Document:

Securities Purchase Agreement

 EXHIBIT 10.1 
  
 SECURITIES PURCHASE AGREEMENT 
  

SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of November 9, 2004, by and among The Wet Seal, Inc., a Delaware
corporation, with headquarters located at 26972 Burbank, Foothill Ranch, California 92610 (the “Company”), and the investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and
collectively, the “Buyers”). 
  
 WHEREAS:

  
 A. The Company and each Buyer is executing and delivering
this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of Regulation D (“Regulation D”) as
promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act. 
  
 B. The Company has authorized a new series of convertible notes of the Company, which notes shall be convertible into the Company’s Class A Common
Stock, $0.10 par value per share (the “Class A Common Stock”), in accordance with the terms of such notes. 
  
 C. Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) that aggregate principal
amount of notes, in substantially the form attached hereto as Exhibit A-1 (as amended or modified from time to time, collectively, the “Initial Notes”), set forth opposite such Buyer’s name in column (3) on the Schedule
of Buyers (which aggregate principal amount for all Buyers shall be $40,000,000) (the shares of Class A Common Stock into which the Notes are convertible, collectively, the “Initial Conversion Shares”), (ii) rights, in substantially
the form attached hereto as Exhibit B-1 (collectively, the “Series A Additional Investment Right Warrants”), to acquire up to that principal amount of additional notes, in substantially the form attached hereto as Exhibit
A-2 (as amended or modified from time to time, collectively, the “Additional Series A Notes”), set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers (which aggregate principal amount for all Buyers
shall be $9,900,000), (iii) rights, in substantially the form attached hereto as Exhibit B-2 (collectively, the “Series B Additional Investment Right Warrants” and, collectively with the Series A Additional Investment Right
Warrants, the “Additional Investment Right Warrants”), to acquire up to that principal amount of additional notes, in substantially the form attached hereto as Exhibit A-3 (as amended or modified from time to time,
collectively, the “Additional Series B Notes” and together with the Additional Series A Notes, the “Additional Notes”, and together with the Initial Notes and any convertible notes issued in replacement of the
Initial Notes or the Additional Notes in accordance with the terms thereof, the “Notes”), set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers (which aggregate principal amount for all Buyers shall be
$5,950,000) (the Additional Notes as converted, the “Additional Conversion Shares” and together with the Initial Conversion Shares, the “Conversion Shares”) and (iv) (A) Series B Warrants, in substantially the form
attached hereto as Exhibit C-2 (the “Series B Warrants”), to acquire up to that number of additional shares of Class A Common Stock set forth opposite such Buyer’s name in column (3) of the Schedule of Warrants attached
hereto, (B) Series C Warrants, in substantially the form attached hereto as Exhibit C-3 (the “Series C Warrants”), to acquire up to that number of additional 

  

 
shares of Class A Common Stock set forth opposite such Buyer’s name in column (4) of the Schedule of Warrants attached hereto, and (C) Series D
Warrants, in substantially the form attached hereto as Exhibit C-4 (the “Series D Warrants”), to acquire up to that number of additional shares of Class A Common Stock set forth opposite such Buyer’s name in column (5)
of the Schedule of Warrants attached hereto (the Series B Warrants, the Series C Warrants and the Series D Warrants are collectively referred to herein as the “Additional Warrants”) (as exercised, collectively, the
“Additional Warrant Shares”). 
  
 D. On the date
hereof, each Buyer will receive Series A Warrants, in substantially the form attached hereto as Exhibit C-1 (collectively, the “Series A Warrants” and together with the Additional Warrants, the “Warrants”) to
acquire up to that number of additional shares of Class A Common Stock set forth opposite such Buyer’s name in column (2) of the Schedule of Warrants (as exercised, the “Series A Warrant Shares” and together with the Additional
Warrant Shares, the “Warrant Shares”). 
  
 E.
Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement, substantially in the form attached hereto as Exhibit D (as amended or modified from time to
time in accordance with its terms, the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide certain registration rights with respect to the Notes, Warrants, Conversion Shares and the Warrant Shares
under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws. 
  
 F. Concurrently herewith, the Company and certain of its subsidiaries are entering into temporary financing arrangements with certain of the Buyers, as
secured lenders, and as more fully set forth in a credit agreement by and among the Company, The Wet Seal Catalog, Inc., and The Wet Seal Retail, Inc., as borrowers (collectively, the “Bridge Borrowers”), and Wet Seal GC, Inc., as
guarantor (together with the Bridge Borrowers, the “Bridge Loan Parties”), S.A.C. Capital Associates, LLC, as administrative agent and collateral agent (in such capacity the “Bridge Agent”), and the Buyers, as
lenders, and certain other security and ancillary documents related thereto, and an intercreditor and lien subordination agreement by and among the Bridge Agent, Fleet Retail Group, Inc., as administrative agent and collateral agent (the
“Senior Agent”) for certain lenders (the “Senior Lenders”), and the Bridge Loan Parties (the “Bridge Facility”), pursuant to which, subject to the satisfaction of certain borrowing conditions, the
Buyers are making available to the Bridge Borrowers a $10 million secured term loan (the “Bridge Amount”). The documents entered into in connection with the Bridge Facility are referred to herein as the “Bridge Facility
Documents”. 
  
 G. The Notes, the Conversion Shares, the
Additional Investment Right Warrants, the Warrants and the Warrant Shares collectively are referred to herein as the “Securities”. 
  
 H. The Notes will be secured by a second lien on substantially all of the personal property assets of the Bridge Loan Parties. The Notes and the liens
securing such Notes are fully subordinated to the debt and liens in favor of the Senior Agent and the Senior Lenders pursuant to the Subordination Agreement, dated as of the date hereof, among the Senior Lenders and the Buyers, and certain other
security and ancillary documents related thereto (collectively, the “Security Agreements”). 
  

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 NOW, THEREFORE, the Company and each Buyer hereby agree as follows: 
  
 1. PURCHASE AND SALE OF NOTES AND WARRANTS. 
  
 (a) Purchase of Notes and Warrants. 
  
 (i) Series A Warrants. Concurrently with the
execution of this Agreement, the Company shall issue to each Buyer one or more Series A Warrants to acquire up to that number of Series A Warrant Shares as is set forth opposite such Buyer’s name in column (2) on the Schedule of Warrants.

  
 (ii) Notes, Additional Investment Right
Warrants and Additional Warrants. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from
the Company on the Closing Date (as defined below), (A) one or more Notes with an aggregate principal amount as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers, (B) one or more Additional Series B Warrants to
acquire up to that number of Warrant Shares as is set forth opposite such Buyer’s name in column (3) on the Schedule of Warrants, (C) one or more Series C Warrants to acquire up to that number of Warrant Shares as is set forth opposite such
Buyer’s name in column (4) on the Schedule of Warrants, (D) one or more Series D Warrants to acquire up to that number of Warrant Shares as is set forth opposite such Buyer’s name in column (5) on the Schedule of Warrants, (E) Series A
Additional Investment Right Warrants to acquire up to that principal amount of Additional Notes as is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers and (F) Series B Additional Investment Right Warrants to acquire
up to that principal amount of Additional Notes as is set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers 
  
 (iii) Closing. The date and time (the “Closing Date”) of the consummation of the transactions contemplated by
Section 1(a)(ii) above (the “Closing”) shall be five (5) Business Days after notification of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 6 and 7 below (or such other date as is mutually agreed to
by the Company and holders of at least a majority of the principal amount of the Notes issued and, prior to the Closing, issuable hereunder (the “Majority Buyers”)) at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue,
New York, New York 10022. For purposes of this Agreement, “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.

  
 (iv) Purchase Price. 
  
 (1) The aggregate purchase price for the Notes, Additional
Investment Right Warrants and the Warrants to be purchased by each Buyer at the Closing (the “Purchase Price”) shall be the amount set forth opposite such Buyer’s name in column (7) of the Schedule of Buyers less (A) such
Buyer’s pro rata share of any outstanding Bridge Amount (including any outstanding principal, accrued and unpaid interest, fees, late charges and other amounts due in respect thereof) and (B) in the case of 

  

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S.A.C. Capital Associates, LLC (“SAC”) (a Buyer), a withholding amount with respect to certain expenses in accordance with Section 4(g)(ii).

  
 (2) The Buyers and the Company agree that
the Notes, the Additional Investment Right Warrants and the Warrants constitute an “investment unit” for purposes of Section 1273(c)(2) of the Internal Revenue Code of 1986, as amended (the “Code”). Not later than two days
before the Closing Date, the Buyers shall notify the Company of their determination of the allocation of the issue price of such investment unit between the Notes, the Additional Investment Right Warrants and the Warrants in accordance with Section
1273(c)(2) of the Code and Treasury Regulation Section 1.1273-2(h), and neither the Buyers nor the Company shall take any position inconsistent with such allocation in any tax return or in any judicial or administrative proceeding in respect of
taxes. 
  
 (b) Form of Payment. On the
Closing Date, (i) each Buyer shall pay its Purchase Price to the Company for the Notes, Additional Investment Right Warrants and the Warrants to be issued and sold to such Buyer at the Closing, by wire transfer of immediately available funds in
accordance with the Company’s written wire instructions, and (ii) the Company shall deliver to each Buyer (A) the Notes (allocated in the principal amounts as such Buyer shall request) which such Buyer is then purchasing, (B) the Warrants
(allocated in the amounts as such Buyer shall request) such Buyer is purchasing, in each case duly executed on behalf of the Company and registered in the name of such Buyer or its designee and (C) the Additional Investment Right Warrants (in the
amounts as such Buyer shall request) such Buyer is purchasing, in each case duly executed on behalf of the Company and registered in the name of such Buyer or its designee. 
  
 2. BUYERS’ REPRESENTATIONS AND WARRANTIES. 
  
 Each Buyer represents and warrants with respect to only itself that: 
  
 (a) No Sale or Distribution. Such Buyer is acquiring
the Notes, the Additional Investment Right Warrants and the Warrants, and upon conversion of the Notes and exercise of the Warrants, will acquire the Conversion Shares issuable upon conversion of the Notes, the Warrant Shares issuable upon exercise
of the Warrants and the Additional Notes issuable upon exercise of the Additional Investment Right Warrants, for its own account, not as nominee or agent, and not with a view towards, or for resale in connection with, the sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that by making the representations herein, such Buyer does not agree to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. Such Buyer is acquiring the Securities hereunder in the ordinary course of its business.
Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities. For the purpose of this Agreement, “Person” shall mean any individual, corporation,
partnership (general or limited), limited liability company, firm, joint venture, association, joint-stock company, trust, estate, unincorporated organization or government or any department or agency thereof. 
  

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 (b) Accredited Investor Status. Such Buyer is an “accredited investor”
as that term is defined in Rule 501(a) of Regulation D. 
  
 (c) Reliance on Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer to acquire the Securities. 
  
 (d) Information. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the Securities which have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely on the Company’s representations and warranties contained
herein. Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to
its acquisition of the Securities. 
  
 (e) No
Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of
the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities. 
  
 (f) Transfer or Resale. Such Buyer understands that except as provided in the Registration Rights Agreement: (i) the Securities
have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) offered for sale, sold, assigned or transferred to an affiliate of such Buyer, (B)
subsequently registered thereunder, (C) such Buyer shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred
pursuant to an exemption from such registration, or (D) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended,
(or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale
of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act
or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder. 
  

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 (g) Legends. Such Buyer understands that, until such time as the resale of the
Securities have been registered under the 1933 Act as contemplated by the Registration Rights Agreement, the certificates or other instruments representing the Securities, except as set forth below, shall bear any legend as required by the
“blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such instruments): 
  
 [NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. 
  
 The
legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped, if, unless otherwise required by state securities laws, (i) such Securities are
registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that such sale, assignment or transfer
of the Securities may be made without registration under the applicable requirements of the 1933 Act, or (iii) such holder provides the Company with reasonable assurance that the Securities can be sold, assigned or transferred pursuant to Rule 144
or Rule 144A. 
  
 (h) Validity;
Enforcement. This Agreement, the Registration Rights Agreement and the Bridge Facility Documents to which such Buyer is a party have been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal,
valid and binding obligations of such Buyer enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies. 
  
 (i) No Conflicts. The execution, delivery and performance by such Buyer of this Agreement, the
Registration Rights Agreement and the Bridge Facility Documents to which such Buyer is a party and the consummation by such Buyer of the transactions contemplated 

  

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hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or
violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder. 
  
 (j) Residency. Such Buyer is a resident of that jurisdiction specified below its address on the
Schedule of Buyers. 
  
 3. REPRESENTATIONS AND WARRANTIES OF
THE COMPANY. 
  
 The Company represents and warrants to each
of the Buyers that: 
  
 (a) Organization and
Qualification. 
  
 (i) The Company and its
“Subsidiaries” (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns outstanding capital stock or holds an equity or similar interest representing the outstanding equity or similar
interest of such entity) are entities duly organized and validly existing in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their
business as now being conducted. Each of the Company and its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted
by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. The Company has no Subsidiaries except as set forth on Schedule 3(a).
Schedule 3(a) sets forth the nature and percentage ownership of the Company in each Subsidiary. As used in this Agreement, “Material Adverse Effect” means any material adverse effect on the business, properties, assets,
operations, results of operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole, or on the transactions contemplated hereby and in the Transaction Documents (as defined below) or by the agreements and
instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents. 
  
 (b) Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter
into and perform its obligations under this Agreement, the Notes, the Additional Investment Right Warrants and the Warrants, the Registration Rights Agreement, the documents relating to the Bridge Facility, the Security Documents, the Issuance
Documents (as defined in Section 4(a)(ii)), the Irrevocable Transfer Agent Instructions (as defined in Section 5(b)) and any other certificate, instrument or document contemplated hereby or thereby (collectively, the “Transaction
Documents”) and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and

  

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thereby, including, without limitation, the issuance of the Notes, the Additional Investment Right Warrants and the Warrants, the reservation for issuance
and the issuance of the Conversion Shares issuable upon conversion of the Notes and the reservation for issuance and issuance of Warrant Shares issuable upon exercise of the Warrants have been duly authorized by the Company’s Board of Directors
and, other than the filings specified in Section 3(e) and the Stockholder Approval (as defined in Section 4(p)), no further filing, consent, or authorization is required by the Company, its Board of Directors or its stockholders. This Agreement and
the other Transaction Documents of even date herewith have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies. Any other Transaction Documents dated after the date herewith upon execution shall have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies. 
  
 (c) Issuance of Securities. The issuance of the Notes, the Additional Investment Right Warrants and the Warrants and, subject to
Stockholder Approval, the issuance of the Conversion Shares and Warrant Shares are duly authorized and are free from all taxes, liens and charges with respect to the issue thereof. As of the Closing, a number of shares of Class A Common Stock shall
have been duly authorized and reserved for issuance which equals or exceeds 130% of the aggregate of the maximum number of shares Class A Common Stock: (i) issuable upon conversion of the Notes pursuant to Section 3 of the Notes as of the trading
day immediately preceding the Closing Date and (ii) issuable upon exercise of the Warrants as of the trading day immediately preceding the Closing Date. Upon issuance or conversion in accordance with the Notes or exercise in accordance with the
Warrants, as the case may be, the Conversion Shares and the Warrant Shares, respectively, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue
thereof, with the holders being entitled to all rights accorded to a holder of Class A Common Stock. Assuming the accuracy of each of the representations and warranties set forth in Section 2 of this Agreement, the offer and issuance by the Company
of the Notes and Warrants is exempt from registration under the 1933 Act. 
  
 (d) No Conflicts. Subject, as applicable, to obtaining the Stockholder Approval, the execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby (including, without limitation, the issuance of the Notes, the Additional Investment Right Warrants and the Warrants, and reservation for issuance and issuance of the Conversion Shares and the Warrant Shares,
without regard to the limitation on issuance thereof) will not (i) result in a violation of any certificate of incorporation, certificate of formation, any certificate of designations or other constituent documents of the Company or any of is
Subsidiaries, any capital stock of the Company or any of its Subsidiaries or bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or constitute a default (or an event which with notice or lapse of 

  

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time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture
or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and
regulations of the Nasdaq National Market (the “Principal Market”)) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except in the
case of (ii) and (iii) to the extent that such violation, conflict, default or right would not have a Material Adverse Effect. 
  
 (e) Consents. Except as set forth in Schedule 3(e), the Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by the
Transaction Documents, in each case in accordance with the terms thereof. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence shall have been obtained or effected
on or prior to the Closing Date, and the Company and its Subsidiaries are unaware of any facts or circumstances which might prevent the Company from obtaining or effecting any of the registration, application or filings pursuant to the preceding
sentence. The Company is not in violation of the listing requirements of the Principal Market and has no knowledge of any facts which would reasonably lead to delisting or suspension of the Class A Common Stock in the foreseeable future. 

 
 (f) Acknowledgment Regarding Buyer’s Purchase of
Securities. The Company acknowledges and agrees that each Buyer is acting individually and solely in the capacity of arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and
that no Buyer is (i) an officer or director of the Company, (ii) an “affiliate” of the Company (as defined in Rule 144) or (iii) to the knowledge of the Company, a “beneficial owner” of more than 10% of the shares of Class A
Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “1934 Act”)). The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the Securities. The Company further represents to each Buyer that the Company’s decision to enter into the Transaction Documents has been based
solely on the independent evaluation by the Company and its representatives. 
  
 (g) No General Solicitation; Agent’s Fees. Neither the Company, nor any of its affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions
(other than for Persons engaged by any Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby. Except for Rothschild, Inc. and the other agents and advisors whose compensation is set forth on Schedule
3(g) hereto, the Company has not engaged any investment advisor, placement agent or other agent in connection with the sale of the Securities. 
  

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 (h) No Integrated Offering. None of the Company, its Subsidiaries, any of their
affiliates, and any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Securities under
the 1933 Act or cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of the 1933 Act or, assuming the receipt of the Stockholder Approval, any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. None of the Company, its Subsidiaries, their affiliates and any Person acting
on their behalf will take any action or steps referred to in the preceding sentence that would require registration of any of the Securities under the 1933 Act or cause the offering of the Securities to be integrated with other offerings.

  
 (i) Dilutive Effect. The Company
understands and acknowledges that the number of Conversion Shares issuable upon conversion of the Notes and the Warrant Shares issuable upon exercise of the Warrants may increase in certain circumstances. The Company further acknowledges that its
obligation to issue Conversion Shares upon conversion of the Notes in accordance with this Agreement and the Notes and its obligation to issue the Warrant Shares upon exercise of the Warrants in accordance with this Agreement and the Warrants is, in
each case, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company. 
  
 (j) Application of Takeover Protections; Rights Agreement. The Company and its board of directors
have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the jurisdiction of its formation which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance
of the Securities and any Buyer’s ownership of the Securities. Except as set forth on Schedule 3(j)(a), the Company has not adopted a stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of
Class A Common Stock or a change in control of the Company (each “Rights Plan”). The Board of Directors of the Company has, prior to the execution of this Agreement, adopted a resolution exempting the issuance of the Securities from
any Rights Plan of the Company and from any control share acquisition statute applicable to the Company, which is attached hereto as Schedule 3(j)(b). 
  

(k) SEC Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial
statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The Company has delivered to the Buyers or their respective representatives true, correct
and complete copies of the SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, or as of the date of the last 

  

 - 10 - 

 
amendment thereof, if amended after filing, contained any untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied
as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes
or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). 
  
 (l) Absence of Certain Changes. Other than as set forth in the SEC Documents, since the date of the Company’s most recent SEC Documents, there has been no material adverse change and no material adverse
development, which constitutes a Material Adverse Effect as defined in Section 8(e) of this Agreement. Since January 31, 2004, the Company has not (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, in excess
of $100,000 outside of the ordinary course of business or (iii) had capital expenditures, individually or in the aggregate, in excess of $100,000 outside of the ordinary course of business. The Company has not taken any steps to seek protection
pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so.
The Company and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent. For purposes of this Section
3(l), “Insolvent” means, with respect to any Person, (i) the present fair saleable value of such Person’s assets is less than the amount required to pay such Person’s total Indebtedness (as defined in Section 3(s)) (other
than any future lease liabilities as such exist on the date hereof), (ii) the Person is unable to pay its debts and liabilities (other than any future lease liabilities as such exist on the date hereof), subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured, (iii) such Person intends to incur or believes that it will incur debts (other than any future lease liabilities as such exist on the date hereof) that would be beyond its ability to pay as
such debts mature or (iv) such Person has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted. 
  
 (m) No Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or circumstance has occurred or exists, or is contemplated to occur with respect to the Company or its Subsidiaries or their respective business, properties, prospects operations or financial
condition, that would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Class A Common Stock and which has
not been publicly announced. 
  

 - 11 - 

 (n) Conduct of Business; Regulatory Permits. Neither the Company nor its
Subsidiaries is in violation of any term of or in default under its Certificate of Incorporation or Bylaws or their organizational charter or certificate of incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in
violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the
foregoing, except for possible violations which would not, individually or in the aggregate, have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or
requirements of the Principal Market and has no knowledge of any facts or circumstances which would reasonably lead to delisting or suspension of the Class A Common Stock by the Principal Market in the foreseeable future. Since January 31, 2004, (i)
the Class A Common Stock has been designated for quotation on the Principal Market, (ii) trading in the Class A Common Stock has not been suspended by the SEC or the Principal Market and (iii) the Company has received no communication, written or
oral, from the SEC or the Principal Market regarding the suspension or delisting of the Class A Common Stock from the Principal Market. The Company and its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
regulatory authorities necessary to conduct their respective businesses, as presently operated, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse
Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. 
  
 (o) Foreign Corrupt Practices. Neither the Company,
nor any of its Subsidiaries, nor any director, officer, agent, employee or other Person acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government
official or employee. 
  
 (p) Sarbanes-Oxley
Act. The Company is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC thereunder that are
effective as of the date hereof, except where such noncompliance would not have, individually or in the aggregate, a Material Adverse Effect. 
  
 (q) Transactions With Affiliates. Except as set forth in the SEC Documents filed at least ten days prior to the date hereof and
other than the grant of stock options disclosed on Schedule 3(r), none of the officers, directors or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for ordinary course
services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to
or from any such officer, director or employee or, to the knowledge of the Company, any corporation, partnership, trust or 

  

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other entity in which any such officer, director, or employee has a substantial interest or is an officer, director, trustee or partner. 
  
 (r) Equity Capitalization. As of the date hereof, the
authorized capital stock of the Company consists of (i) 60,000,000 shares of Class A Common Stock, of which as of the date hereof, 34,660,657 are issued and outstanding and 4,817,619 shares are reserved for issuance pursuant to the Company’s
stock option and purchase plans, (ii) 10,000,000 shares of Class B Common Stock, $0.10 par value (the “Class B Common Stock”), of which as of the date hereof, 1,500,000 are issued and outstanding and (iii) 2,000,000 shares of
preferred stock, $.01 par value per share, of which as of the date hereof none of which is issued and outstanding or reserved for issuance. All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and
nonassessable. Except as disclosed in Schedule 3(r): (i) none of the Company’s share capital is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any share capital of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional share capital of the Company or any of its Subsidiaries or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any share capital of the Company or any of its Subsidiaries; (iii) there are no
outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness (as defined in Section 3(s)) of the Company or any of its Subsidiaries or by which the Company or any of
its Subsidiaries is or may become bound; (iv) there are no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection with the Company; (v) there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except the Registration Rights Agreement); (vi) there are no outstanding securities or instruments of the Company or any of
its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company
or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (viii) the Company does not have any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan or agreement; and (ix) the Company and its Subsidiaries have no liabilities or obligations required to be disclosed in the SEC Documents but not so disclosed in the SEC Documents,
other than those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or would not have a Material Adverse Effect. The Company has furnished to the
Buyer true, correct and complete copies of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”), and the Company’s Bylaws, as amended and as in
effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into, or exercisable or exchangeable for, shares of Class A Common Stock and the material rights of the holders thereof in respect thereto.

  

 - 13 - 

 (s) Indebtedness and Other Contracts. Except as disclosed in Schedule 3(s),
neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such
contract, agreement or instrument would result in a Material Adverse Effect, (iii) is in violation of any term of or in default under any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would
not result, individually or in the aggregate, in a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is
expected to have a Material Adverse Effect. Schedule 3(s) provides a detailed description of the material terms of any such outstanding Indebtedness. For purposes of this Agreement: (x) “Indebtedness” of any Person means,
without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business), (C)
all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets
acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F)
above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (A) through (G) above; and (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability
will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto. 
  
 (t) Absence of Litigation. Except as set forth in
Schedule 3(t), there is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company,
threatened against the Company, the Class A Common Stock or any of the Company’s Subsidiaries or any of the Company’s or the Company’s Subsidiaries’ officers or directors. Schedule 3(t) sets forth the details of any such
litigation. 
  
 (u) Insurance. The Company
and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts 

  

 - 14 - 

 
as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the
Company nor any such Subsidiary has been refused any insurance coverage sought or applied for and neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. 
  
 (v) Employee Relations. (i) Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or employs any member of a union. Except as set forth on Schedule 3(v), the Company and its Subsidiaries believe that their relations with their employees are good. Except as set forth on Schedule 3(v),
no executive officer of the Company (as defined in Rule 501(f) of the 1933 Act) has notified the Company that such officer intends to leave the Company or otherwise terminate such officer’s employment with the Company. No executive officer of
the Company, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters except a would not,
either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. 
  
 (ii) The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. 
  
 (w) Title. The Company
and its Subsidiaries have good and marketable title to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all
liens, encumbrances and material defects except such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries. Any real property
and facilities held under lease by the Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its Subsidiaries. 
  
 (x) Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use (A) patents (and any renewals and extensions thereof), patent rights (and any applications
therefor), rights of priority and other rights in inventions; (B) trademarks, service marks, trade names and trade dress, and all registrations and applications therefor and all legal and common-law equivalents of any of the foregoing; (C)
copyrights and rights in mask works (and any applications or registrations for the foregoing, and all renewals and extensions thereof), common-law copyrights and rights of authorship including all rights to exploit any of the foregoing in any media
and by any manner and means now known or hereafter devised; (D) industrial design rights, and all registrations and applications therefor; (E) rights in 

  

 - 15 - 

 
data, collections of data and databases, and all legal or common-law equivalents thereof; (F) rights in domain names and domain name reservations; (G) rights
in trade secrets, proprietary information and know-how (collectively, “Intellectual Property Rights”), collectively with all licenses and other agreements providing the Company or its Subsidiaries the Intellectual Property Rights
material to the operation of their businesses as now conducted and as described in the SEC Documents. None of the Company or any of its Subsidiaries has knowledge that any of them has infringed on any of the Intellectual Property Rights of any
Person and none of the Company or any of its Subsidiaries is infringing on any of the Intellectual Property Rights of any Person. There is no action, suit, hearing, claim, notice of violation, arbitration or other proceeding, hearing or
investigation that is pending, or to the Company’s knowledge, is threatened against, the Company regarding the infringement of any of the Intellectual Property Rights. The Company is not, to its knowledge, making unauthorized use of any
confidential information or trade secrets of any third party, and the Company has not received any notice of any asserted infringement (nor is the Company aware of any reasonable basis for any third party asserting an infringement) by the Company
of, any rights of a third party with respect to any Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property
Rights. 
  
 (y) Environmental Laws. The
Company and its Subsidiaries (i) are in compliance with any and all Environmental Laws (as hereinafter defined), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous
Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder. 

 
 (z) Subsidiary Rights. The Company or one of its
Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary. 
  
 (aa) Tax Status. The Company and each of its
Subsidiaries (i) has made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to 

  

 - 16 - 

 
the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company know of no basis for any such claim. 
  
 (bb) Internal Accounting Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization
and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. 
  
 (cc) Ranking of Notes. Except as set forth on
Schedule (cc), no Indebtedness of the Company is senior to or ranks pari passu with the Notes in right of payment, whether with respect of payment of redemptions, interest, damages or upon liquidation or dissolution or otherwise.

