Document:

Registration Rights Agreement

 EXHIBIT 10.2 
  
 REGISTRATION RIGHTS AGREEMENT 
  

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), is entered into as of April 29, 2005, by and among The Wet Seal, Inc., a
Delaware corporation (the “Company”) and the buyers listed on the Schedule of Buyers attached hereto as Exhibit A (each, a “Buyer” and, collectively, the “Buyers”). 
  
 THE PARTIES TO THIS AGREEMENT enter into this agreement on the basis
of the following facts, intentions and understanding: 
  
 A. The
Company and the Buyers entered into that certain Securities Purchase Agreement, dated as of April 29, 2005 (the “Securities Purchase Agreement”), and, upon the terms and subject to the conditions of the Securities Purchase
Agreement, the Company has agreed to issue and sell to the Buyers an aggregate of (i) Twenty-Four Thousand Six Hundred (24,600) shares of the Company’s Series C Convertible Preferred Stock, $0.01 par value (the “Preferred
Shares”), issued pursuant to the Company’s Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock (the “Certificate of Designations”) related thereto, which shall be convertible
into shares of Class A Common Stock of the Company (as converted, collectively, the “Conversion Shares”), $0.10 par value per share (the “Common Stock”), and (ii) Warrants (as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof, the “Warrants”) to purchase in the aggregate up to seven million five hundred thousand (7,500,000) shares of Common Stock (as exercised, collectively, the
“Warrant Shares”). 
  
 B. To induce the Buyers to
execute and deliver the Securities Purchase Agreement, the Company has agreed to provide certain registration rights to the Buyers under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the “1933 Act”), and applicable state securities laws. 
  
 NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and each of the Buyers hereby agree as follows: 
  
 Section 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: 
  
 “Business Day” means any day other than Saturday, Sunday or
any other day on which commercial banks in The City of New York are required by law to remain closed. 
  
 “Commission” means the Securities and Exchange Commission. 
  
 “Investor” means each Buyer and any transferee or assignee thereof to 

 
whom a Buyer assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 of this
Agreement, and any subsequent transferee or assignee thereof to whom a transferee or assignee assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 of this Agreement.

  
 “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization or association and governmental or any department or agency thereof. 
  
 “register,” “registered,” and “registration” means a registration
effected by preparing and filing one or more Registration Statements (as defined below) in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous or delayed
basis (“Rule 415”), and the declaration or ordering of effectiveness of such Registration Statements by the Commission. 
  
 “Registrable Securities” means (i) the Conversion Shares issued or issuable upon conversion of the Preferred Shares, (ii) the Warrant
Shares issued or issuable upon exercise of the Warrants, (iii) any shares of capital stock issued or issuable with respect to securities referenced in the preceding clause, as a result of any stock split, stock dividend, recapitalization, exchange
or similar event or otherwise, without regard to any limitations on conversions of the Preferred Shares or exercise of the Warrants, (iv) any shares of capital stock of any entity issued in respect of the capital stock referenced in the immediately
preceding clauses as a result of a merger, consolidation, sale of assets, sale or exchange of capital stock or other similar transaction; provided, that any Registrable Securities that have been sold pursuant to a Registration Statement or Rule 144
promulgated under the 1933 Act shall no longer be Registrable Securities. 
  
 “Registration Statement” means a registration statement or registration statements of the Company filed under the 1933 Act and covering all of the Registrable Securities. 
  
 Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement. 
  
 Section 2. Registration. 
  
 (a) Mandatory
Registration. The Company shall use its best efforts to prepare and, as soon as practicable but in no event later than 30 calendar days after the Closing Date (as defined in the Securities Purchase Agreement) “(the “Filing
Deadline”), file with the Commission a Registration Statement on Form S-3 covering the resale of all of the Registrable Securities. In the event that Form S-3 is unavailable for such a registration, the Company shall use such other form as
is available for such a registration, subject to the provisions of Section 2(d) of this Agreement. The Registration Statement prepared pursuant hereto shall register the Registrable Securities for resale, including at least 130% of the number of
shares of Common Stock issuable upon conversion of the 

  

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Preferred Shares and exercise of the Warrants by the Investors from time to time in accordance with the methods of distribution elected by such Investors or
such other amount as required by Section 4(e) of the Securities Purchase Agreement. The Registration Statement shall contain (except if otherwise directed by the holders of at least a majority of the Registrable Securities) the “Selling
Securityholders” and “Plan of Distribution” sections in substantially the form attached hereto as Exhibit B. The Company shall use reasonable efforts to have the Registration Statement declared effective by the Commission as
soon as practicable, but not later than 90 calendar days (or in the event the Commission reviews the Registration Statement and requires the Company to make modifications thereto, 120 calendar days) after the Closing Date (the “Effectiveness
Deadline”). 
  
 (b) Allocation of Conversion Shares
and Warrant Shares. The initial number of Conversion Shares and Warrant Shares included in any Registration Statement and each increase in the number thereof included therein shall be allocated pro rata among the Investors based on the number of
Registrable Securities held by each Investor at the time the Registration Statement covering such initial number of Registrable Securities or increase thereof is declared effective by the Commission. In the event that an Investor sells or otherwise
transfers any of such Investor’s Registrable Securities, each transferee shall be allocated the portion of the then remaining number of the applicable Registrable Securities included in such Registration Statement allocable to the transferor.
Other than the securities covered by the Existing RRA (as defined in the Securities Purchase Agreement), which the Holders hereby consent to be included in this Registration Statement, in no event shall the Company include any securities other than
Registrable Securities on any Registration Statement without the prior written consent of the Investors holding at least a majority in interest of the applicable Registrable Securities, determined as if all of the Preferred Shares held by Investors
then outstanding had been converted into Conversion Shares and all Warrants then outstanding had been exercised for Warrant Shares without regard to any limitations on conversion of the Preferred Shares or exercise of the Warrants (the
“Required Holders”). To the extent that the registration statement required pursuant to the terms of the Existing RRA (the “Existing RRA Registration Statement”) is filed, but not declared effective, prior to the
Registration Statement required hereunder, the Holders hereby consent to the inclusion of the Registrable Securities hereunder in the Existing RRA Registration Statement. 
  
 (c) Legal Counsel. Subject to Section 5 of this Agreement, the Required Holders in interest of the Registrable
Securities shall have the right to select one legal counsel to review and comment upon any registration pursuant to this Agreement (the “Legal Counsel”), which the Investors agree shall be Schulte Roth & Zabel LLP or such other
counsel as thereafter designated in writing by the Required Holders. Schulte Roth & Zabel LLP, or any other counsel designated in writing by the Required Holders, shall not represent any Investor that sends such counsel written notice that such
Investor does not wish such counsel to represent it in connection with the matters discussed in this Section 2(c). The Investors, other than any Investor that delivers the notice discussed in the preceding sentence, hereby waive any conflict of
interest or potential conflict of interest that may arise as a result of the representation of such Investors by Schulte Roth & Zabel LLP in connection with the subject matter of this Agreement. This provision will not prohibit any other counsel
to an Investor from reviewing and commenting on any registration filed pursuant to this Agreement at no cost to the Company. 
  

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 (d) Ineligibility for Form S-3. If Form S-3 is not available for the registration of the resale of
the Registrable Securities hereunder or the Company is not permitted by the 1933 Act or the Commission to use Form S-3, then the Company shall (i) register the resale of the Registrable Securities on another appropriate form reasonably acceptable to
the Required Holders and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available; provided, however, that the Company shall maintain the effectiveness of the Registration Statement then in effect until
such time as a Registration Statement on Form S-3 covering all of the Registrable Securities has been declared effective by the Commission or, if earlier, until the end of the Registration Period (as defined in Section 3(a). 
  
 (e) Sufficient Number of Shares Registered. In the event the number of
shares registered under a Registration Statement filed pursuant to Section 2(a) of this Agreement is insufficient to cover all of the Conversion Shares and Warrant Shares or all of an Investor’s allocated portion of the Conversion Shares and
Warrant Shares pursuant to Section 2(b) of this Agreement, the Company shall amend the Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover at least one hundred
thirty percent (130%) of the number of such Conversion Shares and Warrant Shares as of the trading day immediately preceding the date of the filing of such amendment and/or new Registration Statement, in each case, as soon as practicable, but in no
event later than fifteen (15) days after the necessity therefor arises. The Company shall use its reasonable efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof.
The calculation of the number of shares sufficient to cover all of the Conversion Shares and Warrant Shares shall be made without regard to any limitations on the conversion of the Preferred Shares or the exercise of the Warrants, and such
calculation shall assume that all of the Preferred Shares and all of the Warrants are then exercisable for, shares of Common Stock at the then prevailing Conversion Rate (as defined in the Certificate of Designations) or Warrant Exercise Price (as
defined in the Warrants), as applicable. 
  
 (f) Effect of
Failure to File and Obtain and Maintain Effectiveness of Registration Statement. Subject to any elections made pursuant to Section 4(b), if (i) a Registration Statement covering all the Registrable Securities is not filed with the Commission on
or before the Filing Deadline or is not declared effective by the Commission on or before the Effectiveness Deadline, (ii) a Registration Statement covering all of the Registrable Securities required to be covered thereby, as described in Section
2(e) of this Agreement, is not filed with the Commission on or before the deadline described in Section 2(e) of this Agreement or is not declared effective by the Commission on or before the deadline described in Section 2(e) of this Agreement,
(iii) on any day after such Registration Statement has been declared effective by the Commission, sales of all of the Registrable Securities required to be included on such Registration Statement cannot be made as a matter of law (other than during
an Allowable Grace Period (as defined in Section 3(n) of this Agreement) pursuant to such 

  

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Registration Statement (including, without limitation, because of a failure to keep such Registration Statement effective, to disclose such information as is
necessary for sales to be made pursuant to such Registration Statement or to register a sufficient number of shares of Common Stock but excluding failures caused solely by a breach of the applicable Investor’s obligations hereunder), or (iv) a
Grace Period (as defined in Section 3(n) of this Agreement) exceeds the length of an Allowable Grace Period (each of the items described in clauses (i), (ii), (iii) and (iv) above shall be referred to as a “Registration Delay”),
then, as partial relief for the damages to any holder by reason of any such delay in or reduction of its ability to sell the underlying shares of Common Stock (which remedy shall not be exclusive of any other remedies available at law or in equity)
the Company shall pay on the occurrence of each Registration Delay and every thirtieth day (pro rated for periods totaling less than thirty days) thereafter until such Registration Delay is cured, (1) to each holder of the Preferred Shares an amount
in cash equal to the product of (i) the initial principal amount paid for the Preferred Shares held by such holder or the related Conversion Shares multiplied by (ii) two percent (2%) and (2) to each holder of the Warrants or Warrant Shares an
amount in cash equal to the product of (i) the Exercise Price for such Warrant or the related Warrant Shares multiplied by (ii) two percent (2%). The payments to which a holder shall be entitled pursuant to this Section 2(f) are referred to herein
as “Registration Delay Payments.” The Registration Delay Payments shall be paid in cash on the earlier of (A) the last day of the calendar month during which such Registration Delay Payments are incurred and (B) the third Business
Day after the event or failure giving rise to the Registration Delay Payments is cured. In the event the Company fails to make Registration Delay Payments in a timely manner, such Registration Delay Payments shall bear interest at the rate of one
and two-tenths percent (1.2%) per month (prorated for partial months) until paid in full; provided that, so long as the Senior Credit Facility (as defined in the Securities Purchase Agreement) remains outstanding, each of the Buyers hereby
acknowledges, covenants and agrees that such Buyer will not demand or accept, and the Company will not be obligated to make, any payment (each a “Delay Fee”) (whether in whole or in part) required to be made pursuant to this
Section 2(f), Section 2(d)(v) of the Company’s Certificate of Designations (regarding the Company’s obligation to make payments in the event of its failure to timely convert the Preferred Shares) and Section 1(c) of
the Warrants (regarding the Company’s obligation to make payments in the event of its failure to timely deliver securities upon exercise of the Warrants), which would, in the aggregate of all of the aforementioned payments made to all Buyers,
exceed $250,000 in the aggregate in any calendar year (the “Delay Fee Cap”). Each Buyer agrees that, so long as the Senior Credit Facility (as defined in the Securities Purchase Agreement) is outstanding, (i) such Buyer does not
have any rights to, and shall not accept or demand any, Delay Fees in excess of its pro rata share of the Delay Fee Cap and (ii) to the extent any amounts are received with respect to the Delay Fees by such Buyer from the Company in excess of such
Buyer’s pro rata share of the Delay Fee Cap, such Buyer shall promptly forward an amount equal to such excess in immediately available funds to the Administrative Agent (as defined in the Senior Credit Facility) at such account as the
Administrative Agent shall designate from time to time. 
  
