand (100,000) shares of the
Company’s Class A common stock (the “Option”) under such terms and conditions as provided for under the Company’s Amended and Restated 1996 Long-Term Incentive Plan (“the Stock Option Plan”) which are not inconsistent
with clause (b) below. To the maximum extent permitted under Section 422 of the Internal Revenue Code, the Options are intended to qualify as “incentive stock options.”  
  
 (b) The Option shall be granted subject to the following terms and conditions: (i) the Option shall be granted under the
Company’s Stock Option Plan; (ii) the exercise price per share of each Option shall be equal to the greater of the 30-day trailing average price of the common stock from the date of grant or the closing price on the date of the grant (with the
grant date as August 25, 2003); (iii) the Option shall be vested as to 33 1/3% of the shares subject to the Option on the first anniversary of the date of grant and as to an additional 33 1/3% of the shares subject to the Option on each of the
second and third anniversaries of the date of grant; provided, that, the Option shall cease to vest upon the termination of Employee’s employment; (iv) the Option shall be exercisable for the ten year period following the date of
grant; provided, that, upon the termination of Employee’s employment, the Option shall remain exercisable only for the period as provided in the Stock Option Plan or the Stock Option Agreement as defined herein, depending on the
circumstances of such termination; and (v) each Option shall be evidenced by, and subject to, a stock option agreement whose terms and conditions are consistent with the terms hereof (the “Stock Option Agreement”). 
  
 (c) During the Employment Period, Employee shall be eligible to be granted
performance shares and additional options consistent with grants made to other executive officers, in all cases as determined by the Board (or a committee thereof) in its sole discretion. 
  
 2.4. Vacation Benefits. 
  
 Employee shall be entitled to three weeks of vacation annually to be used and accrued in accordance with the Company’s
vacation policy as it shall be in effect from time to time. In addition, Employee shall receive other paid time-off in accordance with the Company’s policies for executive 
  

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officers as they may exist from time to time. 
  
 2.5. Automobile Allowance. 
  
 Employee shall be entitled to reimbursement of $500 per month to defray the cost of maintaining an automobile. Employee shall also be entitled to
reimbursement of reasonable and appropriate automobile insurance. Such amount shall be reported to the Internal Revenue Service as part of the Employee’s compensation. 
  
 2.6. Group Benefits. 
  

Employee and his spouse and dependents shall be entitled to participate in all medical, dental, vision, life insurance, disability and any other
benefit or insurance plans established by Company and made available to its other executive officers in accordance with the terms of such plans as they may be in effect from time to time. 
  
 2.7. Other Fringe Benefits. 
  
 Employee shall be entitled to participate in all fringe benefits as are generally made available by Company to its executive
officers and may be in effect from time to time. 
  
 2.8.
Business Expenses. 
  
 Company will reimburse Employee
for reasonable business expenses incurred in performing his duties and promoting the business of Company in accordance with the Company’s business expense reimbursement policies. These expenses may include, but are not limited to,
reasonable entertainment expenses, travel and lodging expenses, long distance and cellular telephone expenses, and approved professional memberships in accordance with Company’s business expense reimbursement policies. 
  
 2.9. Indemnification; Insurance. 
  
 Employee’s Position will be added as an additional named insured, in his
capacity as an officer or director, under all liability insurance policies now in force or hereafter obtained covering any officer or director of Company. Company will indemnify Employee in his capacity as an officer and/or director and hold him
harmless from any cost, expense or liability arising out of or relating to Company to the maximum extent provided by Company’s Certificate of Incorporation and Bylaws and by applicable law, and Company will execute and deliver such further
instruments as reasonably requested by Employee to effect the foregoing. 
  
 3.
Termination. 
  
 3.1. Due to Death or
Disability. 
  
 If Employee dies during the Employment
Period, Employee’s employment shall terminate as of the date of his death. The Company may terminate Employee if he becomes “disabled,” 
  

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 as defined below, upon written notice to Employee. Such termination shall not be a breach of this Agreement. For purposes
of this Agreement, the term “Disability” shall mean a physical or mental incapacity as a result of which Employee becomes unable to continue the regular performance of Employee’s duties hereunder for ninety (90) consecutive days or
for 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 longer period or periods as permitted by law. 
  
 3.2. By the Company Without “Cause”. 
  
 The Company may terminate this Agreement without Cause (as hereinafter
defined) at any time following the Effective Date upon 30 days prior written notice to Executive. Such termination shall not be a breach of this Agreement. 
  