  
 (dd) Form S-3 Eligibility. The Company
is eligible to register the Notes, Warrants, Additional Investment Right Warrants, Conversion Shares and the Warrant Shares for resale by the Buyers using Form S-3 promulgated under the 1933 Act. 
  
 (ee) Manipulation of Price. The Company has not, and
to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any
of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of
the Company. 
  
 (ff) Disclosure. Other
than the provision of certain projections as to the financial situation of the Company (the “Disclosed Information”), which disclosed information shall be made public prior to or in conjunction with the Final 8-K Filing (as defined
below), the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic
information. The Company understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company, its business
and the transactions contemplated hereby, including the Schedules to this Agreement, taken as a whole, furnished by or on behalf of the Company is true and correct in all material respects and does not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each press release issued by the Company during the twelve (12) months preceding
the date of this Agreement did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. No event or circumstance has 

  

 - 17 - 

 
occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed. 
  
 (gg) Independent Accountants. Deloitte & Touche
LLP, who have certified the consolidated financial statements of the Company as of January 31, 2004, are independent public accountants within the meaning of the 1933 Act. 
  
 (hh) Investment Company. Neither the Company nor its Subsidiaries is or, after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof, will become an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for an investment
company, within the meaning of the Investment Company Act of 1940, as amended. 
  
 4. COVENANTS. 
  
 (a) Best Efforts; Conversion Cooperation. 
  
 (i) Each party shall use its best efforts timely to satisfy each of the conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement. 
  
 (ii) Each party agrees that during the period from and after
the date hereof and prior to the Closing Date, if the Buyers so request, the parties shall work in good faith to amend the Transaction Documents (other than the Issuance Documents (defined below)) to allow for the maximum flexibility with respect to
the buying and selling of Notes and Warrants in markets approved by the Buyers, including, without limitation, the creation of an indenture with respect to the issuance of the Notes (the “Indenture”), warrant agreements with respect
to the Warrants and the Additional Investment Right Warrants (collectively, the “Warrant Agreements”, and together with the Indenture, the “Issuance Documents”) and amend this Agreement and the Registration Rights
Agreement to reflect any necessary terms of the Issuance Documents. 
  
 (b) Form D and Blue Sky. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to each Buyer promptly after such filing. The Company
shall, on or before the Closing Date, take such action as is necessary in order to obtain an exemption for or to qualify the Securities for sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or “Blue
Sky” laws of the states of the United States, and shall provide evidence of any such exemption or qualification so taken to the Buyers on or prior to the Closing Date. The Company shall make all filings and reports relating to the offer and
sale of the Securities required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date. 
  
 (c) Reporting Status. Until the date on which the Investors (as defined in the Registration Rights Agreement) shall have sold all
the Securities and none of the Securities is outstanding (the “Reporting Period”), and other than in accordance with the Notes and Warrants, the Company shall timely file all reports required to be filed with the SEC pursuant to the
1934 Act, and the Company shall continue to timely file reports under the 1934 Act even if 

  

 - 18 - 

 
the 1934 Act or the rules and regulations thereunder would otherwise no longer require such filings. 
  
 (d) Use of Proceeds. The Company will use the
proceeds from the sale of the Securities for general working capital purposes, including payment of trade creditors. The Company will not use the proceeds from the sale of the Securities for the (i) repayment of any outstanding Indebtedness of the
Company or any of its Subsidiaries or (ii) redemption or repurchase of any of its equity securities. 
  
 (e) Financial Information. The Company agrees to send the following to each Investor during the Reporting Period provided that the
following does not constitute material, nonpublic information, (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system, within one (1) Business Day after the filing thereof with the SEC,
a copy of its Annual Reports on Form 10-K or 10-KSB, any interim reports or any consolidated balance sheets, income statements, stockholders’ equity statements and/or cash flow statements for any fiscal quarter, any Current Reports on Form 8-K
and any registration statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, and (ii) promptly after the release thereof, facsimile copies of all press releases issued by the Company or any of its Subsidiaries, unless those
press releases are timely filed on Form 8-K. 
  
 (f) Listing. The Company shall promptly secure the listing of all of the Conversion Shares and Warrant Shares upon each national securities exchange and automated quotation system, if any, upon which the Class A Common Stock is then
listed (subject to official notice of issuance) and shall maintain such listing of all Conversion Shares and Warrant Shares from time to time issuable under the terms of the Transaction Documents. The Company shall maintain the Class A Common
Stocks’ authorization for quotation on the Principal Market. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Class A Common Stock on the
Principal Market. 
  
 (g) Fees. (i)
Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, the Company shall pay or cause to be paid all costs and expenses incident to the performance of its obligations hereunder, including
without limitation, all fees, costs and expenses (A) incident to the preparation, issuance, execution, authentication and delivery of the Securities, including any expenses of any trustee or warrant agent, (B) incurred in connection with the
registration or qualification and determination of eligibility for investment of the Securities, (C) in connection with the admission for trading of the Notes and Warrants on any securities exchange or inter-dealer quotation system, (D) related to
any filing with the National Association of Securities Dealers, Inc. (“NASD”), (E) the satisfaction of the conditions set forth in Sections 6 and 7, in each case whether or not the Closing Date occurs or this Agreement is
terminated, and (F) otherwise in connection with satisfying its obligations hereunder. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or broker’s commissions (other than for Persons
engaged by any Buyer) relating to or arising out of the transactions contemplated hereby, including, without limitation, any fees or commissions payable to any agents. The Company shall pay, and hold each Buyer harmless against, any liability, loss
or expense (including, 

  

 - 19 - 

 
without limitation, reasonable attorney’s fees and out of pocket expenses) arising in connection with any claim relating to any such payment.

  
 (ii) Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is terminated, the Company shall pay or cause to be paid all out-of-pocket costs, fees and expenses (including, without limitation, all fees and other client charges and expenses of
Schulte Roth & Zabel LLP, counsel for SAC) (“Expenses”) incurred by, or on behalf of, SAC in connection with the transactions contemplated by this Agreement, including, but not limited to, in connection with (i) any accounting,
business, environmental, legal, or regulatory due diligence review of the Company and its business and (ii) the revision, negotiation, execution and delivery of all Transaction Documents, the Bridge Facility and any related documents, up to a
maximum reimbursement of $600,000 including any payment made under the Exclusivity Agreement dated November 3, 2004 between the Company and SAC (the “Fee Cap”); provided, however, that such Fee Cap shall be increased if SAC
determines that such amount does not reasonably reflect the actual or reasonably anticipated Expenses and the Board of the Company approves such increase (such approval not to be unreasonably withheld or delayed); provided, however, the Company
shall not be obligated to pay more than $250,000 in Expenses if the Company terminates this agreement pursuant to Section 8(d). Subject to the Fee Cap, the Company shall within ten (10) Business Days of any written request by SAC, pay or reimburse
SAC for the Expenses set forth in such written request, and SAC shall withhold any Expenses not previously reimbursed from its Purchase Price at the Closing. 
  

(h) Pledge of Securities. The Company acknowledges and agrees that the Securities may be pledged by an Investor (as defined in
the Registration Rights Agreement) in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document,
including, without limitation, Section 2(f) hereof; provided that an Investor and its pledgee shall be required to comply with the provisions of Section 2(f) hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. The
Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by an Investor. 
  
 (i) Disclosure of Transactions and Other Material
Information. On or before 8:30 a.m., New York time, on the second Business Day following the date of this Agreement, the Company shall file a Current Report on Form 8-K describing the terms of the transactions contemplated by the Transaction
Documents in the form required by the 1934 Act and attaching the material Transaction Documents (including, without limitation, this Agreement, all documents relating to the Bridge Facility, the form of the Notes, the form of each of the Warrants
and the Registration Rights Agreement) as exhibits to such filing, which Form 8-K shall be in form and substance reasonably acceptable to the Buyers (including all attachments, the “Initial 8-K Filing”). On or before 8:30 a.m., New
York time, on the second Business Day following the date of any material amendment to the terms set forth in this Agreement, the Company shall file a Current Report on Form 8-K describing the terms of such amendment or modification in the form
required by the 1934 Act and attaching any material transaction 

  

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documents, as entered into, prepared, modified or amended, as exhibits to such filing (including all attachments, an “Amending 8-K Filing”).
On or before 8:30 a.m., New York time, on the second Business Day following the Closing Date, the Company shall file a Current Report on Form 8-K describing the Closing and disclosing any previously undisclosed Disclosed Information in the form
required by the 1934 Act and attaching any material transaction documents not previously filed as exhibits to such filing (including all attachments, the “Final 8-K Filing”, and collectively with the Initial 8-K Filing and all
Amending 8-K Filings, the “8-K Filings”). From and after the filing of the Final 8-K Filing with the SEC, no Buyer shall be in possession of any material, nonpublic information received from the Company, any of its Subsidiaries or
any of its respective officers, directors, employees or agents, that is not disclosed in the 8-K Filings. The Company shall not, and shall cause each of its Subsidiaries and its and each of their respective officers, directors, employees and agents,
not to, provide any Buyer with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the filing of the Initial 8-K Filing with the SEC without the express written consent of such Buyer. Subject to the
foregoing, neither the Company nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior
approval of any Buyer, to make any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filings and contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) each Buyer shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release and provided that in any case the Company shall not disclose
the identity of any Buyer without such Buyer’s express written consent unless required by applicable law and regulations). 
  
 (j) Additional Notes; Variable Securities; Dilutive Issuances. So long as any Buyer beneficially owns any Securities, the Company
will not issue any Notes other than to the Buyers as contemplated hereby and the Company shall not issue any other securities that would cause a breach or default under the Notes. For so long as any Notes, the Additional Investment Right Warrants or
Warrants remain outstanding, the Company shall not, in any manner, issue or sell any rights, warrants or options to subscribe for or purchase Class A Common Stock or directly or indirectly convertible into or exchangeable or exercisable for Class A
Common Stock at a price which varies or may vary with the market price of the Class A Common Stock, including by way of one or more reset(s) to any fixed price, unless the conversion, exchange or exercise price of any such security cannot be less
than the then applicable Conversion Price (as defined in the Notes) with respect to the Class A Common Stock into which any Note is convertible and the then applicable Exercise Price (as defined in the Warrants) with respect to the Class A Common
Stock into which any Warrant is exercisable. For so long as any Notes, the Additional Investment Right Warrants or Warrants remain outstanding, the Company shall not, in any manner, enter into or affect any Dilutive Issuance (as defined in the
Notes) if the effect of such Dilutive Issuance is to cause the Company to be required to issue upon conversion of any Note or exercise of any Warrant any shares of Class A Common Stock in excess of that number of shares of Class A Common Stock which
the Company may issue upon conversion of the Notes and exercise of the Warrants without breaching the Company’s obligations under the rules or regulations of the Principal Market. 
  

 - 21 - 

 (k) Corporate Existence. So long as any Buyer beneficially owns any Securities,
the Company shall not be party to any Fundamental Transaction (as defined in the Notes) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes, the Additional Investment Right
Warrants and the Warrants. 
  
 (l) Reservation
of Shares. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, after the Closing Date, 130% of the aggregate number of shares of Class A Common Stock issuable upon conversion of
all of the Notes (including the Additional Notes) and issuable upon exercise of the Warrants. 
  
 (m) Conduct of Business. 
  
 (i) Unless the Company shall otherwise agree in writing with the Majority Buyers (such agreement not to be unreasonably withheld) and
except as expressly contemplated by the Transaction Documents, during the period from the date of this Agreement to the Closing Date, (i) the Company shall conduct, and it shall cause its Subsidiaries to conduct, its or their businesses in the
ordinary course and consistent with past practice, and the Company shall, and it shall cause its Subsidiaries to, use its or their reasonable best efforts to preserve intact its business organization, to keep available the services of its officers
and employees and to maintain satisfactory relationships with all Persons with whom it does business and (ii) without limiting the generality of the foregoing, neither the Company nor any of its Subsidiaries will: 
  
 (1) amend or propose to amend its Certificate of
Incorporation or Bylaws (or comparable governing instruments) in any material respect; 
  
 (2) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any shares of,
or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any shares of, the capital stock or other securities of the Company or any of its Subsidiaries including, but not limited to, any securities convertible
into or exchangeable for shares of stock of any class of capital stock of the Company or any of its Subsidiaries, except for the issuance of shares pursuant to the exercise of either incentive or non-qualified stock options, including management
stock options, outstanding on the date of this Agreement in accordance with their present terms; 
  
 (3) hire any executive officer of the Company; 
  

(4) split, combine or reclassify any shares of its capital stock or declare, pay or set aside any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of its capital stock, other than dividends or distributions to the Company or a Subsidiary, or directly or indirectly redeem, purchase or otherwise acquire or offer to
acquire any shares of its capital stock or other securities; 
  
 (5) (a) create, incur or assume any debt, except refinancings of existing obligations on terms that are no less favorable to the Company or its Subsidiaries 

  

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than the existing terms; (b) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, indirectly, contingently or otherwise)
for the obligations of any Person; (c) make any capital expenditures or make any loans, advances or capital contributions to, or investments in, any other Person (other than to a Subsidiary); (d) acquire the stock or assets of, or merge or
consolidate with, any other Person; (e) voluntarily incur any material liability or obligation (absolute, accrued, contingent or otherwise), other than in the ordinary course of business consistent with past practice; or (f) other than in the
ordinary course of business consistent with past practice, sell, transfer, mortgage, pledge or otherwise dispose of, or encumber, or agree to sell, transfer, mortgage, pledge or otherwise dispose of or encumber, any assets or properties, real,
personal or mixed material to the Company and its Subsidiaries taken as a whole other than to secure debt permitted under (a) of this clause (v); 
  
 (6) increase in any manner the compensation of any of its officers or employees or enter into, establish, amend or terminate any
employment, consulting, retention, change in control, collective bargaining, bonus or other incentive compensation, profit sharing, health or other welfare, stock option or other equity, pension, retirement, vacation, severance, deferred
compensation or other compensation or benefit plan, policy, agreement, trust, fund or arrangement with, for or in respect of, any stockholder, officer, director, other employee, agent, consultant or affiliate other than as required pursuant to the
terms of agreements in effect on the date of this Agreement and such as are in the ordinary course of business consistent with past practice; 
  
 (7) enter into or commit to enter into any material transaction, material monetary commitment or capital expenditure or enter into,
amend, modify or terminate any material agreement (including real estate leases that are material in the aggregate); 
  
 (8) acquire or agree to acquire, by merging or consolidating with, by purchasing an equity interest in or a portion of the securities of,
or by any other manner, any Person, or otherwise acquire or agree to acquire all or substantially all of the assets of any other Person (other than the purchase of assets from suppliers or vendors in the ordinary course of the business of the
Company); 
  
 (9) settle or compromise any
litigation, proceeding, action or claim that could reasonably be expected to result in payments (to the extent not covered by insurance) that exceed $250,000 in the aggregate; 
  
 (10) fail to use its commercially reasonable efforts to comply in all material respects with any law, rule,
regulation, order, judgment or decree (including federal and state securities laws) applicable to it or any of its properties, assets or business and maintain in full force and effect all the Company permits necessary for, or otherwise material to,
such business; and 
  
 (11) agree or commit to
do any of the foregoing. 
  

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 (ii) Notwithstanding the forgoing, to the extent that any of the foregoing shall
constitute material, nonpublic information, before seeking the Buyers’ consent hereunder, the Company shall first confirm with such Buyer that it desires to receive such information (without disclosing the nature of any information that may
constitute material, nonpublic information) and if the Buyer agrees to receive such information, then such information shall constitute Disclosed Information for all purposes hereof. 
  
 (n) Additional Issuances of Securities. 
  
 (i) For purposes of this Section 4(n), the following
definitions shall apply. 
  
 (1)
“Convertible Securities” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares of Class A Common Stock. 
  
 (2) “Options” means any rights, warrants or options to subscribe for or purchase shares of
Class A Common Stock or Convertible Securities. 
  
 (3) “Class A Common Stock Equivalents” means, collectively, Options and Convertible Securities. 
  
 (ii) From the date hereof until the date that is 30 Trading Days (as defined in the Notes) following the Effective Date (as defined in the
Registration Rights Agreement) (the “Trigger Date”), the Company will not, directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or
other disposition of) any of its or its Subsidiaries’ equity or equity equivalent securities, including without limitation any debt, preferred stock or other instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for shares of Class A Common Stock or Class A Common Stock Equivalents (any such offer, sale, grant, disposition or announcement being referred to as a “Subsequent
Placement”). 
  
 (iii) Subject to the
satisfaction of the rights set forth in Section 3(bb) of that Securities Purchase Agreement, dated as of June 29, 2004, by and among the Company and the purchasers signatory thereto (the “June 2004 Participation Right”), from the
Trigger Date until the thirty-six (36) month anniversary of the later of the date of this Agreement and the Closing Date, the Company will not, directly or indirectly, effect any Subsequent Placement unless the Company shall have first complied with
this Section 4(n)(iii). 
  
 (1) The Company
shall deliver to each Buyer a written notice (the ”Offer Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”) of the securities being offered (the “Offered Securities”) in
a Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price and other terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be
issued, sold or exchanged, (y) identify the Persons (if known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (z) offer to issue and sell to or 

  

 - 24 - 

 
exchange with such Buyers the Offered Securities allocated among such Buyers (a) based on such Buyer’s pro rata portion of the aggregate principal
amount of Notes purchased hereunder (the “Basic Amount”), and (b) with respect to each Buyer that elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of other
Buyers as such Buyer shall indicate it will purchase or acquire should the other Buyers subscribe for less than their Basic Amounts (the “Undersubscription Amount”). 
  
 (2) To accept an Offer, in whole or in part, such Buyer must deliver a written notice to the Company prior
to the end of the tenth (10th) Business Day after such Buyer’s receipt of the Offer Notice (the “Offer
Period”), setting forth the portion of such Buyer’s Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Buyer elects to
purchase (in either case, the “Notice of Acceptance”). If the Basic Amounts subscribed for by all Buyers are less than the total of all of the Basic Amounts, then each Buyer who has set forth an Undersubscription Amount in its
Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed for; provided, however, that if the Undersubscription Amounts subscribed for exceed the
difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), each Buyer who has subscribed for any Undersubscription Amount shall be entitled to purchase only
that portion of the Available Undersubscription Amount as the Basic Amount of such Buyer bears to the total Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent its deems
reasonably necessary. 
  
 (3) The Company shall
have five (5) Business Days from the expiration of the Offer Period above to offer, issue, sell or exchange all or any part of such Offered Securities as to which a Notice of Acceptance has not been given by the Buyers (the “Refused
Securities”), but only to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and interest rates) that are not more favorable to the acquiring
Person or Persons or less favorable to the Company than those set forth in the Offer Notice. 
  
 (4) In the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the
terms specified in Section 4(n)(iii)(3) above), then each Buyer may, at its sole option and in its sole discretion, reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than
the number or amount of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(n)(iii)(2) above multiplied by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be issued or sold to Buyers pursuant to Section 4(n)(iii)(3) above prior to such reduction) and (ii) the denominator of which shall be the original amount of the Offered
Securities. In the event that any Buyer so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not 

  

 - 25 - 

 
issue, sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered to the
Buyers in accordance with Section 4(n)(iii)(1) above. 
  
 (5) Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, the Buyers shall acquire from the Company, and the Company shall issue to the Buyers, the number or amount of Offered Securities
specified in the Notices of Acceptance, as reduced pursuant to Section 4(n)(iii)(3) above if the Buyers have so elected, upon the terms and conditions specified in the Offer. The purchase by the Buyers of any Offered Securities is subject in all
cases to the preparation, execution and delivery by the Company and the Buyers of a purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to the Buyers and their respective counsel. 
  
 (6) Any Offered Securities not acquired by the Buyers or
other Persons in accordance with Section 4(n)(iii)(3) above may not be issued, sold or exchanged until they are again offered to the Buyers under the procedures specified in this Agreement. 
  
 (iv) The restrictions contained in subsections (ii) and
(iii) of this Section 4(n) shall not apply in connection with the issuance of any Excluded Securities (as defined in the Notes). 
  
 (o) Proxy Statement; Stockholder Approval. 
  
 (i) The Company shall use its best efforts to prepare and file with the SEC, as promptly as practicable
after the date hereof but in no event later than 15 days after the date hereof, preliminary proxy materials, substantially in the form that has been previously reviewed and reasonably approved by SAC and Schulte Roth & Zabel LLP with respect to
a special or annual meeting of the stockholders of the Company (the “Stockholder Meeting”), which the Company shall use its reasonable best efforts to hold by no later than February 20, 2005, and which shall be held not later than
March 20, 2005 (the “Stockholder Meeting Deadline”), for the purpose of approving resolutions (the “Transaction Resolutions”) providing for (A) the Company’s issuance of all of the Securities as described in
the Transaction Documents in accordance with applicable law and the rules and regulations of the Principal Market and (B) the increase in the authorized Class A Common Stock from 60,000,000 shares to 150,000,000 shares (such affirmative approval
being referred to herein as the “Stockholder Approval”). Thereafter, the Company shall as promptly as possible file with the SEC the definitive proxy statement, substantially in the form that has been previously reviewed and
reasonably approved by SAC and Schulte Roth & Zabel LLP. The proxy materials shall not contain any information concerning any Buyer without such Buyer’s consent. The proxy materials at the time they are filed with the SEC, or as of the date
of the last amendment thereof, if amended after filing, shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. 
  
 (ii) The Company shall provide each stockholder entitled to vote at the Stockholder Meeting a proxy statement and the Company shall use its best efforts to solicit its 

  

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the stockholders’ approval of the Transaction Resolutions (which best efforts shall include, without limitation, the requirement to hire a reputable
proxy solicitor) and to cause the Board of Directors of the Company to recommend to the stockholders that they approve the Transaction Resolutions. The Company shall be obligated to obtain the Stockholder Approval by the Stockholder Meeting
Deadline. 
  
 (iii) If the Company calls a
special (or annual) meeting of stockholders pursuant to this Section 4, neither prior to nor at such meeting shall the Company put forth any matter, other than approving the Transaction Resolutions, to the holders of Class A Common Stock or any
other voting securities of the Company for their approval without the prior written consent (such consent not to be unreasonably withheld) of the Majority Buyers, except that the Company may include in any meeting a proposal regarding the election
of directors and a proposal regarding the adoption of an employee stock incentive plan in a form reasonably acceptable to the Majority Buyers. 
  
 (iv) Notwithstanding anything in this Section 4(o) to the contrary, the Company may satisfy its obligations in this Section 4(o) by
obtaining the Stockholder Approval of the Transaction Resolutions by written consent in accordance with applicable law and the Company’s governing documents and the filing of an information statement with the SEC, with such consent and
information statement substantially in the form that has been previously reviewed by SAC and Schulte Roth & Zabel LLP. 
  
 (p) General Solicitation. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act) or any person
acting on behalf of the Company or such affiliate will solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement,
article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general
advertising. 
  
 (q) Integration. None of
the Company or any of its Subsidiaries will offer, sell or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the 1933 Act) in a manner that would cause the offer and sale of the Securities to fail to be entitled
to the exemption from registration afforded by Rule 506 of Regulation D and Section 4(2) of the 1933 Act. 
  
 (r) Notification of Certain Matters. The Company shall give prompt notice to each Buyer if any of the following occur after the
date of this Agreement: (i) receipt of any notice or other communication in writing from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement, provided
that such consent would have been required to have been disclosed in this Agreement; (ii) receipt of any material notice or other communication from any Person (including, but not limited to, the SEC, NASD or any securities exchange) in connection
with the transactions contemplated by this Agreement; (iii) the occurrence of an event which would be reasonably likely to have a Material Adverse Effect; or (iv) the commencement or threat of any litigation involving or affecting the Company or any
of its Subsidiaries, or any of their respective properties or assets, or, to its knowledge, any employee, agent, director or officer, in his or her 

  

 - 27 - 

 
capacity as such, of the Company or any of its Subsidiaries which, if pending on the date hereof, would have been required to have been disclosed in this
Agreement or which relates to the consummation of the transactions contemplated by the Transaction Documents; provided, however, that to the extent that any of the foregoing shall constitute material, nonpublic information, the Company
shall first confirm with such Buyer that it desires to receive such information (without disclosing the nature of any information that may constitute material, nonpublic information) and if the Buyer agrees to receive such information, then such
information shall constitute Disclosed Information for all purposes hereof. 
  
 (s) Access and Information. Between the date of this Agreement and the Closing Date, the Company will give, and shall direct its accountants and legal counsel to give, each Buyer and their respective authorized
representatives (including, without limitation, its financial advisors, accountants, consultants and legal counsel), at all reasonable times, access as reasonably requested to all offices and other facilities and to all contracts, agreements,
commitments, books and records of or pertaining to the Company and its Subsidiaries, will permit the foregoing to make such reasonable inspections as they may require and will cause its officers and other employees promptly to furnish such Buyer
with (a) such financial and operating data and other information with respect to the business and properties of the Company and its Subsidiaries as such Buyer may from time to time reasonably request, and (b) a copy of each material report, schedule
and other document filed or received by the Company or any of its Subsidiaries pursuant to the requirements of applicable securities laws or the NASD; provided, however, that to the extent that any of the foregoing shall constitute
material, nonpublic information, the Company shall first confirm with such Buyer that it desires to receive such access or information (without disclosing the nature of any information that may constitute material, nonpublic information) and if the
Buyer agrees to receive such information, then such information shall constitute Disclosed Information for all purposes hereof. 
  
 (t) Consultants. 
  
 (i) The Company shall use its reasonable best efforts to enter into consulting agreements, on terms satisfactory to the Majority Buyers
and the Company Board of Directors, with Michael Gold and Tom Brosig within five (5) Business Days after the date hereof. 
  
 (ii) The Company shall engage a reputable real estate and lease appraisal consultant reasonably acceptable to the Majority Buyers and the
Company Board of Directors, on terms and satisfactory to the Majority Buyers, to perform an evaluation of the store lease obligations of the Company and its Subsidiaries and to make recommendations regarding terminations and modifications to such
leases. The Company shall cause such consultant to complete such review and make such recommendations to the Company within 60 days after the date hereof. The Company shall permit the Buyers access to such consultant and any work product and
recommendations of such consultant; provided, however, that to the extent that any of the foregoing shall constitute material, nonpublic information, the Company shall first confirm with such Buyer that it desires to receive such
information (without disclosing the nature of any information that may constitute material, nonpublic information) and if the Buyer agrees to receive such information, then such information shall constitute Disclosed Information for all purposes
hereof. 
  

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 (u) Sales by Officers and Directors. Until the later of (i) the Trigger Date and
(ii) 180 Trading Days after the Closing Date, the Company shall not, directly or indirectly, permit any officer or director of the Company or any of its Subsidiaries to sell any Class A Common Stock pursuant to a contract, instruction or plan in
accordance with Rule 10b5-1 of the 1934 Act. 
  
 (v) Regulation M. The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection with the distribution of the Securities contemplated hereby. 
  
 (w) Qualification Under Trust Indenture Act. To the
extent that the parties enter into an Indenture pursuant hereto, prior to any registration of the Notes or the Conversion Shares pursuant to the Registration Rights Agreement, or at such earlier time as may be so required, the Company shall qualify
the Indenture under the Trust Indenture Act of 1939, as amended (the “TIA”) and enter into any necessary supplemental indentures in connection therewith. 
  
 (x) Existing Right of Participation. The Company shall have given or shall promptly after the date
hereof give proper notice to the holders of the June 2004 Participation Right and the Company shall inform the Buyers party hereto at such time (the “Initial Buyers”) by no later than ten (10) Business Days after the date hereof as
to whether or not and to what extent such holders have exercised any such right. To the extent that any holder of a June 2004 Participation Right shall elect to participate in the transaction contemplated hereby (any such holder exercising its June
2004 Participation Right, a “Participating Buyer”), such Participating Buyer shall be required to participate in the Bridge Facility on the same terms and in a proportionate amount as the Initial Buyers. The Initial Buyers,
proportionately among the Initial Buyers, shall assign to the Participating Buyers a number of the Series A Warrants issued to the Initial Buyers upon execution of this Agreement that equals the number of Series A Warrants that the Participating
Buyers would have received had they been Initial Buyers. The reduction in the amount of Securities being purchased by the Initial Buyers as a result of the participation by the Participating Buyers shall be allocated generally pro rata among the
Initial Buyers but shall be proportionately adjusted among all the Buyers if necessary in a manner that leaves SAC with a majority of each of the Securities. 
  