 Section 3. Related Obligations. At such time as the Company is obligated to file a Registration Statement with the Commission pursuant to Section 2(a), 

  

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2(d) or 2(e) of this Agreement, the Company will use reasonable efforts to effect the registration of all of the Registrable Securities in accordance with
the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations: 
  
 (a) The Company shall promptly prepare and file with the Commission a Registration Statement with respect to all of the Registrable Securities (but in no
event later than the applicable Filing Deadline) and use reasonable efforts to cause such Registration Statement relating to all of the Registrable Securities required to be covered thereby to become effective as soon as practicable after such
filing (but in no event later than the applicable Effectiveness Deadline). The Company shall submit to the SEC, within two (2) Business Days after the Company learns that no review of a particular Registration Statement will be made by the staff of
the SEC or that the staff has no further comments on a particular Registration Statement, as the case may be, a request for acceleration of effectiveness of such Registration Statement to a time and date not later than 48 hours after the submission
of such request. The Company shall, subject to the terms of this Agreement, keep each Registration Statement effective pursuant to Rule 415 at all times during the period from the date it is initially declared effective until the earliest of (i) the
second anniversary of the date such Registration Statement is filed, (ii) the date as of which all of the Investors (other than any Investors who are “affiliates” of the Company as such term is used in Rule 144(k) promulgated under the
1933 Act) may sell all of the Registrable Securities without restriction pursuant to Rule 144(k) (or the successor rule thereto) promulgated under the 1933 Act or (iii) the date on which all of the Investors shall have sold all of the Registrable
Securities (the “Registration Period”), which Registration Statement, as of its filing and effective dates and each day thereafter (including all amendments or supplements thereto, as of their respective filing and effective dates
and each day thereafter), shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, not misleading, and the prospectus contained in such
Registration Statement, as of its filing date and each day thereafter (including all amendments and supplements thereto, as of their respective filing dates and each day thereafter), shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated thereon, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. 
  
 (b) Subject to Section 3(n) of this Agreement, the Company shall prepare and file with the Commission such amendments
(including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 (or any successor rule thereto)
promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act. In the case of amendments and
supplements to a Registration Statement and the prospectus used in connection with such Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of the Company filing a
report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the Securities Exchange Act of 1934, as amended, and the rules and regulations 

  

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thereunder, or any similar successor statute (the “1934 Act”), the Company shall have incorporated such report by reference into such
Registration Statement, if applicable, or shall file such amendments or supplements with the Commission on the same day on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement such Registration
Statement and prospectus. 
  
 (c) The Company shall permit Legal
Counsel, or if no Legal Counsel shall have been chosen by the Investors, the Investors, to review and provide written comment upon each Registration Statement, prospectus and all amendments and supplements thereto at least three (3) Business Days
prior to their filing with the Commission. The Company shall furnish to the Investors and Legal Counsel, without charge, (i) promptly after receipt of such correspondence, copies of all correspondence from the Commission or the staff of the
Commission to the Company or its representatives relating to each Registration Statement, prospectus and all amendments and supplements thereto, (ii) promptly after the same is prepared and filed with the Commission, one (1) copy of each
Registration Statement, prospectus and all amendments and supplements thereto, including all exhibits and financial statements related thereto, and (iii) promptly upon the effectiveness of each Registration Statement and each amendment and
supplement thereto, one (1) copy of the prospectus included in each such Registration Statement and all amendments and supplements thereto. The Company agrees that it will, and it will cause its counsel to, consider in good faith any comments or
objections from Legal Counsel, or if no Legal Counsel shall have been selected, the Investors, as to the form or content of each Registration Statement, prospectus and all amendments or supplements thereto or any request for acceleration of the
effectiveness of each Registration Statement, prospectus and all amendments or supplements thereto. 
  
 (d) [Intentionally omitted]. 
  
 (e) Subject to Section 3(n) of this Agreement, and excluding any Registrable Shares held by Investors electing to exclude their Registrable Shares from
the Registration Statement under Section 4(b), the Company shall use reasonable efforts to (i) promptly register and qualify, unless an exemption from registration and qualification applies, the resale of the Registrable Securities under such other
securities or “blue sky” laws of all applicable jurisdictions in the United States as any holder of Registrable Shares reasonably requests in writing, (ii) promptly prepare and file in those jurisdictions, such amendments (including
post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) promptly take such other actions as may be reasonably necessary to
maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) promptly take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection therewith or as a condition thereto to file a general consent to service of process in any such jurisdiction, except in such jurisdictions where the Company is subject to
service of process. The Company shall promptly notify each Investor who holds Registrable Securities and Legal Counsel of the receipt by the Company of any notification with respect to the suspension 

  

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of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in
the United States or its receipt of notice of the initiation or threatening of any proceeding for such purpose. 
  
 (f) Notwithstanding anything to the contrary set forth herein, as promptly as practicable after becoming aware of such event, the Company shall notify
each Investor and Legal Counsel in writing of the happening of any event as a result of which (i) the Registration Statement or any amendment or supplement thereto, as then in effect, includes an untrue statement of a material fact or omission to
state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) the prospectus related to such Registration Statement or any amendment or supplement thereto includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and, subject to Section 3(n) of this Agreement,
promptly prepare a supplement or amendment to such Registration Statement and prospectus to correct such untrue statement or omission, and deliver such number of copies of such supplement or amendment to each Investor and Legal Counsel as such
Investor or Legal Counsel may reasonably request. The Company shall also promptly notify each Investor and Legal Counsel in writing (i) when a prospectus and each prospectus supplement or amendment thereto has been filed, and when a Registration
Statement and each amendment (including post-effective amendments) and supplement thereto has been declared effective by the Commission (notification of such effectiveness shall be delivered to each Investor and Legal Counsel by facsimile on the
same day of such effectiveness and by overnight mail), (ii) of any request by the Commission for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company’s reasonable
determination that an amendment (including any post-effective amendment) or supplement to a Registration Statement or prospectus would be appropriate (subject to Section 3(n) hereof). 
  
 (g) Subject to Section 3(n) of this Agreement, the Company shall use reasonable efforts to (i) prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction, (ii) if such an order or suspension is issued, obtain the
withdrawal of such order or suspension at the earliest practicable moment and notify each holder of Registrable Securities and Legal Counsel of the issuance of such order and the resolution thereof or its receipt of notice of the initiation or
threat of any proceeding for such purpose. 
  
 (h) The Company
shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with United States federal or state securities laws, (ii) the
disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, prospectus or any amendment or supplement thereto, (iii) the release of such information is ordered pursuant to a subpoena or
other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public 

  

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other than by disclosure in violation of this Agreement or any other agreement. The Company agrees that it shall, upon learning that disclosure of such
information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, unless ordered or requested by the Commission or other governmental authority not to do so, give prompt written
notice to such Investor and allow such Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information. 
  
 (i) The Company shall use reasonable efforts to cause all the Conversion
Shares and Warrant Shares to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Conversion Shares and Warrant Shares is then permitted under the
rules of such exchange. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(i). 
  
 (j) In connection with any sale or transfer of Registrable Securities pursuant to a Registration Statement, the Company shall cooperate with the Investors
who hold Registrable Securities being offered and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a
Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Investors may reasonably request and, registered in such names as the Investors may request. 
  
 (k) If requested by an Investor, the Company shall (i) as soon as
practicable, incorporate in each prospectus supplement or post-effective amendment to the Registration Statement such information as an Investor provides in writing and reasonably requests to be included therein relating to the sale and distribution
of the Registrable Securities, and (ii) as soon as practicable, make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment. 
  
 (l) The Company shall comply with
all applicable rules and regulations of the Commission in connection with any registration hereunder. 
  
 (m) Within two (2) Business Days after a Registration Statement is ordered effective by the Commission the Company will so notify the transfer agent for
the Registrable Securities and the Investors whose Registrable Securities are included in the Registration Statement. 
  
 (n) Notwithstanding anything to the contrary herein, at any time after a Registration Statement has been declared effective by the Commission, the Company
may delay the disclosure of material non-public information concerning the Company if the disclosure of such information at the time is not, in the good faith judgment of the Board of Directors of the Company relying upon the opinion of counsel, in
the best interests of the Company (a “Grace Period”); provided, however, that the Company shall promptly (i) notify the Investors in writing of the existence of material non-public 

  

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information giving rise to a Grace Period (provided that the Company shall not disclose the content of such material non-public information to the Investors)
and the date on which the Grace Period will begin, and (ii) notify the Investors in writing of the date on which the Grace Period ends; provided further, that no single Grace Period shall exceed fifteen (15) consecutive days, and during any three
hundred sixty-five (365) day period, the aggregate of all of the Grace Periods shall not exceed an aggregate of thirty (30) days and the first day of any Grace Period must be at least five (5) trading days after the last day of any prior Grace
Period (each Grace Period complying with this provision being an “Allowable Grace Period”). For purposes of determining the length of a Grace Period, the Grace Period shall be deemed to begin on and include the date the Investors
receive the notice referred to in clause (i) above and shall end on and include the later of the date the Investors receive the notice referred to in clause (ii) above and the date referred to in such notice; provided, however, that no Grace Period
shall be longer than an Allowable Grace Period. The provisions of Section 3(g) of this Agreement shall not be applicable during the period of any Allowable Grace Period. Upon expiration of the Grace Period, the Company shall again be bound by the
first sentence of Section 3(f) of this Agreement. 
  
 (o) If
reasonably requested in writing in connection with any disposition of Registrable Securities pursuant to a Registration Statement, make reasonably available for inspection during normal business hours by a representative for the Investors of such
Registrable Securities and any broker-dealers, attorneys and accountants retained by such Investors, all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries, and cause the
appropriate executive officers, directors and designated employees of the Company and its subsidiaries to make reasonably available for inspection during normal business hours all relevant information reasonably requested by such representative for
the Investors or any such broker-dealers, attorneys or accountants in connection with such disposition, in each case as is customary for similar “due diligence” examinations; provided, however, that any information that is designated by
the Company, in good faith, as confidential at the time of delivery of such information shall be kept confidential by such Persons, unless disclosure thereof is made in connection with a court, administrative or regulatory proceeding or required by
law, or such information has become available to the public generally through the Company or through a third party without an accompanying obligation of confidentiality. 
  