 3.3. By the Company For Cause. 
  
 The Company may terminate Employee’s employment for Cause at any time by providing Employee written notice of its intent to terminate him for Cause
which sets forth in reasonable detail the Company’s basis for such termination. Such termination shall not be a breach of this Agreement. For purposes of this Agreement, Cause shall mean: 
  

	 	(a)	 	Employee’s continued failure to perform the specific, lawful directives of the current CEO (i.e., as of the Effective Date) or Board concerning Employee’s duties with
Company (other than any such failure resulting from Employee’s incapacity due to physical or mental illness) after (i) a good-faith written demand of the current CEO (i.e., as of the Effective Date) or Board for substantial performance is
delivered to Employee which identifies the specific manner in which the Board believes that Employee has not performed his duties and (ii) a reasonable opportunity (of not less than 30 days) is provided to Employee to substantially cure such
failure, provided it is a curable event; 

  

	 	(b)	 	Employee’s conviction of, or plea of guilty or nolo contendere to, a felony or any other comparable crime under applicable law; 

  

	 	(c)	 	Employee’s commission of any act of theft, embezzlement or misappropriation against the Company; 

  

	 	(d)	 	Employee’s willful breach of the known (by Employee) and written standards set by the Company’s Business Ethics Policy and Code of Conduct; 

  

	 	(e)	 	Employee’s material breach of a material term of this Agreement or material breach of any written or otherwise known material Company policy or standard of conduct known by
Employee; provided that a reasonable opportunity (of not less than 30 days) is provided to Employee to substantially cure such failure, and provided it is a curable event; and 

  

	 	(f)	 	Employee’s use of illegal drugs or abuse of alcohol or legally prescribed drugs; and/or 

  

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	 	(g)	 	Breach of a material representation made by Employee hereunder, provided that a reasonable opportunity (of not less than 30 days) is provided to Employee to substantially cure such
failure, and provided it is a curable event. 

  
 3.4. By Employee for Good Reason. 
  
 Employee may terminate this Agreement for Good Reason (as defined below) within 90 days after the occurrence of an event giving rise to such Good Reason by providing written notice to the Company describing the claimed event or circumstance
and setting forth Employee’s intention to terminate Employee’s employment with Company; provided Company is first provided a reasonable opportunity of 30 days to substantially cure such event, provided it is a curable event. For purposes
of this Agreement, “Good Reason” shall mean that any of the following have occurred: (i) the Company has materially breached a material term of this Agreement, (ii) Employee is directed to perform an act that Employee reasonably believes
to be in contravention of law, or which Employee reasonably believes would subject himself to material liability or would constitute an act of perjury by Employee (including but not limited to any requirement to execute any instrument in support of
any certificate required by Company in any public filing or periodic or current report of Company) despite his express written objection addressed to the Chief Executive Officer or to the Board with respect to such action, (iii) there is a material
reduction in the nature or scope of Employee’s responsibilities, (iv) there is any change in Employee’s title, (v) there is any reduction in Employee’s Base Salary or any reduction in Employee’s benefits (other than any reduction
in benefits generally applicable to similarly situated officers of Company) or (vi) Employee is required to relocate his principal place of business outside a radius of 35 miles from the current principal place of business of Company. Such
termination shall not be a breach of this Agreement. 
  
 3.5.
By Employee without Good Reason. 
  
 Employee may
terminate this Agreement without Good Reason by providing at least one hundred twenty (120) days written notice to the Company. Such termination shall not be a breach of this Agreement. 
  
 3.6. Expiration of the Employment Period. 
  
 Employee’s employment shall automatically terminate upon expiration of the Employment Period unless the parties agree
to extend the Employment Period or continue the employment relationship “at will.” 
  
 3.7. Termination Payment. 
  
 For purposes of this Section 3.7, the “Severance Period” will mean the period beginning on the Termination Date as defined herein and ending on the later of (i) August 25, 2006 or (ii) the 12-month anniversary of the Termination
Date; provided that if such period is longer than 24 months, the Severance Period will instead mean the period beginning on the Termination Date and ending on the 24-month anniversary of the Termination Date. 
  

	 	(a)	 	Amount. In the event that Employee’s employment is terminated pursuant to Sections 3.1 through 3.6, Employee shall continue to render services to the

  

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	 	  	 	Company pursuant to this Agreement until his date of death or the date of termination (“Termination Date”) and shall continue to receive compensation and payment for any
unreimbursed expenses incurred and other accrued employee benefits as provided in this Agreement, through the Termination Date. If requested by the Board, effective on the Termination Date, Employee shall resign all directorships and officerships
Employee then holds with the Company and its affiliates. Subject to Section 3.7(c) below, in the event Employee’s employment is terminated pursuant to Section 3.2 or 3.4, Employee shall be entitled to receive, as severance for such termination,
(i) throughout the Severance Period continued payment of the Base Salary at the rate in effect immediately prior to the Termination Date in accordance with the Company’s normal payroll cycle and (ii) at the time the Company pays annual bonuses,
a prorated portion of Employee’s Annual Bonus for the fiscal year of termination; provided that, at the time such bonuses are determined with respect to such fiscal year, the Board (or Committee thereof) concludes that Employee would have been
entitled to an Annual Bonus pursuant to Section 2.2 hereof had he remained employed by the Company until the date that such fiscal year’s bonus, if any, would be payable. Except as provided in this Section 3.7, from and after the Termination
Date, Employee shall not be entitled to any other payments in connection with his employment and/or the termination thereof, and shall have no further right to receive compensation or other consideration from the Company or have any other remedy
whatsoever against the Company as a result of the termination of this Agreement, the Employment Period or the termination of Employee’s employment. Employee shall have a duty of mitigation and shall be subject to right of offset with respect to
any compensation received by Employee on or after the termination of employment, unless Company determines otherwise in its sole discretion. 