(y) Exclusivity. (i) The Company agrees that, during the period from the date hereof until the Closing Date, it shall not, and
shall cause its directors, officers, agents, representatives, affiliates, stockholders and any other person acting on its behalf (collectively, the “Representatives”) not to, directly or indirectly, (1) solicit offers, inquiries or
proposals for, or entertain any offer, inquiry or proposal to enter into: (A) a merger, consolidation or other business combination involving the Company, (B) an acquisition of 5% or more of the then-outstanding equity securities of the Company, (C)
an acquisition of equity securities, or of debt securities or other securities convertible into or exchangeable for equity securities of the Company, which would, after giving effect to such conversion or exchange, constitute more than 5% of the
outstanding equity securities of the Company, (D) the issuance of debt securities with no equity component or related equity component of, or other borrowing by, the Company in an amount in excess of $10 million, (E) a sale, transfer, conveyance,
lease or disposal of all or any significant portion of the assets of the Company in one transaction or a series of related transactions (other than sales of inventory in the ordinary course of business), (F) a liquidation or dissolution of the
Company or the adoption of a plan of liquidation or dissolution by the Company, (G) the occurrence of individuals who at the beginning of such period constituted the Board of Directors 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 662/3% of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination for election was previously so approved), ceasing for any reason to constitute a majority of such Board of 

  

 - 29 - 

 
Directors then in office or (H) any other transaction in lieu of, or which would impede or prevent, the transactions contemplated by the Transaction
Documents (any of the foregoing, a “Competing Transaction”), or (2) conduct any discussions or negotiations, or provide any information to (or any review information of) any other party, or enter into any agreement, arrangement or
understanding, regarding, or in connection with, a Competing Transaction; provided, however, that nothing herein shall prevent the Company from taking a position contemplated by Rules 14d-9 and 14e-2 promulgated under the 1934 Act with
regard to any unsolicited tender offer. 
  
 (ii)
The Company will promptly notify each Buyer if the Company (or any of its Representatives) receives any such offer, inquiry or proposal and the details thereof, and keep each Buyer informed with respect to each such offer, inquiry or proposal. The
Company will provide each Buyer with copies of all such offers, inquiries or proposals which are in writing. 
  
 (iii) The Company acknowledges that each Buyer will be entitled to obtain a court order in any court of competent jurisdiction against
acts of non-compliance with this Section 4(y), without the posting of bond or other security, in addition to, and not in lieu of, other remedies it may have. 
  
 5. REGISTER; TRANSFER AGENT INSTRUCTIONS. 
  
 (a) 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 each holder of Securities), a register for the Notes, the Additional Investment Right Warrants and the Warrants, in which the Company shall record the name and address of the Person in whose name the Notes, the Additional
Investment Right Warrants and the Warrants have been issued (including the name and address of each transferee), the principal amount of Notes held by such Person, the number of Conversion Shares issuable upon conversion of the Notes and Warrant
Shares issuable upon exercise of the Warrants held by such Person. The Company shall keep the register open and available at all times during business hours for inspection of any Buyer or its legal representatives. 
  
 (b) Transfer Agent Instructions. The Company shall
issue irrevocable instructions to its transfer agent, and any subsequent transfer agent, to issue certificates or credit shares to the applicable balance accounts at The Depository Trust Company (“DTC”), registered in the name of
each Buyer or its respective nominee(s) or transferee, for the Securities issued at the Closing or upon conversion of the Notes or exercise of the Additional Investment Right Warrants or the Warrants or transfer of the Notes, the Additional
Investment Right Warrants or the Warrants in such amounts as specified from time to time by each Buyer to the Company upon conversion or transfer of the Notes or exercise or transfer of the Additional Investment Right Warrants or the Warrants in the
form of Exhibit E attached hereto (the “Irrevocable Transfer Agent Instructions”). The Company warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and stop
transfer instructions to give effect to Section 2(g) hereof, will be given by the Company to its transfer agent, and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in
this Agreement and the other Transaction 

  

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Documents. If a Buyer effects a sale, assignment or transfer of the Securities in accordance with Section 2(f), the Company shall permit the transfer and
shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment. In
the event that such sale, assignment or transfer involves Securities sold, assigned or transferred pursuant to an effective registration statement or pursuant to Rule 144, the transfer agent shall issue such Securities to the Buyer, assignee or
transferee, as the case may be, without any restrictive legend. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 5(b) will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5(b), that a Buyer shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required. 
  
 6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL. 
  
 (a) Closing Date. The obligation of the Company
hereunder to issue and sell the Notes and the Additional Warrants and the Additional Investment Right Warrants to each Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided
that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof: 
  
 (i) Such Buyer shall have executed each of the Transaction
Documents to which it is a party and delivered the same to the Company. 
  
 (ii) Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price (less, in the case of SAC, the amounts withheld pursuant to Section 4(g)) for the Notes, the Additional Investment Right
Warrants and the related Warrants being purchased by such Buyer at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company. 
  
 (iii) The representations and warranties of such Buyer shall be true and correct in all material respects as
of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and such Buyer shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Closing Date. 
  
 (iv) The Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as
such Buyer or its counsel may reasonably request. 
  
 7.
CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE. 
  
 (a) Closing Date. The obligation of each Buyer hereunder to purchase the Notes and Additional Warrants and the Additional Investment Right Warrants at the Closing is 

  

 - 31 - 

 
subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s
sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof: 
  
 (i) The Company and, to the extent it is a party thereto, each of its Subsidiaries, shall have executed and delivered to such Buyer (i)
each of the Transaction Documents (including the Issuance Documents, if any), (ii) the Notes (in such principal amounts as such Buyer shall request) being purchased by such Buyer at the Closing pursuant to this Agreement (iii) the Warrants (in such
amounts as such Buyer shall request) being purchased by such Buyer at the Closing pursuant to this Agreement and (iv) the Additional Investment Right Warrants (in such amounts as such Buyer shall request) being purchased by such Buyer at the Closing
pursuant to this Agreement. 
  
 (ii) The Company
shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form of Exhibit E attached hereto, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer
agent. 
  
 (iii) Each Buyer shall have received
the opinion of Willkie Farr & Gallagher LLP and Akin Gump Strauss Hauer & Feld LLP, the Company’s outside counsel, dated as of the Closing Date, substantially covering the matters set forth in Exhibit F attached hereto.

  
 (iv) The Company shall have delivered to such
Buyer a certificate evidencing the formation and good standing of the Company and each of its Subsidiaries in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction, as of a date
within 10 days of the Closing Date. 
  
 (v) The
Company shall have delivered to such Buyer a certificate evidencing the Company’s and each Subsidiary’s qualification as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction
in which the Company and each Subsidiary conducts business, as of a date within 10 days of the Closing Date. 
  
 (vi) The Company shall have delivered to such Buyer a certified copy of the Certificate of Incorporation as certified by the Secretary of
State of the State of Delaware within ten (10) days of the Closing Date, which shall reflect the increase in the authorized capital stock of the Company as provided in the Transaction Resolutions. 
  
 (vii) The Company shall have delivered to such Buyer a
certificate, executed by the Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s Board of Directors in a form reasonably acceptable to such Buyer, (ii)
the Certificate of Incorporation, as amended and (iii) the Bylaws, each as in effect at the Closing, in the form attached hereto as Exhibit G. 
  
 (viii) The representations and warranties of the Company shall be true and correct in all material respects (other than representations
and warranties that are already 

  

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qualified by materiality which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by the Transaction Documents to
be performed, satisfied or complied with by the Company at or prior to the Closing Date. Such Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect,
certifying as to the fulfillment of the conditions specified in Section 7 of this Agreement and as to such other matters as may be reasonably requested by such Buyer in the form attached hereto as Exhibit H. 
  
 (ix) No event, circumstances or fact shall have occurred
which has resulted in, would result in or could reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect; provided, however, that for purposes of this condition, Material Adverse Effect does not
include any event, circumstance or fact that does not or would not reasonably be expected to result in an Event of Default (as defined in either (A) the Amended and Restated Credit Agreement, dated as of September 22, 2004, by and among the Senior
Lenders, the Company and certain of its Subsidiaries, as amended as of the date hereof and without regard to any future waiver or amendment thereof (other than such waiver or amendment wherein the Senior Lenders agree to extend, in the aggregate, no
more than $3 million in additional loans to the Company or increase the borrowing availability that would otherwise be available as of the date hereof to the Company), the “Senior Credit Agreement” or (B) the Bridge Facility (other
than such Events of Default, which are cured or waived by a waiver or amendment to the Senior Credit Agreement wherein the Senior Lenders agree to extend, in the aggregate, no more than $3 million in additional loans to the Company or increase the
borrowing availability that would otherwise be available as of the date hereof to the Company)). 
  
 (x) Stockholder Approval shall have been obtained and each Buyer shall have been provided with evidence reasonably satisfactory thereof.

  
 (xi) The size of the Board of Directors of
the Company shall have been reduced from 11 to no more than 9 members and the Buyers shall be satisfied as of the Closing Date with the identity of (1) at least a number of directors equal to one less than the minimum number of directors that would
constitute a majority of the Board of Directors of the Company and (2) the Chairman of the Board of Directors of the Company. 
  
 (xii) Peter Whitford shall have resigned as Chief Executive Officer of the Company and shall have resigned as a member of the Board of
Directors. 
  
 (xiii) The Company shall have
delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares of Class A Common Stock outstanding as of a date within five days of the Closing Date. 
  
 (xiv) The Class A Common Stock (i) shall be designated for
quotation or listed on the Principal Market and (ii) shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been
threatened, as of the Closing Date, either (A) in 

  

 - 33 - 

 
writing by the SEC or the Principal Market or (B) by falling below the minimum listing maintenance requirements of the Principal Market. 
  
 (xv) The Company shall have obtained all governmental,
regulatory or third party consents and approvals, if any, necessary to be obtained for the sale of the Securities. 
  
 (xvi) The Notes, the Additional Investment Rights and the Warrants shall be listed for trading on a securities market or exchange.

  
 (xvii) The actions contemplated by Section
4(a)(ii) shall have been completed to each Buyer’s reasonable satisfaction. 
  
 (xviii) Any Person purchasing Securities hereunder pursuant to the exercise of the June 2004 Participation Right shall have funded its
Purchase Price in full. 
  
 (xix) The Company
shall have delivered to each Buyer a schedule setting forth the details of any insurance coverage with respect to the matters set forth on Schedule 3(t), and such details shall not be materially different than as disclosed to the Majority
Buyers prior to the date hereof. 
  
 (xx) The
Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request. 
  
 8. TERMINATION. 
  
 This Agreement may be terminated at any time prior to the Closing: 
  
 (a) by mutual written agreement of the Company and the Majority Buyers; 
  
 (b) by the Majority Buyers, if the Company executes an
agreement, letter of intent, memorandum of understanding or otherwise accepts a proposal or offer from any Person (other than the Majority Buyers) regarding any Competing Transaction; 
  
 (c) by either the Company or the Majority Buyers if any Person shall have issued an order, decree, or ruling
that permanently restrains, enjoins, or otherwise prohibits consummation of the transactions contemplated hereby; 
  
 (d) by the Company, (A) upon a material breach of any covenant or agreement on the part of the Majority Buyers set forth in this Agreement
or if any representation or warranty of the Majority Buyers set forth in this Agreement shall not be true and correct, except to the extent that such breach of a covenant or agreement or untrue or incorrect representation or warranty does not
constitute a material adverse effect on the Majority Buyers, in either case such that the conditions set forth in Section 7 would not be satisfied or the representations and warranties of the Majority Buyers shall not have been true and correct in
all material respects on the date hereof (a “Terminating Buyer Breach”); provided, that such Terminating Buyer Breach shall not have been waived by the Company or, to the extent curable, cured within the earlier of 30 days after
written notice of such Terminating Buyer Breach is 

  

 - 34 - 

 
given to such breaching Buyers by the Company or the Drop Dead Date (as defined below); or (B) if any condition to the Company’s obligations to close at
the Closing set forth in Section 6 is or becomes impossible to fulfill (other than because of the failure of the Company to comply with its obligations under this Agreement or any Transaction Document), and the Company has not waived such condition;

  
 (e) by the Majority Buyers, (A) upon a
material breach of any covenant or agreement on the part of the Company set forth in this Agreement or if any representation or warranty of the Company set forth in this Agreement shall not be true and correct, except to the extent that such breach
of a covenant or agreement or untrue or incorrect representation or warranty does not constitute a Material Adverse Effect (provided, however, that for purposes of the foregoing, Material Adverse Effect does not include any event,
circumstance or fact that does not or would not reasonably be expected to result in an Event of Default (as defined in either (A) the Senior Credit Agreement or (B) the Bridge Facility (other than such Events of Default, which are cured or waived by
a waiver or amendment to the Senior Credit Agreement wherein the Senior Lenders agree to extend, in the aggregate, no more than $3 million in additional loans to the Company or increase the borrowing availability that would otherwise be available as
of the date hereof to the Company)), in either case such that the conditions set forth in Section 7 would not be satisfied or the representations and warranties of the Company shall not have been true and correct in all material respects on the date
hereof (a “Terminating Company Breach”); provided, that such Terminating Company Breach shall not have been waived by such Buyer or, to the extent curable, cured within the earlier of 30 days after written notice of such Terminating
Company Breach is given to the Company by such Buyer or the Drop Dead Date; or (B) if any condition to such Buyer’s obligations to close at the Closing set forth in Section 7 is or becomes impossible to fulfill (other than because of the
failure of such Buyer to comply with its obligations under this Agreement or any Transaction Document), and such Buyer has not waived such condition; 
  
 (f) by the Majority Buyers, upon any Voluntary Bankruptcy or Involuntary Bankruptcy of the Company or its Subsidiaries or any action in
furtherance of any Voluntary Bankruptcy or Involuntary Bankruptcy. For the purpose of this Agreement: 
  
 (i) “Voluntary Bankruptcy” shall mean, with respect to any Person, (a) an admission in writing by such Person of its
inability to pay its debts generally or a general assignment by such Person for the benefit of creditors, (b) the filing of any petition or answer by such Person seeking to adjudicate it bankrupt or insolvent or seeking for itself any liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or composition of such Person or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking, consenting to or acquiescing in the
entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for such Person or for any substantial part of its property, or (c) corporate action taken by such Person to authorize any of the actions set
forth above; and 
  
 (ii) “Involuntary
Bankruptcy” shall mean, with respect to any Person, without the consent or acquiescence of such Person, the entering of an order for relief or approving a petition for relief or reorganization or any other petition seeking any 

  

 - 35 - 

 
reorganization, arrangement, composition, readjustment, liquidation, dissolution or other similar relief under any present or future bankruptcy, insolvency
or similar statute, law or regulation or the filing of any such petition against such Person which order or petition shall not be dismissed within 30 days or, without the consent or acquiescence of such Person, the entering of an order appointing a
trustee, custodian, receiver or liquidator of such Person or of all or any substantial part of the property of such Person which order shall not be dismissed within 30 days; and 
  
 (g) by either the Company or the Majority Buyers, if the Closing Date has not occurred by March 31, 2005
(the “Drop Dead Date”). 
  
 9. Effect of
Termination. If this Agreement is terminated by any party pursuant to Section 8 and the transactions contemplated hereby are not consummated, this Agreement shall become null and void and of no further force and effect and there shall be no
liability on the part of any party hereto (or any shareholder, director, officer, partner, employee, agent, consultant or representative of such party), except as set forth in this Section 9; provided, however, this if this Agreement
is terminated pursuant to Section 8, the Company shall remain obligated to reimburse SAC for the expenses described in Section 4(g) above; and provided, further, that any termination of this Agreement shall not relieve any party hereto
from any liability for any breach of any provisions of this Agreement. This Section 9 shall survive termination of this Agreement in accordance with its terms. If this Agreement is terminated by the Company pursuant to a Terminating Buyer Breach,
then the Series A Warrants shall be cancelled by the Company and shall be null and void. 
  
 10. MISCELLANEOUS. 
  
 (a) Governing Law; Jurisdiction; Jury Trial. 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 application of the laws of any jurisdictions other than the State of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in 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. 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 WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. 
  

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 (b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due
execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature. 
  
 (c) Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. 
  
 (d)
Severability. 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. 
  
 (e) Entire Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between the Buyers, the
Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, including the Exclusivity Agreement, by and between S.A.C. Capital Management, LLC and the Company, dated as November 3, 2004, and including
the Confidentiality Agreement, by and between S.A.C. Capital Management, LLC and the Company, dated as of October 1, 2004, as amended on October 4, 2004, (other than the standstill provisions contained therein which shall only be superseded as of
the Closing Date), and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Majority Buyers, and
any amendment to this Agreement made in conformity with the provisions of this Section 10(e) shall be binding on all Buyers and holders of Securities, as applicable. No provision hereof may be waived other than by an instrument in writing signed by
the party against whom enforcement is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the applicable Securities then outstanding. 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 the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents, holders of Notes, holders of Additional Investment
Rights or holders of the Warrants, as the case may be. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set
forth in the Transaction Documents. 
  

 - 37 - 

 (f) Notices. 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 (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier 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:
	  	(800) 735-7325
	 Facsimile:
	  	(949) 699-4825
	 Attention:
	  	Chief Executive Officer

  
 With
a copy (for informational purposes only) to: 
  

			
	Willkie Farr & Gallagher LLP
	787 Seventh Avenue
	New York, New York 10019
	 Telephone:
	  	(212) 728-8288
	 Facsimile:
	  	(212) 728-8111
	 Attention:
	  	Christopher E. Manno, Esq.
	
	and
	
	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.

  
 If to
the Transfer Agent: 
  

			
	American Stock Transfer and Trust Company
	40 Wall Street
	New York, New York
	 Telephone:
	  	(718) 921-8208
	 Facsimile:
	  	(718) 921-8335
	 Attention:
	  	Geraldine Zarbo

  
 If to a Buyer, to its address and
facsimile number set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers, 
  
 With a copy (for informational purposes only) to: 
  

			
	Schulte Roth & Zabel LLP
	919 Third Avenue
	New York, New York 10022
	Telephone:	  	(212) 756-2000
	Facsimile:	  	(212) 593-5955
	Attention:	  	Eleazer N. Klein, Esq.

  

 - 38 - 

 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 five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively. 
  
 (g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Majority Buyers, including by way of a Fundamental Transaction (unless the Company is in compliance
with the applicable provisions governing Fundamental Transactions set forth in the Notes, the Additional Investment Rights and the Warrants). A Buyer may assign some or all of its rights hereunder without the consent of the Company in connection
with a transfer by such Buyer of any of the Securities in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights. In addition to the foregoing, the Company acknowledges that any of the Buyers may
assign and transfer some of the rights and obligations in connection with the purchase of the Securities prior to Closing to other Buyers, which Buyers shall become party hereto by execution of a signature to this Agreement and by updating of the
Schedule of Buyers hereto in which case such assignee shall be deemed a Buyer for all purposes hereunder as if such assignee executed this Agreement on the date hereof. In the event that any Buyer fails to provide its Purchase Price at the Closing,
SAC shall have the right to purchase such Buyer’s Securities hereunder. 
  
 (h) No Third Party Beneficiaries. 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. 
  
 (i)
Purchase Price Failure; Participating Buyers. In the event that any Buyer other than a Participating Buyer fails to provide its Purchase Price at the Closing, SAC shall be required to purchase such Buyer’s Securities hereunder. In the
event that any Participating Buyer fails to provide its Purchase Price at Closing (a “Breaching Participating Buyer”), SAC shall be entitled to pursue damages, to the same extent as the Company (and SAC shall be deemed a third party
beneficiary of the Company’s rights in respect thereof), caused by any Breaching Participating Buyer. In addition to the foregoing, any Breaking Participating Buyer shall be required to assign its participation for the Bridge Facility to SAC.

  
 (j) Survival. Unless this Agreement is
terminated under Section 8, the representations and warranties of the Company and the Buyers contained in Sections 2 and 3 and the agreements and covenants set forth in Sections 4, 5 and 10 shall survive the Closing. Each Buyer shall be responsible
only for its own representations, warranties, agreements and covenants hereunder. 
  

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 (k) Further Assurances. 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 any 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. 
  
 (l) Indemnification. In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company’s other
obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and each other holder of the Securities and all of their stockholders, partners, members, officers, directors, employees and
direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a
party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or (c)
any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery,
performance or enforcement of the Transaction Documents, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities or (iii) the status of such Buyer or holder of
the Securities as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this
Section 10(k) shall be the same as those set forth in Section 6 of the Registration Rights Agreement. 
  
 (m) No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party. 
  
 (n) Remedies. Each Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction
Documents and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations
under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary and permanent injunctive 

  

 - 40 - 

 
relief in any such case without the necessity of proving actual damages and without posting a bond or other security. 
  
 (o) Payment Set Aside. To the extent that the Company
makes a payment or payments to the Buyers hereunder or pursuant to any of the other Transaction Documents or the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any
other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to
be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 
  
 (p) Independent Nature of Buyers’ Obligations and Rights. 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, other than SAC, acknowledges that (i) Schulte Roth & Zabel LLP solely represented SAC in connection with the transaction contemplated hereby and (ii) SAC did not provide any
advice in connection herewith and such Buyer’s determination to participate herein was based solely on its own evaluation of the risks and merits of the investment contemplated hereby. 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. 
  
 [Signature Page Follows] 
  

 - 41 - 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	COMPANY:
	
	THE WET SEAL, INC.
		
	By:	 	/s/    JOSEPH DECKOP
	 	 	 Name: Joseph Deckop

	 	 	 Title: Interim Chief Executive Officer

  

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

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

		
	By:	 	/s/    PETER NUSSBAUM
	 	 	 Name: Peter Nussbaum

	 	 	 Title: General Counsel

  

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	GMM CAPITAL, LLC
		
	By:	 	 /s/    DONALD HECHT

	 	 	 Name: Donald Hecht

	 	 	 Title: Administrative Trustee

	
	GOLDFARB CAPITAL PARTNERS LLC
		
	By:	 	 /s/    MORRIS GOLDFARB

	 	 	 Name:

	 	 	 Title:

		
	 	 	 /s/    CHARLES PHILLIPS

	Mr. Charles Phillips

  

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

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

	 	 	 Title:

  
 SCHEDULE OF BUYERS

  

																					
	(1)	  	(2)	  	(3)	  	(4)	  	(5)	  	 	  	(6)	  	(7)	  	(8)
	 Buyer

	  	 Address and Facsimile
Number

	  	Aggregate
Principal
Amount of
Initial Notes

	  	Maximum
Aggregate
Principal
Amount of
Additional
Series A
Notes

	  	Maximum
Aggregate
Principal
Amount of
Additional
Series B
Notes

	  	Number of
Series A
Warrant
Shares

	  	Aggregate
Number of
Additional
Warrant
Shares

	  	Purchase Price

	  	 Legal Representative’s
Address and Facsimile
Number

	S.A.C. Capital Associates, LLC	  	 c/o S.A.C. Capital Advisors, LLC
 72 Cummings Point
Road
 Stanford, Connecticut 06902
 Attention: General
Counsel
 Facsimile: (203) 890-2393
 Residence:
Anguila
	  	$	26 Million	  	$	6,435,000	  	$	3,867,500	  	1,495,000	  	7,345,000	  	$	25.4 Million	  	 Schulte Roth & Zabel
 LLP 919 Third Avenue

New York, New York
 10022 Attention: Eleazer
 Klein, Esq.
 Facsimile: (212) 593-5955
 Telephone: (212) 756-2376

	GMM Capital, LLC	  	111 West 40th Street 20th Floor New York, NY 10018	  	$	7 Million	  	$	1,732,500	  	$	1,041,250	  	402,500	  	1,977,500	  	$	7 Million	  	 Skadden, Arps, Slate, Meagher & Flom LLP
 Four Times Square
 New York, NY 10036
 Attention: Thomas W. Greenberg, Esq.
 Facsimile: (917) 777-7886
 Telephone: (212) 735-7886

	Goldfarb Capital Partners LLC	  	21 Fairway Drive Mamaroneck, NY 10543	  	$	4.9 Million	  	$	1,212,750	  	$	728,875	  	281,750	  	1,384,250	  	$	4.9 Million	  	 Fulbright and Jaworski
 666 Fifth Avenue
 New York, N.Y. 10103
 Attention: Neil Gold, Esq.
 Facsimile: (212) 318-3400
 Telephone: (212) 318-3022

	Mr. Charles Phillips	  	777 Park Avenue New York, NY 10021	  	$	2 Million	  	$	495,000	  	$	297,500	  	115,000	  	565,000	  	$	2 Million	  	 
	WLSS Capital Partners, LLC	  	c/o Wayne Miller 1365 York Avenue Apt. 26B New York, NY 10021	  	$	100,000	  	$	24,750	  	$	14,875	  	5,750	  	28,250	  	$	100,000	  	 Fulbright and Jaworski
 666 Fifth Avenue
 New York, N.Y. 10103
 Attention: Neil Gold, Esq.
 Facsimile: (212) 318-3400
 Telephone: (212) 318-3022

  

 46 

  
 SCHEDULE OF WARRANTS

  

													
	(1)	  	(2)	  	(3)	  	(4)	  	(5)	  	(6)	  	 
	 Buyer

	  	Number of
Series A
Warrant Shares

	  	Number of
Series B
Warrant Shares

	  	Number of
Series C
Warrant Shares

	  	Number of
Series D
Warrant Shares

	  	Aggregate
Number of
Additional
Warrant Shares

	  	Aggregate
Number of
Warrant Shares

	 S.A.C. Capital Associates, LLC
	  	1,495,000	  	2,210,000	  	2,925,000	  	2,210,000	  	7,345,000	  	8,840,000
	 GMM Capital, LLC
	  	402,500	  	595,000	  	787,500	  	595,000	  	1,977,500	  	2,380,000
	 Goldfarb Capital Partners LLC
	  	281,750	  	416,500	  	551,250	  	416,500	  	1,384,250	  	1,666,000
	 Mr. Charles Phillips
	  	115,000	  	170,000	  	225,000	  	170,000	  	565,000	  	680,000
	 WLSS Capital Partners, LLC
	  	5,750	  	8,500	  	11,250	  	8,500	  	28,250	  	34,000

  

  
 EXHIBITS

  

			
	 Exhibit A-1
	  	Form of Initial Notes
	 Exhibit A-2
	  	Form of Additional Series A Notes
	 Exhibit A-3
	  	Form of Additional Series B Notes
	 Exhibit B-1
	  	Form of Series A Additional Investment Right Warrants
	 Exhibit B-2
	  	Form of Series B Additional Investment Right Warrants
	 Exhibit C-1
	  	Form of Series A Warrants
	 Exhibit C-2
	  	Form of Series B Warrants
	 Exhibit C-3
	  	Form of Series C Warrants
	 Exhibit C-4
	  	Form of Series D Warrants
	 Exhibit D
	  	Registration Rights Agreement
	 Exhibit E
	  	Irrevocable Transfer Agent Instructions
	 Exhibit F
	  	Form of Outside Company Counsel Opinion
	 Exhibit G
	  	Form of Secretary’s Certificate
	 Exhibit H
	  	Form of Officer’s Certificate

  

 - i -Credit Agreement entered into between the Company and the Investors

 EXHIBIT 10.2 
  
 CREDIT AGREEMENT 
  
 dated as of 
 November 9, 2004 
  
 among 
  
 S.A.C. CAPITAL ASSOCIATES, LLC 
 as Administrative Agent and Collateral Agent 
  
 THE LENDERS FROM TIME TO TIME PARTY HERETO 
  
 THE WET SEAL, INC., 
 as Lead Borrower for: 
  