 (p) The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90)
days after the close of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than the first day of
the Company’s fiscal quarter next following the effective date of a Registration Statement. 
  
 Section 4. Obligations of The Investors. 
  
 (a) At least three (3) Business Days prior to the first anticipated filing date of a Registration Statement, the Company shall notify each Investor in
writing of the information the Company requires from each such Investor if such Investor elects to have 

  

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any of such Investor’s Registrable Securities included in such Registration Statement. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by
it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with
such registration as the Company may reasonably request. Each Investor shall promptly notify the Company of any material change with respect to such information previously provided to the Company by such Investor. 
  
 (b) Each Investor agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless such Investor has notified the Company in writing of such Investor’s election to exclude all of such Investor’s
Registrable Securities from such Registration Statement, in which case, such Investor does not need to cooperate with the Company until it notifies the Company of its desire to include one or more shares of the Registrable Securities in such
Registration Statement. 
  
 (c) Each Investor agrees that, upon
receipt of any notice from the Company of the happening of any event of the kind described in Section 3(g) or 3(n) of this Agreement or the first sentence of Section 3(f) of this Agreement, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statements covering such Registrable Securities until such Investor’s receipt of the copies of the amended or supplemented prospectus contemplated by Section 3(g) of this Agreement or the
first sentence of Section 3(f) of this Agreement or receipt of notice that no amendment or supplement is required and, if so directed by the Company, such Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver
to the Company a certificate of destruction) all copies of the prospectus covering such Registrable Securities current at the time of receipt of such notice (other than a single file copy, which such Investor may keep) in such Investor’s
possession. 
  
 Section 5. Expenses of Registration. All
expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3 of this Agreement, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, transfer agent fees and fees and disbursements of counsel for the Company, shall be paid by the Company. The Company shall pay all of the Investors’ reasonable costs (including reasonable fees
and disbursements of Legal Counsel) incurred in connection with the registration, filing or qualification pursuant to this Agreement, up to an aggregate amount of $15,000. 
  
 Section 6. Indemnification. In the event any Registrable Securities are included in a Registration Statement under
this Agreement: 
  
 (a) To the fullest extent permitted by law,
the Company will, and hereby does, indemnify, hold harmless and defend each Investor, the directors, officers, 

  

 - 11 - 

 
members, partners, employees, agents, representatives of, and each Person, if any, who controls any Investor within the meaning of the 1933 Act or the 1934
Act (each, an “Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or several,
(collectively, “Claims”) incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the Commission, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims
(or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any amendment (including
post-effective amendments) or supplement thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which the Registrable Securities are offered
(“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if authorized for use by the Company prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if any) or the omission or
alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of
the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement, or (iv) any
material violation of this Agreement by the Company (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”). Subject to Section 6(c) of this Agreement, the Company shall reimburse the Indemnified
Persons, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person or its Legal Counsel expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; (ii) shall not be available
to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company, including a corrected prospectus, if such prospectus or corrected prospectus was timely made
available by the Company pursuant to Section 3(d) of this Agreement; and (iii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be
unreasonably withheld, conditioned or delayed. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9 of this Agreement. 
  

 - 12 - 

 (b) In connection with any Registration Statement in which an Investor is participating, each such
Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a) of this Agreement, the Company, each of its directors, each of its officers who signs the
Registration Statement, its agents and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claims or Indemnified Damages to which any of them
may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claims or Indemnified Damages arise out of or are based upon any Violation (including for purposes of this paragraph, a material violation of this Agreement by the
Investor), in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor or its Legal Counsel expressly for use in connection with
such Registration Statement and, subject to Section 6(c) of this Agreement, such Investor will reimburse any legal or other expenses reasonably incurred by an Indemnified Party in connection with investigating or defending any such Claim; provided,
however, that the indemnification agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 of this Agreement shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld or delayed; provided, further, that the Investor shall be liable under this Section 6(b) for only that amount of the Claims and Indemnified
Damages as does not exceed the net proceeds to such Investors as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnification agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9 of this Agreement. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented. 
  
 (c) Promptly
after an Indemnified Person or Indemnified Party under this Section 6 has knowledge of any Claim as to which such Indemnified Person or Indemnified Party reasonably believes indemnity may be sought or promptly after such Indemnified Person or
Indemnified Party receives notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made
against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of such Claim, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however,
that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by 

  

 - 13 - 

 
such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding; provided, further, that the indemnifying party shall not be responsible for the reasonable fees and expense of more than one (1)
separate legal counsel for such Indemnified Person or Indemnified Party. In the case of an Indemnified Person, the legal counsel referred to in the immediately preceding sentence shall be selected by the Required Holders. The Indemnified Party or
Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available
to the Indemnified Party or Indemnified Person which relates to such action or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent; provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a full release from all liability in respect to such Claim and action and proceeding. After indemnification as
provided for under this Agreement, the rights of the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written notice to the indemnifying party as provided in this Agreement shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section
6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. 
  
 (d) No Person involved in the sale of Registrable Securities who is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
1933 Act) in connection with such sale shall be entitled to indemnification from any Person involved in such sale of Registrable Securities who is not guilty of fraudulent misrepresentation. 
  
 (e) The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred. 
  
 (f) The indemnification agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law. 
  
 Section 7. Contribution. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees
to make 

  

 - 14 - 

 
the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 of this Agreement to the fullest extent permitted
by law; provided, however, that: 
  
 (i) no contribution shall be
made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities who is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities who is not guilty of fraudulent misrepresentation,
and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities pursuant to such Registration Statement. The provisions of
this Section 7 shall remain in full force and effect, regardless of the investigation made by or on behalf of the beneficiaries of this Section 7 and shall survive the transfer of Registrable Securities by the Investors pursuant to Section 9 of this
Agreement. 
  
 Section 8. Reporting. 
  
 (a) Reports Under The 1934 Act. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the Commission that may at any time permit the Investors to sell securities of the Company to the public without registration (“Rule
144”), the Company shall use reasonable efforts to: 
  
 (1) make and keep public information available, as those terms are understood and defined in Rule 144; 
  
 (2) file with the Commission in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934
Act; and 
  
 (3) furnish to each Investor, so
long as such Investor owns Registrable Securities, promptly upon request, (A) a written statement by the Company, if true, that it has complied with the applicable reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (B) a copy of the
most recent annual or quarterly report of the Company and copies of such other reports and documents so filed by the Company, and (C) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to
Rule 144 without registration. 
  
 (b) Rule 144A Information. The
Company shall, upon request of any Investor, make available to such Investor the information required by Rule 144A(d)(4) (or any successor rule) under the 1933 Act. 
  
 Section 9. Assignment of Registration Rights. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties, including, without the need for an express assignment or any consent by the 

  

 - 15 - 

 
Company thereto, subsequent Investors, subject to the condition that such transfer shall have been conducted in accordance with all applicable federal and
state securities laws. The rights under this Agreement shall be automatically assignable by the Investors to any transferee of all or any portion of such Investor’s Registrable Securities if: (i) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such rights are being transferred or assigned; (iii) immediately following such transfer or assignment, the further disposition
of such securities by the transferee or assignee is restricted under the 1933 Act and applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence, the transferee
or assignee agrees in writing with the Company to be bound by all of the obligations of an Investor under this Agreement; (v) such transfer shall have been made in accordance with the applicable requirements of the Securities Purchase Agreement, the
Certificate of Designations and the Warrants; and (vi) such transfer shall have been conducted in accordance with all applicable federal and state securities laws. The Company hereby shall extend the benefits of this Agreement to any Investor and
any such Investor may specifically enforce the provisions of this Agreement as if an original party hereto. 
  
 Section 10. Amendment of Registration Rights. Any provision of this Agreement may be amended and the observance of any provision of this Agreement
may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Required Holders. Any amendment or waiver affected in accordance with this Section 10 shall
be binding upon each Investor and the Company. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Registrable Securities. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the parties to this Agreement. 
  
 Section 11. Miscellaneous. 
  

(a) A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from such record owner of
such Registrable Securities. 
  
 (b) Any notices, consents,
waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(evidenced by mechanically or electronically generated receipt by the sender’s facsimile machine); or (iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party
to receive the same. The addresses and facsimile numbers for such communications shall be: 
  
 If to the Company: 
  
 The Wet
Seal, Inc. 
 26972 Burbank 
 Foothill Ranch, California 92610 
 Telephone: (949) 699-3919 
 Facsimile: (949) 699-4825 
 Attention: Chief
Financial Officer 
  

 - 16 - 

 with a copy to: 
  
 Akin Gump Strauss Hauer & Feld LLP 
 590 Madison Avenue 
 New York, New York 10022 
 Telephone: (212) 872-1000 
 Facsimile: (212)
872-1002 
 Attention: Alan Siegel, Esq. 
                  Ackneil M. Muldrow III, Esq. 
  
 If to Legal Counsel: 
  
 Schulte Roth & Zabel LLP 
 919 Third
Avenue 
 New York, NY 10022 
 Telephone: (212) 756-2000 
 Facsimile: (212) 593-5955 
 Attention: Eleazer Klein, Esq. 
  
 If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers attached hereto as Exhibit A, with copies to such Buyer’s representatives as
set forth on the Schedule of Buyers, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party. 
  
 (c) Failure of any party to exercise any right or remedy under this Agreement
or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. 
  
 (d) All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the 

  

 - 17 - 

 
application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the
state and federal courts sitting the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to
it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. 
  
 (e) This Agreement, the Securities Purchase Agreement, the Certificate of Designations, the Warrants and the other documents referenced herein and therein constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement, the Securities Purchase Agreement, the Certificate of
Designations and the Warrants supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof. 
  

(f) This Agreement shall become effective as of the Closing Date. 
  
 (g) Subject to the requirements of Section 9 of this Agreement, this Agreement shall inure to the benefit of and be binding
upon the permitted successors and assigns of each of the parties hereto. 
  
 (h) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 
  
 (i) This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other parties hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this
Agreement. 
  
 (j) Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated hereby. 
  

 - 18 - 

 (k) All consents and other determinations required to be made by the Investors pursuant to this Agreement
shall be made, unless otherwise specified in this Agreement, by the Required Holders. 
  
 (l) This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

  
 (m) The obligations of each Buyer under any Transaction
Document are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Buyers
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Buyer confirms that it has independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other
Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose. 
  

 - 19 - 

 IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed
as of day and year first above written. 
  

			
	COMPANY
	
	THE WET SEAL, INC.
		