  

	 	(b)	 	Benefits. Subject to Section 3.7(c) below, in the event that Employee’s employment is terminated pursuant to Section 3.2 or 3.4 and Employee (or his qualified dependents
as applicable) timely elects to continue healthcare coverage through COBRA for himself and/or his spouse and qualified dependents, the Company shall throughout the Severance Period continue to timely pay, directly to the COBRA provider, that portion
of the COBRA premium equal to the difference between the COBRA premium and Employee’s monthly contribution (if any) towards healthcare benefits that was in effect as of the Termination Date (the “Monthly Contribution”) (or, if such
COBRA provider does not permit continuation of such benefits throughout such period, Company will reimburse Employee or his qualified dependents throughout the Severance Period the amount equal to the monthly premium paid by Employee or his
qualified dependents to obtain substantially similar benefits coverage, less the Monthly Contribution, and up to a maximum amount of the equivalent cost of COBRA continuation coverage). The Company shall make such payments during the
Severance Period so long as Employee or his qualified dependents continue to timely pay any Monthly Contribution to the provider of such benefits and are 

  

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	 	  	 	eligible to continue COBRA benefits (the “Severance Benefits”). For purposes hereof, “COBRA” means the 1986 Consolidated Omnibus Budget Reconciliation Act and
any applicable state law. 

  

	 	(c)	 	Release. To be eligible to receive severance and Severance Benefits under this Section 3.7, Employee must execute and deliver (and not revoke, if a revocation period is
required by law) a release of all claims against the Company and any of its parent, subsidiaries, affiliates, shareholders, members, partners, investors, officers, directors, agents and employees in a form reasonably acceptable to the Company and
Employee, so long as Company (on behalf of itself and its parent, subsidiaries and affiliates) concurrently executes and delivers to Employee a release of all claims against Employee and his affiliates, successors and beneficiaries on the same terms
and conditions. Notwithstanding the foregoing or anything else herein to the contrary, the Company’s release of Employee herein does not extend to any claim, known or unknown, suspected or unsuspected, against Employee (i) which arises
out of facts which are finally adjudged by a court of competent jurisdiction to be a willful breach of fiduciary duty or the violation of any federal, state or local statute, law, ordinance or regulation, or (ii) which are based upon facts which
give rise to a recovery by the Company against Employee under any applicable policy of insurance solely as a result of actions or omissions by Employee and as to which the insurer has a right to subrogation against Employee.

  
 4. Trade Secrets, Confidentiality and Non-Solicitation.

  
 4.1. Employee specifically agrees that Employee
will not at any time, whether during or subsequent to the Employment Period, in any fashion, form or manner, except in furtherance of Employee’s duties at Company or with the specific written consent of Company or as required by law or to
enforce the terms of this Agreement, either directly or indirectly use or divulge, disclose or communicate to any Person in any manner whatsoever, any confidential information of any kind, nature or description concerning any matters affecting or
relating to the business of Company (the “Proprietary Information”), including (i) all information, formulae, compilations, software programs (including object codes and source codes), devices, methods, techniques, drawings, plans,
experimental and research work, inventions, patterns, processes and know-how, whether or not patentable, and whether or not at a commercial stage related to Company or any subsidiary thereof, (ii) the names, buying habits or practices of any of its
customers, (iii) Company’s marketing methods and related data, (iv) the names of any of its vendors or suppliers, (v) Company’s costs of materials, (vi) the prices it obtains or has obtained or at which its sells or has sold its products
or services, (vii) lists or other written records used in Company’s business, (viii) compensation paid to employees and other terms of employment or (ix) any other confidential information of, about or concerning the business of Company, its
manner of operation, or other confidential data of any kind, nature, or description. 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 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 4.1 is an example. All Proprietary Information shall be and remain Company’s sole property. The 
  

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 parties agree that Proprietary Information will not include any information (1) that has been published in a form
generally available to the public through no fault of Employee or (2) which Employee obtains from a third party not required by Company to hold such information in confidence. 
  
 4.2. Employee agrees to keep confidential and not to use or divulge except in furtherance of Employee’s duties
at Company any Proprietary Information of any customer of Company to which Employee may obtain access during the Employment Period. 
  
 4.3. Employee acknowledges that by virtue of Employee’s position and employment hereunder, Employee 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, Employee agrees that during Employee’s
employment and for a twelve (12) month period commencing from the Termination Date, Employee will not on behalf of himself, or any other person or entity, directly or indirectly, solicit, take away, hire, employ or endeavor to employ any
person who is employed by Company with the title of Vice President or above; provided that this restriction will not apply with respect to any individuals who solely respond to general advertisements or solicitations made through trade-related or
other media in which Employee had no part. 
  