 THE WET SEAL, INC. 
 THE WET SEAL RETAIL, INC. 
 WET SEAL CATALOG, INC., 
 as the Borrowers 
  
 WET SEAL GC,
INC. 
 as Facility Guarantor 
  

  

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page

	 ARTICLE I Definitions
	  	1
			
	 1.01.
	  	 Defined Terms
	  	1
	 1.02.
	  	 Terms Generally
	  	16
	 1.03.
	  	 Accounting Terms; GAAP
	  	17
		
	 ARTICLE II Amount and Terms of Term Loan
	  	17
			
	 2.01.
	  	 Term Loan.
	  	17
	 2.02.
	  	 Request for Borrowing
	  	18
	 2.03.
	  	 Intentionally Omitted
	  	18
	 2.04.
	  	 Intentionally Omitted
	  	18
	 2.05.
	  	 Intentionally Omitted
	  	18
	 2.06.
	  	 Intentionally Omitted
	  	18
	 2.07.
	  	 Intentionally Omitted
	  	18
	 2.08.
	  	 Notes; Repayment of Term Loan.
	  	18
	 2.09.
	  	 Interest on Term Loan
	  	19
	 2.10.
	  	 Default Interest
	  	19
	 2.11.
	  	 Intentionally Omitted
	  	19
	 2.12.
	  	 Intentionally Omitted
	  	19
	 2.13.
	  	 Intentionally Omitted
	  	19
	 2.14.
	  	 Intentionally Omitted
	  	19
	 2.15.
	  	 Intentionally Omitted
	  	19
	 2.16.
	  	 Termination of Commitments.
	  	19
	 2.17.
	  	 Intentionally Omitted
	  	20
	 2.18.
	  	 Intentionally Omitted
	  	20
	 2.19.
	  	 Mandatory Prepayment
	  	20
	 2.20.
	  	 Optional Prepayment of Term Loan
	  	20
	 2.21.
	  	 Maintenance of Loan Account; Statements of Account
	  	20
	 2.22.
	  	 Cash Receipts
	  	20
	 2.23.
	  	 Application of Payments
	  	21
	 2.24.
	  	 Intentionally Omitted
	  	22
	 2.25.
	  	 Intentionally Omitted
	  	22
	 2.26.
	  	 Payments; Sharing of Setoff
	  	22
	 2.27.
	  	 Taxes
	  	23
	 2.28.
	  	 Security Interests in Collateral
	  	25
	 2.29.
	  	 Mitigation Obligations; Replacement of Lenders
	  	25
		
	 ARTICLE III Representations and Warranties
	  	26
			
	 3.01.
	  	 Organization; Powers
	  	26
	 3.02.
	  	 Authorization; Enforceability
	  	26
	 3.03.
	  	 Governmental Approvals; No Conflicts
	  	26

  

 (i) 

					
	 3.04.
	  	 Financial Condition
	  	26
	 3.05.
	  	 Properties
	  	27
	 3.06.
	  	 Litigation and Environmental Matters
	  	27
	 3.07.
	  	 Compliance with Laws and Agreements
	  	27
	 3.08.
	  	 Investment and Holding Company Status
	  	28
	 3.09.
	  	 Taxes
	  	28
	 3.10.
	  	 ERISA
	  	28
	 3.11.
	  	 Disclosure
	  	28
	 3.12.
	  	 Subsidiaries
	  	28
	 3.13.
	  	 Insurance
	  	29
	 3.14.
	  	 Labor Matters
	  	29
	 3.15.
	  	 Security Documents
	  	29
	 3.16.
	  	 Federal Reserve Regulations
	  	29
	 3.17.
	  	 Solvency
	  	29
		
	 ARTICLE IV Conditions
	  	30
			
	 4.01.
	  	 Closing Date
	  	30
		
	 ARTICLE V Affirmative Covenants
	  	32
			
	 5.01.
	  	 Financial Statements and Other Information
	  	32
	 5.02.
	  	 Notices of Material Events
	  	35
	 5.03.
	  	 Information Regarding Collateral
	  	35
	 5.04.
	  	 Existence; Conduct of Business
	  	36
	 5.05.
	  	 Payment of Obligations
	  	36
	 5.06.
	  	 Maintenance of Properties
	  	36
	 5.07.
	  	 Insurance
	  	36
	 5.08.
	  	 Casualty and Condemnation
	  	37
	 5.09.
	  	 Books and Records; Inspection and Audit Rights; Appraisals; Accountants
	  	37
	 5.10.
	  	 Physical Inventories
	  	38
	 5.11.
	  	 Compliance with Laws
	  	39
	 5.12.
	  	 Use of Proceeds
	  	39
	 5.13.
	  	 Additional Subsidiaries
	  	39
	 5.14.
	  	 Depository Account
	  	39
	 5.15.
	  	 Further Assurances
	  	40
	 5.16.
	  	 Post-Closing Requirements
	  	40
	 5.17.
	  	 Working Capital Notices
	  	41
		
	 ARTICLE VI Negative Covenants
	  	41
			
	 6.01.
	  	 Indebtedness and Other Obligations
	  	41
	 6.02.
	  	 Liens
	  	42
	 6.03.
	  	 Fundamental Changes
	  	43
	 6.04.
	  	 Investments, Loans, Advances, Guarantees and Acquisitions
	  	43
	 6.05.
	  	 Asset Sales
	  	43
	 6.06.
	  	 Restricted Payments; Certain Payments of Indebtedness
	  	44

  

 (ii) 

					
	 6.07.
	  	 Transactions with Affiliates
	  	44
	 6.08.
	  	 Restrictive Agreements
	  	45
	 6.09.
	  	 Amendment of Material Documents
	  	45
	 6.10.
	  	 Additional Subsidiaries
	  	46
	 6.11.
	  	 Excess Availability
	  	46
	 6.12.
	  	 Fiscal Year
	  	46
	 6.13.
	  	 Environmental Laws
	  	46
	 6.14.
	  	 Store Closings
	  	46
		
	 ARTICLE VII Events of Default
	  	47
			
	 7.01.
	  	 Events of Default
	  	47
	 7.02.
	  	 Intentionally Omitted
	  	49
	 7.03.
	  	 Remedies on Default
	  	49
	 7.04.
	  	 Application of Proceeds
	  	50
		
	 ARTICLE VIII The Agents
	  	50
			
	 8.01.
	  	 Administration by Administrative Agent
	  	50
	 8.02.
	  	 The Collateral Agent
	  	50
	 8.03.
	  	 Sharing of Excess Payments
	  	50
	 8.04.
	  	 Agreement of Required Lenders
	  	51
	 8.05.
	  	 Liability of Agents
	  	51
	 8.06.
	  	 Notice of Default
	  	52
	 8.07.
	  	 Lenders’ Credit Decisions
	  	53
	 8.08.
	  	 Reimbursement and Indemnification
	  	53
	 8.09.
	  	 Rights of Agents
	  	53
	 8.10.
	  	 Independent Lenders
	  	54
	 8.11.
	  	 Notice of Transfer
	  	54
	 8.12.
	  	 Successor Agent
	  	54
	 8.13.
	  	 Reports and Financial Statements
	  	54
	 8.14.
	  	 Delinquent Lender
	  	54
		
	 ARTICLE IX Miscellaneous
	  	55
			
	 9.01.
	  	 Notices
	  	55
	 9.02.
	  	 Waivers; Amendments
	  	55
	 9.03.
	  	 Intentionally Omitted
	  	57
	 9.04.
	  	 Expenses; Indemnity; Damage Waiver
	  	57
	 9.05.
	  	 Designation of Lead Borrower as Borrowers' Agent
	  	59
	 9.06.
	  	 Successors and Assigns
	  	59
	 9.07.
	  	 Survival
	  	62
	 9.08.
	  	 Counterparts; Integration; Effectiveness
	  	62
	 9.09.
	  	 Severability
	  	62
	 9.10.
	  	 Right of Setoff
	  	62
	 9.11.
	  	 Governing Law; Jurisdiction; Consent to Service of Process
	  	63
	 9.12.
	  	 WAIVER OF JURY TRIAL
	  	63

  

 (iii) 

					
	 9.13.
	  	 Headings
	  	64
	 9.14.
	  	 Interest Rate Limitation
	  	64
	 9.15.
	  	 Additional Waivers
	  	64
	 9.16.
	  	 Confidentiality
	  	65
	 9.17.
	  	 Publicity
	  	66
	 9.18.
	  	 Intercreditor Arrangements
	  	66

  

 (iv) 

 EXHIBITS 
  

			
	A	  	 Assignment and Acceptance

	B	  	 Term Note

	C	  	 Opinion of Counsel to Loan Parties

	D	  	 Form of Compliance Certificate

  

 (v) 

 SCHEDULES 
  

			
	1.1	  	 Commitments

	3.05(c)(i)	  	 Title to Properties; Real Estate Owned

	3.05(c)(ii)	  	 Leased Properties

	3.06	  	 Disclosed Matters

	3.09	  	 Taxes

	3.12	  	 Subsidiaries

	3.13	  	 Insurance

	5.01(i)	  	 Financial Reporting Requirements

	6.01	  	 Indebtedness

	6.02	  	 Liens

	6.04	  	 Investments

  

 (vi) 

 CREDIT AGREEMENT dated as of November 9, 2004 among 
  
 THE WET SEAL, INC., a Delaware corporation, having its principal place of
business at 26972 Burbank, Foothill Ranch, California 92610, as Lead Borrower for the Borrowers, being: 
  
 said WET SEAL, INC., 
  
 WET SEAL CATALOG, INC., a Delaware corporation, having its principal place of business at 26972 Burbank, Foothill Ranch, California 92610; and 

 
 THE WET SEAL RETAIL, INC., a Delaware corporation, having its principal
place of business at 26972 Burbank, Foothill Ranch, California 92610; and 
  
 WET SEAL GC, INC., a Virginia corporation, having its principal place of business at 26972 Burbank, Foothill Ranch, California 92610, as Facility Guarantor; and 
  
 the LENDERS party hereto; and 
  
 S.A.C. CAPITAL ASSOCIATES, LLC (“SAC”), as Administrative
Agent and Collateral Agent for the Lenders, a limited liability company organized under the laws of Anguilla. 
  
 In consideration of the mutual covenants and agreements contained herein and benefits to be derived herefrom, the parties hereto agree as follows:

  
 ARTICLE I 
  
 Definitions 
  
 1.01. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below: 
  
 “Account”
shall include, without limitation, “accounts” as defined in the UCC, and also all: accounts, accounts receivable, receivables, and rights to payment (whether or not earned by performance) (i) for property that has been or is to be
sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or
to be provided, (vi) for the use or hire of a vessel, (vii) arising out of the use of a credit or charge card or information contained on or used with that card, or (viii) for winnings in a lottery or other game of chance. 
  
 “Administrative Agent” means SAC, or any successor by merger
to SAC, in its capacity as administrative agent for the Lenders hereunder. 
  
 “Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the
Person specified. 
  

 1 

 “Agents” shall mean collectively, the Administrative Agent and the Collateral Agent.

  
 “Agreement” means this Credit Agreement, as
modified, amended, supplemented or restated, and in effect from time to time. 
  
 “Applicable Law” means as to any Person: (i) all statutes, rules, regulations, orders, or other requirements having the force of law and (ii) all court orders and injunctions, and/or similar rulings,
in each instance ((i) and (ii)) of or by any Governmental Authority, or court, or tribunal which has jurisdiction over such Person, or any property of such Person, or of any other Person for whose conduct such Person would be responsible.

  
 “Assignment and Acceptance” means an
assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.06), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the
Administrative Agent. 
  
 “Board” means the Board
of Governors of the Federal Reserve System of the United States of America. 
  
 “Borrowers” means collectively, The Wet Seal, Inc., Wet Seal Catalog, Inc. and The Wet Seal Retail, Inc. 
  
 “Borrowing Base” means, unless expressly provided otherwise herein, the “Borrowing Base” as defined in the Working Capital
Credit Agreement. 
  
 “Business Day” means any
day that is not a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to remain closed. Except as otherwise provided herein, if any day on which a payment is due is not a Business Day, then
the payment shall be due on the next day following which is a Business Day and such extension of time shall be included in computing interest and fees in connection with such payment. 
  
 “Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts
under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under
GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. 
  
 “Cash Dominion Event” means the occurrence and continuance of a “Cash Dominion Event” under and as defined in the Working
Capital Credit Agreement. 
  
 “CERCLA” means the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. 
  
 “Change in Control” means, at any time, (a) during any period of twelve months, individuals who at the beginning of such period
constituted the board of directors of the Lead Borrower (together with any new directors whose election or appointment by such board of 

  

 2 

 
directors, or whose nomination for election by shareholders of the Lead Borrower, as the case may be, was approved by a vote of a majority of the directors
still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the board of directors then in office; or (b) any
person or group (within the meaning of the Securities and Exchange Act of 1934, as amended) is or becomes the beneficial owner (within the meaning of Rule 13d-3 and 13d-5 of the Securities and Exchange Act of 1934, as amended, except that such
person shall be deemed to have “beneficial ownership” of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time) directly or indirectly of fifty percent
(50%) or more of the total then outstanding voting power of the Voting Stock of the Lead Borrower on a fully diluted basis, whether as a result of the issuance of securities of the Lead Borrower, any merger, consolidation, liquidation or dissolution
of the Lead Borrower, any direct or indirect transfers of securities or otherwise, or has the right or ability to Control the Lead Borrower; or (c) the Lead Borrower fails to own one hundred percent (100%) of the capital stock of the other Loan
Parties. Notwithstanding the foregoing, no Change of Control shall occur as a result of the Specified Transactions. 
  
 “Change in Law” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule
or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender with any request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement. 
  
 “Charges” has the meaning provided therefor in Section 9.14. 
  
 “Closing Date” means the date on which the conditions specified in Section 4.01 are satisfied or waived in accordance with Section 9.02, and the Term Loan is made. 
  
 “Code” means the Internal Revenue Code of 1986 and the
Treasury regulations promulgated thereunder, as amended from time to time. 
  
 “Collateral” means any and all “Collateral” as defined in any applicable Security Document. 
  
 “Collateral Agent” means SAC, in its capacity as collateral agent under the Security Documents. 
  
 “Commitment” shall mean, with respect to each Lender, the
aggregate commitment of such Lender hereunder in the amount set forth opposite its name on Schedule 1.1 hereto or as may subsequently be set forth in the Register from time to time, as the same may be reduced from time to time pursuant to
Section 2.16. 
  
 “Consent” means actual consent
given by a Lender from whom such consent is sought or the passage of seven (7) Business Days from receipt of written notice to a Lender from the Administrative Agent of a proposed course of action to be followed by the Administrative Agent without
such Lender’s giving the Administrative Agent written notice of that Lender’s objection to such course of action. 
  

 3 

 “Consolidated” means, when used to modify a financial term, test, statement, or report
of a Person, refers to the application or preparation of such term, test, statement or report (as applicable) based upon the consolidation, in accordance with GAAP, of the financial condition or operating results of such Person and its Subsidiaries.

  
 “Control” means the possession, directly or
indirectly, of the power (a) to vote 50% or more of the securities having ordinary voting power for the election of directors of a Person, or (b) to direct or cause the direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. The terms “Controlling” and “Controlled” have meanings correlative thereto. 
  
 “Default” means any event or condition that constitutes an Event of Default or that upon notice, lapse of
time or both would, unless cured or waived, become an Event of Default. 
  
 “Delinquent Lender” has the meaning therefor provided in Section 8.14. 
  
 “Disbursement Letter” means a letter agreement, dated as of the Closing Date, among the Borrowers and the Lenders party hereto on the
Closing Date, with respect to the disbursement of proceeds of the Term Loan. 
  
 “dollars” or “$” refers to lawful money of the United States of America. 
  
 “Eligible Assignee” means a bank, insurance company, company, financial institution or fund engaged in the business of making commercial
loans having (together with its Affiliates) a combined capital and surplus in excess of $300,000,000, or any Affiliate of any Lender, or a Related Fund of any Lender, or any individual or Person approved by the Administrative Agent or any Person to
whom a Lender assigns its rights and obligations under this Agreement as part of an assignment and transfer of such Lender’s rights in and to a material portion of such Lender’s portfolio of asset based credit facilities. For the purposes
of this Agreement, “Related Fund” shall mean, with respect to any Lender which is a fund that invests in loans, any other such fund managed by the same investment advisor as such Lender or by an Affiliate of such Lender or such
advisor. 
  
 “Environmental Laws” means all laws,
rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, handling, treatment, storage, disposal, Release or threatened Release of any Hazardous Material or to health and safety matters. 
  
 “Environmental Liability” means any liability, contingent or otherwise (including any liability for
damages, natural resource damage, costs of environmental remediation, administrative oversight costs, fines, penalties or indemnities), of any Person directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the environment or (e) any contract,
agreement or other consensual 

  

 4 

 
arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. 
  
 “ERISA” means the Employee Retirement Income Security Act of
1974, as amended from time to time and the regulations promulgated and rulings issued thereunder. 
  
 “ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Lead Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. 
  
 “ERISA Event” means (a) any “reportable
event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver
of the minimum funding standard with respect to any Plan; (d) the incurrence by the Lead Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Lead
Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Lead Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Lead Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Lead Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

  
 “Event of Default” has the meaning assigned
to such term in Section 7.01. An “Event of Default” shall be deemed to have occurred and to be continuing unless and until that Event of Default has been duly waived or cured as provided herein. 
  
 “Excess Availability” shall have the meaning set forth in
the Working Capital Credit Agreement (as in effect on the date hereof). 
  
 “Excluded Taxes” means, with respect to the Agents, any Lender, or any other recipient of any payment to be made by or on account of any obligation of the Borrowers hereunder, (a) income or franchise Taxes imposed on (or
measured by) its gross or net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable
lending office is located, (b) any branch profits Taxes imposed by the United States of America or any similar Tax imposed by any other jurisdiction in which a Borrower or Lender is located and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by a Borrower under Section 2.29(b)), any withholding Tax that (i) is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending
office), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive 

  

 5 

 
additional amounts from a Borrower with respect to such withholding Tax pursuant to Section 2.27(a), or (ii) would not have been imposed but for such Foreign
Lender’s failure to comply with Sections 2.27(e) or (f). 
  
 “Facility Guarantee” means the Guarantee executed by the Facility Guarantors in favor of the Agents and the Lenders. 
  
 “Facility Guarantors” means each of the Subsidiaries of the Lead Borrower (other than any Borrower), now existing or hereafter created,
other than Foreign Subsidiaries. 
  
 “Facility Guarantors
Collateral Documents” means all security agreements, mortgages, pledge agreements, deeds of trust, and other instruments, documents or agreements executed and delivered by any Facility Guarantor to secure the Facility Guarantee.

  
 “Federal Funds Effective Rate” means, for any
day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. 
  
 “Financial Officer” means, with respect to the Borrowers, the chief financial officer, treasurer, controller or assistant controller of
the Lead Borrower. 
  
 “Fiscal Quarter” means any
fiscal quarter of any Fiscal Year, which quarters shall generally end on the Saturday nearest to the last day of each January, April, July or October of such Fiscal Year in accordance with the fiscal accounting calendar of the Borrowers. 

 
 “Fiscal Year” means any period of twelve consecutive
months ending on the Saturday nearest to the last day of January of any calendar year. 
  
 “Fleet” means Fleet National Bank, a national banking association. 
  
 “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia. 
  
 “Foreign
Subsidiary” means any Subsidiary (a) that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia, (b) that conducts the major portion of its business outside of
the United States, and (c) all or substantially all of the property and assets of which are located outside of the United States. 
  
 “GAAP” means principles which are (a) consistent with those promulgated or adopted by the Financial Accounting Standards Board and its
predecessors (or successors) in effect and applicable to that accounting period in respect of which reference to GAAP is being made, and 

  

 6 

 
(b) consistently applied with past financial statements of the Lead Borrower and its Subsidiaries adopting the same principles. 
  
 “Governmental Authority” means the government of the United
States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government. 
  
 “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for
the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation, provided that the term
“Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. 
  
 “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes, mold, fungi or similar bacteria, and all other substances or wastes of any
nature regulated pursuant to any Environmental Law, including any material listed as a hazardous substance under Section 101(14) of CERCLA. 
  
 “Hedging Agreement” means any interest rate protection agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, foreign currency exchange agreement, commodity price protection agreement, or other interest or currency exchange rate or commodity price hedging arrangement designed to hedge against fluctuations in interest rates or foreign
exchange rates. 
  
 “Indebtedness” of any Person
means, without duplication, (a) all obligations of such Person for borrowed money (including any obligations which are without recourse to the credit of such Person) or with respect to deposits or advances of any kind, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid (excluding current accounts payable incurred in the ordinary course of business), (d) all
obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding
current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such 

  

 7 

 
Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty (j) all obligations, contingent or otherwise, of such Person in respect of
bankers’ acceptances, (k) all Hedging Agreements (provided that for purposes hereof the amount of Indebtedness in respect of any Hedging Agreement at any time shall equal the maximum aggregate net amount that a Borrower would be
required to pay if such Hedging Agreement were terminated at that time), and (l) the principal and interest portions of all rental obligations of such Person under any Synthetic Lease, Tax retention operating lease, off-balance sheet loan or similar
off-balance sheet financing where such transaction is considered borrowed money indebtedness for Tax purposes but is classified as an operating lease in accordance with GAAP. The Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms
of such Indebtedness provide that such Person is not liable therefor. 
  
 “Indemnified Taxes” means Taxes other than Excluded Taxes. 
  
 “Indemnitee” has the meaning provided therefor in Section 9.04(b). 
  
 “Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the United States Bankruptcy Code
(as in effect from time to time) or under any other bankruptcy or insolvency law, assignment for the benefit of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or proceedings seeking reorganization,
arrangement or other similar relief. 
  
 “Interest Payment
Date” has the meaning provided therefor in Section 2.09(b). 
  
 “Interest Rate” has the meaning provided therefor in Section 2.09(a). 
  
 “Inventory” has the meaning assigned to such term in the Security Agreement. 
  
 “Investment” means (a) any stock, evidence of Indebtedness
or other security, including any option, warrant or other right to acquire any of the foregoing, of another Person, (b) any loan, advance, contribution to capital, extension of credit (except for current trade and customer accounts receivable for
inventory sold or services rendered in the ordinary course of business and payable in accordance with customary trade terms) to another Person, (c) any purchase of (i) stock or other securities of another Person, or (ii) any business or undertaking
of any Person (whether by purchase of assets or securities in one transaction or a series of transactions), (d) any commitment or option to make any such purchase, or (e) any other investment, in all cases whether now existing or hereafter made.

  
 “Lead Borrower” means The Wet Seal, Inc.

  

 8 

 “Lease” means any agreement, whether written or oral, no matter how styled or
structured, pursuant to which any Borrower is entitled to the use or occupancy of any space in a structure, land, improvements or premises for any period of time. 
  
 “Lenders” shall mean the lenders from time to time party hereto. 
  
 “Lien” means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities. 
  
 “Loan Account” has the meaning provided therefor in Section
2.21. 
  
 “Loan Documents” means this Agreement,
the Notes, the Security Documents, the Facility Guarantee, the Facility Guarantors Collateral Documents, and any other instrument or agreement now or hereafter executed and delivered in connection herewith, each as amended and in effect from time to
time. 
  
 “Loan Party” or “Loan
Parties” means the Borrowers and the Facility Guarantors. 
  
 “Margin Stock” has the meaning assigned to such term in Regulation U. 
  
 “Material Adverse Effect” means a material adverse effect on (a) the business, operations, property, assets, or condition, financial or
otherwise, of the Lead Borrower and its Subsidiaries taken as a whole, (b) the ability of the Loan Parties to perform any material obligation or to pay any Obligations under this Agreement or any of the other Loan Documents, or (c) the validity or
enforceability of this Agreement or any of the other Loan Documents or any of the material rights or remedies of the Administrative Agent, the Collateral Agent or the Lenders hereunder or thereunder. In determining whether any individual event would
result in a Material Adverse Effect, notwithstanding that such event in and of itself does not have such effect, a Material Adverse Effect shall be deemed to have occurred if the cumulative effect of such event and all other then existing events
would result in a Material Adverse Effect. 
  
 “Material
Indebtedness” means Indebtedness (other than the Term Loan and the Working Capital Indebtedness) of any one or more of the Borrowers in an aggregate principal amount exceeding $20,000,000. For purposes of determining the amount of Material
Indebtedness at any time, the “principal amount” of the obligations in respect of any Hedging Agreement at such time shall be the maximum aggregate amount that a Borrower would be required to pay if such Hedging Agreement were
terminated at that time. 
  
 “Maturity Date”
means the earliest of (i) February 28, 2005 (or as determined by the Administrative Agent in its sole discretion, March 31, 2005 or April 29, 2005), (ii) the occurrence of the Closing Date under and as defined in the Securities Purchase Agreement,
and (iii) the termination of the Securities Purchase Agreement. 
  

 9 

 “Maximum Rate” has the meaning provided therefor in Section 9.14. 
  
 “Minimum Required Excess Availability” means (a) through the
period ending December 19, 2004, Excess Availability at all times of not less than the greater of (i) fifteen percent (15%) of the greater of the Borrowing Base or the Term Loan Borrowing Base, at any time of calculation, or (ii) $7,500,000, and (b)
commencing on December 20, 2004 and thereafter, Excess Availability at all times of not less than the greater of (x) fifteen percent (15%) of the greater of the Borrowing Base or the Term Loan Borrowing Base, at any time of calculation, or (y)
$11,000,000. 
  
 “Moody’s” means
Moody’s Investors Service, Inc. 
  
 “Multiemployer
Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Lead Borrower or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within the preceding five plan years made or
accrued an obligation to make contributions. 
  
 “Multiple
Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Lead Borrower or any of its Subsidiaries or any ERISA Affiliate and at least one Person other than the Lead
Borrower, any Subsidiary or the ERISA Affiliate or (b) was so maintained and in respect of which the Lead Borrower, any Subsidiary or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or
were to be terminated. 
  
 “Notes” shall mean the
promissory notes of the Borrowers substantially in the form of Exhibit B, each payable to the order of a Lender, evidencing the Term Loan. 
  
 “Obligations” means (a) the due and punctual payment by the Loan Parties of (i) the principal of, and interest (including all interest
that accrues after the commencement of any case or proceeding by or against any Loan Party under any federal or state bankruptcy, insolvency, receivership or similar law, whether or not allowed in such case or proceeding) on the Term Loan, as and
when due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (ii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise, of the Loan Parties to the Secured Parties under the Credit Agreement and the other Loan Documents, and (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Loan Parties under or
pursuant to the Credit Agreement and the other Loan Documents. 
  
 “Organizational Document” means, relative to any Loan Party, its partnership agreement, its certificate of incorporation, its by-laws and all shareholder or equity holder agreements, voting trusts and similar arrangements
to which such Loan Party is a party or which is applicable to its capital stock, its partnership agreement and all other arrangements relating to the control or management of such entity. 
  
 “Other Taxes” means any and all current or future stamp or documentary Taxes or any other excise or
property Taxes, charges or similar levies arising from any payment made under 

  

 10 

 
any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document. 
  
 “PBGC” means the Pension Benefit Guaranty Corporation
referred to and defined in ERISA and any successor entity performing similar functions. 
  
 “Permitted Encumbrances” means: 
  
 (a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance with Section 5.05; 
  
 (b) carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in compliance with Section 5.05;

  
 (c) pledges and deposits made in the ordinary
course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations; 
  
 (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course of business; 
  
 (e) judgment liens in respect of judgments that do not constitute an Event of Default under Section 7.01(k); 
  
 (f) easements, zoning restrictions, rights-of-way and
similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary
conduct of business of a Borrower or any Subsidiary; and 
  
 (g) Liens granted in favor of the Working Capital Collateral Agent for the benefit of the Working Capital Lenders under the Working Capital Loan Documents to secure the Working Capital Indebtedness permitted to be
incurred hereunder, provided that such Liens are subject to the Working Capital Intercreditor Agreement; 
  
 provided that, except as provided in any one or more of clauses (a) through (g) above, the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness. 
  