	 By:
	 	 /s/    DOUGLAS C. FELDERMAN

	 Name:
	 	Douglas C. Felderman
	 Title:
	 	 Executive Vice President &
 Chief Financial
Officer

  
 [Signatures of
Buyers on Following Page] 

 [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT] 
  

			
	 BUYERS
  
 S.A.C. CAPITAL ASSOCIATES, LLC
 By: S.A.C. Capital Advisors, LLC

		
	 By:
	 	 /s/    PETER NUSSBAUM

	 Name:
	 	 Peter Nussbaum

	 Title:
	 	 General Counsel

 [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT] 
  

			
	PRENTICE CAPITAL PARTNERS QP, LP
		
	 By:
	 	Prentice Capital GP, LLC,
its general partner
		
	 By:
	 	 /s/ Charles Phillips

	 	 	

	 Name:
	 	Charles Phillips
	 Title:
	 	 
	
	PRENTICE CAPITAL PARTNERS, LP
		
	 By:
	 	Prentice Capital GP, LLC,
its general partner
		
	 By:
	 	 /s/ Charles Phillips

	 	 	

	 Name:
	 	Charles Phillips
	 Title:
	 	 
	
	PRENTICE CAPITAL OFFSHORE, LTD
		
	 By:
	 	Prentice Capital Management, LP,
the Investment Manager
		
	 By:
	 	 /s/ Charles Phillips

	 	 	

	 Name:
	 	Charles Phillips
	 Title:
	 	 

 [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT] 
  

			
	GMM CAPITAL, LLC
		
	 By:
	 	 /s/    ISAAC DABAH

	 Name:
	 	 Isaac Dabah

	 Title:
	 	Director

 [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT] 
  

			
	GOLDFARB CAPITAL PARTNERS LLC
		
	 By:
	 	 /s/    MORRIS GOLDFARB

	 Name:
	 	Morris Goldfarb
	 Title:
	 	Member

 [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT] 
  

	
	 /s/    CHARLES PHILLIPS

	Mr. Charles Phillips

 [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT] 
  

			
	
	UBS FINANCIAL SERVICES AS CUSTODIAN FBO CHARLES G. PHILLIPS ROLLOVER IRA
		
	 By:
	 	 /s/ Charles Phillips

	 	 	

	 Name:
	 	Charles Phillips
	 Title:
	 	 

 [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT] 
  

	
	 /s/    ELI WACHTEL

	Mr. Eli Wachtel

 [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT] 
  

			
	WLSS CAPITAL PARTNERS, LLC
		
	 By:
	 	 /s/    WAYNE S. MILLER

	 Name:
	 	Wayne S. Miller
	 Title:
	 	Member

 [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT] 
  

			
	SMITHFIELD FIDUCIARY, LLC
		
	 By:
	 	 /s/    SCOTT M. WALLACE

	 Name:
	 	Scott M. Wallace
	 Title:
	 	Authorized Signatory

 [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT] 
  

			
	D.B. ZWIRN SPECIAL OPPORTUNITIES FUND, L.P.
		
	 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.
		
	 By:
	 	 D.B. ZWIRN & CO., L.P.,
 its trading Manager

		
	 By:
	 	 /s/    DANIEL B. ZWIRN

	 Name:
	 	Daniel B. Zwirn
	 Title:
	 	Managing Member

 [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT] 
  

			
	RIVERVIEW GROUP, LLC
		
	 By:
	 	 /s/    DAVE NOLAN

	 Name:
	 	Dave Nolan
	 Title:
	 	Executive Vice President

 EXHIBIT A TO REGISTRATION RIGHTS AGREEMENT 
 SCHEDULE OF BUYERS 
  

					
	 NAME OF BUYERS

	  	NUMBER OF
PREFERRED SHARES

	  	NUMBER OF
WARRANTS

			
	 S.A.C. Capital Associates, LLC
 c/o S.A.C. Capital
Advisors, LLC
 72 Cummings Point Road
 Stamford, Connecticut
06902
 Attention: General Counsel
 Facsimile: (203)
890-2393
 Residence: Anguila
	  	 	  	 
			
	 Prentice Capital Partners QP, LP
 c/o Prentice Capital
Management, LP
 623 Fifth Avenue
 32nd Floor
 New York, NY 10022
 Attention: Michael Zimmerman
 Charles Phillips
 Facsimile: 212-756-1464
	  	 	  	 
			
	 Prentice Capital Offshore, Ltd
 c/o Prentice Capital
Management, LP
 623 Fifth Avenue
 32nd Floor
 New York, NY 10022
 Attention: Michael Zimmerman
 Charles Phillips
 Facsimile: 212-756-1464
	  	 	  	 
			
	 Prentice Capital Management, LP
 623 Fifth
Avenue
 32nd Floor
 New York, NY 10022
 Attention: Michael Zimmerman
 Charles Phillips
 Facsimile: 212-756-1464
	  	 	  	 
			
	 GMM Capital, LLC
 111 West 40th Street
 20th Floor
 New York, NY
10018
	  	 	  	 
			
	 Goldfarb Capital Partners LLC
 21 Fairway
Drive
 Mamaroneck, NY 10543
	  	 	  	 
			
	 Mr. Charles Phillips
 777 Park Avenue
 New York, NY 10021
	  	 	  	 
			
	 UBS Financial Services as Custodian FBO
 Charles G.
Phillips Rollover IRA
 777 Park Avenue
 New York, NY
10021
	  	 	  	 
			
	 Mr. Eli Wachtel
 7 Shaw Road
 Scarsdale, NY 10583
	  	 	  	 
			
	 WLSS Capital Partners, LLC
 c/o Wayne Miller

1365 York Avenue
 Apt. 26B
 New York, NY 10021
	  	 	  	 
			
	 Smithfield Fiduciary LLC
 c/o Highbridge Capital
Management, LLC
 9 West 57th Street
 27th Floor
 New York, NY 10019
 Attention: Ari J. Storch
                  Adam J. Chill
 Facsimile: (212) 751-0755
 Telephone: (212) 287-4720
 Residence: Cayman Islands
	  	 	  	 
			
	 D.B. Zwirn Special Opportunities Fund, L.P
 c/o D.B.
Zwirn & Co., L.P.
 745 Fifth Avenue, 18th Floor
 New York,
New York 10151
 Phone: (646) 720-9100
 Fax: (646)
720-9000
 Attention: Daniel B. Zwirn
                  Perry A. Gruss
 Residence: Cayman
Islands
	  	 	  	 
			
	 D.B. Zwirn Special Opportunities Fund, Ltd.
 c/o D.B.
Zwirn & Co., L.P.
 745 Fifth Avenue, 18th Floor
 New York,
New York 10151
 Phone: (646) 720-9100
 Fax: (646)
720-9000
 Attention: Daniel B. Zwirn
                  Perry A. Gruss
 Residence: Cayman
Islands
	  	 	  	 
			
	 Riverview Group, LLC
 666 Fifth Avenue, 8th floor
 New York, New York
10103
 Attention: Daniel Cardella
 Facsimile: (212)
977-1667
 Telephone: (212) 841-4100
 Residence:
Delaware
	  	 	  	 

 EXHIBIT B 
  

SELLING SECURITYHOLDERS 
  
 The preferred shares and warrants were originally issued by us in transactions exempt from the registration requirements of the 1933 Act to persons
reasonably believed to be “accredited investors” as defined in Regulation D under the 1933 Act. The shares of common stock being offered by the selling securityholders are issuable upon conversion of the preferred shares and upon exercise
of the warrants. For additional information regarding the preferred shares and warrants see “Private Placement of Preferred Shares and Warrants” above. We are registering the shares of common stock underlying the preferred shares and
warrants in order to permit the selling securityholders to offer the shares of common stock for resale from time to time. Except for the ownership of the preferred shares, the warrants and the purchases of other securities from the Company on
January 14, 2005, the selling stockholders have not had any material relationship with us within the past three years. 
  
 The table below lists the selling securityholders and other information regarding the beneficial ownership of the shares of common stock by each of the
selling securityholders. The second column lists the number of shares of common stock beneficially owned by each selling stockholder as of             , 2005, assuming conversion of
all of the preferred shares and exercise of all of the warrants held by the selling securityholders on that date, without regard to any limitations on conversion or exercise. The third column lists the shares of common stock being offered pursuant
to this prospectus by each of the selling securityholders. The fourth column lists the number of shares that will be beneficially owned by the selling securityholders assuming all of the shares offered pursuant to this prospectus are sold and that
shares beneficially owned by them, as of             , 2005, but not offered hereby are not sold. 
  
 In accordance with the terms of registration rights agreements with the holders of the preferred shares and the warrants,
this prospectus generally covers the resale of (i) 130% of the maximum number of shares of common stock issuable upon conversion of the preferred shares (without taking into account any limitations on the conversion of the preferred shares set forth
in the certificate of designations relating to the preferred shares) and (ii) 130% of the maximum number of shares of common stock issuable upon exercise of the warrants (without taking into account any limitations on the exercise of the warrants
set forth in the warrants), in each case as of the trading day immediately preceding the date this registration statement was initially filed with the SEC. Because the conversion price of the preferred shares and exercise price of the warrants may
be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. 
  
 Under the terms of the certificate of designations relating to the preferred shares and the warrants, a selling securityholder may not convert the
preferred shares or exercise the warrants, to the extent such conversion or exercise would cause such selling securityholder, together with its affiliates, to beneficially own a number of shares of common stock which would exceed 9.99% of our then
outstanding shares of common stock following such conversion or exercise, excluding for purposes of such determination shares of common stock issuable upon conversion of the preferred shares which have not been converted and upon exercise of the
warrants which have not been exercised. The numbers in the second column do not reflect this limitation. The selling securityholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.” 
  
 The inclusion of any securities in the following table does not constitute an
admission of beneficial ownership by the persons named below. 

							
	 Name of Selling Securityholder

	  	Shares of
Common Stock
Owned Before the
Offering

	  	Shares of
Common
Stock Offered
Hereby

	  	Shares of
Common Stock
Owned After the
Offering (1)

	 S.A.C. Capital Associates, LLC (2)
	  	 	  	 	  	 
	 Prentice Capital Partners QP, LP
	  	 	  	 	  	 
	 Prentice Capital Partners, LP
	  	 	  	 	  	 
	 Prentice Capital Offshore, Ltd
	  	 	  	 	  	 
	 GMM Capital, LLC
	  	 	  	 	  	 
	 Goldfarb Capital Partners LLC
	  	 	  	 	  	 
	 Mr. Charles Phillips
	  	 	  	 	  	 
	 UBS Financial Services as Custodian FBO Charles G. Phillips Rollover IRA
	  	 	  	 	  	 
	 Mr. Eli Wachtel
	  	 	  	 	  	 
	 WLSS Capital Partners, LLC
	  	 	  	 	  	 
	 Smithfield Fiduciary LLC (3)
	  	 	  	 	  	 
	 D.B. Zwirn Special Opportunities Fund, L.P (4)
	  	 	  	 	  	 
	 D.B. Zwirn Special Opportunities Fund, Ltd. (4)
	  	 	  	 	  	 
	 Riverview Group, LLC (5)
	  	 	  	 	  	 

	(1)	Assumes that all of the shares offered hereby are sold and that shares owned before the offering but not offered hereby are not sold. 

	(2)	Pursuant to investment agreements, each of S.A.C. Capital Advisors, LLC, a Delaware limited liability company which we refer to in this prospectus as SAC Capital Advisors, and
S.A.C. Capital Management, LLC, a Delaware limited liability company which we refer to in this prospectus as SAC Capital Management, share all investment and voting power with respect to the securities held by S.A.C. Capital Associates, LLC. Mr.
Steven A. Cohen controls both SAC Capital Advisors and SAC Capital Management. Each of SAC Capital Advisors, SAC Capital Management and Mr. Cohen disclaim beneficial ownership of these securities. 

	(3)	Highbridge Capital Management, LLC (“Highbridge”), is the trading manager of Smithfield Fiduciary LLC (“Smithfield”) and consequently has voting control and
investment discretion over the shares of Common Stock held by Smithfield. Glenn Dubin and Henry Swieca control Highbridge. Each of Highbridge and Messrs. Dubin and Swieca disclaims beneficial ownership of the shares held by Smithfield.