 5. Inventions.

  
 5.1. Employee agrees to disclose promptly to
Company any and all concepts, designs, inventions, discoveries and improvements (collectively, “Inventions”) that Employee may conceive, discover or make from the beginning of Employee’s employment with Company until the termination
thereof, whether such is made solely or jointly with others, whether or not patentable, and whether or not such conception or making involves the use of Company’s time, facilities, equipment or personnel. 
  
 5.2. Employee agrees to assign, and does hereby assign, to Company (or
its nominee) Employee’s right, title and interest in and to any and all Inventions that Employee may conceive, discover or make, either solely or jointly with others, patentable or unpatentable, from the beginning of Employee’s employment
with Company until the termination thereof. 
  
 5.3.
Employee agrees to sign at the reasonable request of 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 Company (or its nominee). Employee further agrees to reasonably cooperate and reasonably assist Company in preparing, filing and prosecuting any
and all such patent applications and in pursuing or defending any litigation upon Inventions covered hereby. Company shall bear all costs and expenses involved in the prosecution of such patent applications it desires to have filed. Employee agrees
to sign at the reasonable request of Company any and all instruments necessary to vest title in Company (or its nominee) to any specific patent application prepared by Company and covering Inventions which Employee has agreed to assign to Company
(or its nominee) pursuant to Section 5.2 above. 
  
 5.4.
The provisions of Sections 5.2 and 5.3 do not apply to an invention which qualifies fully 
  

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 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 on the employee’s own time, except for those inventions that either (a) relate, at the time of conception or reduction to practice of the invention, (1) to the business of the employer or (2) to the
employer’s actual or demonstrably anticipated research or development, or (b) result from any work performed by the employee for the employer. 
  
 6. Shop Rights. 
  
 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 patentable or not, 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 Employee during regular working hours or with the use of the facilities, materials or personnel of Company. 
  
 7. Injunctive Relief. 
  
 Employee acknowledges that any violation of any provision of Sections 4
through 6 and 10 herein by Employee 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 4 through 6 and 10 by Employee, in addition to any other rights at law or in equity, Employee agrees that the Company will be
entitled to injunctive relief including, but not limited to, temporary and/or permanent restraining orders to restrain any violation or threatened violation of such Sections by Employee. 
  
 8. Blue Pencil. 
  
 It is the desire and intent of the parties that the provisions of Sections 4 through 7 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 4 through 7 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 justification 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 4 through 7 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. 
  

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 9. Copyright. 
  
 Employee agrees that any work prepared for 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 Company. In the event any such work is deemed not be a work made for hire for any reason, Employee 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 Company, and agrees to provide all assistance reasonably requested by Company in the establishment, preservation and enforcement of its
copyright in such work, such assistance to be provided at Company’s expense but without any additional compensation to Employee. Employee 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. 
  
 10. Employee’s Duties on Termination. 
  
 In the event of termination of Employee’s employment, Employee agrees to deliver promptly to Company all tangible
Proprietary Information which is or has been in Employee’s possession or under Employee’s control (or to certify as to the items no longer in Employee’s possession or control). Upon termination or for any reason whatsoever and at any
earlier time the Company so requests, Employee 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 Employee’s possession, under Employee’s
control or to which Employee may have access (or certify as to the items no longer in Employee’s possession or control). Until the end of the second anniversary of the Termination Date, Employee and Company (on behalf of itself and its
affiliates) acknowledge and agree that they will not publicly criticize the services, business, integrity, veracity or personal or professional reputation of each other in either a professional or personal manner, unless otherwise required by law.

  
 11. Additional Covenants. 
  
 11.1. During the Employment Period, Employee agrees that Employee
will not directly or indirectly, own an interest in, operate, join, control, or participate in, or be connected as an officer, employee, agent, independent contractor, partner, shareholder, or principal of any Person producing designing, providing,
soliciting orders for, selling, distributing, or marketing products, goods, equipment, and/or services which directly or indirectly compete with the products and/or services of Company’s business, except as otherwise permitted in this
Agreement. Notwithstanding anything else in Sections 11.1, 11.2, 11.3 and 11.4, Employee may directly or indirectly own securities of any entity or Person so long as Employee does not own 5% or more of the outstanding securities of such entity or
Person. 
  
 11.2. During the Employment Period, Employee
agrees that Employee will not, directly or indirectly, either for himself or for any other Person, divert or take away or attempt to divert or take away any of Company’s customers, including those upon whom Employee called or whom Employee
solicited while engaged as an employee of Company, except as otherwise permitted in this Agreement. 
  
 11.3. During the Employment Period, Employee agrees that Employee will not undertake planning for, or organization of any business activity
competitive with, the Company’s business or 
  

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 combine or conspire with other employees or representatives of Company’s business for the purpose of organizing any
such competitive business activity, except as otherwise permitted in this Agreement. 
  