 “Permitted Investments” means each of the following:

  
 (a) direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), and municipal
securities with an “AA” long-term credit rating obtainable from S&P and/or from Moody’s, including pre-funded municipal bonds 

  

 11 

 
escrowed to maturity and guaranteed by the securities issued by the United States of America (or by any agency thereof); 
  
 (b) Investments in commercial paper (taxable and
tax-exempt); 
  
 (c) Investments in (i)
securities issued by a corporation (other than a Loan Party or an Affiliate of a Loan Party) and denominated in U.S. Dollars maturing within three (3) years from the date of acquisition thereof and having, at such date of acquisition, the long-term
credit rating of “A/A” or the short-term credit rating of “A1/P1 SP1/MIG-1” or better obtainable from S&P and/or from Moody’s, (ii) securities issued by a Lender or another banking institution with total
assets in excess of $2,000,000,000 maturing within three (3) years from the date of acquisition thereof; and (iii) auction rate preferred stock or bonds having, at such date of acquisition, the long-term credit rating of “AA” with a
reset and maturing within 180 days from the date of acquisition thereof; 
  
 (d) Investments in certificates of deposit, banker’s acceptances and time deposits (including Eurodollar denominated and Yankee issues) maturing within three (3) years from the date of acquisition thereof issued
or guaranteed by or placed with, and demand deposit and money market deposit accounts issued or offered by, any Lender or another banking institution with total assets in excess of $2,000,000,000; 
  
 (e) fully collateralized repurchase agreements for
securities described in clause (a) above (without regard to the limitation on maturity contained in such clause) and entered into with any primary dealer and having a market value at the time that such repurchase agreement is entered into of not
less than 100% of the repurchase obligation of such counterparty entity with whom such repurchase agreement has been entered into; 
  
 (f) short-term Tax exempt securities (including municipal notes, auction rate floaters and floating rate notes); and 
  
 (g) Shares of investment companies that are registered under
the Investment Company Act of 1940, as amended, and invest solely in one or more of the types of securities described in clauses (a) through (f) above. 
  
 provided that, notwithstanding the foregoing, no such Investments shall be permitted (i) after the occurrence of a Cash Dominion Event and (ii) unless such
Investments are pledged to the Collateral Agent as additional collateral for the Obligations pursuant to such agreements as may be reasonably required by the Collateral Agent (provided that, so long as the Working Capital Indebtedness shall remain
unpaid or any Working Capital Revolver Commitment shall have not been terminated, such Investment shall be pledged to the Working Capital Collateral Agent as additional collateral for the Obligations in accordance with the terms of the Working
Capital Intercreditor Agreement). 
  
 “Person”
means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. 
  
 “Plan” means a Single Employer Plan or a Multiple Employer Plan. 
  

 12 

 “Pledge Agreement” means the Pledge Agreement dated as of November 9, 2004 among the
Loan Parties and the Collateral Agent for the benefit of the Secured Parties, as amended and in effect from time to time. 
  
 “Real Estate” means all land, together with the buildings, structures, parking areas, and other improvements thereon, now or hereafter
owned by any Loan Party, including all easements, rights-of-way, and similar rights relating thereto and all leases, tenancies, and occupancies thereof. 
  
 “Register” has the meaning set forth in Section 9.06(c). 
  
 “Regulation U” means Regulation U of the Board as from time to time in effect and all official rulings and
interpretations thereunder or thereof. 
  
 “Regulation
X” means Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. 
  
 “Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers,
employees, agents and advisors of such Person and such Person’s Affiliates. 
  
 “Release” has the meaning set forth in Section 101(22) of CERCLA. 
  
 “Required Lenders” means Lenders that hold at least 51% of the Total Commitment, provided that if the Total Commitment shall have been
terminated or reduced to zero, “Required Lenders” shall mean Lenders that hold at least 51% of the outstanding principal amount of the Term Loan. 
  
 “Restricted Payment” means any dividend or other distribution (whether in cash, securities or other
property) with respect to any shares of any class of capital stock of any Loan Party or any Subsidiary of any Loan Party, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination of any such shares of capital stock of any Loan Party or any such Subsidiary or any option, warrant or other right to acquire any such shares of capital stock of any Loan
Party or any such Subsidiary. Without limiting the foregoing, “Restricted Payments” with respect to any Person shall also include all payments made by such Person with respect to any stock appreciation rights, plans, equity
incentive or achievement plans or any similar plans and all proceeds of a dissolution or liquidation of such Person payable to the shareholders of such Person. 
  

“S&P” means Standard & Poor’s. 
  

“SAC” has the meaning set forth in the preamble to this Agreement. 
  
 “SEC” means the Securities and Exchange Commission.

  
 “Secured Parties” has the meaning assigned to
such term in the Security Agreement. 
  

 13 

 “Securities Purchase Agreement” means (a) the Securities Purchase Agreement, dated as of
November 9, 2004, among The Wet Seal, Inc. and the “Buyers” (as defined therein) party thereto, or (b) an indenture, in form and substance reasonably satisfactory to the Administrative Agent, in each case pursuant to which the Lead
Borrower issued certain securities to such Buyers. 
  
 “Security Agreement” means the Security Agreement dated as of November 9, 2004 among the Loan Parties and the Collateral Agent for the benefit of the Secured Parties, as amended and in effect from time to time. 

 
 “Security Documents” means the Security Agreement, the
Pledge Agreement, the Facility Guarantors Collateral Documents, and each other security agreement or other instrument or document executed and delivered pursuant to Sections 5.13, 5.14, 5.15 or 5.16 to secure any of the Obligations. 
  
 “Single Employer Plan” means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Lead Borrower or any of its Subsidiaries or any ERISA Affiliate and no Person other than the Lead Borrower, its Subsidiaries or the ERISA Affiliate or (b) was so
maintained and in respect of which the Lead Borrower, any Subsidiary or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. 
  
 “Solvent” means, with respect to any Person on a particular
date, that on such date (a) at fair valuations, all of the properties and assets of such Person are greater than the sum of the debts, including contingent liabilities, of such Person, (b) the present fair saleable value of the properties and assets
of such Person is not less than the amount that would be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its properties and assets and pay its debts and
other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts beyond such Person’s ability to pay as such
debts mature, and (e) such Person is not engaged in a business or a transaction, and is not about to engage in a business or transaction, for which such Person’s properties and assets would constitute unreasonably small capital after giving due
consideration to the prevailing practices in the industry in which such Person is engaged. The amount of all Guarantees at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, can
reasonably be expected to become an actual or matured liability. 
  
 “Specified Transactions” shall mean the execution and delivery of the Securities Purchase Agreement, and the other agreements, documents, and instruments referred to therein, and the consummation of the transactions
contemplated thereby, in each case on terms and conditions satisfactory to the Agents in their sole discretion. 
  
 “Subordinated Indebtedness” means Indebtedness which is expressly subordinated in right of payment, in form and on terms approved by the
Administrative Agent in writing, to the prior payment in full of the Obligations. 
  

 14 

 “Subsidiary” means, with respect to any Person (the “parent”) at any
date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s Consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more
than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held. 
  
 “Synthetic Lease” means any lease or other agreement for the use or possession of property creating
obligations which do not appear as indebtedness on the balance sheet of the lessee thereunder but which, upon the insolvency or bankruptcy of such Person, may be characterized as Indebtedness of such lessee without regard to the accounting
treatment. 
  
 “Taxes” means any and all current
or future taxes, levies, imposts, duties, deductions, charges or withholdings and all related penalties, interest and additions to tax, imposed by any Governmental Authority. 
  
 “Term Loan” shall mean the term loan in the principal amount of $10,000,000 to be made by the Lenders to
the Borrowers in accordance with the provisions of Section 2.01. 
  
 “Term Loan Borrowing Base” means, unless expressly provided otherwise herein, the “Term Loan Borrowing Base” as defined in the Working Capital Credit Agreement. 
  
 “Termination Date” shall mean the earliest to occur of (i)
the Maturity Date, or (ii) the date on which the maturity of the Term Loan is accelerated in accordance with Section 7.01, or (iii) the date of the occurrence of any Event of Default pursuant to Section 7.01(h) or 7.01(i) hereof. 
  
 “Total Commitment” shall mean, at any time, the sum of the
Commitments at such time. As of the Closing Date, the Total Commitments aggregate $10,000,000. 
  
 “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York. 
  
 “Voting Stock” means, with respect to any corporation, the outstanding stock of all classes (or equivalent interests) which ordinarily,
in the absence of contingencies, entitles holders thereof to vote for the election of directors (or Persons performing similar functions) of such corporation, even though the right so to vote has been suspended by the happening of such contingency.

  
 “Withdrawal Liability” means liability to a
Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. 
  
 “Working Capital Administrative Agent” means Fleet Retail Group Inc., in its capacity as administrative
agent for the Working Capital Lenders. 
  

 15 

 “Working Capital Agents” means collectively, the Working Capital Administrative Agent
and the Working Capital Collateral Agent. 
  
 “Working
Capital Credit Agreement” means the Amended and Restated Credit Agreement, dated as of September 22, 2004, as amended by the First Amendment to Amended and Restated Credit Agreement, dated as of the date hereof, as the same may be amended,
replaced, renewed or refinanced from time to time in accordance with the terms thereof and Section 6.09 hereof. 
  
 “Working Capital Collateral Agent” means Fleet Retail Group Inc., in its capacity as collateral agent for the Working Capital
Lenders. 
  
 “Working Capital
Indebtedness” means the “First Lien Debt” under and as defined in the Working Capital Intercreditor Agreement. 
  
 “Working Capital Intercreditor Agreement” means the Intercreditor and Lien Subordination Agreement, dated as of the date hereof, by and
among Agents, Working Capital Agents and the Loan Parties (as the same may be amended, restated or otherwise modified from time to time pursuant to the terms thereof). 
  
 “Working Capital Lenders” means the lenders from time to time party to the Working Capital Credit
Agreement. 
  
 “Working Capital Loan Documents”
means collectively, (i) the Working Capital Credit Agreement, and (ii) all other “Loan Documents”, as such term is defined in the Working Capital Credit Agreement (subject to Section 6.09 hereof). 
  
 “Working Capital Revolver Commitment” means the
“Revolving Loan Credit Commitment” as defined in the Working Capital Credit Agreement. 
  
 1.02. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase
“without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. 
  

 16 

 1.03. Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in effect on the Closing Date, provided that, if the Lead Borrower notifies the Administrative Agent that the Borrowers request an amendment to any provision
hereof to reflect the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Lead Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such provision shall have been amended in accordance herewith. 
  
 ARTICLE II 
  
 Amount and Terms of Term Loan 
  
 2.01. Term Loan. 
  
 (a) Each Lender severally and not jointly with any other Lender, agrees, upon the terms and subject to the conditions herein set forth, on the Closing Date to make a Term Loan to the Borrowers in a single drawing in
an aggregate principal amount not to exceed the amount of such Lender’s Commitment, provided that the aggregate principal amount of the Term Loan shall not exceed $10,000,000. Any portion of the Term Loan that is repaid may not be reborrowed.

  
 (b) The Term Loan shall be made by the
Lenders simultaneously and in accordance with their respective Commitments. The failure of any Lender to make its portion of the Term Loan shall neither relieve any other Lender of its obligation to fund its portion of the Term Loan in accordance
with the provisions of this Agreement nor increase the obligation of any such other Lender. Notwithstanding anything herein to the contrary, in the event that any Lender party hereto on the Closing Date fails to provide its portion of the Term Loan
on the Closing Date (a “Defaulting Lender”), SAC shall be required to fund such Defaulting Lender’s portion of the Term Loan hereunder, provided that SAC shall be entitled to pursue damages against such Defaulting Lender caused
by any such Defaulting Lender. A Defaulting Lender shall not be entitled to give instructions to the Agents or to approve, disapprove, consent to or vote on any matters relating to this Agreement and the other Loan Documents. All amendments, waivers
and other modifications of this Agreement and the other Loan Documents may be made without regard to a Defaulting Lender and, for purposes of the definition of “Required Lenders”, or for any payments or other rights hereunder, a Defaulting
Lender shall be deemed not to be a Lender, not to have any Commitment and not to have any Term Loan outstanding. 
  
 (c) The Administrative Agent, without the request of any Borrower, may advance any interest, fee, service charge, or other payment to
which any Agent or their Affiliates or any Lender is entitled from the Borrowers pursuant hereto or any other Loan Document and may charge the same to the Loan Account. The Administrative Agent 

  

 17 

 
shall advise the Lead Borrower of any such advance or charge promptly after the making thereof. Any amount which is added to the principal balance of the
Loan Account as provided in this Section 2.01(c) shall bear interest at the Interest Rate and shall be payable on the Maturity Date. 
  
 2.02. Request for Borrowing. The Borrowers hereby request the Term Loan in the aggregate principal amount of $10,000,000 to be made on or about
November 9, 2004. The Borrowers hereby agree to use the proceeds of the Term Loan as expressly permitted hereunder. 
  
 2.03. Intentionally Omitted. 
  
 2.04. Intentionally Omitted. 
  
 2.05. Intentionally Omitted. 
  
 2.06. Intentionally Omitted. 
  
 2.07. Intentionally Omitted. 
  
 2.08. Notes; Repayment of Term Loan. 
  
 (a) The Term Loan shall be evidenced by this Agreement and/or one or more Notes duly executed on behalf of the Borrowers, dated the
Closing Date, in substantially the form attached hereto as Exhibit B, payable to the order of a Lender in the aggregate principal amount equal to the amount of the principal portion of the Term Loan advanced by such Lender plus the amount of
interest capitalized thereon in accordance with the terms of this Agreement. The outstanding principal balance of all Obligations shall be payable on the Termination Date (subject to earlier repayment as provided below). The Term Loan (including,
without limitation, any interest capitalized thereon and added to the outstanding principal balance of the Term Loan in accordance with the terms hereof) shall bear interest from the date hereof on the outstanding principal balance thereof as set
forth in this Article II. Each Lender is hereby authorized by the Borrowers to endorse on a schedule attached to each Note delivered to such Lender (or on a continuation of such schedule attached to such Note and made a part thereof), or otherwise
to record in such Lender’s internal records, an appropriate notation evidencing the date and amount of the Term Loan from such Lender, each payment and prepayment of principal of such Term Loan, each payment of interest on the Term Loan and the
other information provided for on such schedule; provided, however, that the failure of any Lender to make such a notation or any error therein shall not affect the obligation of the Borrowers to repay the Term Loan made by such Lender
in accordance with the terms of this Agreement and the applicable Notes. 
  
 (b) Upon receipt of and indemnification reasonably satisfactory to the Borrowers, and an affidavit of a Lender as to the loss, theft, destruction or mutilation of such Lender’s Note and upon cancellation of such
Note, the Borrowers will issue, in lieu thereof, a replacement Note in favor of such Lender, in the same principal amount thereof and otherwise of like tenor. 
  

 18 

 2.09. Interest on Term Loan. 
  
 (a) Subject to Section 2.10, the Term Loan shall bear interest (computed on the basis of the actual number
of days elapsed over a year of 360 days) on the principal amount thereof from time to time outstanding, from the date of the making of such Term Loan until such principal amount is repaid in full, at a rate per annum equal to 25% (the
“Interest Rate”), provided that, such interest that has accrued during such period may be capitalized on such Interest Payment Date and added to the outstanding principal amount of the Term Loan. For purposes of this Agreement and
the other Loan Documents, the amounts so capitalized hereunder shall bear interest in accordance with this Section 2.09 as though such amounts constituted a Term Loan made by the Lenders hereunder. 
  
 (b) Accrued interest on the Term Loan shall be payable
monthly in arrears, on the first Business Day of each month (the “Interest Payment Date”), commencing on December 1, 2004, at maturity (whether by acceleration or otherwise), and after such maturity on demand. 
  
 (c) The Borrowers shall repay the entire unpaid balance of
the Term Loan (including, without limitation, all capitalized interest thereon) and all accrued and unpaid interest thereon on the Termination Date. 
  
 2.10. Default Interest. Effective upon the occurrence of any Event of Default and at all times thereafter while such Event of Default is
continuing, at the option of the Administrative Agent or upon the direction of the Required Lenders, interest shall accrue on the outstanding Term Loan (after as well as before judgment, as and to the extent permitted by law) at a rate per annum
equal to the rate in effect from time to time plus three (3)% per annum, and such interest shall be payable on demand, provided that, if as a result of the provisions of the Working Capital Intercreditor Agreement, an Event of Default hereunder is
required to be waived as a result of the requisite Working Capital Lenders waiving a counterpart event of default arising under the Working Capital Loan Documents and the requisite Lenders would not otherwise waive such Event of Default in the
exercise of their sole discretion, then such waiver shall not be deemed a waiver of such Event of Default solely for purposes of imposing the default rate of interest that is otherwise permitted to be imposed in accordance with this Section 2.10.

  
 2.11. Intentionally Omitted. 
  
 2.12. Intentionally Omitted. 
  
 2.13. Intentionally Omitted. 
  
 2.14. Intentionally Omitted. 
  
 2.15. Intentionally Omitted. 
  
 2.16. Termination of Commitments. 
  
 The Total Commitment shall terminate upon the funding of the
Term Loan in accordance with the terms herein. 
  

 19 

 2.17. Intentionally Omitted. 
  
 2.18. Intentionally Omitted. 
  

2.19. Mandatory Prepayment. 
  
 (a) Subject to the Working Capital Intercreditor Agreement, the Borrowers will immediately prepay all Obligations in the event that the
Working Capital Credit Agreement is terminated for any reason and either (i) the Working Capital Credit Agreement is not replaced with another credit agreement, the terms and conditions of which are no less favorable to the Loan Parties, the Agents
and the Lenders than the Working Capital Credit Agreement (as determined by the Agents in their discretion) or (ii) the lenders and agents party to such new credit agreement are not reasonably acceptable to the Agents and the Required Lenders.

  
 (b) Upon the Termination Date, the credit
facility provided hereunder shall be terminated in full and, subject to the Working Capital Intercreditor Agreement, the Borrowers shall pay, in full and in cash, the outstanding Term Loan and all other outstanding Obligations. 
  
 2.20. Optional Prepayment of Term Loan. Subject to the Working Capital
Intercreditor Agreement, the Borrowers may upon at least five (5) Business Days’ prior written notice to the Administrative Agent, prepay without penalty or premium, all or any portion of the principal balance of the Term Loan. Each prepayment
made pursuant to this Section 2.20 shall be accompanied by the payment of accrued interest to the date of such payment on the amount prepaid. 
  
 2.21. Maintenance of Loan Account; Statements of Account. 
  

(a) The Administrative Agent shall maintain an account on its books in the name of the Borrowers (the “Loan Account”)
which will reflect the Term Loan and any and all other Obligations that have become payable. 
  
 (b) The Loan Account will be credited with all amounts received by the Administrative Agent from the Borrowers or otherwise for the
Borrowers’ account, and the amounts so credited shall be applied as set forth in Section 2.23(a). After the end of each month, the Administrative Agent shall send to the Lead Borrower a statement accounting for the charges, loans, advances and
other transactions occurring among and between the Administrative Agent, the Lenders and the Borrowers during that month. The monthly statements shall, absent manifest error, be final, conclusive and binding on the Borrowers. 
  
 2.22. Cash Receipts. 
  
 (a) Borrowers shall take all actions necessary to maintain,
preserve and protect the rights and interests of the Agents with respect to all cash deposits of Borrowers and their Subsidiaries and all other proceeds of Collateral and shall not, after a 

  

 20 

 
Cash Dominion Event without the Agents’ prior written consent, open or maintain any deposit or other bank account, or instruct their Subsidiaries’
account debtors or credit card processors to make payment to any account other than a dominion account, lockbox account or other controlled account under the Working Capital Administrative Agent’s control, provided that the Borrowers may
maintain bank accounts that in the aggregate have balances of $2,500 or less. 
  
 (b) Borrowers shall, and shall cause each of their Subsidiaries to, comply with the cash management provisions of the Working Capital Credit Agreement (or any successor or replacement agreement acceptable to Agent),
including, without limitation, Section 2.22 of the Working Capital Credit Agreement (as in effect on the date hereof), provided that, if the Working Capital Credit Agreement shall have been terminated and Borrowers shall not have
entered into a successor or replacement agreement acceptable to Agents, then Borrowers shall, and shall cause each of their Subsidiaries to, enter into control agreements, cash management agreements, lockbox agreements and other similar agreements
in form and substance and reasonably satisfactory to Agents and Lead Borrower. 
  
 2.23. Application of Payments. 
  
 (a) Subject to the Working Capital Intercreditor Agreement, as long as no Cash Dominion Event has occurred and is continuing, and no Event of Default has occurred and is continuing, and the Obligations have not been
accelerated, subject to the provisions of Sections 2.19 and 2.20, all amounts received by the Agents from any source shall be applied to the Obligations as the Administrative Agent and the Lead Borrower may agree. Subject to the provisions of
Section 2.20, if a Cash Dominion Event has occurred and is continuing, as long as the Obligations have not been accelerated (in which event the provisions of Section 6.02 of the Security Agreement shall apply), all amounts received by any Agent or
any Lender from any source, shall be applied to the Obligations in the following order: first, to pay interest due and payable on the Term Loan and to pay fees and expense reimbursements and indemnification then due and payable to the
Administrative Agent, the Collateral Agent, and the Lenders; until paid in full second, to repay all amounts outstanding under the Term Loan, until paid in full; third, to pay all other Obligations that are then outstanding and then
due and payable. 
  
 (b) For purposes of the
foregoing, “paid in full” means payment of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after
the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not the same would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding. 
  
 (c) In the event of a direct conflict between the priority
provisions of this Section 2.23 and other provisions contained in any other Loan Document, it is the intention of the parties hereto that such priority provisions in such documents shall be read together and construed, to the fullest extent
possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as 

  

 21 

 
aforesaid, the terms and provisions of this Section 2.23 shall control and govern (subject to the Working Capital Intercreditor Agreement). 
  
 2.24. Intentionally Omitted. 
  
 2.25. Intentionally Omitted. 
  
 2.26. Payments; Sharing of Setoff. 
  
 (a) The Borrowers shall make each payment required to be
made by it hereunder or under any other Loan Document (whether of principal, interest, fees or amounts payable under Section 2.27 or otherwise) prior to 12:00 noon, New York time, on the date when due, in immediately available funds, without setoff
or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at SAC’s offices at 72 Cummings Point Road, Stamford, Connecticut 06902 (or such other office or offices of the Administrative Agent as may be designated in writing from time to time by the
Administrative Agent to the Lead Borrower). The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment under any Loan
Document shall be due on a day that is not a Business Day the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such
extension. All payments under each Loan Document shall be made in U.S. dollars. 
  
 (b) All funds received by and available to the Administrative Agent to pay principal, interest and fees then due hereunder, shall be
applied in accordance with the provisions of Section 2.23(a) hereof or Section 6.02 of the Security Agreement, as applicable, ratably among the parties entitled thereto. 
  
 (c) Unless the Administrative Agent shall have received notice from the Lead Borrower prior to the date on
which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrowers will not make such payment, the Administrative Agent may assume that the Borrowers have made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrowers have not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. 
  
 (d) If any Lender shall fail to make any payment required to be made by it pursuant to this Agreement, then the Administrative Agent may,
in its discretion 

  

 22 

 
(notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy
such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid. 
  
 2.27. Taxes. 
  
 (a) Any and all payments by or on account of any obligation of the Borrowers hereunder or under any other Loan Document shall be made free
and clear of and without deduction for any Indemnified Taxes, provided that if the Borrowers shall be required to deduct any Indemnified Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions for Indemnified Taxes (including deductions for Indemnified Taxes applicable to additional sums payable under this Section) the Agents or such Lender (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrowers shall make such deductions, and (iii) the Borrowers shall pay the full amount deducted to the relevant Governmental Authority in accordance with Applicable Law. 
  
 (b) In addition, the Borrowers shall pay any Other Taxes to
the relevant Governmental Authority in accordance with Applicable Law. 
  
 (c) The Borrowers shall indemnify the Agents and each Lender within ten (10) Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Agents or such Lender,
as the case may be, on or with respect to any payment by or on account of any obligation of the Borrowers hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts
payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Lead Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of an Agent or a Lender setting forth in reasonable detail
the manner in which such amount was determined, shall be conclusive absent manifest error. 
  
 (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrowers to a Governmental Authority, the
Borrowers shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent. 
  
 (e)
Any Foreign Lender that is entitled to an exemption from or reduction in U.S. Federal withholding tax shall deliver to the Lead Borrower and the Administrative Agent two copies of either United States Internal Revenue Service Form W-8BEN, W-8IMY or
Form W-8ECI, or any subsequent versions thereof or successors thereto, or, in the case of a Foreign Lender claiming exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio
interest”, a (i) Form W-8BEN, W-8IMY or any subsequent versions thereof or successors 

  

 23 

 
thereto and (ii) a certificate representing that such Foreign Lender is not (A) a bank extending credit pursuant to this Agreement and that has entered into
this Agreement in the ordinary course of its trade or business as described in Section 881(c)(3)(A) of the Code, (B) is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of any Borrower and (C) is not a controlled
foreign corporation related to any Borrower (within the meaning of Section 864(d)(4) of the Code)), properly completed and duly executed by such Foreign Lender claiming, as applicable, complete exemption from, or reduced rate of, U.S. Federal
withholding tax on payments by the Borrowers under this Agreement and the other Loan Documents. Such forms shall be delivered by each Foreign Lender on or before the date it becomes a party to this Agreement (or, in the case of a transferee that is
a participation holder, on or before the date such participation holder becomes a transferee hereunder) and on or before the date, if any, such Foreign Lender changes its applicable lending office by designating a different lending office (a
“New Lending Office”). In addition, each Foreign Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Foreign Lender. Notwithstanding any other provision of this
Section 2.27(e), a Foreign Lender shall not be required to deliver any form pursuant to this Section 2.27(e) that such Foreign Lender is not legally able to deliver. 
  
 (f) Upon the request of the Lead Borrower, any Lender that is not a Foreign Lender shall deliver to the Lead
Borrower two copies of United States Internal Revenue Service Form W-9 or any subsequent versions thereof or successors thereto, properly completed and duly executed. If any Lender fails to deliver Form W-9 or any subsequent versions thereof or
successors thereto as required herein, then the Borrowers may withhold from any payment to such party an amount equivalent to the applicable backup withholding Tax imposed by the Code, without reduction. 
  
 (g) The Borrowers shall not be required to indemnify any
Lender or to pay any additional amounts to any Lender in respect of U.S. Federal withholding tax pursuant to paragraph (a) or (c) above to the extent that the obligation to pay such additional amounts would not have arisen but for a failure by such
Lender to comply with the provisions of paragraphs (e) or (f) above. Should a Lender become subject to Taxes because of its failure to deliver a form required hereunder, the Borrowers shall, at such Lender’s expense, take such steps as such
Lender shall reasonably request to assist such Lender to recover such Taxes. 
  
 (h) Each of the Lenders agrees that upon the occurrence of any circumstances entitling such party to indemnification or additional amounts pursuant to Section 2.27(a) or (c), such party shall use reasonable efforts to
take any action (including designating a new lending office and signing any prescribed forms or other documentation appropriate in the circumstances) if such action would reduce or eliminate any Tax (including penalties or interest, as applicable)
with respect to which such indemnification or additional amounts may thereafter accrue. 
  
 (i) If any Lender (or any partner of a Lender that is a pass-through entity for tax purposes) reasonably determines that it has actually
and finally realized, by reason of a refund, deduction or credit of any Taxes paid or reimbursed by the Borrowers pursuant 

  

 24 

 
to subsection (a) or (c) above in respect of payments under the Loan Documents, a current monetary benefit that it would otherwise not have obtained and that
would result in the total payments under this Section 2.27 exceeding the amount needed to make such Lender whole, such Lender shall pay to the Lead Borrower, with reasonable promptness following the date upon which it actually realizes such benefit,
an amount equal to the lesser of the amount of such benefit or the amount of such excess, in each case net of all out-of-pocket expenses incurred in securing such refund, deduction or credit. 
  