	(4)	D. B. Zwirn & Co., L.P. is the trading manager of each of Zwirn Special Opportunities Fund, Ltd. and Zwirn Special Opportunities Fund, L.P. and consequently has voting control
and investment discretion over securities held by each of these entities. Daniel B. Zwirn controls Zwirn Holdings, LLC, which in turn is the managing member of, and thereby controls, DBZ GP, LLC, which in turn is the general partner of, and thereby
controls, D. B. Zwirn & Co., L.P. Each of Daniel B. Zwirn, Zwirn Holdings, LLC, DBZ GP, LLC and D. B. Zwirn & Co., L.P. disclaims beneficial ownership of securities held by each of Zwirn Special Opportunities Fund, Ltd. and Zwirn Special
Opportunities Fund, L.P. 

	(5)	The managing member of Riverview is Millennium Holding Group, L.P., a Delaware limited partnership (“Millennium Holdings”). Millennium Management, L.L.C., a Delaware
limited liability company (“Millennium Management”), is the general partner of Millennium Holdings and consequently may be deemed to have voting control and investment discretion over securities owned by Millennium Holdings and by
Riverview. Israel A. Englander (“Mr. Englander”) is the managing member of Millennium Management. As a result, Mr. Englander may be deemed to be the beneficial owner of any shares deemed to be beneficially owned by Millennium Management.
The foregoing should not be construed in and of itself as an admission by any of Millennium Holdings, Millennium Management or Mr. Englander as to beneficial ownership of the shares owned by Riverview. Millennium Partners, L.P., a Cayman Islands
limited partnership (“Millennium Partners”), is a limited partner of Millennium Holdings. As a limited partner, Millennium Partners has no investment or voting control over Millennium Holdings or its securities positions.

 PLAN OF DISTRIBUTION 
  
 We are registering the shares of common stock issuable upon conversion of the preferred shares and upon exercise of warrants
and to permit the resale of the underlying shares of common stock by the holders from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling securityholders of the securities. We will
bear all fees and expenses incident to our obligation to register the preferred shares, warrants and shares of common stock. 
  
 The selling securityholders may sell all or a portion of the securities beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the securities are sold through underwriters or broker-dealers, the selling securityholders will be responsible for underwriting discounts or commissions or agent’s commissions. The
securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which
may involve crosses or block transactions, 
  

	•	 	on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; 

  

	•	 	in the over-the-counter market; 

  

	•	 	in transactions otherwise than on these exchanges or systems or in the over-the-counter market; 

  

	•	 	through the writing of options, whether such options are listed on an options exchange or otherwise; 

  

	•	 	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; 

  

	•	 	block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;

  

	•	 	purchases by a broker-dealer as principal and resale by the broker-dealer for its account; 

  

	•	 	an exchange distribution in accordance with the rules of the applicable exchange; 

  

	•	 	privately negotiated transactions; 

  

	•	 	short sales; 

  

	•	 	pursuant to Rule 144 under the Securities Act; 

  

	•	 	broker-dealers may agree with the selling securityholders to sell a specified number of such securities at a stipulated price per security; 

  

	•	 	a combination of any such methods of sale; and 

  

	•	 	any other method permitted pursuant to applicable law. 

  
 If the selling securityholders effect such transactions by selling the preferred shares, warrants, or shares of common stock to or through underwriters,
broker-dealers or 

 
agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling
securityholders or commissions from purchasers of the preferred shares, warrants or shares of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular
underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of any securities or otherwise, the selling securityholders may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the securities in the course of hedging in positions they assume. The selling securityholders may also sell securities short and deliver securities covered by this prospectus to close out
short positions. The selling securityholders may also loan or pledge securities to broker-dealers that in turn may sell such securities. 
  
 The selling securityholders may pledge or grant a security interest in some or all of the preferred shares, warrants or shares of common stock owned by
them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933, as amended, amending, if necessary, the list of selling securityholders to include the pledgee, transferee or other successors in interest as selling securityholders under this
prospectus. The selling securityholders also may transfer and donate the preferred shares, warrants or shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus. 
  
 The selling
securityholders and any broker-dealer participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the 1933 Act, and any commission paid, or any discounts or concessions allowed
to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the 1933 Act. At the time a particular offering of the securities is made, a prospectus supplement, if required, will be distributed which will set forth the
aggregate amount of securities being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling securityholders and any
discounts, commissions or concessions allowed or reallowed or paid to broker-dealers. 
  
 Under the securities laws of some states, the securities may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the preferred shares, warrants and shares of
common stock may not be sold unless such preferred shares, warrants or shares of common stock have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. 

 
 The selling securityholders may choose not to sell any or may choose to
sell less than all of the shares of common stock registered pursuant to the shelf registration statement, of which this prospectus forms a part. 

 The selling securityholders and any other person participating in such distribution will be subject to
applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, Regulation M of the 1934 Act, which may limit the timing of purchases and sales of any of the shares
of common stock by the selling securityholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect
to the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of common stock. 
  
 We will pay all expenses of the registration of the preferred shares,
warrants and shares of common stock pursuant to the registration rights agreement, estimated to be $[            ] in total, including, without limitation, Securities and Exchange
Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that a selling securityholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling
securityholders against liabilities, including some liabilities under the 1933 Act, in accordance with the registration rights agreements, or the selling securityholders will be entitled to contribution. We may be indemnified by the selling
securityholders against civil liabilities, including liabilities under the 1933 Act, that may arise from any written information furnished to us by the selling securityholder specifically for use in this prospectus, in accordance with the related
registration rights agreements, or we may be entitled to contribution. 
  
 Once sold under the shelf registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our affiliates.Certificate of Designations

 EXHIBIT 10.3 
  
 CERTIFICATE OF DESIGNATIONS, PREFERENCES 
 AND RIGHTS OF SERIES C CONVERTIBLE PREFERRED STOCK 
 OF 
 THE WET SEAL, INC. 
  
 The Wet Seal, Inc. (the “Company”), a corporation organized and existing under the General Corporation Law of the State of Delaware (the
“DGCL”), does hereby certify that, pursuant to authority conferred upon the Board of Directors of the Company by the Certificate of Incorporation, as amended, of the Company, and pursuant to Sections 151 and 141 of the DGCL, the
Board of Directors of the Company adopted resolutions (i) designating a series of the Company’s previously authorized preferred stock, par value $0.01 per share, and (ii) providing for the designations, preferences and relative, participating,
optional or other rights, and the qualifications, limitations or restrictions thereof, of Twenty-Four Thousand Six Hundred (24,600) shares of Series C Convertible Preferred Stock of the Company, as follows: 
  
 RESOLVED, that the Company is authorized to issue 24,600 shares of Series C
Convertible Preferred Stock (the “Preferred Shares”), par value $0.01 per share, which shall be perpetual unless and until converted as contemplated by this Certificate of Designations, Preferences and Rights (this
“Certificate of Designations”) and shall have the following powers, designations, preferences and other special rights: 
  
 (1) Dividends. The holders of the Preferred Shares (each, a “Holder” and collectively, the “Holders”) shall not
be entitled to receive any regularly scheduled dividends in respect of such Preferred Shares. 
  
 (2) Conversion of Preferred Shares. Preferred Shares shall be convertible into shares of the Company’s Class A Common Stock, par value $0.10 per share (the “Common Stock”), on the terms
and conditions set forth in this Section 2. 
  
 (a) Certain
Defined Terms. For purposes of this Certificate of Designations, the following terms shall have the following meanings: 
  
 (i) “AMEX” means the American Stock Exchange. 
  
 (ii) “Approved Stock Plan” means any employee benefit plan which has been approved by the
Board of Directors of the Company, pursuant to which the Company’s securities may be issued to any employee, officer, consultant or director for services provided to the Company. 
  
 (iii) “Bloomberg” means Bloomberg Financial Markets. 
  
 (iv) “Business Day” means any day other
than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed. 

 (v) “Capital Stock” means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate stock, including, without limitation, with respect to partnerships, partnership interests (whether general or limited) and any other interest or participation that confers
on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership. 
  
 (vi) “Change of Control” means any Fundamental Transaction other than (A) a Fundamental Transaction in which holders of
the Company’s voting power immediately prior to the Fundamental Transaction continue after the Fundamental Transaction to hold publicly traded securities and, directly or indirectly, the voting power of the surviving entity or entities
necessary to elect a majority of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities, or (B) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction
of incorporation of the Company. 
  
 (vii)
“Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or last trade price, respectively, of such
security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such
security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the
over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask
prices, respectively, of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined by the Company and the Required
Holders. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 2(d)(iii). All such determinations to be appropriately adjusted for any stock dividend,
stock split, stock combination or other similar transaction during the applicable calculation period. 
  

 - 2 - 

 (viii) “Common Stock Deemed Outstanding” means, at any given time, the
number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be outstanding pursuant to Sections 2(f)(i)(A) and 2(f)(i)(B) hereof regardless of whether the Options or Convertible Securities
are actually exercisable at such time, but excluding any shares of Common Stock owned or held by or for the account of the Company or issuable upon conversion of the Preferred Shares. 
  
 (ix) “Conversion Amount” means the Stated Value. 
  
 (x) “Conversion Price” means, with respect
to the Preferred Shares, as of any Conversion Date or other date of determination, $3.00, subject to adjustment as provided herein. 
  
 (xi) “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into
or exchangeable or exercisable for Common Stock. 
  
 (xii) “Eligible Market” means the Principal Market, NYSE, AMEX or The Nasdaq SmallCap Market. 
  
 (xiii) “Excluded Securities” means shares of Common Stock issued or deemed to be issued in accordance with Section 2(f)
hereof by the Company: (v) in connection with an Approved Stock Plan; (w) upon issuance of the Preferred Shares or upon conversion of the Preferred Shares or upon exercise of the Warrants; (x) pursuant to a bona fide firm commitment underwritten
public offering with a nationally recognized underwriter which generates gross proceeds to the Company in excess of $35,000,000 (other than an “at-the-market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act and
“equity lines”), (y) upon exercise of any Options or Convertible Securities which are outstanding on the date immediately preceding the Subscription Date, provided that such issuance of shares of Common Stock upon exercise of such Options
or Convertible Securities is made pursuant to the terms of such Options or Convertible Securities as in effect on the date immediately preceding the Subscription Date (including such Convertible Securities issued by the Company pursuant to the
Existing SPA and the Indenture) and such Options or Convertible Securities are not amended after the date immediately preceding the Subscription Date, and (z) to one or more parties who have provided consulting services to the Company, including
Michael Gold or one of his affiliates, in an amount not to exceed, in the aggregate, 2,800,000 shares of Common Stock or warrants to acquire such number of shares of Common Stock. 
  

 - 3 - 

 (xiv) “Existing SPA” means that certain Securities Purchase Agreement,
dated as of November 9, 2004, by and among the Company and certain parties listed on the Schedule of Buyers attached thereto, as amended and restated or modified. 
  
 (xv) “Fundamental Transaction” means that the Company shall, directly or indirectly, in
one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company to another Person, or (iii) allow another Person to make a purchase offer, tender offer or exchange offer that is accepted by the holders of more than 50% of the Company’s outstanding voting securities (but
excluding any voting securities held by the Person or Persons making or party to, or any Person(s) associated or affiliated with such Person or Persons making or party to, such purchase offer, tender offer or exchange offer), or (iv) enter into a
stock purchase agreement or other agreement to effect any other business combination (including, without limitation, a reorganization, recapitalization or spin-off) with another Person or Persons, whereby more than 50% of the Company’s
outstanding voting securities are acquired by such Person or Persons (excluding any voting securities of the Company held by such Person or Persons making or party to, or any Person(s) associated or affiliated with such Person or Persons making or
party to, such stock purchase agreement or other agreement to effect such other business combination), or (v) change the members constituting its Board of Directors such that the individuals who constituted the Board of Directors on the Subscription
Date or other governing body of the Company (together with any new directors whose election to such Board of Directors or whose nomination for election by the stockholders of the Company was approved by a vote of 66 2/3% of the directors then still in office who were either directors on the Subscription Date or whose election or nomination for election was previously so approved), cease for any reason to constitute a majority of such Board
of Directors then in office, or (vi) reorganize, recapitalize or reclassify its Common Stock. 
  