 11.4. Nothing contained in this Section 11 shall be deemed a waiver of Employee’s obligations under Section 4, and in the event of any conflict or inconsistency between the provisions hereof and Section 4,
the provisions of Section 4 shall control. The covenants of this Section 11 shall be construed as separate covenants covering their subject matter in each of the separate counties, states, provinces or other political subdivisions in which Company
transacts its business. To the extent that any covenant shall be unenforceable in any of said counties, states, provinces or other political subdivisions, said covenant shall not be affected with respect to each other county, state, province or
other political subdivision, each covenant with respect to each county, state, province or other political subdivision being construed as severable and independent. To the extent any of the covenants of Section 11 are unenforceable, a court of
competent jurisdiction or duly appointed arbitrator shall have the authority to modify such provision in order for it to be enforceable, such modification to preserve as much as possible the parties’ original intentions with respect to such
provision. 
  
 12. Arbitration. 
  
 12.1. In consideration of the Company employing Employee or
continuing to employ Employee and the mutual promises set forth herein, Employee and the Company agree, on behalf of themselves as well as their representatives, successors, and assigns, that any controversy or claim 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 arising out of or relating in any way to Employee’s employment with Company or
termination thereof, shall first be attempted to be settled through good faith negotiation for a period of 7 days or longer as determined by Company and Employee in writing. If the dispute cannot be settled through negotiation, the parties agree to
attempt in good faith to settle the dispute by mediation administered by JAMS for resolution in Orange County, California for a period of 10 days or longer as determined by Company and Employee in writing. If the parties are unsuccessful at
resolving the dispute through mediation, the parties agree to final and binding arbitration in Orange County, California, before a single arbitrator, in accordance with the procedures required under California law. 
  
 12.2. To the extent not inconsistent with California law, the
following will govern any arbitration hereunder: 
  
 (a) The JAMS
Employment Arbitration Rules & Procedure subject to JAMS Policy on Employment Arbitration Minimum Standards of Procedural Fairness shall apply. The arbitrator may award any form of remedy or relief (including injunctive relief) that would
otherwise be available in court, consistent with applicable laws. Any award pursuant to said arbitration shall be accompanied by a written opinion of the arbitrator setting forth the reason for the award. The award rendered by the arbitrator shall
be conclusive and binding upon the parties hereto, and judgment upon the award may be entered, and enforcement may be sought in, any court of competent jurisdiction. 
  
 (b) Except as provided in this Agreement or as required by law, each party shall pay 
  

 57 

 its own expenses of arbitration and the expenses of the arbitrator (including compensation) shall be borne equally by the
parties. However, the arbitrator will assess to the maximum extent as provided by law, as part of the arbitration award to the prevailing party, all or any part of the arbitration expenses (including reasonable attorney’s fees and expenses) of
the other party and the arbitration fees against the non-prevailing party. 
  
 (c) This predispute resolution agreement covers all matters directly or indirectly related to Employee’s recruitment, employment, or termination of employment by the Company, including, but not limited to,
alleged violations of Title VII of the Civil Rights Act of 1964, sections 1981 through 1988 of Title 42 of the United States Code and all amendments thereto, Employee Retirement Income Security Act of 1974 (“ERISA”), the Americans with
Disabilities Act of 1990 (“ADA”), the Age Discrimination in Employment Act of 1967 (“ADEA”), the Older Workers Benefits Protection Act of 1990 (“OWBPA”), the Fair Labor Standards Act (“FLSA”), the Occupational
Safety and Health Act (“OSHA”), the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), and any and all claims under federal, state, and local laws against discrimination, but excluding Worker’s Compensation
Claims. 
  
 12.3. In the event that either party files, and
is allowed by the courts to prosecute, a court action against the other, the plaintiff in such action agrees not to request, and hereby waives such party’s right to a trial by jury. 
  
 12.4. EMPLOYEE AND THE COMPANY UNDERSTAND THAT, ABSENT THIS AGREEMENT, THEY WOULD HAVE THE RIGHT TO SUE EACH OTHER IN
COURT, AND THE RIGHT TO A JURY TRIAL, BUT, BY THIS AGREEMENT, GIVE UP THAT RIGHT AND AGREE TO RESOLVE ANY AND ALL GRIEVANCES BY ARBITRATION. 
  
 13. Additional Terms. 
  
 13.1. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given when
received if personally delivered, when transmitted if transmitted by telecopy, electronic or digital transmission method with electronic confirmation of receipt, the day after it is sent, if sent for next-day delivery to a domestic address by
recognized overnight delivery service with a confirmation of delivery; and upon receipt, if sent by certified or registered mail, return receipt requested. In each case notice shall be sent to: (a) If to the Company: Vice President, Human Resources,
The Wet Seal, Inc., 26972 Burbank, Foothill Ranch, California 92610, facsimile number (949) 699-4722; or (b) If to Employee: Allan D. Haims, to Employee’s address as recorded in Company’s personnel records or such other address as Employee
may provide to Company in writing, with a copy (not constituting notice) to O’Melveny & Myers LLP, 1999 Avenue of the Stars, Suite 700, Los Angeles, CA 90067, Attention: Steven L. Grossman, Esq. 
  
 13.2. All compensation payable to Employee hereunder shall be subject
to such withholdings and taxation as may be required by applicable law. 
  