 2.28. Security Interests in Collateral. To secure their Obligations
under this Agreement and the other Loan Documents, the Loan Parties shall grant to the Collateral Agent, for its benefit and the ratable benefit of the other Secured Parties, a security interest in all of the Collateral pursuant to the Security
Documents. 
  
 2.29. Mitigation Obligations; Replacement of
Lenders. 
  
 (a) If the Borrowers are
required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.27, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking
the Term Loan hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to
Section 2.27 in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment; provided, however, that the Borrowers shall not be liable for such costs and expenses of a Lender requesting compensation if (i) such Lender becomes a party to this
Agreement on a date after the Closing Date and (ii) the relevant Change in Law occurs on a date prior to the date such Lender becomes a party hereto. 
  
 (b) If the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.27, or if any Lender defaults in its obligation to fund the Term Loan hereunder, then the Borrowers may, at their sole expense and effort, upon notice to such Lender and the Administrative Agent by the Lead Borrower, require
such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.06), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations
(which assignee may be another Lender, if a Lender accepts such assignment), provided that (i) the Lead Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, (ii)
such Lender shall have received payment of an amount equal to the outstanding principal of its Term Loan, accrued interest thereon, accrued fees and all other amounts payable to it hereunder from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrowers (in the case of all other amounts) and (iii) in the case of any payments required to be made pursuant to Section 2.27, such assignment will result in a reduction in such payments. A Lender
shall not be required to make any such assignment and delegation if, prior thereto, as a result 

  

 25 

 
of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply. 
  
 ARTICLE III 
  
 Representations and Warranties 
  
 Each Loan Party represents and warrants to the Agents and the Lenders that: 
  
 3.01. Organization; Powers. Each Loan Party is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required. 
  
 3.02. Authorization; Enforceability. The transactions contemplated hereby and by the other Loan Documents to be
entered into by each Loan Party are within such Loan Party’s corporate or partnership and other powers, as applicable, and have been duly authorized by all necessary corporate and, if required, stockholder action. This Agreement has been duly
executed and delivered by each Loan Party that is a party hereto and constitutes, and each other Loan Document to which any Loan Party is a party, when executed and delivered by such Loan Party will constitute, a legal, valid and binding obligation
of such Loan Party (as the case may be), enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law. 
  
 3.03. Governmental Approvals; No Conflicts. The transactions to be entered into contemplated by the Loan Documents (a) do not require any consent or approval of, registration or filing with, or any other action
by, any Governmental Authority, except for such as have been obtained or made and are in full force and effect and except filings and recordings necessary to perfect Liens created under the Loan Documents, (b) will not violate any Applicable Law or
the Organizational Documents of any Loan Party or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon any Loan Party or its assets, or give rise to a
right thereunder to require any payment to be made by any Loan Party, and (d) will not result in the creation or imposition of any Lien on any asset of any Loan Party, except Liens created under the Loan Documents. 
  
 3.04. Financial Condition. The Lead Borrower has heretofore furnished
to the Lenders the Consolidated balance sheet, and statements of income, stockholders’ equity, and cash flows for the Lead Borrower and its Subsidiaries as of and for the Fiscal Year ending January 31, 2004, certified by a Financial Officer of
the Lead Borrower. Such financial statements present fairly, in all material respects, the financial position, results of operations and cash flows of the Lead Borrower and its Subsidiaries as of such dates and for such periods in accordance with
GAAP, subject to year end audit adjustments and the absence of footnotes. Since July 31, 2004, there have been no changes in the assets, liabilities, financial condition, or business of the Lead 

  

 26 

 
Borrower and its Subsidiaries other than changes in the ordinary course of business, the effect of which has had a Material Adverse Effect. 
  
 3.05. Properties. 
  
 (a) Except as disclosed in Schedules 3.05(c)(i) and
3.05(c)(ii), each Loan Party has good title to, or valid leasehold interests in, all its real and personal property material to its business, except for defects which could not reasonably be expected to have a Material Adverse Effect. 
  
 (b) Each Loan Party owns, or is licensed to use, all
trademarks, trade names, copyrights, patents and other intellectual property material to its business, and the use thereof by the Loan Parties does not infringe upon the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 
  
 (c) Schedule 3.05(c)(i) sets forth the address (including county) of all Real Estate that is owned by the Loan Parties, together with a
list of the holders of any mortgage or other Lien thereon as of the Closing Date. Schedule 3.05(c)(ii) sets forth the address (including county) of all Leases of the Loan Parties, together with a list of the holders of any mortgage or other Lien on
any Borrower’s interest in such Lease as of the Closing Date. Each of such Leases is in full force and effect and the Loan Parties are not in default of the terms thereof. 
  
 3.06. Litigation and Environmental Matters. 
  
 (a) There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Borrowers, threatened against or affecting any Loan Party (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually
or in the aggregate, to result in a Material Adverse Effect or (ii) that involve any of the Loan Documents. 
  
 (b) Except for the matters set forth on Schedule 3.06, no Loan Party (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability. 
  
 (c) Since the date of this Agreement, there has been no change in the status of the matters set forth on Schedule 3.06 that, individually or in the aggregate, has resulted in, or could reasonably be expected to
result in, a Material Adverse Effect. 
  
 3.07. Compliance with
Laws and Agreements. Each Loan Party is in compliance with all Applicable Law and all indentures, material agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate,
could not 

  

 27 

 
reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing. 
  
 3.08. Investment and Holding Company Status. No Loan Party is (a) an
“investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a “holding company” as defined in, or subject to regulation under, the Public Utility Holding Company Act
of 1935. 
  
 3.09. Taxes. Except as set forth on Schedule
3.09 hereto, each Loan Party has timely filed or caused to be filed all federal and state Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are
being contested in good faith by appropriate proceedings, for which such Loan Party has set aside on its books adequate reserves, and as to which no Lien has been filed, or (b) to the extent that the failure to do so could not reasonably be expected
to result in a Material Adverse Effect. 
  
 3.10. ERISA. No
ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The
present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such
amounts, exceed the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of all such underfunded Plans. 
  
 3.11. Disclosure. The Borrowers have disclosed to the Lenders all agreements, instruments and corporate or other
restrictions to which any Loan Party is subject, and all other matters known to any of them, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of any of the reports, financial
statements, certificates or other written information furnished by or on behalf of any Loan Party to the Administrative Agent, Collateral Agent or any Lender in connection with the negotiation of this Agreement or any other Loan Document or
delivered hereunder or thereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. 
  
 3.12. Subsidiaries. 
  
 (a)
Schedule 3.12 sets forth the name of, and the ownership interest of each Loan Party in each Subsidiary as of the Closing Date. There is no other capital stock or ownership interest of any class outstanding as of the Closing Date. The Loan
Parties are not party to any joint venture, general or limited partnership, or limited liability company, agreements or any other business ventures or entities as of the Closing Date. 
  
 (b) The Lead Borrower and its Subsidiaries have received the consideration for which the capital stock and
other ownership interests was authorized to be issued and 

  

 28 

 
have otherwise complied with all legal requirements relating to the authorization and issuance of shares of stock and other ownership interests, and all such
shares and ownership interests are validly issued, fully paid, and non-assessable. 
  
 (c) WSCC Buying, Inc. does not (i) engage in any business activities, (ii) have any assets, and (iii) have any liabilities or obligations.

  
 3.13. Insurance. Schedule 3.13 sets forth a description
of all insurance maintained by or on behalf of the Loan Parties and their Subsidiaries. Each of such policies is in full force and effect. All premiums in respect of such insurance that are due and payable have been paid. 
  
 3.14. Labor Matters. There are no strikes, lockouts or slowdowns
against any Loan Party pending or, to the knowledge of the Borrowers, threatened. The hours worked by and payments made to employees of the Loan Parties have not been in violation of the Fair Labor Standards Act or any other applicable federal,
state, local or foreign law dealing with such matters to the extent that any such violation could reasonably be expected to have a Material Adverse Effect. All payments due from any Loan Party, or for which any claim may be made against any Loan
Party, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of such member. The consummation of the transactions contemplated by the Loan Documents will not give rise
to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any Loan Party is bound. 
  
 3.15. Security Documents. The Security Documents create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable security interest in the Collateral, and the Security Documents constitute the creation of a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties thereunder in such Collateral, in
each case prior and superior in right to any other Person (other than Permitted Encumbrances having priority under Applicable Law or Liens in favor of the Working Capital Agents for the benefit of the Working Capital Lenders expressly permitted
under clause (g) of the definition of the term “Permitted Encumbrances”). 
  
 3.16. Federal Reserve Regulations. 
  
 (a) No Loan Party is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock. 
  
 (b) No part of the proceeds of the Term Loan will be used,
whether directly or indirectly, and whether immediately, incidentally or ultimately, (i) to buy or carry Margin Stock or to extend credit to others for the purpose of buying or carrying Margin Stock or to refund indebtedness originally incurred for
such purpose or (ii) for any purpose that entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including Regulation U or X. 
  
 3.17. Solvency. The Loan Parties, on a Consolidated basis, are Solvent. No transfer of property is being made by any
Loan Party and no obligation is being incurred by any Loan Party in connection with the transactions contemplated by this Agreement or the other Loan 

  

 29 

 
Documents with the intent to hinder, delay, or defraud either present or future creditors of any Loan Party. 
  
 ARTICLE IV 
  
 Conditions 
  
 4.01. Closing Date. The obligation of the Lenders to make the Term Loan on the Closing Date, is subject to the following conditions precedent:

  
 (a) The Agents (or their counsel) shall have
received from each party hereto either (i) a counterpart of this Agreement and all other Loan Documents (including, without limitation, the Security Documents, together with copies of all schedules to such Loan Documents ) signed on behalf of such
party or (ii) written evidence satisfactory to the Agents (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement and all other Loan Documents. 
  
 (b) The Agents shall have received a favorable written
opinion (addressed to each Agent and the Lenders and dated the Closing Date) of Akin Gump Strauss Hauer & Feld LLP, counsel for the Loan Parties, and covering such matters relating to the Loan Parties, the Loan Documents or the transactions
contemplated thereby as the Agents shall reasonably request. The Borrowers hereby request such counsel to deliver such opinion. 
  
 (c) The Agents shall have received such documents, resolutions and certificates as the Agents or their counsel may reasonably request
relating to the organization, existence and good standing of each Loan Party (including, without limitation, a copy of the Organizational Documents of each Loan Party (other than Wet Seal GC, Inc.) certified as of a recent date by the appropriate
official of the state of organization of each Loan Party), the authorization of the transactions contemplated by the Loan Documents and any other legal matters relating to the Loan Parties, the Loan Documents or the transactions contemplated
thereby, all in form and substance reasonably satisfactory to the Agents and their counsel. 
  
 (d) After giving effect to the making of the Term Loan, and all then held checks, accounts payable which are beyond credit terms then
accorded the Borrowers, and overdrafts, Excess Availability shall be not less than $20,000,000. The Agents shall have received a Borrowing Base Certificate (as defined in the Working Capital Credit Agreement) dated the Closing Date, relating to the
most recent week ending on November 6, 2004, and executed by a Financial Officer of the Lead Borrower, evidencing such calculation. 
  
 (e) The Agents shall have received a certificate, reasonably satisfactory in form and substance to the Agents, (i) with respect to the
Solvency of the Loan Parties as of the Closing Date, and (ii) certifying that, as of the Closing Date, the representations and warranties made by the Loan Parties in the Loan Documents and otherwise are true and complete and that no Default or Event
of Default exists. 
  

 30 

 (f) All of the Loan Parties’ accounts payable and Taxes then due and owing shall be
paid currently, other than those amounts subject to the good faith dispute of the Loan Parties. 
  
 (g) The corporate structure and organization of the Loan Parties shall be reasonably satisfactory to the Administrative Agent, and the
Administrative Agent shall be reasonably satisfied that all Loan Parties are Solvent as of the Closing Date, and are left with capital sufficient to operate, and that all transactions and conditions required to consummate the closing and post
closing will not be subject to a successful claim of fraudulent conveyance. 
  
 (h) All necessary consents and approvals to the transactions contemplated hereby shall have been obtained and shall be reasonably satisfactory to the Agents. 
  
 (i) The Agents shall be reasonably satisfied that any
financial statements delivered to them fairly present the business and financial condition of the Lead Borrower and its Subsidiaries, and that there has been no material adverse change in the assets, business, financial condition, income or
prospects of the Lead Borrower and its Subsidiaries since the date of the most recent financial information delivered to the Agents. 
  
 (j) The Administrative Agent and the Lenders shall have received and be reasonably satisfied with such information (financial or
otherwise) reasonably requested by the Administrative Agent. 
  
 (k) There shall not be pending any litigation or other proceeding, the result of which could reasonably be expected to have a Material Adverse Effect. 
  
 (l) There shall not have occurred any default of any material contract or agreement of any Loan Party which
could reasonably be expected to have a Material Adverse Effect. 
  
 (m) The Collateral Agent shall have received all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Collateral Agent to be filed,
registered or recorded to create or perfect the Liens intended to be created under the Loan Documents and all such documents and instruments shall have been so filed, registered or recorded to the satisfaction of the Collateral Agent. 
  
 (n) Intentionally Omitted. 
  
 (o) Intentionally Omitted. 
  
 (p) All fees, costs and expenses incurred by the Agents in
connection with the establishment of the credit facility contemplated hereby (including the fees and expenses of counsel to the Agents) shall have been paid in full. 
  

 31 

 (q) The consummation of the transactions contemplated hereby shall not (a) violate any
Applicable Law or (b) conflict with, or result in a default or event of default under, any material agreement of any Loan Party. No event shall exist which is, or solely with the passage of time, the giving of notice or both, would be a default
under any material agreement of any Loan Party. 
  
 (r) The Agents shall have received a fully executed counterpart of the Working Capital Intercreditor Agreement. 
  
 (s) The Agents shall have received fully executed copies of the Working Capital Credit Agreement and the other Working Capital Loan
Documents, including, without limitation, an amendment and waiver, dated as of the Closing Date, to the Working Capital Loan Documents, in form and substance satisfactory to the Agents, together with a certificate of the chief financial officer of
each Loan Party certifying that such Working Capital Loan Documents remain in full force and effect and that no Loan Party is in breach or default in any of its obligations thereunder. 
  
 (t) There shall have been delivered to the Administrative Agent such additional instruments and documents as
the Agents or counsel to the Agents reasonably may require or request. 
  
 (u) The Agent shall have received a fully executed counterpart of the Disbursement Letter. 
  
 The Administrative Agent shall notify the Lead Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding. Notwithstanding the
foregoing, the obligations of the Lenders to make the Term Loan hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived by the Administrative Agent in writing) at or prior to 12:00 noon, New York time, on
November 11, 2004 (and, in the event such conditions are not so satisfied or waived, this Agreement shall terminate at such time). 
  
 ARTICLE V 
  
 Affirmative Covenants 
  
 Until the principal of and interest on the Term Loan shall have been paid in full, each Loan Party covenants and agrees with the Agents and the Lenders that: 
  
 5.01. Financial Statements and Other Information. The Lead Borrower
will furnish to the Agents and the Lenders: 
  
 (a) within ninety (90) days after the end of each Fiscal Year of the Lead Borrower, its Consolidated balance sheet and related statements of operations (and consolidated statements of operations breaking out operating divisions),
stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all audited and reported on by independent public accountants of recognized
national standing (without a “going 

  

 32 

 
concern” or like qualification or exception and without a qualification or exception as to the scope of such audit) to the effect that such
Consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Lead Borrower and its Subsidiaries on a Consolidated basis in accordance with GAAP consistently applied; 

 
 (b) within forty-five (45) days after the end of each
Fiscal Quarter of the Lead Borrower, its Consolidated balance sheet and related statements of operations (and consolidated statements of operations breaking out operating divisions), stockholders’ equity and cash flows, as of the end of and for
such Fiscal Quarter and the elapsed portion of the Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all certified by one of its Financial Officers as presenting in all material respects the
financial condition and results of operations of the Lead Borrower and its Subsidiaries on a Consolidated basis in accordance with GAAP consistently applied, subject to normal year end audit adjustments and the absence of footnotes; 
  
 (c) within thirty (30) days after the end of each fiscal
month of the Lead Borrower, its Consolidated balance sheet and related statements of operations (and consolidated statements of operations breaking out operating divisions), stockholders’ equity and cash flows, as of the end of and for such
fiscal month and the elapsed portion of the Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year and the figures as set forth in the business plan delivered pursuant to Section 5.01(e) hereof, all
certified by one of its Financial Officers as presenting in all material respects the financial condition and results of operations of the Lead Borrower and its Subsidiaries on a Consolidated basis in accordance with GAAP consistently applied,
subject to normal year end audit adjustments and the absence of footnotes; 
  
 (d) concurrently with any delivery of financial statements under clause (a), (b), or (c) above, a certificate of a Financial Officer of the Lead Borrower in the form of Exhibit D (i) certifying as to whether a Default
or Event of Default has occurred and, if a Default or Event of Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, and (ii) setting forth reasonably detailed calculations (A) with
respect to the average Excess Availability for such period, and (B) demonstrating compliance with Section 6.11, and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the Lead Borrower’s
audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate; 
  
 (e) within thirty (30) days after the commencement of each
Fiscal Year of the Lead Borrower, a preliminary business plan, and within ninety (90) days after the commencement of each Fiscal Year of the Lead Borrower, a final business plan, including a detailed Consolidated budget by month for such Fiscal Year
(including a projected Consolidated balance sheet and related statements of projected operations and cash flow as of the end of and for such Fiscal Year); 
  

 33 

 (f) on Wednesday of each week, (i) a Borrowing Base Certificate (as defined in the
Working Capital Credit Agreement) showing the Borrowing Base and Term Loan Borrowing Base as of the close of business on the immediately preceding Saturday, and (ii) if the Borrowing Base (as defined in the Working Capital Credit Agreement as in
effect on the Closing Date), the Term Loan Borrowing Base (as defined in the Working Capital Credit Agreement as in effect on the Closing Date) or any component definition thereof (as in effect on the Closing Date) shall be modified after the
Closing Date, an additional Borrowing Base Certificate (as defined in the Working Capital Credit Agreement as in effect on the date hereof) showing the Borrowing Base (as defined, together with any component definition used therein, in the Working
Capital Credit Agreement as in effect on the Closing Date) and Term Loan Borrowing Base (as defined, together with any component definition used therein, in the Working Capital Credit Agreement as in effect on the Closing Date) as of the close of
business on the immediately preceding Saturday, in each case of clauses (i) and (ii) above, each such Borrowing Base Certificate to be certified as complete and correct on behalf of the Borrowers by a Financial Officer of the Lead Borrower;

  
 (g) promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and other materials filed in final form by any Loan Party with the Securities and Exchange Commission (including, without limitation, Forms 10K and 10Q but excluding any
registration statement on Form S-8 or its equivalent), or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, as the case may be; 
  
 (h) promptly upon receipt thereof, copies of all reports
submitted to any Loan Party by independent certified public accountants in connection with each annual, interim or special audit of the books of the Loan Parties or any of their Subsidiaries made by such accountants, including any management letter
commenting on the Loan Parties’ internal controls submitted by such accountants to management in connection with their annual audit; 
  
 (i) the financial and collateral reports described on Schedule 5.01(i) hereto, at the times set forth in such Schedule; 

 
 (j) notice of any intended sale or other disposition of
any material portion of the assets of any Loan Party permitted hereunder or incurrence of any material amount of Indebtedness permitted hereunder at least thirty (30) Business Days prior to the date of consummation of such sale or disposition or the
incurrence of such Indebtedness; 
  
 (k) promptly
following any request therefor, such other information regarding the operations, business affairs and financial condition of any Loan Party, or compliance with the terms of any Loan Document, as the Agents or any Lender (acting through an Agent) may
reasonably request; and 
  
 (l) within ten (10)
Business Days prior thereto, notice of any anticipated change in any senior management of any of the Borrowers. 
  

 34 

 5.02. Notices of Material Events. The Lead Borrower will furnish to the Agents prompt written
notice of the following: 
  
 (a) the occurrence
of any Default or Event of Default (including, without limitation, any Default or Event of Default under any Working Capital Loan Document); 
  
 (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or
affecting any Loan Party or any Affiliate thereof that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect; 
  
 (c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected
to result in a Material Adverse Effect; 
  
 (d)
any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect; 
  
 (e) any change in any Loan Party’s chief executive officer, chief financial officer or chairman; 
  
 (f) the discharge by any Loan Party of its present
independent accountants or any withdrawal or resignation by such independent accountants; 
  
 (g) any failure by any Loan Party to pay rent at any of such Loan Party’s locations, which failure continues for more than ten (10)
days following the day on which such rent first came due if the result of such failure would be reasonably likely to result in a Material Adverse Effect; 
  
 (h) any collective bargaining agreement or other labor contract to which a Loan Party becomes a party, or the application for the
certification of a collective bargaining agent; and 
  
 (i) the filing of any Lien for unpaid Taxes against any Loan Party. 
  
 Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Lead Borrower setting forth the details of the event or development requiring such notice and, if
applicable, any action taken or proposed to be taken with respect thereto. 
  
 5.03. Information Regarding Collateral. The Lead Borrower will furnish to the Agents at least ten (10) days’ prior written notice of any change (i) in any Loan Party’s corporate name or in any trade
name used to identify it in the conduct of its business or in the ownership of its properties, (ii) in the location of any Loan Party’s chief executive office, its principal place of business, any office in which it maintains books or records
relating to Collateral owned by it or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility), (iii) in any Loan Party’s corporate structure or jurisdiction of
incorporation or formation, or (iv) in any Loan Party’s Federal Taxpayer Identification Number 

  

 35 

 
or organizational identification number assigned to it by its state of organization. The Borrowers also agree promptly to notify the Agents if any material
portion of the Collateral is damaged or destroyed. 
  
 5.04.
Existence; Conduct of Business. Each Loan Party will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to comply with its respective Organizational Documents, as applicable, and to preserve, renew and
keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of its business, provided that the foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03. 
  
 5.05. Payment of Obligations. Each Loan Party will, and will cause each of the Subsidiaries to, pay its Indebtedness and other obligations, including Tax liabilities, and claims for labor, materials, or
supplies, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) such Loan Party or such Subsidiary has set aside on its books adequate
reserves with respect thereto in accordance with GAAP, (c) such contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation, (d) no Lien has been filed with respect thereto, and (e) the
failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect. 
  
 5.06. Maintenance of Properties. Each Loan Party will, and will cause each of the Subsidiaries to, keep and maintain all property material to the
conduct of its business in good working order and condition, ordinary wear and tear excepted and with the exception of store closings and asset dispositions permitted hereunder. 
  
 5.07. Insurance. 
  
 (a) Each Loan Party shall (i) maintain insurance with financially sound and reputable insurers reasonably acceptable to the Administrative
Agent (or, to the extent consistent with prudent business practice, a program of self-insurance) on such of its property and in at least such amounts and against at least such risks as is customary with companies in the same or similar businesses
operating in the same or similar locations, including public liability insurance against claims for personal injury or death occurring upon, in or about or in connection with the use of any properties owned, occupied or controlled by it (including
the insurance required pursuant to the Security Documents); (ii) maintain such other insurance as may be required by law; and (iii) furnish to the Administrative Agent, upon written request, full information as to the insurance carried. 

 
 (b) Fire and extended coverage policies maintained with
respect to any Collateral shall be endorsed or otherwise amended to include (i) a non-contributing mortgage clause (regarding improvements to real property) and lenders loss payable clause (regarding personal property), in form and substance
reasonably satisfactory to the Collateral Agent, which endorsements or amendments shall provide that the insurer shall pay all proceeds otherwise payable to the Loan Parties under the policies directly to the Collateral Agent (or its designee), (ii)
a provision to the effect that none of the Loan 

  

 36 

 
Parties, the Administrative Agent, the Collateral Agent, or any other party shall be a coinsurer and (iii) such other provisions as the Collateral Agent may
reasonably require from time to time to protect the interests of the Lenders. Commercial general liability policies shall be endorsed to name the Collateral Agent as an additional insured. Business interruption policies shall name the Collateral
Agent as a loss payee and shall be endorsed or amended to include (i) a provision that, from and after the Closing Date, the insurer shall pay all proceeds otherwise payable to the Loan Parties under the policies directly to the Working Capital
Administrative Agent or the Working Capital Collateral Agent (or after the Working Capital Indebtedness shall have been paid in full and the Working Capital Revolver Commitment shall have been terminated, the Administrative Agent or the Collateral
Agent), which amounts shall be released to the Borrowers provided that, no Event of Default or Cash Dominion Event has occurred and is then continuing (subject to the Working Capital Intercreditor Agreement), (ii) a provision to the
effect that none of the Loan Parties, the Administrative Agent, the Collateral Agent or any other party shall be a co-insurer and (iii) such other provisions as the Collateral Agent may reasonably require from time to time to protect the interests
of the Lenders. Each such policy referred to in this paragraph also shall provide that it shall not be canceled, modified or not renewed (i) by reason of nonpayment of premium except upon not less than 10 days’ prior written notice thereof by
the insurer to the Collateral Agent (giving the Collateral Agent the right to cure defaults in the payment of premiums) or (ii) for any other reason except upon not less than 30 days’ prior written notice thereof by the insurer to the
Collateral Agent. The Lead Borrower shall deliver to the Collateral Agent, prior to the cancellation, modification or nonrenewal of any such policy of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a policy
previously delivered to the Collateral Agent, including an insurance binder) together with evidence reasonably satisfactory to the Collateral Agent of payment of the premium therefor. 
  
 5.08. Casualty and Condemnation. The Borrowers will furnish to the Agents and the Lenders prompt written notice of
any casualty or other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any interest in a material portion of the Collateral under power of eminent domain or by condemnation or
similar proceeding. 
  
 5.09. Books and Records; Inspection and
Audit Rights; Appraisals; Accountants. 
  
 (a) Each Loan Party will, and will cause each of the Subsidiaries to, keep proper books of record and account in accordance with GAAP and in which full, true and correct entries are made of all dealings and transactions in relation to its
business and activities. Each Loan Party will, and will cause each of the Subsidiaries to, permit any representatives designated by any Agent, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its
books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested, provided that Lead Borrower shall be furnished the
opportunity to participate in any such discussions. 
  

 37 

 (b) Each Loan Party will, and will cause each of the Subsidiaries to, from time to time
upon the request of the Collateral Agent or the Required Lenders and after reasonable prior notice, permit any Agent or professionals (including investment bankers, consultants, accountants, lawyers and appraisers) retained by the Agents to conduct
appraisals, commercial finance examinations and other evaluations, including, without limitation, of (i) the Borrowers’ practices in the computation of the Borrowing Base and (ii) the assets included in the Borrowing Base and related financial
information such as, but not limited to, sales, gross margins, payables, accruals and reserves, and pay the reasonable fees and expenses of the Agents or such professionals with respect to such evaluations and appraisals. Without limiting the
foregoing, the Loan Parties acknowledge that the Agents may undertake up to four (4) inventory appraisals and four (4) commercial finance examinations each Fiscal Year after the Closing Date, at the Loan Parties’ expense. Notwithstanding the
foregoing, the Agents may cause additional appraisals and commercial finance examinations to be undertaken as they in their reasonable discretion deem necessary or appropriate, or as may be required by Applicable Law, provided that the
Loan Parties shall not be obligated to pay for any such additional appraisals and commercial finance examinations unless (i) an Event of Default has occurred and is continuing, or (ii) Excess Availability is at any time less than the greater of (A)
forty percent (40%) of the lesser of the Borrowing Base or the Term Loan Borrowing Base at the time of calculation, or (B) $20,000,000, in which case all such additional appraisals and commercial finance examinations shall be at the expense of the
Borrowers. 
  