 (xvi) “Indenture” means that certain Indenture, dated as of January 14, 2005, by and between the Company and The Bank of
New York, as Trustee, as amended and restated or modified. 
  
 (xvii) “Initial Issuance Date” means the Closing Date, as defined in the Securities Purchase Agreement. 
  

 - 4 - 

 (xviii) “Liquidation Event” means (x) the voluntary or involuntary
liquidation, dissolution or winding up of the Company or such Subsidiaries the assets of which constitute all of the business of the Company and its Subsidiaries taken as a whole, in a single transaction or series of transactions or (y) a Change of
Control. 
  
 (xix) “NYSE” means
The New York Stock Exchange, Inc. 
  
 (xx)
“Options” means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities. 
  
 (xxi) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose
common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of
consummation of the Fundamental Transaction. 
  
 (xxii) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

  
 (xxiii) “Principal Market”
means the Nasdaq National Market. 
  
 (xiv)
“Registration Rights Agreement” means that certain registration rights agreement, by and among the Company and the initial Holders of the Preferred Shares relating to the filing of a registration statement covering the resale of the
shares of Common Stock issuable upon conversion of the Preferred Shares and exercise of the Warrants, as such agreement may be amended or modified from time to time as provided in such agreement. 
  
 (xxv) “Required Holders” means the Holders
of Preferred Shares representing at least a majority of the aggregate Preferred Shares then outstanding. 
  
 (xxvi) “SEC” means the Securities and Exchange Commission. 
  
 (xxvii) “Securities Purchase Agreement”
means that certain securities purchase agreement, dated as of the Subscription Date, by and among the Company and the initial Holders, as such agreement may be amended or modified from time to time as provided in such agreement. 
  
 (xxviii) “Stated Value” means $1,000.

  
 (xxix) “Subscription Date”
means April 29, 2005. 
  

 - 5 - 

 (xxx) “Successor Entity” means the Person, which may be the Company,
formed by, resulting from or surviving any Fundamental Transaction or the Person with which such Fundamental Transaction shall have been made, provided that if such Person is not a publicly traded entity whose common stock or equivalent equity
security is quoted or listed for trading on an Eligible Market, Successor Entity shall mean such Person’s Parent Entity. 
  
 (xxxi) “Trading Day” means any day on which the Common Stock are traded on the Principal Market, or, if the Principal
Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock are then traded; provided that “Trading Day” shall not include any day on which the
Common Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock are suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not
designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time). 
  
 (xxxii) “Warrants” means the warrants to purchase shares of Common Stock issued by the Company pursuant to the
Securities Purchase Agreement. 
  

 - 6 - 

 (b) Holder’s Conversion Right. Subject to the provisions of Section 5 and Section 12, at any
time or times on or after the Initial Issuance Date, any Holder shall be entitled to convert any whole number of Preferred Shares into fully paid and nonassessable shares of Common Stock in accordance with Section 2(d) at the Conversion Rate (as
defined below). 
  
 (c) Conversion. Subject to Sections 5
and 12, the number of fully paid, non-assessable shares of Common Stock issuable upon conversion of each Preferred Share pursuant to Section 2(b) shall be determined according to the following formula (the “Conversion Rate”):

  
 Conversion Amount 
 Conversion Price 
  
 (d) Mechanics of Conversion. The conversion of Preferred Shares shall be conducted in the following manner: 
  
 (i) Holder’s Delivery Requirements. To convert
Preferred Shares into shares of Common Stock on any date (the “Conversion Date”), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 5:00 p.m., New York City Time, on such date, a copy of a
properly completed notice of conversion executed by the registered Holder of the Preferred Shares subject to such conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to the Company and the
Company’s designated transfer agent (the “Transfer Agent”) and (B) if required by Section 2(d)(vii), surrender to a common carrier for delivery to the Company as soon as practicable following such date the original certificates
representing the Preferred Shares being converted (or compliance with the procedures set forth in Section 14) (the “Preferred Stock Certificates”). 
  
 (ii) Company’s Response. Upon receipt by the Company of copy of a Conversion Notice, the
Company shall (I) as soon as practicable, but in any event within one (1) Business Day, send, via facsimile, a confirmation of receipt of such Conversion Notice to such Holder and the Transfer Agent, which confirmation shall constitute an
instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein and (II) on or before the third (3rd) Trading Day following the date of receipt by the Company of such Conversion Notice, (the “Share Delivery Date”), (A) provided the Transfer Agent is participating in the DTC Fast Automated Securities
Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or (B) if the
Transfer 

  

 - 7 - 

 
Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a
certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled. If the number of Preferred Shares represented by the Preferred Stock Certificate(s) submitted for
conversion, as may be required pursuant to Section 2(d)(viii), is greater than the number of Preferred Shares being converted, then the Company shall, as soon as practicable and in no event later than three (3) Business Days after receipt of the
Preferred Stock Certificate(s) (the “Preferred Stock Delivery Date”) and at its own expense, issue and deliver to the Holder a new Preferred Stock Certificate representing the number of Preferred Shares not converted. 
  
 (iii) Dispute Resolution. In the case of a dispute
as to the determination of the Closing Sale Price or the arithmetic calculation of the Conversion Rate, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt of the
Conversion Notice giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon the determination of the Closing Sale Price or arithmetic calculation of the Conversion Rate within three (3)
Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days thereafter submit via facsimile (a) the disputed determination of the Closing Sale Price to an
independent, reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Conversion Rate to the Company’s independent, outside accountant. The Company shall cause, at its
expense, the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives the disputed
determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error. 
  
 (iv) Record Holder. The Person or Persons entitled
to receive the shares of Common Stock issuable upon a conversion of Preferred Shares shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date. 
  
 (v) Company’s Failure to Timely Convert.

  
 (A) Cash Damages. If (I) within three (3) Business
Days after the Company’s receipt of the facsimile copy of a Conversion Notice the Company shall fail to credit a Holder’s balance account with DTC or issue and deliver a certificate to such Holder for the number of shares of Common Stock
to which such Holder is entitled upon such Holder’s conversion of Preferred Shares or (II) within three (3) Business Days of the Company’s 

  

 - 8 - 

 
receipt of a Preferred Stock Certificate the Company shall fail to issue and deliver a new Preferred Stock Certificate representing the number of Preferred
Shares to which such Holder is entitled pursuant to Section 2(d)(ii), then in addition to all other available remedies which such Holder may pursue hereunder and under the Securities Purchase Agreement, the Company shall pay in cash to the Holder on
each day after such third Business Day that the issuance of such shares of Common Stock is not timely effected an amount equal to 1.5% of the product of (A) the sum of the number of shares of Common Stock not issued to the Holder on a timely basis
and to which the Holder is entitled and (B) the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such shares of Common Stock to the Holder without
violating Section 2(d)(ii). In addition to the foregoing, if within three (3) Trading Days after the Company’s receipt of the facsimile copy of a Conversion Notice the Company shall fail to issue and deliver a certificate to the Holder and
register such shares of Common Stock on the Company’s share register or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such Holder’s conversion of Preferred
Shares hereunder, and if on or after the third Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such
conversion that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the
Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver
such certificate (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such shares of Common Stock and pay cash to the Holder in an
amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, multiplied by (B) the Closing Bid Price on the Conversion Date, provided that, so long as the Senior Credit Facility (as defined
in the Securities Purchase Agreement) remains outstanding, each of the Holders hereby acknowledges, covenants and agrees that such Holder will not demand or accept, and the Company will not be obligated to make, any payment (each a “Delay
Fee”) (whether in whole or in part) required to be made pursuant to this Section 2(d)(v), Section 1(c) of the Warrants (regarding the Company’s obligation to make payments in the event of its failure to timely deliver
securities upon exercise of the Warrants) and Section 2(f) of the Registration Rights Agreement (regarding the Company’s obligation to make Registration Delay Payments, as defined in the Registration Rights Agreement), which would, in
the aggregate of all of the aforementioned payments made to all Holders, exceed $250,000 in the aggregate in any calendar year (the “Delay Fee Cap”). Each Holder agrees that, so long as the Senior Credit Facility (as defined in the
Securities Purchase Agreement) is outstanding, (i) such Holder does not have any rights to, and shall not accept or demand any, Delay Fees in excess of its pro rata share of the Delay Fee Cap and (ii) to the extent any amounts are received with
respect to the Delay Fees by such Holder from the Company in excess of such Holder’s pro rata share of the Delay Fee Cap, such Holder shall promptly forward an amount equal to such excess in immediately available funds to the Administrative
Agent (as defined in the Senior Credit Facility) at such account as the Administrative Agent shall designate from time to time. 
  
 (B) Void Conversion Notice; Adjustment of Conversion Price. If for any reason a Holder has not received all of the shares of Common Stock to which

  

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such Holder is entitled prior to the fifth (5th) Business Day after the Share Delivery Date with respect to a conversion of Preferred Shares, then the Holder, upon written notice to the Company, with a copy to the Transfer Agent, may void its Conversion Notice with
respect to, and retain or have returned, as the case may be, any Preferred Shares that have not been converted pursuant to such Holder’s Conversion Notice; provided that the voiding of a Holder’s Conversion Notice shall not effect the
Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant to Section 2(d)(v)(A) or otherwise. 
  
 (vi) Pro Rata Conversion. Subject to Section 12, in the event the Company receives a Conversion Notice from more than one Holder
for the same Conversion Date and the Company can convert some, but not all, of such Preferred Shares, the Company shall convert from each Holder electing to have Preferred Shares converted at such time a pro rata amount of such Holder’s
Preferred Shares submitted for conversion based on the number of Preferred Shares submitted for conversion on such date by such Holder relative to the number of Preferred Shares submitted for conversion on such date. 
  
 (vii) Book-Entry. Notwithstanding anything to the
contrary set forth herein, upon conversion of Preferred Shares in accordance with the terms hereof, the Holder thereof shall not be required to physically surrender the certificate representing the Preferred Shares to the Company unless (A) the full
or remaining number of Preferred Shares represented by the certificate are being converted or (B) a Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of Preferred
Shares upon physical surrender of any Preferred Shares. The Holder and the Company shall maintain records showing the number of Preferred Shares so converted and the dates of such conversions or shall use such other method, reasonably satisfactory
to the Holder and the Company, so as not to require physical surrender of the certificate representing the Preferred Shares upon each such conversion. In the event of any dispute or discrepancy, such records of the Company establishing the number of
Preferred Shares to which the record holder is entitled shall be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if Preferred Shares represented by a certificate are converted as aforesaid, the Holder
may not transfer the certificate representing the Preferred Shares unless the Holder first physically surrenders the certificate representing the Preferred Shares to the Company, whereupon the Company will forthwith issue and deliver upon the order
of the Holder a new certificate of like tenor, registered as the Holder may request, representing in the aggregate the remaining number of Preferred Shares represented by such certificate. The Holder and any assignee, by acceptance of a certificate,
acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of any Preferred Shares, the number of Preferred Shares represented by such certificate 

  

 - 10 - 

 
may be less than the number of Preferred Shares stated on the face thereof. Each certificate for Preferred Shares shall bear the following legend:

  
 ANY TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW
THE TERMS OF THE COMPANY’S CERTIFICATE OF DESIGNATIONS RELATING TO THE PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE, INCLUDING SECTION 2(d)(vii) THEREOF. THE NUMBER OF PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE
NUMBER OF PREFERRED SHARES STATED ON THE FACE HEREOF PURSUANT TO SECTION 2(d)(vii) OF THE CERTIFICATE OF DESIGNATIONS RELATING TO THE PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE. 
  