 13.3. The failure of either party at any time to require the other’s performance of any provision hereof shall not affect its rights thereafter to enforce the same; nor shall the waiver of any breach of any 
  

 58 

 provision hereof be construed to be a waiver of any succeeding breach of any such provision, or to be a waiver of the
provision itself. 
  
 13.4. This Agreement (together with
the other documents referenced herein) constitutes the entire agreement between the parties hereto and supersedes all prior agreements and undertakings, both written and oral, with respect to the subject matter hereof and, except as otherwise
expressly provided herein, is not intended to confer upon any other person any rights or remedies hereunder. Any prior agreements of the parties hereto in respect of the subject matter contained herein is hereby terminated and canceled as of the
date hereof. This Agreement may not be amended or modified except by an instrument in writing signed by Employee and by a duly authorized officer selected at such time by the Board. 
  
 13.5. This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be
an original but both of which taken together shall constitute one and the same agreement. 
  
 13.6. This Agreement shall be governed by and construed in accordance with the laws of the State of California without giving effect to that State’s choice of law rules. 
  
 13.7. This Agreement may not be assigned or transferred by either
party hereto without the prior written consent of the other party, except Company may assign or transfer this Agreement to any assignee of all or substantially all of its assets or to the surviving entity in any merger or other reorganization of
Company. Except as otherwise provided herein, all provisions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by and against the respective heirs, executors, administrators, personal representatives, and permitted
successors and assigns of either party hereto. 
  
 13.8.
The Section headings are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of any of the provisions of this Agreement. All references to Sections contained in this Agreement
refer to the Sections of this Agreement. All references to the words “include” or “including” mean “including without limitation.” There will be no presumption against any party (or its counsel) on the ground that such
party (or its counsel) was responsible for preparing this Agreement or any part of it. 
  
 13.9. 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.

  
 13.10. The parties hereto acknowledge that they have
read and understood each and every provision of this Agreement and consent to all of its terms and provisions contained herein, voluntarily and without any reservation whatsoever, and that the parties have had the opportunity to have the same
explained to them by independent legal counsel. 
  
 13.11.
Company will reimburse Employee for his reasonable legal fees and expenses in connection with the negotiation, preparation and execution of this Agreement in an amount not to 
  

 59 

 exceed Five Thousand Dollars ($5,000) upon the Company’s receipt of adequate documentation supporting the amount of
the fees. 
  
 IN WITNESS WHEREOF, this
Agreement has been executed as of the date first set forth in this Agreement. 
  

	THE WET SEAL, INC.
		
	 By:
	 	 /s/    PETER D. WHITFORD
        

	 Its:
	 	CHIEF EXECUTIVE OFFICER

	
	 /s/    ALLAN D.
HAIMS        

	ALLAN D. HAIMS

  

 60Prepared by R.R. Donnelley Financial -- Form of Investor Common Stock Purchase Warrant

 EXHIBIT 10.1 
  
 CONFIDENTIAL 
  
 THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT. 
  
 COMMON STOCK PURCHASE WARRANT 
  
 To Purchase
             Shares of Common Stock of 
  
 Cardima, Inc. 
  
 THIS COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received,              (the “Holder”), is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date which is six (6) months after the date of issuance of this Warrant (the “Initial Exercise Date”) and on or prior to
the close of business on the fourth anniversary of the date hereof (the “Termination Date”) but not thereafter, to subscribe for and purchase from Cardima, Inc., a corporation incorporated in the State of Delaware (the
“Company”), up to              shares (the “Warrant Shares”) of Common Stock, par value $0.001 per share, of the Company (the “Common
Stock”). The purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall be $            , subject to adjustment hereunder.
The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain
Securities Purchase Agreement (the “Purchase Agreement”), dated August             , 2003, between the Company and the purchasers signatory thereto. 

 

 1 

 1. Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws
and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with
the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company. 
  
 2. Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of
the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the
issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). 
  
 3. Exercise of Warrant. 
  
 (a) Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and
on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered
Holder at the address of such Holder appearing on the books of the Company); provided, however, within 5 Trading Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have surrendered this Warrant to
the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank. Certificates for shares purchased hereunder shall be
delivered to the Holder within the earlier of (i) 5 Trading Days after the date on which the Notice of Exercise shall have been delivered by facsimile copy or (ii) 3 Trading Days from the delivery to the Company of the Notice of Exercise Form by
facsimile copy, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”); provided, however, in the event the Warrant is not surrendered or the aggregate
Exercise Price is not received by the Company within 5 Trading Days after the date on which the Notice of Exercise shall be delivered by facsimile copy, the Warrant Share Delivery Date shall be extended to the extent such 5 Trading Day period is
exceeded. This Warrant shall be deemed to have been exercised on the later of the date the Notice of Exercise is delivered to the Company by facsimile copy and the date the Exercise Price is received by the Company. The Warrant Shares shall be
deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company
of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 prior to the issuance of such shares, have been paid. If the Company fails to deliver to the Holder a certificate or certificates representing the
Warrant Shares pursuant to this Section 3(a) by the third Trading Day following the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise. 
  