 (c) The Loan Parties shall, at all
times, retain independent certified public accountants who are reasonably satisfactory to the Administrative Agent and instruct such accountants to cooperate with, and be reasonably available to, the Administrative Agent or its representatives to
discuss the Loan Parties’ financial performance, financial condition, operating results, controls, and such other matters, within the scope of the retention of such accountants, as may be raised by the Administrative Agent, provided that Lead
Borrower shall be furnished the opportunity to participate in any such discussions. 
  
 (d) The foregoing rights under this Section 5.09 shall in all cases be subject to the Working Capital Intercreditor Agreement. 

 
 5.10. Physical Inventories. 
  
 Subject to the Working Capital Intercreditor Agreement:

  
 (a) The Collateral Agent at the expense of
the Loan Parties, may participate in and/or observe each physical count and/or inventory of so much of the Collateral as consists of Inventory which is undertaken on behalf of the Borrowers so long as such participation does not disrupt the normal
inventory schedule or process. 
  
 (b) The
Borrowers, at their own expense, shall cause not less than one physical inventory per location of the Borrowers’ Inventory in each twelve (12) month period during which this Agreement is in effect, conducted by nationally recognized 

  

 38 

 
inventory takers and using practices consistent with practices in effect on the date hereof, provided, however, if no Cash Dominion Event has occurred, the
Borrowers shall not be required to engage nationally recognized inventory takers to conduct such physical inventories. 
  
 (c) The Lead Borrower shall provide the Collateral Agent with the preliminary Inventory levels at each of each Borrower’s stores
within ten (10) days following the completion of such inventory. 
  
 (d) The Lead Borrower, within forty-five (45) days following the completion of such inventory, shall provide the Collateral Agent with a reconciliation of the results of each such inventory (as well as of any other
physical inventory undertaken by the Borrowers) and shall post such results to the Borrowers’ stock ledger and general ledger, as applicable. 
  
 (e) The Collateral Agent, in its discretion, if any Event of Default exists, may, and shall at the Required Lenders’ direction, cause
such additional inventories to be taken as the Collateral Agent determines (each, at the expense of the Borrowers). 
  
 5.11. Compliance with Laws. Each Loan Party will, and will cause each of the Subsidiaries to, comply with all Applicable Laws, except where the
failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 
  
 5.12. Use of Proceeds. The proceeds of the Term Loan will be used only (a) to finance the acquisition of working capital assets of the Borrowers,
including the purchase of inventory, in the ordinary course of business, (b) for general corporate purposes and, (c) to pay the Purchase Price under and as defined in the Securities Purchase Agreement. No part of the proceeds of any Loan will be
used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations U and X. 
  
 5.13. Additional Subsidiaries. If any additional Subsidiary of any Loan Party is formed or acquired after the Closing Date, the Lead Borrower will
notify the Agents and the Lenders thereof and (a) if such Subsidiary is not a Foreign Subsidiary, the Borrowers will cause such Subsidiary to become a Loan Party hereunder and under each applicable Security Document in the manner provided therein
within ten (10) Business Days after such Subsidiary is formed or acquired and promptly take such actions to create and perfect Liens on such Subsidiary’s assets to secure the Obligations as any Agent or the Required Lenders shall reasonably
request and (b) if any shares of capital stock or Indebtedness of such Subsidiary are owned by or on behalf of any Loan Party, the Borrowers will cause such shares and promissory notes evidencing such Indebtedness to be pledged within ten (10)
Business Days after such Subsidiary is formed or acquired (except that, if such Subsidiary is a Foreign Subsidiary shares of stock of such Subsidiary to be pledged may be limited to 65% of the outstanding shares of Voting Stock of such Subsidiary).

  
 5.14. Depository Account. The Borrowers shall maintain
with Fleet or its Affiliates (or, after the Working Capital Indebtedness shall have been paid in full and the Working Capital Revolver Commitment shall have been terminated, such other bank as reasonably acceptable to 

  

 39 

 
the Administrative Agent and the Lead Borrower) as each Borrower’s principal depository bank, including for the maintenance of operating,
administrative, cash management, collection activity and other deposit accounts for the conduct of such Borrower’s business. 
  
 5.15. Further Assurances. 
  
 (a) Subject to the Working Capital Intercreditor Agreement, each Loan Party will execute any and all further documents, financing
statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements and other documents), that may be required under any Applicable Law, or which any Agent or the Required Lenders may
reasonably request, or to grant, preserve, protect or perfect the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Loan Parties. The Loan Parties also agree to
provide to the Agents, from time to time upon request, evidence reasonably satisfactory to the Agents as to the perfection and priority of the Liens created or intended to be created by the Security Documents. 
  
 (b) If any material assets are acquired by any Loan Party
after the Closing Date (other than assets constituting Collateral under the Security Agreement that become subject to the Lien of the Security Agreement upon acquisition thereof), except for real property leaseholds to the extent that the consent of
the landlord is required but is not obtained, the Lead Borrower will notify the Agents and the Lenders thereof, and subject to the Working Capital Intercreditor Agreement, the Loan Parties will cause such assets to be subjected to a Lien securing
the Obligations and will take such actions as shall be necessary or reasonably requested by any Agent or the Required Lenders to grant and perfect such Liens, including actions described in paragraph (a) of this Section, all at the expense of the
Loan Parties. 
  
 (c) Upon the request of the
Administrative Agent, each Borrower shall cause each of its customs brokers to deliver an agreement to the Administrative Agent covering such matters and in such form as the Administrative Agent may reasonably require. 
  
 5.16. Post-Closing Requirements. (a) Within 20 days following the
Closing Date (or such longer period of time as the Collateral Agent may agree), the Collateral Agent shall have received (i) results of UCC, tax and judgment lien searches and intellectual property searches, or other evidence reasonably satisfactory
to the Collateral Agent indicating the absence of Liens on the assets of the Loan Parties, except for Permitted Encumbrances and (ii) a copy of the Organizational Documents of Wet Seal GC, Inc. certified as of a recent date by the appropriate
official of the State of Virginia). 
  
 (b) Upon
receipt of any additional intellectual property search results which reflect intellectual property owned by any of the Loan Parties not subject to an existing Intellectual Property Security Agreement executed in favor of the Collateral Agent, the
Loan Parties shall execute and deliver to the Collateral Agent such additional amendments and/or Intellectual Property Security Agreements as may be reasonably requested by the Collateral Agent. 
  

 40 

 (c) Within 8 days after the Closing Date, the Collateral Agent shall have received, and
be reasonably satisfied with, evidence of the Loan Parties’ insurance, together with such endorsements as are required by the Loan Documents, in form and substance reasonably satisfactory to the Collateral Agent. 
  
 5.17. Working Capital Notices. 
  
 (a) Concurrently with the delivery thereof, unless otherwise
provided for hereunder, each Loan Party shall deliver to Administrative Agent a copy of each notice, demand, statement, certificate, report or other communication or document (other than notices of borrowing under the Working Capital Credit
Agreement delivered in the ordinary course of business) delivered by any Loan Party to any Working Capital Agent or any Working Capital Lender or any other Person in connection with any Working Capital Loan Document. 
  
 (b) Within 3 Business Days of receipt thereof, deliver to
Administrative Agent a copy of each notice, demand, statement, certificate, report or other communication or document received by any Loan Party from any Working Capital Agent and/or any Working Capital Lender, or from any other Person in connection
with any Working Capital Loan Document. 
  
 ARTICLE VI 

 
 Negative Covenants 
  
 Until the principal of and interest on the Term Loan shall have been paid in
full each Loan Party covenants and agrees with the Agents and the Lenders that: 
  
 6.01. Indebtedness and Other Obligations. The Loan Parties will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except: 
  
 (a) Indebtedness created under the Loan Documents;

  
 (b) Indebtedness set forth in Schedule
6.01 and extensions, renewals and replacements of any such Indebtedness provided that after giving effect to the refinancing (i) the principal amount of the outstanding Indebtedness is not increased, (ii) neither the tenor nor the
weighted average life to maturity is reduced, and (iii) the holders of such refinancing Indebtedness are not afforded covenants, defaults, rights or remedies more burdensome in any material respect to the obligor or obligors than those contained in
the Indebtedness being refinanced; 
  
 (c)
Indebtedness of any Loan Party to any other Loan Party, all of which Indebtedness shall be reflected in the Loan Parties’ books and records in accordance with GAAP; 
  
 (d) Indebtedness of any Loan Party to finance the acquisition of any fixed or capital assets, including
Capital Lease Obligations and any Indebtedness assumed in 

  

 41 

 
connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or result in an earlier maturity date or decreased weighted average life to maturity thereof, provided that the aggregate principal
amount of Indebtedness permitted by this clause (d) shall not exceed $20,000,000 at any time outstanding; 
  
 (e) Indebtedness incurred to finance any Real Estate owned by any Loan Party or incurred in connection with sale-leaseback transactions;

  
 (f) other unsecured Indebtedness, in an
aggregate principal amount not exceeding $5,000,000 at any time outstanding; 
  
 (g) Subordinated Indebtedness, in amounts, and on terms and conditions reasonably satisfactory to the Administrative Agent and the Lenders; 
  
 (h) Working Capital Indebtedness; and 
  
 (i) Indebtedness under Hedging Agreements with Fleet National Bank or an Affiliate thereof so long as such
Indebtedness is either unsecured or Excluded First Lien Debt (as defined in the Working Capital Intercreditor Agreement). 
  
 6.02. Liens. The Loan Parties will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or
asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including Accounts) or rights in respect of any thereof, except: 
  
 (a) Liens created under the Loan Documents; 
  
 (b) Permitted Encumbrances; 
  
 (c) any Lien on any property or asset of any Loan Party set forth in Schedule 6.02, provided that (i) such Lien shall
not apply to any other property or asset of any Loan Party and (ii) such Lien shall secure only those obligations that it secures as of the Closing Date, and extensions, renewals and replacements thereof that do not increase the outstanding
principal amount thereof; 
  
 (d) Liens on fixed
or capital assets acquired by any Loan Party, provided that (i) such Liens secure Indebtedness permitted by Section 6.01(d), (ii) the Indebtedness secured thereby does not exceed 100% of the cost of acquiring such fixed or capital
assets and (iii) such Liens shall not extend to any other property or assets of the Loan Parties; and 
  
 (e) Liens to secure Indebtedness permitted by Section 6.01(e) provided that such Liens shall not extend to any property or
assets of the Loan Parties other than the Real Estate so financed or which is the subject of a sale-leaseback transaction. 
  

 42 

 6.03. Fundamental Changes. 
  
 (a) The Loan Parties will not merge into or consolidate with any other Person, or permit any other Person to
merge into or consolidate with it, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default or Event of Default shall have occurred and be continuing, (i) any Facility Guarantor may merge
into any other Facility Guarantor, provided that in any such transaction involving the Lead Borrower, the Lead Borrower shall be the surviving entity, and (ii) any Facility Guarantor (other than the Lead Borrower) may liquidate or
dissolve voluntarily into the Lead Borrower or into any other Facility Guarantor. 
  
 (b) The Loan Parties will not engage in any business other than businesses of the type conducted by the Loan Parties on the date of
execution of this Agreement and businesses reasonably related thereto. 
  
 (c) WSCC Buying, Inc. will not (i) engage in any business activities, (ii) have any assets, (iii) have any liabilities or obligations, or (iv) receive or use any of the proceeds of the Term Loan. 
  
 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. The
Loan Parties will not make any Investment, except: 
  
 (a) Permitted Investments; 
  
 (b)
Investments existing on the Closing Date, and set forth on Schedule 6.04; 
  
 (c) loans or advances made by any Loan Party to any other Loan Party; 
  
 (d) Guarantees constituting Indebtedness permitted by Section 6.01; 
  
 (e) Investments received in connection with the bankruptcy
or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business; 
  
 (f) loans or advances to employees for the purpose of travel, entertainment or relocation in the ordinary course of business in an amount
not to exceed $50,000 in the aggregate at any time outstanding; and 
  
 (g) other Investments not to exceed $1,000,000 in the aggregate at any time outstanding. 
  
 6.05. Asset Sales. The Loan Parties will not, and will not permit any of the Subsidiaries to, sell, transfer, lease or otherwise dispose of any
asset, including any capital stock, nor will the Loan Parties permit any of the Subsidiaries to issue any additional shares of its capital stock or other ownership interest in such Subsidiary, except: 
  
 (a) (i) sales of Inventory in the ordinary course of
business, or (ii) sales of used or surplus equipment, or (iii) Permitted Investments, in each case in the ordinary course of business; 
  

 43 

 (b) sales, transfers and dispositions among the Loan Parties and their Subsidiaries,
provided that any such sales, transfers or dispositions involving a Subsidiary that is not a Loan Party shall be made in compliance with Section 6.07; and 
  
 (c) sale-leaseback transactions involving any Loan Party’s Real Estate as long as if the Administrative
Agent so requests, the Administrative Agent shall have received an intercreditor agreement executed by the purchaser of such Real Estate on terms and conditions reasonably satisfactory to the Administrative Agent; 
  
 provided that all sales, transfers, leases and other dispositions permitted
hereby (other than sales, transfers and other disposition permitted under clause (b)) shall be made at arm’s length and for fair value and solely for cash consideration. 
  
 6.06. Restricted Payments; Certain Payments of Indebtedness. 
  
 (a) The Loan Parties will not, and will not permit any
Subsidiary to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except that any Loan Party may pay dividends to the Lead Borrower. Except in connection with the Specified Transactions, none of the Loan
Parties will, nor will they permit any Subsidiary to, issue any preferred stock (except for preferred stock that is not subject to redemption other than redemption at the option of the Loan Party issuing such preferred stock) or be or become liable
in respect of any obligation (contingent or otherwise) to purchase, redeem, retire, acquire or make any other payment in respect of (i) any shares of capital stock of any Loan Party or (ii) any option, warrant or other right to acquire any such
shares of capital stock. 
  
 (b) The Loan Parties
will not, and will not permit any Subsidiary to, make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any
Indebtedness, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any
Indebtedness, except: 
  
 (i) mandatory payments
as and when due in respect of any Indebtedness permitted hereunder; and 
  
 (ii) refinancings of Indebtedness described in clause (i), above, to the extent permitted by Section 6.01. 
  
 6.07. Transactions with Affiliates. The Loan Parties will not, and will not permit any Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except transactions in the ordinary course of business that are at prices and on
terms and conditions not less favorable to the Loan Parties or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties. The Loan Parties will not conduct any business in the name of, nor permit any business
to be conducted in the name of, 

  

 44 

 
WSCC Buying Group, Inc., nor will any of the Loan Parties transfer any assets to WSCC Buying Group, Inc. 
  
 6.08. Restrictive Agreements. The Loan Parties will not, and will not
permit any Subsidiary to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Loan Parties or any Subsidiary to create, incur
or permit to exist any Lien upon any of its property or assets or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Loan Parties or
any other Subsidiary or to guarantee Indebtedness of the Loan Parties or any other Subsidiary, provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law, by any Loan Document, by any Working Capital
Loan Document, or by any agreement or arrangement entered into in connection with the Specified Transactions, (ii) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness
permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness and (iii) clause (a) of the foregoing shall not apply to customary provisions in leases restricting the assignment or
subleasing thereof. 
  
 6.09. Amendment of Material
Documents. 
  
 (a) The Loan Parties will not,
and will not permit any Subsidiary to, amend, modify or waive any of its rights under (i) its Organizational Documents (except to effectuate any increase in shares of capital stock of the Lead Borrower in order to satisfy the requirements under the
Securities Purchase Agreement and in connection with the Specified Transactions), and (ii) any other instruments, documents or agreements (other than the Working Capital Loan Documents), in each case to the extent that such amendment, modification
or waiver would be materially adverse to the interests of the Agents and/or the Lenders. 
  
 (b) The Loan Parties will not, and will not permit any Subsidiary to, amend, modify, alter, increase, or change any of the terms or
conditions of (or permit the amendment, modification, alteration, increase or other change in any manner of) any of the Working Capital Loan Documents if such amendment, modification, alteration, increase or other change would: 
  
 (i) cause the First Lien Principal Obligations to exceed the
Maximum First Lien Debt (as such terms are defined in the Working Capital Intercreditor Agreement); or 
  
 (ii) increase the interest rate applicable to any obligation in respect of Working Capital Indebtedness by more than 200 basis points
above the rate of interest applicable to such obligation under the Working Capital Credit Agreement (as in effect on the date hereof) (except in connection with (A) the imposition of a default rate of interest in accordance with the terms of the
Working Capital Loan Documents or (B) as expressly contemplated by the definitions of the terms “Prime Rate” and “LIBO Rate”, respectively, in each case as set forth in the Working Capital Loan Documents (as in effect on the date
hereof)); or 
  

 45 

 (iii) release any Asset Sale Reserve or Insurance Reserve (as such terms are defined in
the Working Capital Intercreditor Agreement). 
  
 6.10.
Additional Subsidiaries. The Loan Parties will not, and will not permit any Subsidiary to, create any additional Subsidiary unless no Default or Event of Default would arise therefrom and the requirements of Section 5.13 are satisfied.

  
 6.11. Excess Availability. The Borrowers shall maintain
Excess Availability at all times of not less than the Minimum Required Excess Availability. 
  
 6.12. Fiscal Year. The Lead Borrower and its Subsidiaries shall not change their Fiscal Year without the prior written consent of the Administrative Agent, which consent shall not be unreasonably withheld.

  
 6.13. Environmental Laws. The Loan Parties shall not
(a) fail to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, or (b) become subject to any Environmental Liability, in each case which is reasonably
likely to have a Material Adverse Effect. 
  
 6.14. Store
Closings. The Borrowers will not commit to close, or close, any location at which any Borrower maintains, offers for sale or stores any of its Inventory or other Collateral, except that the Borrowers may downsize by closing up to 10% of the
number of stores existing as of the Closing Date in any twelve (12) month period, provided that if the Borrowers close more than 5% of the number of stores existing as of the Closing Date in any twelve (12) month period, all such
closings in excess of 5% of the number of stores existing as of the Closing Date in any twelve (12) month period shall be conducted by professional liquidators, subject to the approval of, and on terms and conditions reasonably acceptable to the
Administrative Agent. The Borrowers will be permitted to close additional stores upon the consent of the Administrative Agent, in its reasonable discretion, which store closures shall be considered by the Administrative Agent upon the Administrative
Agent’s receipt of a business plan reasonably satisfactory to the Administrative Agent, which business plan reflects levels of Borrowing Base and Term Loan Borrowing Base availability and financial performance by the Borrowers reasonably
satisfactory in all respects to the Administrative Agent, including pro forma Borrowing Base and Term Loan Borrowing Base availability and financial performance by the Borrowers after giving effect to the closure of such stores. The Administrative
Agent may require that such closures be conducted by professional liquidators, subject to the approval of, and on terms and conditions reasonably acceptable to the Administrative Agent. 
  

 46 

  
 ARTICLE VII 
  
 Events of Default 
  
 7.01. Events of Default. If any of the following events
(“Events of Default”) shall occur: 
  
 (a) the Loan Parties shall fail to pay any principal of the Term Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise; 
  
 (b) (i) the Loan Parties shall fail to pay any interest on
the Term Loan payable under this Agreement, when and as the same shall become due and payable or (ii) the Loan Parties shall fail to pay any fee or any other amount (other than an amount referred to in clause (a) or (b)(i) of this Article) payable
under this Agreement or any other Loan Document, when and as the same shall become due and payable and such failure continues for five (5) days; 
  
 (c) any representation or warranty made or deemed made by or on behalf of any Loan Party in or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder,
shall prove to have been incorrect in any material respect when made or deemed made; 
  
 (d) the Loan Parties shall fail to observe or perform any covenant, condition or agreement contained in Sections 2.22 or 5.07 (with
respect to insurance covering the Collateral), 5.09, or 5.12, or in Article VI; 
  
 (e) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b), (c), or (d) of this Article), and such failure shall continue unremedied for a period of 15 days after notice thereof from the Administrative Agent to the Lead Borrower; 
  
 (f) any Loan Party shall fail to make any payment (whether
of principal or interest and regardless of amount) in respect of any Material Indebtedness when and as the same shall become due and payable (after giving effect to the expiration of any grace or cure period set forth therein); 
  
 (g) any event or condition occurs that results in any
Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (after giving effect to the expiration of any grace or cure period set forth therein) the holder or holders of any such Material Indebtedness or any
trustee or agent on its or their behalf to cause any such Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; 
  
 (h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of any Loan Party or its debts, or of a substantial part of its assets, under any federal or state bankruptcy, insolvency, receivership or similar
law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or for a substantial part of its assets, and, in any such case, such proceeding or petition
shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; 
  

 47 

 (i) any Loan Party shall (i) voluntarily commence any proceeding or file any petition
seeking liquidation, reorganization or other relief under any federal or state bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Section 7.01, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the
foregoing; 
  
 (j) any Loan Party shall become
unable, admit in writing its inability or fail generally to pay its debts as they become due; 
  
 (k) one or more judgments for the payment of money in an aggregate amount in excess of $1,000,000 shall be rendered against any Loan Party
or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any
material assets of any Loan Party to enforce any such judgment; 
  
 (l) an ERISA Event shall have occurred that when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in liability of the Loan Parties in an aggregate amount exceeding
$500,000; 
  
 (m) (i) any challenge in writing by
or on behalf of any Loan Party to the validity of any Loan Document or the applicability or enforceability of any Loan Document strictly in accordance with the subject Loan Document’s terms or which seeks to void, avoid, limit, or otherwise
adversely affect any security interest created by or in any Loan Document or any payment made pursuant thereto; 
  
 (ii) any judicial proceeding by or on behalf of any other Person seeking to challenge the validity of any Loan Document or the
applicability or enforceability of any Loan Document strictly in accordance with the subject Loan Document’s terms or which seeks to void, avoid, limit, or otherwise adversely affect any security interest created by or in any Loan Document or
any payment made pursuant thereto; 
  
 (iii) any
Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any Collateral, with the priority required by the applicable Security Document, except as a
result of the sale or other disposition of the applicable Collateral in a transaction permitted under the Loan Documents; 
  
 (n) the occurrence of any uninsured loss to any material portion of the Collateral; 
  

 48 

 (o) the indictment of, or institution of any legal process or proceeding against, any
Loan Party, under any federal, state, municipal, and other civil or criminal statute, rule, regulation, order, or other requirement having the force of law where the relief, penalties, or remedies sought or available include the forfeiture of any
material property of any Loan Party and/or the imposition of any stay or other order, the effect of which could reasonably be to restrain in any material way the conduct by the Loan Parties, taken as a whole, of their business in the ordinary
course; 
  
 (p) the determination by the
Borrowers, whether by vote of the Borrowers’ board of directors or otherwise to: suspend the operation of any Borrower’s business in the ordinary course, liquidate all or a material portion of the Borrowers’ assets or store locations,
or employ an agent or other third party to conduct any so-called store closing, store liquidation or “Going-Out-Of-Business” sales; 
  
 (q) the occurrence of any Change in Control; or 
  

(r) the occurrence of any Event of Default (or words of similar effect) under and as defined in any of the Working Capital Loan
Documents (after giving effect to any and all relevant cure periods thereunder), 
  
 then, and in every such event (other than an event with respect to any Loan Party described in clause (h) or (i) of this Section 7.01), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at
the request of the Required Lenders shall, by notice to the Lead Borrower, declare the Term Loan then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the principal of the Term Loan so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrowers accrued hereunder, shall become due and
payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Loan Parties; and in case of any event with respect to any Loan Party described in clause (h) or (i) of this Article, the
principal of the Term Loan then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrowers accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Loan Parties. 
  
 7.02. Intentionally Omitted. 
  
 7.03. Remedies
on Default. In case any one or more of the Events of Default shall have occurred and be continuing, and whether or not the maturity of the Term Loan shall have been accelerated pursuant hereto, the Administrative Agent may, subject to the
Working Capital Intercreditor Agreement, proceed to protect and enforce its rights and remedies under this Agreement, the Notes or any of the other Loan Documents by suit in equity, action at law or other appropriate proceeding, whether for the
specific performance of any covenant or agreement contained in this Agreement and the other Loan Documents or any instrument pursuant to which the Obligations are evidenced, and, if such amount shall have become due, by declaration or otherwise,
proceed to enforce the payment thereof or any other legal or equitable right of the Agents or the Lenders. No remedy herein is intended to be exclusive of any other remedy and 

  

 49 

 
each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or any other provision of law. 
  
 7.04. Application
of Proceeds. After the occurrence of an Event of Default and acceleration of the Obligations, all proceeds realized from any Loan Party or on account of any Collateral shall be applied in the manner set forth in Section 6.02 of the Security
Agreement (subject to the Working Capital Intercreditor Agreement). 
  
 ARTICLE VIII 
  
 The Agents 
  
 8.01. Administration by Administrative Agent. Each Lender and the
Collateral Agent hereby irrevocably designates SAC as Administrative Agent under this Agreement and the other Loan Documents. The general administration of the Loan Documents shall be by the Administrative Agent. The Lenders and the Collateral Agent
each hereby irrevocably authorizes the Administrative Agent (i) to enter into the Loan Documents to which it is a party and (ii) at its discretion, to take or refrain from taking such actions as agent on its behalf and to exercise or refrain from
exercising such powers under the Loan Documents and the Notes as are delegated by the terms hereof or thereof, as appropriate, together with all powers reasonably incidental thereto. The Administrative Agent shall have no duties or responsibilities
except as set forth in this Agreement and the other Loan Documents, nor shall it have any fiduciary relationship with any Lender, and no implied covenants, responsibilities, duties, obligations, or liabilities shall be read into the Loan Documents
or otherwise exist against the Administrative Agent. 
  
 8.02.
The Collateral Agent. Each Lender and the Administrative Agent hereby irrevocably (i) designates SAC as Collateral Agent under this Agreement and the other Loan Documents, (ii) authorizes the Collateral Agent to enter into the Collateral
Documents and the other Loan Documents to which it is a party and to perform its duties and obligations thereunder, together with all powers reasonably incidental thereto, and (iii) agrees and consents to all of the provisions of the Security
Documents. All Collateral shall be held or administered by the Collateral Agent (or its duly-appointed agent) for its benefit and for the ratable benefit of the other Secured Parties. Any proceeds received by the Collateral Agent from the
foreclosure, sale, lease or other disposition of any of the Collateral and any other proceeds received pursuant to the terms of the Security Documents or the other Loan Documents shall be paid over to the Administrative Agent for application as
provided in Sections 2.23, or 7.04, as applicable. The Collateral Agent shall have no duties or responsibilities except as set forth in this Agreement and the remaining Loan Documents, nor shall it have any fiduciary relationship with any Lender,
and no implied covenants, responsibilities, duties, obligations, or liabilities shall be read into the Loan Documents or otherwise exist against the Collateral Agent. 
  
 8.03. Sharing of Excess Payments. Each of the Lenders and the Agents agrees that if it shall, through the exercise of
a right of banker’s lien, setoff or counterclaim against the Loan Parties, including, but not limited to, a secured claim under Section 506 of the Bankruptcy Code or other security or interest arising from, or in lieu of, such secured claim and
received by such Lender or any Agent under any applicable bankruptcy, insolvency or other similar law, or 

  

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otherwise, obtain payment in respect of the Obligations owed it (an “excess payment”) as a result of which such Lender or such Agent has received
payment of the Term Loan or other Obligations outstanding to it in excess of the amount that it would have received if all payments at any time applied to the Term Loan and other Obligations had been applied in the order of priority set forth in
Section 7.04, then such Lender or Agent shall promptly purchase at par (and shall be deemed to have thereupon purchased) from the other Lenders and such Agent as applicable, a participation in the Term Loan and Obligations outstanding to such other
Persons, in an amount determined by the Administrative Agent in good faith as the amount necessary to ensure that the economic benefit of such excess payment is reallocated in such manner as to cause such excess payment and all other payments at any
time applied to the Term Loan and other Obligations to be effectively applied in the order of priority set forth in Section 7.04 pro rata; provided that if any such excess payment is thereafter recovered or otherwise set aside such
purchase of participations shall be correspondingly rescinded (without interest). The Loan Parties expressly consent to the foregoing arrangements and agree that any Lender or any Agent holding (or deemed to be holding) a participation in the Term
Loan or other Obligation may exercise any and all rights of banker’s lien, setoff or counterclaim with respect to any and all moneys owing by such Loan Party to such Lender or such Agent as fully as if such Lender or Agent held a Note and was
the original obligee thereon, in the amount of such participation, subject in all cases to the Working Capital Intercreditor Agreement. 
  