 (e) Taxes. The Company shall pay any and all documentary, stamp, transfer (but only in respect of the registered
holder thereof) and other similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon the conversion of Preferred Shares. 
  

(f) Adjustments to Conversion Price. Subject to Sections 5 and 12, the Conversion Price will be subject to adjustment from time to time as
provided in this Section 2(f). 
  
 (i)
Adjustment of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Subscription Date, the Company issues or sells, or in accordance with this Section 2(f) is deemed to have issued or sold, any shares of Common Stock
(including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company but excluding Excluded Securities) for a consideration per share (the “New Securities Issuance Price”) less than a price
(the “Applicable Price”) equal to the Conversion Price in effect immediately prior to such time (a “Dilutive Issuance”), then immediately after such issue or sale, the Conversion Price then in effect shall be
reduced to an amount equal to the product of (x) the Conversion Price in effect immediately prior to such Dilutive Issuance and (y) (1) the sum of (I) the product of the Applicable Price and the number of shares of Common Stock Deemed Outstanding
immediately prior to such Dilutive Issuance and (II) the consideration, if any, received by the Company upon such Dilutive Issuance, divided by (2) the product of (I) the Applicable Price multiplied by (II) the number of shares of Common Stock
Deemed Outstanding immediately after such Dilutive Issuance. For purposes of 

  

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determining the adjusted Conversion Price under this Section 2(f)(i), the following shall be applicable: 
  
 (A) Issuance of Options. If the Company in any manner grants or
sells any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exchange or exercise of any Convertible Securities issuable upon exercise of such Option is
less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this
Section 2(f)(i)(A), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exchange or exercise of any Convertible Securities issuable upon exercise of such
Option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon granting or sale of the Option, upon exercise of the Option and upon
conversion, exchange or exercise of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Conversion Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the
exercise of such Options or upon the actual issuance of such Common Stock upon conversion, exchange or exercise of such Convertible Securities. 
  
 (B) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for
which one share of Common Stock is issuable upon such conversion, exchange or exercise thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at
the time of the issuance of sale of such Convertible Securities for such price per share. For the purposes of this Section 2(f)(i)(B), the “lowest price per share for which one share of Common Stock is issuable upon such conversion, exchange or
exercise” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the
conversion, exchange or exercise of such Convertible Security. No further adjustment of the Conversion Price shall be made upon the actual issuance of such Common Stock upon conversion, exchange or exercise of such Convertible Securities, and if any
such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price had been or are to be made pursuant to other provisions of this Section 2(f)(i), no further adjustment of the
Conversion Price shall be made by reason of such issue or sale. 
  
 (C) Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into or exchangeable or exercisable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be adjusted to the Conversion Price
which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold.
For purposes of this Section 2(f)(i)(C), if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of the Preferred Shares are changed in 

  

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the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the date of such change. No adjustment shall be made if such adjustment would result in an increase of the Conversion Price then in effect. 
  
 (D) Calculation of Consideration Received. In case any Option is
issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have
been issued for a consideration of $0.01. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the gross amount received by
the Company therefor. If any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair value of such
consideration, except where such consideration consists of marketable securities, in which case the amount of consideration received by the Company will be the arithmetic average of the Closing Sale Prices of such securities during the ten (10)
consecutive Trading Days ending on the date of receipt of such securities. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Required Holders. If such parties are unable to reach
agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10th) day following
the Valuation Event by an independent, reputable appraiser selected by the Company and the Required Holders. The determination of such appraiser shall be deemed binding upon all parties absent manifest error and the fees and expenses of such
appraiser shall be borne by the Company. 
  
 (E) Record
Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (I) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (II) to subscribe for or purchase
Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of subscription or purchase, as the case may be. 
  
 (ii) Adjustment of Conversion Price Upon Subdivisions or Combinations of Common Stock. If the Company at any time on or after the
Subscription Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such
subdivision will be proportionately reduced. If the Company at any time on or after the Subscription Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment under this Section 2(f) shall become effective at the close of business on the date the subdivision or combination
becomes effective. 
  

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 (iii) Notices. 
  
 (A) Whenever the Conversion Price is adjusted, the Company shall promptly mail to Holders a notice of the adjustment
accompanied by an Officers’ Certificate briefly stating the facts requiring the adjustment and the manner of computing it, which computation shall have been made by the Company. In the case of a dispute as to the determination of such
adjustment, then such dispute shall be resolved in accordance with the procedures set forth in Section 2(d)(iii). 
  
 (B) The Company will give written notice stating the proposed effective date or record date, as the case may be, to each Holder at least ten (10)
Business Days prior to the date on which any Fundamental Transaction or Liquidation Event will take place or on which the Company closes its books or takes a record (I) with respect to any dividend or distribution upon the Common Stock, (II) with
respect to any pro rata subscription offer to holders of Common Stock or (III) for determining rights to vote with respect to any Fundamental Transaction or Liquidation Event, provided that such information shall be made known to the public prior to
or in conjunction with such notice being provided to such Holder. 
  
 Failure to provide the requisite notice or any defect therein shall not affect the validity of any transaction referred to in clause (A), (B) or (C) of this Section 2(f)(xii). 
  
 (3) [Intentionally Omitted] 
  

(4) Other Rights of Holders. 
  
 (a) Assumption. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all
of the obligations of the Company under this Certificate of Designations and the other Transaction Documents in accordance with the provisions of this Section 4(a) pursuant to written agreements in form and substance satisfactory to the Required
Holders and approved by the Required Holders prior to such Fundamental Transaction, including agreements to deliver to each holder of Preferred Shares in exchange for such Preferred Shares a security of the Successor Entity evidenced by a written
instrument substantially similar in form and substance to the Certificate of Designations, including, without limitation, having a stated value equal to the stated value of the Preferred Shares held by such holder and having similar ranking to the
Preferred Shares, and satisfactory to the Required Holders and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence
of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Certificate of Designations referring to the “Company”
shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Certificate of Designations with the same effect as if such Successor Entity had
been named as the Company herein. Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon conversion of the Preferred Shares at any time after the consummation
of the Fundamental Transaction, in lieu of the shares of the Company’s 

  

 - 14 - 

 
Common Stock (or other securities, cash, assets or other property) purchasable upon the conversion of the Preferred Shares prior to such Fundamental
Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of such Fundamental
Transaction had the Preferred Shares been converted immediately prior to such Fundamental Transaction, as adjusted in accordance with the provisions of this Certificate of Designations. The provisions of this Section shall apply similarly and
equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion of the Preferred Shares. 
  
 (b) Purchase Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holders will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of the Preferred Shares (without taking into account any limitations or restrictions on the
convertibility of the Preferred Shares) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights. 
  
 (5) Limitation on Beneficial Ownership. The Company shall not effect any conversion of the Preferred Shares, and any Holder shall not have the right to convert any Preferred Shares pursuant hereto, to the extent that after giving
effect to such conversion, such Holder (together with its affiliates) would beneficially own in excess of 9.99% (the “Conversion Limitation”) of the number of shares of Common Stock outstanding immediately after giving effect to
such conversion. For purposes of the foregoing sentences, the aggregate 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 conversion of the Preferred
Shares 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) conversion of the remaining, nonconverted portion of the Preferred Shares
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 Company (including, without limitation, any of the warrants or convertible notes)
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 5, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of this Section 5, 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 (1) the Company’s most recent Form 10-K or 10-Q or any Current Report on Form 8-K filed subsequent thereto or other public filing with the Securities and Exchange Commission, (2) a more recent public announcement by the
Company or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the Company shall within three (3)
Business Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, 

  

 - 15 - 

 
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 the Preferred Shares, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, any Holder may increase or decrease the Conversion
Limitation to any other percentage specified in such notice but such percentage shall not be in excess of 9.99%; provided that (i) any such increase will not be effective until the 61st day after such notice is delivered to the Company, and (ii) any
such increase or decrease will apply only to the Holder sending such notice and not to any other Holder of the Preferred Shares. 
  
 (6) Reservation of Shares. 
  
 (a) Reservation. So long as any Preferred Shares are outstanding, the Company shall take all action necessary to reserve and keep
available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Preferred Shares, 130% of the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of
all of the Preferred Shares outstanding at such time; provided that at no time shall the number of shares of Common Stock so reserved be less than the number of shares required to be reserved of the previous sentence (without regard to any
limitations on conversions) (the “Required Reserve Amount”). The initial number of shares of Common Stock reserved for conversions of the Preferred Shares and each increase in the number of shares so reserved shall be allocated pro
rata among the Holders based on the number of Preferred Shares held by each Holder on the Initial Issuance Date or increase in the number of reserved shares, as the case may be (the “Authorized Share Allocation”). In the event that
a Holder shall sell or otherwise transfer any of such Holder’s interests in the Preferred Shares, each transferee shall be allocated a pro rata portion of such Holder’s Authorized Share Allocation. Any shares of Common Stock reserved and
allocated to any Person which ceases to hold any Preferred Shares shall be allocated to the remaining Holders of such Preferred Shares, pro rata based on the number of Preferred Shares then held by such Holders. 
  
 (b) Insufficient Authorized Shares. If at any time
while any of the Preferred Shares remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Preferred Shares at least
a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock
to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Preferred Shares then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an
Authorized Share Failure, but in no event later than 60 days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its shareholders for the approval of an increase in the number of authorized shares of Common
Stock. In connection with such meeting, the Company shall provide each shareholder with a proxy statement and shall use its best efforts to solicit its shareholders’ approval of such increase in authorized shares of Common Stock and to cause
its board of directors to recommend to the shareholders that they approve such proposal. 
  

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 (7) Voting Rights. Except as otherwise required by law and except as provided in Section 13 with
respect to the matters referred to therein, the Holders shall not be entitled to any voting rights or powers accorded to the Common Stock. Notwithstanding the foregoing, each Holder shall be entitled to receive the same prior notice of any
stockholders’ meeting as is provided to the holders of Common Stock in accordance with the bylaws of the Company as well as prior notice of all stockholder actions to be taken by legally available means in lieu of a meeting. 
  
 (8) Liquidation, Dissolution, Winding-Up. In the event of a
Liquidation Event, the Holders shall be entitled to receive in cash out of the assets of the Company, whether from capital or from earnings available for distribution to its stockholders (the “Liquidation Funds”), before any amount
shall be paid to the holders of any of the capital stock of the Company of any class junior in rank to the Preferred Shares in respect of the preferences as to distributions and payments on the liquidation, dissolution and winding up of the Company,
an amount per Preferred Share equal to the Stated Value; provided that, if the Liquidation Funds are insufficient to pay the full amount due to the Holders and holders of shares of other classes or series of preferred stock of the Company that are
of equal rank with the Preferred Shares as to payments of Liquidation Funds (the “Pari Passu Shares”), if any, then each Holder and Pari Passu Shares shall receive a percentage of the Liquidation Funds equal to the full amount of
Liquidation Funds payable to such Holder as a liquidation preference, in accordance with their respective Certificates of Designations, as a percentage of the full amount of Liquidation Funds payable to all holders of Preferred Shares and Pari Passu
Shares. To the extent necessary, the Company shall cause such actions to be taken by any of its Subsidiaries so as to enable, to the maximum extent permitted by law, the proceeds of a Liquidation Event to be distributed to the Holders in accordance
with this Section. All the preferential amounts to be paid to the Holders under this Section shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution of any Liquidation Funds of
the Company to the holders of shares of other classes or series of preferred stock of the Company junior in rank to the Preferred Shares in connection with a Liquidation Event as to which this Section applies. The purchase or redemption by the
Company of stock of any class, in any manner permitted by law, shall not, for the purposes hereof, be regarded as a Liquidation Event. 
  