 2 

 In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a
certificate or certificates representing the Warrant Shares pursuant to an exercise by the fifth Trading Day after the Warrant Share Delivery Date, and if after such day the Holder is required by its broker to purchase (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the
Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the
Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the
portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in
respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant
to the terms hereof. 
  
 (b) If this Warrant
shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares
called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. 
  
 (c) The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this
Warrant, pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s affiliates), as set forth on the applicable Notice of Exercise, would beneficially
own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its
affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be
issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the

  

 3 

 
Company (including, without limitation, any other Debentures or Warrants) subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act. To the extent that the limitation contained in this Section 3(c) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder) and of which a portion of this Warrant is exercisable shall
be in the sole discretion of such Holder, and the submission of a Notice of Exercise shall be deemed to be such Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which
portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. For purposes of this Section 3(c), in determining
the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public
announcement by the Company or (z) any other notice by the Company or the Company’s Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within two
Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 3(c) may be waived by the Holder upon, at
the election of the Holder, not less than 61 days’ prior notice to the Company, and the provisions of this Section 3(c) shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). 
  
 (d) If at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the
resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the
quotient obtained by dividing [(A-B) (X)] by (A), where: 
  
 (A)
= the Closing Price on the Trading Day preceding the date of such election; 
  
 (B) = the Exercise Price of the Warrants, as adjusted; and 
  
 (X) = the number of Warrant Shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant. 
  

4. Restrictive Legend. Except as set forth in the Purchase Agreement, each certificate representing the Warrant Shares or any other securities
issued in respect of the Warrant Shares upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of the Purchase Agreement) be 

  

 4 

 
stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required under applicable state securities laws):

  
 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS REGISTERED UNDER THE SECURITIES ACT AND
QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND THE QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS AND
THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED. THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF HOLDERS THEREOF ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER AND OTHER RESTRICTIONS, AND THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY FUTURE HOLDERS) IS BOUND BY THE TERMS OF A STOCK AND WARRANT PURCHASE AGREEMENT BETWEEN THE ORIGINAL PURCHASER AND THE COMPANY (COPIES
OF WHICH MAY BE OBTAINED FROM THE COMPANY). 
  
 5. No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise,
the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price. 
  
 6. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed
by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form
attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. 
  
 7. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the
timely exercise of this Warrant, pursuant to the terms hereof. 
  
 8. Transfer, Division and Combination. 
  

 5 

 (a) Subject to compliance with any applicable securities laws and the conditions set
forth in Sections 1 and 8(f) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company,
together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue
to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a
new Warrant issued. 
  
 (b) This Warrant
may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its
agent or attorney. Subject to compliance with this Section 8(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice. 
  
 (c) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 8. 
  
 (d) The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

  
 (e) If, at the time of the surrender of this
Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary
for opinions of counsel in comparable transactions and reasonably acceptable to the Company) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that
the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the
Securities Act. 
  
 9. No Rights as Shareholder until
Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means
of a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment. 
  

 6 

 10. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or
stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate. 
  
 11. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday. 
  
 12. Adjustments of Exercise Price and Number of Warrant Shares. The number and kind of securities purchasable upon
the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares
of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock,
or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to
receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of
Warrant Shares or other securities of the Company which are purchasable hereunder, the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant
Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant
Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

  
 13. Reorganization, Reclassification, Merger, Consolidation
or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other
subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then the
Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of Common Stock of 

  

 7 

 
the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of
this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the
Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 13. For purposes of this Section 13, “common
stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and
shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and
any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 13 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.
Notwithstanding the foregoing or any other provision hereof, no Holder shall have the right to obtain an injunction or restraining order or otherwise interfere with or prevent the occurrence of any of the actions described in this Section 13.

  
 14. Voluntary Adjustment by the Company. The Company
may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company. 
  
 15. Notice of Adjustment. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant
Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring
such adjustment and setting forth the computation by which such adjustment was made. 
  
 16. Notice of Corporate Action. If at any time: 
  
 (a) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or 
  
 (b) there shall be any capital reorganization of the
Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of 

  

 8 

 
all or substantially all the property, assets or business of the Company to, another corporation or, 
  
 (c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company; 
  
 then, in any one or more of such
cases, the Company shall give to Holder (i) at least 20 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such
reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution,
liquidation or winding up, at least 20 days’ prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their
Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the
books of the Company and delivered in accordance with Section 19(d). 
  
 17. Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. 
  

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all
such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to 

  

 9 

 
obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company
to perform its obligations under this Warrant. 
  
 Before taking
any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction thereof. 
  
 18. Redemption. 
  
 This
Warrant may be redeemed at the option of the Company at a redemption price of $0.001 (subject to adjustment in good faith by the Company’s Board of Directors in the event of stock splits or other events described in Section 12 or 13 above) (the
“Redemption Price”), per Warrant Share at any time after the Initial Exercise Date provided that (i) the average Closing Price shall have been greater than or equal to
$             (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar events with respect to the Common Stock that occur
after the date of the Purchase Agreement) for any fifteen (15) consecutive trading days (a “Triggering Event”) during a period ending within two (2) business days prior to the Redemption Notice Date (as defined below), (ii) during
the period from the Redemption Notice Date to the Redemption Date the Company shall have honored in accordance with the terms of this Warrant all Notices of Exercise delivered by the Redemption Date, (iii) during the period from the Redemption
Notice Date to the Redemption Date the Registration Statement shall be effective as to all Warrant Shares and the prospectus thereunder available for use by the Holder for the resale of all such Warrant Shares, and (iv) during the period from the
Redemption Notice Date to the Redemption Date the Common Stock shall be listed or quoted for trading on the Trading Market.; provided, further, that at any time after the Redemption Notice Date (as defined below) and prior to the
Redemption Date (as defined below) the Holder may exercise this Warrant after the Initial Exercise Date; and provided, further, that if the Redemption Notice Date is prior to the Initial Exercise Date, then solely with respect to the
redemption that is the subject of such Redemption Notice, the Redemption Date for such redemption shall be the thirtieth (30th) day after the Initial Exercise Date and such redemption shall occur only if the following conditions are satisfied (and in the event they are not satisfied on or before such Redemption Date, the applicable Redemption Notice shall
be deemed rescinded): (i) the average Closing Price shall have been greater than or equal to $             (subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar events with respect to the Common Stock that occur after the date of the Purchase Agreement) for the fifteen (15) consecutive trading days during the period ending on the Initial Exercise Date, (ii)
during the period from the Initial Exercise Date to the Redemption Date the Company shall have honored in accordance with the terms of this Warrant all Notices of Exercise delivered by the Redemption Date, (iii) during the period from the Initial
Exercise Date to the Redemption Date the Registration Statement shall be effective as to all Warrant Shares and the prospectus thereunder available for use by the Holder for the resale of all such Warrant Shares, and (iv) during the period from the
Redemption Notice Date to the Redemption Date the Common Stock shall be listed or quoted for trading on the Trading Market. The Company shall provide written notice of redemption which shall specify the Redemption Date (the “Notice of
Redemption”) to the Holder not later than two (2) business days after a Triggering Event. On or 

  

 10 

 
after the date fixed for redemption (the “Redemption Date”) which shall be no less than thirty (30) days after the date that the Notice of
Redemption is sent to the Holder (the “Redemption Notice Date”), the Holder shall have no rights with respect to this Warrant except to receive the Redemption Price upon surrender of this Warrant Certificate. 
  
 19. Miscellaneous. 
  
 (a) Jurisdiction. This Warrant shall constitute a
contract under, and shall be governed by, the laws of California, without regard to its conflict of law, principles or rules. 
  
 (b) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered,
will have restrictions upon resale imposed by state and federal securities laws. 
  
 (c) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. 
  
 (d) Notices. Any notice, request or other document required or permitted to be given or delivered to
the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement. 
  
 (e) Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or
purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company. 
  
 (f) Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

  
 (g) Successors and Assigns. Subject to
applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this
Warrant are intended to be for the benefit of all Holders 

  

 11 

 
from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares. 
  
 (h) Amendment. This Warrant may be modified or
amended or the provisions hereof waived with the written consent of the Company and the Holder. 
  
 (i) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant. 
  
 (j) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. 
  
 ******************** 
  

 12 

 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly
authorized. 
  
 Dated: August
    , 2003 
  

	 CARDIMA, INC.

	
	 By:

	 Name:
	 	 Gabriel B. Vegh

	 Title:
	 	 Chief Executive Officer

  
  

 13 

 NOTICE OF EXERCISE 
  
 To:       Cardima, Inc. 
  
 (1) The undersigned hereby elects to purchase
             Warrant Shares of Cardima, Inc. pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any. 
  
 (2)
Payment shall take the form of (check applicable box): 
  
 [    ] in lawful money of the United States; or 
  
 [    ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 3(d), to exercise this Warrant with respect to the maximum number of
Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 3(d). 
  
 (3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified
below: 
  

	  _______________________________

	
	 The Warrant Shares shall be delivered to the following:

	
	  _______________________________

	
	  _______________________________

	
	  _______________________________

  
 (4) Accredited
Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended. 
  

	 [PURCHASER]

	
	 By: ____________________________________

	 Name:

	 Title:

	
	 Dated: _______________________________

 ASSIGNMENT FORM 
  
 (To assign the foregoing warrant, execute 
 this form and supply required information. 
 Do not use this form to exercise the warrant.) 
  
 FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to              whose address is 
  

	 _________________________________________________________________________.

	
	 _________________________________________________________________________

	
	 Dated:
                    ,         

	
	 Holder’s Signature:     ___________________________________

	
	 Holder’s Address:       ___________________________________

	
	 ___________________________________

	
	 Signature Guaranteed: __________________________________

  
 NOTE: The signature to this Assignment
Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

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