 (9) Preferred Rank. All shares of Common Stock shall be of junior rank to all Preferred Shares with respect to the preferences as to dividends,
distributions and payments upon any Liquidation Event. The rights of the shares of Common Stock shall be subject to the preferences and relative rights of the Preferred Shares. Without the prior express written consent of the Required Holders, the
Company shall not hereafter authorize or issue additional or other capital stock that is of senior or pari passu rank to the Preferred Shares in respect of the preferences as to distributions and payments upon any Liquidation Event. The Company
shall be permitted to issue preferred stock that is junior in rank to the Preferred Shares in respect of the preferences as to distributions and payments upon any Liquidation Event, provided that such junior preferred stock is perpetual. In the
event of the merger or consolidation of the Company with or into another corporation, the Preferred Shares shall maintain their relative powers, designations and preferences provided for herein (except that the Preferred Shares may be pari passu
with, but not junior to, any capital stock of the successor entity) and no merger shall result inconsistent therewith. 
  

 - 17 - 

 (10) Participation. Each Holder shall be entitled to such dividends paid and distributions made to
the holders of Common Stock, whether in cash or in kind, to the same extent as if such Holder had converted Preferred Shares into Common Stock (without regard to any limitations on conversion herein, in this Certificate of Designations or elsewhere)
and had held such shares of Common Stock on the record date for such dividends and distributions. Payments under the preceding sentence shall be made concurrently with the dividend or distribution to the holders of Common Stock. 
  
 (11) Additional Covenants. 
  
 (a) Existence. Subject to Section 8, the Company shall do or cause
to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if the
Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders. 

 
 (b) Further Instruments and Acts. Upon the request of any Holder,
the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Certificate of Designations. 
  
 (12) Limitation on Number of Conversion Shares. Notwithstanding
anything to the contrary contained herein, the Company shall not be obligated to issue any shares of Common Stock upon conversion of the Preferred Shares or exercise of the Warrants if the issuance of such shares of Common Stock would exceed that
number of shares of Common Stock which the Company may issue upon conversion of the Preferred Shares or exercise of the Warrants without breaching the Company’s obligations under the rules or regulations of the Principal Market, or the market
or exchange where the Common Stock is then traded (the “Exchange Cap”), which number of shares of Common Stock was equal to 8,250,115 in the aggregate as of April 28, 2005, except that such limitation shall not apply in the event
that the Company (a) obtains the approval of its stockholders as required by the applicable rules of the Principal Market (or any successor rule or regulation) for issuances of Common Stock in excess of such amount, or (b) obtains a written opinion
from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Required Holders. Until such approval or written opinion is obtained, no purchaser of Preferred Shares pursuant to the
Securities Purchase Agreement (the “Purchasers”) shall be issued, in the aggregate, upon conversion of Preferred Shares or exercise of the Warrants, shares of Common Stock in an amount greater than the product of (i) the Exchange
Cap amount multiplied by (ii) a fraction, the numerator of which is the number of Preferred Shares issued to such Purchaser pursuant to the Securities Purchase Agreement on the Initial Issuance Date and the denominator of which is the aggregate
amount of all the Preferred Shares issued to the Purchasers pursuant to the Securities Purchase Agreement on the Initial Issuance Date (the “Exchange Cap Allocation”). In the event that any Purchaser shall sell or otherwise transfer
any of such 

  

 - 18 - 

 
Purchaser’s Preferred Shares, the transferee shall be allocated a pro rata portion of such Purchaser’s Exchange Cap Allocation. In the event that
any Holder shall convert all of such Holder’s Preferred Shares into a number of shares of Common Stock which, in the aggregate, is less than such Holder’s Exchange Cap Allocation, then the difference between such Holder’s Exchange Cap
Allocation and the number of shares of Common Stock actually issued to such Holder shall be allocated to the respective Exchange Cap Allocations of the remaining Holders on a pro rata basis in proportion to the number of Preferred Shares then held
by each such Holder. 
  
 (13) Vote to Change the Terms of
Certificate of Designations or Issue Preferred Shares. In addition to any other rights provided by law, except where the vote or written consent of the holders of a greater number of shares is required by law or by another provision of the
Certificate of Incorporation as in effect on the Subscription Date, without first obtaining the affirmative vote at a meeting duly called for such purpose or the written consent without a meeting of the Required Holders, voting together as a single
separate class, the Company shall not: (u) amend or repeal any provision of, or add any provision to, the Certificate of Incorporation or bylaws, or file any certificate of designations, preferences, limitations and relative rights of any series of
preferred stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Preferred Shares, regardless of whether any such action shall be by means of amendment
to the Certificate of Incorporation or by merger, consolidation or otherwise; (v) increase or decrease (other than by conversion) the authorized number of shares of the Preferred Shares; (w) create or authorize (by reclassification or otherwise) any
new class or series of shares that has a preference over or is on a parity with the Preferred Shares with respect to the distribution of assets on any Liquidation Event; (x) purchase, repurchase or redeem any shares of Common Stock (other than
pursuant to equity incentive agreements with employees giving the Company the right to repurchase shares upon the termination of services); (y) pay dividends or make any other distribution on the Common Stock; or (z) whether or not prohibited by the
terms of the Preferred Shares, circumvent a right of the Preferred Shares. 
  
 (14) Lost or Stolen Certificates. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Preferred Stock Certificates representing
the Preferred Shares, and, in the case of loss, theft or destruction, of an indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of the Preferred Stock
Certificate(s), the Company shall execute and deliver new preferred stock certificate(s) of like tenor and date; provided, however, the Company shall not be obligated to re-issue preferred stock certificates if the Holder
contemporaneously requests the Company to convert such Preferred Shares into Common Stock. 
  
 (15) Remedies, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Certificate of Designations shall be cumulative and in addition to all other remedies available under this
Certificate of Designations and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of a Holder’s right to pursue actual
damages for any failure by the Company to comply with the terms of this Certificate of Designations. The Company acknowledges that a breach by it of its obligations hereunder will 

  

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cause irreparable harm to the Holders and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of
any such breach or threatened breach, the Holders shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being
required. 
  
 (16) Construction; Headings. This Certificate
of Designations shall be deemed to be jointly drafted by the Company and all of the Holders and shall not be construed against any person as the drafter hereof. The headings of this Certificate of Designations are for convenience of reference and
shall not form part of, or affect the interpretation of, this Certificate of Designations. 
  
 (17) Failure or Indulgence Not Waiver. No failure or delay on the part of a Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. 
  
 (18) Notice. Whenever notice is required to be given under this Certificate of Designations, unless otherwise provided herein, such notice shall be
given in accordance with Section 9(f) of the Securities Purchase Agreement (provided that if the Preferred Shares are not held by a Buyer (as defined in the Securities Purchase Agreement) then substituting the words “holder of Securities”
for the word “Buyer”), subject to the provisions of Delaware law. 
  
 (19) Transfer of Preferred Shares. A Holder may assign some or all of the Preferred Shares and the accompanying rights hereunder held by such Holder without the consent of the Company; provided that such
assignment is in compliance with applicable securities laws, subject to the transfer and resale restrictions set forth in the Securities Purchase Agreement. 
  
 (20) Preferred Share Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it
may designate by notice to the Holders), a register for the Preferred Shares, in which the Company shall record the name and address of the persons in whose name the Preferred Shares have been issued, as well as the name and address of each
transferee. The Company may treat the person in whose name any Preferred Share is registered on the register as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any properly
made transfers. 
  
 (21) Preferred Stockholder Matters. Any
preferred stockholder action, approval or consent required, desired or otherwise sought by the Company pursuant to the rules and regulations of the Principal Market, the DGCL, this Certificate of Designations or otherwise with respect to the
issuance of the Preferred Shares or the Common Stock issuable upon conversion thereof may be effected by written consent of the Company’s preferred stockholders or any series thereof or at a duly called meeting of the Company’s preferred
stockholders or any series thereof, as applicable, all in accordance with the applicable rules and regulations of the Principal Market and the DGCL. This provision is intended to comply with the applicable sections of the DGCL permitting stockholder
action, approval and consent affected by written consent in lieu of a meeting. 
  
 * * * * * 
  

 - 20 - 

 IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be signed by Douglas C.
Felderman, its Executive Vice President & Chief Financial Officer, as of the 29th day of April, 2005 
  

			
	THE WET SEAL, INC.
		
	By:	 	 /s/    DOUGLAS C. FELDERMAN

	Name:	 	Douglas C. Felderman
	Title:	 	Executive Vice President & Chief Financial Officer

  

 - 21 - 

 EXHIBIT I 
  
 THE WET SEAL, INC. CONVERSION NOTICE 
  
 Reference is made to the Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock of The
Wet Seal, Inc. (the “Certificate of Designations”). In accordance with and pursuant to the Certificate of Designations, the undersigned hereby elects to convert the number of shares of Series C Convertible Preferred Stock, par value
$0.01 per share (the “Preferred Shares”), of The Wet Seal, Inc., a Delaware corporation (the “Company”), indicated below into shares of Class A Common Stock, par value $0.10 per share (the “Common
Stock”), of the Company, as of the date specified below. 
  

	
	 Date of Conversion:______________________________________________________________________________________

	
	 Number of Preferred Shares to be converted:____________________________________________________________________

	
	 Stock certificate no(s). of Preferred Shares to be converted:_________________________________________________________

	
	 Tax ID Number (If applicable): _______________________________________________________________________________

	
	Please confirm the following information:___________________________________________________________________________
	
	 Conversion Price:________________________________________________________________________________________

	
	 Number of shares of Common Stock to be issued:________________________________________________________________

  
 Please issue the
Common Stock into which the Preferred Shares are being converted in the following name and to the following address: 
  

			
	 Issue to:__________________________________________________________________________
	 	 
		
	 __________________________________________________________________________
	 	 
		
	 Address: __________________________________________________________________________
	 	 
		
	 Telephone Number: _________________________________________________________________
	 	 
		
	 Facsimile Number:___________________________________________________________________
	 	 
		
	 Name of Registered Holder:
	 	 
		
	 By:_______________________________________________________________________________
	 	 
		
	 Name:_____________________________________________________________________________
	 	 
		
	 Title:______________________________________________________________________________
	 	 
		
	 Dated:_____________________________________________________________________________
	 	 

  

			
	 Account Number (if electronic book entry transfer):_______________________________________________________________________________
	 	 
		
	 Transaction Code Number (if electronic book entry transfer):________________________________________________________________________
	 	 

  
 [NOTE TO HOLDER — THIS FORM MUST
BE SENT CONCURRENTLY TO TRANSFER AGENT] 
  

 - 22 - 

 ACKNOWLEDGMENT 
  
 The Company hereby acknowledges this Conversion Notice and hereby directs American Stock Transfer and Trust Company to issue
the above indicated number of shares of Common Stock in accordance with the Irrevocable Transfer Agent Instructions dated May     , 2005 from the Company and acknowledged and agreed to by American Stock Transfer and Trust
Company. 
  

			
	THE WET SEAL, INC.
		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

 - 23 -

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