 8.04. Agreement of Required Lenders. 
  
 Upon any occasion requiring or permitting an approval, consent, waiver, election or other action on the part of only the Required Lenders, action shall be
taken by the Agents for and on behalf or for the benefit of all Lenders upon the direction of the Required Lenders, and any such action shall be binding on all Lenders. No amendment, modification, consent, or waiver shall be effective except in
accordance with the provisions of Section 9.02(b). Upon the occurrence of an Event of Default, the Agents shall (subject to the provisions of Section 9.02) take such action with respect thereto as may be reasonably directed by the Required Lenders;
provided that unless and until the Agents shall have received such directions, the Agents may (but shall not be obligated to) take such action as they shall deem advisable in the best interests of the Lenders. In no event shall the
Agents be required to comply with any such directions to the extent that the Agents believe that the Agents’ compliance with such directions would be unlawful. 
  
 8.05. Liability of Agents. 
  

(a) Each of the Agents, when acting on behalf of the Lenders may execute any of its respective duties under this Agreement by or
through any of its respective officers, agents and employees, and none of the Agents nor their respective directors, officers, agents or employees shall be liable to the Lenders or any of them for any action taken or omitted to be taken in good
faith, or be responsible to the Lenders or to any of them for the consequences of any oversight or error of judgment, or for any loss, except to the extent of any liability imposed by law by reason of such Agent’s own gross negligence or wilful
misconduct as determined by a final judgment of a court of competent jurisdiction. The Agents and their respective directors, officers, agents and employees shall in no event be liable to the Lenders or to any of them for any action taken or omitted
to be 

  

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taken by them pursuant instructions received by them from the Required Lenders or in reliance upon the advice of counsel selected by it. Without limiting the
foregoing, none of the Agents, nor any of their respective directors, officers, employees, or agents (A) shall be responsible to any Lender for the due execution, validity, genuineness, effectiveness, sufficiency, or enforceability of, or for any
recital, statement, warranty or representation in, this Agreement, any Loan Document or any related agreement, document or order, or (B) shall be required to ascertain or to make any inquiry concerning the performance or observance by any Loan Party
of any of the terms, conditions, covenants, or agreements of this Agreement or any of the Loan Documents, or (C) shall be responsible to any Lender for the state or condition of any properties of any Borrower or any other obligor hereunder
constituting Collateral for the Obligations of the Borrower hereunder, or any information contained in the books or records of the Borrowers; or (D) shall be responsible to any Lender for the validity, enforceability, collectibility, effectiveness
or genuineness of this Agreement or any other Loan Document or any other certificate, document or instrument furnished in connection therewith; or (E) shall be responsible to any Lender for the validity, priority or perfection of any lien securing
or purporting to secure the Obligations or the value or sufficiency of any of the Collateral. 
  
 (b) The Agents may execute any of their duties under this Agreement or any other Loan Document by or through their agents or
attorneys-in-fact, and shall be entitled to the advice of counsel concerning all matters pertaining to their rights and duties hereunder or under the Loan Documents. The Agents shall not be responsible for the negligence or misconduct of any agents
or attorneys-in-fact selected by them with reasonable care. 
  
 (c) None of the Agents nor any of their respective directors, officers, employees, or agents shall have any responsibility to the Loan Parties on account of the failure or delay in performance or breach by any Lender
(other than by the Agent in its capacity as a Lender) of any of their respective obligations under this Agreement or the Notes or any of the Loan Documents or in connection herewith or therewith. 
  
 (d) The Agents shall be entitled to rely, and shall be fully
protected in relying, upon any notice, consent, certificate, affidavit, or other document or writing believed by it to be genuine and correct and to have been signed, sent or made by the proper person or persons, and upon the advice and statements
of legal counsel (including, without, limitation, counsel to the Loan Parties), independent accountants and other experts selected by the Agents. The Agents shall be fully justified in failing or refusing to take any action under this Agreement or
any other Loan Document unless they shall first receive such advice or concurrence of the Required Lenders as they deem appropriate or they shall first be indemnified to their satisfaction by the Lenders against any and all liability and expense
which may be incurred by them by reason of the taking or failing to take any such action. 
  
 8.06. Notice of Default. The Agents shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the Agents have actual knowledge of the same or has received
notice from a Lender or the Loan Parties referring to this Agreement, 

  

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describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Agents obtain such
actual knowledge or receive such a notice, the Agents shall give prompt notice thereof to each of the Lenders. The Agents shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required
Lenders. Unless and until the Agents shall have received such direction, the Agents may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to any such Default or Event of Default as they shall deem
advisable in the best interest of the Lenders. 
  
 8.07.
Lenders’ Credit Decisions. Each Lender acknowledges that it has, independently and without reliance upon the Agents or any other Lender, and based on the financial statements prepared by the Loan Parties and such other documents and
information as it has deemed appropriate, made its own credit analysis and investigation into the business, assets, operations, property, and financial and other condition of the Loan Parties and has made its own decision to enter into this
Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Agents or any other Lender, and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in determining whether or not conditions precedent to closing the Term Loan hereunder have been satisfied and in taking or not taking any action under this Agreement and the other Loan Documents. 

 
 8.08. Reimbursement and Indemnification. Each Lender agrees (i) to
reimburse (x) each Agent on a pro rata basis for any expenses and fees incurred by such Agent for the benefit of the Lenders under this Agreement, the Notes and any of the other Loan Documents, including, without limitation, counsel fees and
compensation of agents and employees paid for services rendered on behalf of the Lenders, and any other expense incurred in connection with the operations or enforcement thereof not reimbursed by the Loan Parties and (y) each Agent on a pro rata
basis for any expenses of such Agent incurred for the benefit of the Lenders that the Loan Parties have agreed to reimburse pursuant to Section 9.04 and has failed to so reimburse and (ii) to indemnify and hold harmless the Agents and any of their
directors, officers, employees, or agents, on demand, on a pro rata basis, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against it or any of them in any way relating to or arising out of this Agreement, the Notes or any of the other Loan Documents or any action taken or omitted by it or any of them under
this Agreement, the Notes or any of the other Loan Documents to the extent not reimbursed by the Loan Parties (except such as shall result from their respective gross negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction). The provisions of this Section 8.08 shall survive the repayment of the Obligations and the termination of the Commitments. 
  
 8.09. Rights of Agents. It is understood and agreed that SAC (or any successor Administrative Agent or Collateral Agent) shall have the same rights
and powers hereunder (including the right to give such instructions) as the other Lenders and may exercise such rights and powers, as well as its rights and powers under other agreements and instruments to which it is or may be party, and engage in
other transactions with any Borrower, as though it were not the Administrative Agent or the Collateral Agent of the Lenders under this Agreement. The Agents 

  

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and their affiliates may accept deposits from, lend money to, and generally engage in any kind of commercial or investment banking, trust, advisory or other
business with the Loan Parties and their Subsidiaries and Affiliates as if it were not the Agent hereunder. 
  
 8.10. Independent Lenders. The Lenders each acknowledge that they have decided to enter into this Agreement and to make the Term Loan based on
their own analysis of the transactions contemplated hereby and of the creditworthiness of the Loan Parties and agrees that the Agents shall bear no responsibility therefor. 
  
 8.11. Notice of Transfer. The Agents may deem and treat a Lender party to this Agreement as the owner of such
Lender’s portion of the Term Loan for all purposes, unless and until, and except to the extent, an Assignment and Acceptance shall have become effective as set forth in Section 9.06(d). 
  
 8.12. Successor Agent. Any Agent may resign at any time by giving five
(5) Business Days’ written notice thereof to the Lenders the other Agents and the Lead Borrower. Upon any such resignation of any Agent, the Required Lenders shall have the right to appoint a successor Agent, which so long as there is no
Default or Event of Default, shall be reasonably satisfactory to the Lead Borrower (whose consent shall not be unreasonably withheld or delayed). If no successor Agent shall have been so appointed by the Required Lenders and shall have accepted such
appointment, within 30 days after the retiring Agent’s giving of notice of resignation, the retiring Agent may, on behalf of the Lenders and the other Agents appoint a successor Agent which shall be a Person capable of complying with all of the
duties of such Agent, hereunder (in the opinion of the retiring Agent and as certified to the Lenders in writing by such successor Agent) which, so long as there is no Default or Event of Default, shall be reasonably satisfactory to the Lead
Borrower (whose consent shall not be unreasonably withheld or delayed). Upon the acceptance of any appointment as Agent by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent’s resignation hereunder as such Agent, the provisions of this Article VIII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was such Agent under this Agreement. 
  
 8.13. Reports and Financial Statements. Promptly after receipt thereof from the Lead Borrower, the Administrative Agent shall remit to each Lender
and the Collateral Agent copies of all financial statements required to be delivered by the Borrowers hereunder and all commercial finance examinations and appraisals of the Collateral, if any, received by the Administrative Agent. 
  
 8.14. Delinquent Lender. If for any reason any Lender shall fail or
refuse to abide by its obligations under this Agreement (a “Delinquent Lender”) and such failure is not cured within ten (10) days of receipt from the Administrative Agent of written notice thereof, then, in addition to the rights
and remedies that may be available to Agents, other Lenders, the Loan Parties or any other party at law or in equity, and not at limitation thereof, (i) such Delinquent Lender’s right to participate in the administration of, or decision-making
rights related to, the Term Loan, this Agreement or the other Loan Documents shall be suspended during the pendency of such failure or refusal, and (ii) a Delinquent Lender shall be deemed to have assigned any and all 

  

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payments due to it from the Loan Parties, whether on account of the outstanding Term Loan, interest, fees or otherwise, to the remaining non-Delinquent
Lenders for application to, and reduction of, their proportionate shares of the outstanding Term Loan until, as a result of application of such assigned payments the Lenders’ respective percentage of the outstanding Term Loan shall have
returned to those in effect immediately prior to such delinquency and without giving effect to the nonpayment causing such delinquency. The Delinquent Lender’s decision-making and participation rights and rights to payments as set forth in
clauses (i) and (ii) hereinabove shall be restored only upon the payment by the Delinquent Lender of its portion of the Term Loan, any participation obligation, or expenses as to which it is delinquent, together with interest thereon at the rate set
forth in Section 2.10 hereof from the date when originally due until the date upon which any such amounts are actually paid. 
  
 ARTICLE IX 
  
 Miscellaneous 
  
 9.01. Notices. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: 
  
 (a) if to any Loan Party, to it at The Wet Seal, Inc., 26972 Burbank, Foothill Ranch, California 92610, Attention: Chief Financial Officer
(Telecopy No. (858) 206-4977), with a copy to Akin Gump Strauss Hauer & Feld LLP, 590 Madison Avenue, New York, New York 10022, Attention: Steven Scheinman, Esquire (Telecopy No. (212) 872-1090); 
  
 (b) if to the Administrative Agent or the Collateral Agent,
to 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 No. (203) 890-2393), with a copy to Schulte Roth & Zabel LLC, 919 Third Avenue, New
York, New York 10022. Attention: Nancy Finkelstein, Esq. (Facsimile No.: 212-593-5955); 
  
 (c) if to any Lender, to it at its address (or telecopy number) set forth on the signature pages hereto or on any Assignment and
Acceptance for such Lender. 
  
 (d) Any party
hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of receipt. 
  
 9.02. Waivers; Amendments. 
  
 (a) No failure or delay by the Agents or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further 

  

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exercise thereof or the exercise of any other right or power. The rights and remedies of the Agents and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of the
Term Loan shall not be construed as a waiver of any Default, regardless of whether the Agents or any Lender may have had notice or knowledge of such Default at the time. 
  
 (b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived,
amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Lead Borrower and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or
agreements in writing entered into by the Agents and the Loan Parties that are parties thereto, in each case with the Consent of the Required Lenders, provided that no such agreement shall (i) increase the Commitment of any Lender
without the Consent of such Lender, (ii) reduce the principal amount of the Term Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the Consent of each Lender affected thereby, (iii) postpone the scheduled
date of payment of the principal amount of the Term Loan or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of the Commitments or the
Maturity Date, without the Consent of each Lender affected thereby, (iv) change Sections 2.19, 2.22, or 2.23 or Section 6.02 of the Security Agreement, without the Consent of each Lender, (v) change any of the provisions of this Section 9.02 or the
definition of the term “Required Lenders” or any other provision of any Loan Document specifying the number or percentage of Lenders required to waive, amend or modify any rights thereunder or make any determination or grant any
consent thereunder, without the Consent of each Lender, (vi) release any Loan Party from its obligations under any Loan Document, or limit its liability in respect of such Loan Document, without the Consent of each Lender, (vii) except for sales
described in Section 6.05 or as permitted in the Security Documents or in the Working Capital Intercreditor Agreement, release any material portion of the Collateral from the Liens of the Security Documents, without the Consent of each Lender, or
(viii) subordinate the Obligations hereunder, or the Liens granted hereunder or under the other Loan Documents, to any other Indebtedness or Lien, as the case may be, without the prior Consent of each Lender, and provided further that
no such agreement shall amend, modify or otherwise affect the rights or duties of the Agents without the prior written consent of the Agents. 
  
 (c) Notwithstanding anything to the contrary contained in this Section 9.02, in the event that the Borrowers request that this Agreement
or any other Loan Document be modified, amended or waived in a manner which would require the Consent of the Lenders pursuant to Sections 9.02(b) and such amendment is approved by the Required Lenders, but not by the percentage of the Lenders set
forth in Section 9.02(b), the 

  

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Borrowers and the Required Lenders shall be permitted to amend this Agreement without the Consent of the Lender or Lenders which did not agree to the
modification or amendment requested by the Borrowers (such Lender or Lenders, collectively the “Minority Lenders”) subject to providing for (x) if any Loans are outstanding at the time of such amendment, the making of such
additional Loans by such new or increasing Lender or Lenders, as the case may be, as may be necessary to repay in full the outstanding Loans (including principal, interest, and fees) of the Minority Lenders immediately before giving effect to such
amendment and (y) such other modifications to this Agreement or the Loan Documents as may be appropriate and incidental to the foregoing. 
  
 (d) No notice to or demand on any Loan Party shall entitle any Loan Party to any other or further notice or demand in the same, similar or
other circumstances. Each holder of a Note shall be bound by any amendment, modification, waiver or consent authorized as provided herein, whether or not a Note shall have been marked to indicate such amendment, modification, waiver or consent and
any consent by a Lender, or any holder of a Note, shall bind any Person subsequently acquiring a Note, whether or not a Note is so marked. No amendment to this Agreement or any other Loan Document shall be effective against the Borrowers unless
signed by the Borrowers or other applicable Loan Party. 
  
 9.03.
Intentionally Omitted. 
  
 9.04. Expenses; Indemnity;
Damage Waiver. 
  
 (a) The Loan Parties shall
jointly and severally pay (i) all reasonable out-of-pocket expenses incurred by the Agents, the Lenders and their Affiliates, including the reasonable fees, charges and disbursements of counsel for the Agents and the Lenders, outside consultants for
the Agents, appraisers, for commercial finance examinations and environmental site assessments, in connection with the syndication of the credit facilities provided for herein, the negotiation, preparation, execution, delivery, performance and
administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the Agents or any Lender, including the reasonable fees, charges and disbursements of any counsel and any outside consultants for the Agents or any Lender, for appraisers, commercial finance examinations, and
environmental site assessments, in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with the Term Loan made hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Term Loan, provided that the Lenders who are not the Agents shall be entitled to reimbursement for no more than one counsel
representing all such Lenders (absent a conflict of interest in which case the Lenders may engage and be reimbursed for additional counsel).  
  
 (b) The Loan Parties shall, jointly and severally, indemnify the Agents, and each Lender, and each Related Party of any of the foregoing
Persons (each such Person 

  

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being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the reasonable and documented fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery
of any Loan Document or any other agreement or instrument contemplated hereby, the performance by the parties to the Loan Documents of their respective obligations thereunder or the consummation of the transactions contemplated by the Loan Documents
or any other transactions contemplated hereby, (ii) the Term Loan or the use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned or operated by any
Loan Party or any of the Subsidiaries, or any Environmental Liability related in any way to any Loan Party or any of the Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses resulted from the gross negligence or wilful misconduct of such Indemnitee. In connection with any indemnified claim hereunder, the Indemnitee shall be entitled to select its own counsel and the Loan Parties
shall promptly pay the reasonable fees and expenses of such counsel. 
  
 (c) To the extent that any Loan Party fails to pay any amount required to be paid by it to the Agents under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Agents as the case may be,
such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted against the Agents. 
  
 (d) To the extent permitted by Applicable Law, no Loan Party shall assert, and each hereby waives, any claim against any Indemnitee, on
any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the
transactions contemplated by the Loan Documents, the Term Loan or the use of the proceeds thereof. The Loan Parties further agree that no Indemnitee shall have any liability to the Loan Parties, any Person asserting claims by or on behalf of any
Loan Party or any other Person in connection with this Agreement or the other Loan Documents except (i) for breach of the Indemnitee’s obligations under this Agreement and the other Loan Documents, or (ii) the Indemnitee’s gross
negligence, willful misconduct or bad faith. 
  
 (e) All amounts due under this Section shall be payable promptly after written demand therefor. 
  

 58 

 9.05. Designation of Lead Borrower as Borrowers’ Agent. 
  
 (a) Each Borrower hereby irrevocably designates and appoints
the Lead Borrower as that Borrower’s agent to obtain the Term Loan, the proceeds of which shall be available to each Borrower for those uses as those set forth herein. As the disclosed principal for its agent, each Borrower shall be obligated
to the Agents and each Lender on account of the Term Loan so made hereunder as if made directly by the Lenders to that Borrower, notwithstanding the manner by which the Term Loan is recorded on the books and records of the Lead Borrower and of any
Borrower. 
  
 (b) Each Borrower recognizes that
credit available to it hereunder is in excess of and on better terms than it otherwise could obtain on and for its own account and that one of the reasons therefor is its joining in the credit facility contemplated herein with all other Borrowers.
Consequently, each Borrower hereby assumes, guarantees, and agrees to discharge all Obligations of all other Borrowers as if the Borrower so assuming and guarantying were each other Borrower. 
  
 (c) The Lead Borrower shall act as a conduit for each
Borrower (including itself, as a “Borrower”) on whose behalf the Lead Borrower has requested the Term Loan. 
  
 (d) The Lead Borrower shall cause the transfer of the proceeds of the Term Loan to the (those) Borrower(s) on whose behalf the Term Loan
was obtained. Neither the Agents nor any Lender shall have any obligation to see to the application of such proceeds. 
  
 (e) The Administrative Agent may at any time and from time to time designate one or more of the Borrowers to fulfill the financial and
other reporting requirements otherwise imposed herein upon the Lead Borrower. 
  
 (f) The authority of the Lead Borrower to bind the Borrowers shall continue unless and until the Administrative Agent acts as provided in subparagraph (e), above, or the Administrative Agent actually receives written
notice of: (i) the termination of such authority, and (ii) the subsequent appointment of a successor Lead Borrower, which notice is signed by the respective chief executive officers of each Borrower (other than the chief executive officer of the
Lead Borrower being replaced); and written notice from such successive Lead Borrower (i) accepting such appointment; (ii) acknowledging that such removal and appointment has been effected by the respective chief executive officers of such Borrowers;
and (iii) acknowledging that from and after the date of such appointment, the newly appointed Lead Borrower shall be bound by the terms hereof, and that as used herein, the term “Lead Borrower” shall mean and include the newly
appointed Lead Borrower. 
  
 9.06. Successors and Assigns.

  
 (a) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Loan Party may assign or otherwise transfer any of its rights or obligations 

  

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hereunder without the prior written consent of each Lender (and any such attempted assignment or transfer without such consent shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related
Parties of each of the Agents and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. 
  
 (b) Any Lender may, with the written consent of the Collateral Agent, assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its Term Loan at the time owing to it), provided that (i) except in the case of an assignment to a Lender or an Affiliate of a Lender or a Related Fund, the
Administrative Agent must give its prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed), (ii) except in the case of an assignment to a Lender or an Affiliate of a Lender or a Related Fund, or an
assignment of the entire remaining amount of the assigning Lender’s Term Loan, the amount of the Term Loan of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than $1,000,000 unless the Administrative Agent otherwise consents, (iii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning
Lender’s rights and obligations, (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, and, after completion of the syndication of the Loans, together with a processing and
recordation fee of $3,500 and (v) the rights of such Eligible Assignee under the Loan Documents shall be subject to the Working Capital Intercreditor Agreement. The Borrowers shall execute, if requested by the assignee Lender, Notes to reflect such
Assignment and Acceptance. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to
the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Section 9.04). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section. 
  
 (c) The Administrative Agent, acting for this purpose as an agent of the Loan Parties, shall maintain at one of its offices in New York,
New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and principal amount of the Term Loan owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”). The entries in the 

  

 60 

 
Register shall be conclusive and the Loan Parties, the Agents, and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Lead Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice. 
  
 (d) Upon its receipt
of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of
this Section, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph. 
  
 (e)
Any Lender may, without the consent of the Loan Parties and the Agents sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this
Agreement (including all or a portion of the Term Loan owing to it), provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Loan Parties, the Agents and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this
Agreement. Subject to paragraph (f) of this Section, the Loan Parties agree that each Participant shall be entitled to the benefits of Sections 2.26 and 2.27 to the same extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.10 as though it were a Lender, provided such Participant agrees to be subject to Section 2.26(c)
as though it were a Lender. 
  
 (f) A Participant
shall not be entitled to receive any greater payment under Section 2.27 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such
Participant is made with the Lead Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.27 unless (i) the Lead Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Section 2.27(e) as though it were a Lender and (ii) such Participant is eligible for exemption from the withholding Tax referred to
therein, following compliance with Section 2.27(e). 
  
 (g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to any of the twelve
Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341, and this Section shall not apply to any such pledge or assignment of a security interest, provided that no such pledge or assignment of
a security interest shall release a 

  

 61 

 
Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. 
  
 (h) In the event that any Lender sells participations in the
Term Loan, such Lender shall maintain a register on which it enters the name of all participants in the Term Loan held by it (the “Participant Register”). The Term Loan (and the Note, if any, evidencing the same) may be participated
in whole or in part only by registration of such participation on the Participant Register (and each Note shall expressly so provide). 
  
 9.07. Survival. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or
other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and
the making of the Term Loan regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Agents or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on the Term Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid. The
provisions of Section 2.27 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Term Loan, the expiration or termination of the Commitment or
the termination of this Agreement or any provision hereof. 
  
 9.08. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all contemporaneous or previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Agents and the Lenders and when the Administrative Agent shall
have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by telecopy or electronic mail shall be equally effective as delivery of a manually executed counterpart of this Agreement. 
  
 9.09. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. 
  
 9.10. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, each Participant and each of its respective
Affiliates is hereby authorized with the consent of the Administrative Agent or required Lenders at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, 

  

 62 

 
time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the
account of the Loan Parties against any of and all the obligations of the Loan Parties now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured and regardless of the adequacy of the Collateral. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender may have.

  
 9.11. Governing Law; Jurisdiction; Consent to Service of
Process. 
  
 (a) THIS AGREEMENT, THE NOTES
AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 
  
 (b) The Loan Parties agree that any suit for the enforcement
of this Agreement or any other Loan Document may be brought in any New York state or federal court sitting in New York County, New York, as the Administrative Agent may elect in its sole discretion and consent to the non-exclusive jurisdiction of
such courts. The Loan Parties hereby waive any objection which they may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient forum. The Loan Parties agree that any action commenced by
any Loan Party asserting any claim or counterclaim arising under or in connection with this Agreement or any other Loan Document shall be brought solely in any New York or federal court sitting in New York County in New York, New York as the
Administrative Agent may elect in its sole discretion and consent to the exclusive jurisdiction of such courts with respect to any such action. 
  
 (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in
this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law. 
  
 9.12. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A JURY IN ANY TRIAL OF
ANY CASE OR CONTROVERSY IN WHICH ANY BORROWER, ANY AGENT, ANY LENDER OR ANY PARTICIPANT IS OR BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST ANY BORROWER, SUCH AGENT, AND/OR SUCH LENDER OR PARTICIPANT OR IN WHICH ANY
BORROWER, SUCH AGENT, LENDER OR PARTICIPANT, IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF, ANY RELATIONSHIP AMONGST OR BETWEEN ANY BORROWER OR ANY OTHER PERSON AND SUCH AGENT, LENDER OR PARTICIPANT.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE 

  

 63 

 
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION. 
  
 9.13.
Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this
Agreement. 
  
 9.14. Interest Rate Limitation.
Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to the Term Loan, together with all fees, charges and other amounts that are treated as interest on the Term Loan under Applicable Law (collectively, the
“Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by the Lender holding the Term Loan in accordance with Applicable Law, the rate
of interest payable in respect of the Term Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of the
Term Loan but were not payable as a result of the operation of this Section shall be cumulated until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such
Lender. 
  
 9.15. Additional Waivers. 
  
 (a) The Obligations are the joint and several obligations of
each Loan Party. To the fullest extent permitted by Applicable Law, the obligations of each Loan Party hereunder shall not be affected by (i) the failure of any Agent or any other Secured Party to assert any claim or demand or to enforce or exercise
any right or remedy against any other Loan Party under the provisions of this Agreement, any other Loan Document or otherwise, (ii) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, this
Agreement or any other Loan Document, or (iii) the failure to perfect any security interest in, or the release of, any of the security held by or on behalf of the Collateral Agent or any other Secured Party. 
  
 (b) To the fullest extent permitted by Applicable Law, the
obligations of each Loan Party hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of the Obligations), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of each Loan Party hereunder shall not be discharged or impaired or otherwise affected by the failure of any Agent or any other Secured Party to assert any claim or demand
or to enforce any remedy under this Agreement, any other Loan Document or any other agreement, by any waiver or modification of any provision of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or to any extent vary the risk of any Loan Party or that would otherwise operate as a discharge 

  

 64 

 
of any Loan Party as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations). 
  
 (c) To the fullest extent permitted by Applicable Law, each
Loan Party waives any defense based on or arising out of any defense of any other Loan Party or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any other Loan Party,
other than the indefeasible payment in full in cash of all the Obligations. The Collateral Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial
sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with any other Loan Party, or exercise any other right or remedy available to them against any
other Loan Party, without affecting or impairing in any way the liability of any Loan Party hereunder except to the extent that all the Obligations have been paid in full in cash and the Commitments have been terminated. Pursuant to Applicable Law,
each Loan Party waives any defense arising out of any such election even though such election operates, pursuant to Applicable Law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Loan Party
against any other Loan Party, as the case may be, or any security. 
  
 (d) Upon payment by any Loan Party of any Obligations, all rights of such Loan Party against any other Loan Party arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or
otherwise shall in all respects be subordinate and junior in right of payment to the prior payment in full in cash of all the Obligations. In addition, any indebtedness of any Loan Party now or hereafter held by any other Loan Party is hereby
subordinated in right of payment to the prior payment in full of the Obligations. Notwithstanding the foregoing, prior to the occurrence of an Event of Default, any Loan Party may make payments to any other Loan Party on account of any such
indebtedness. After the occurrence and during the continuance of an Event of Default, none of the Loan Parties will demand, sue for, or otherwise attempt to collect any such indebtedness. If any amount shall erroneously be paid to any Loan Party on
account of (a) such subrogation, contribution, reimbursement, indemnity or similar right or (b) any such indebtedness of any Loan Party, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the
Collateral Agent (or its designee) to be credited against the payment of the Obligations, whether matured or unmatured, in accordance with the terms of the Loan Documents. 
  
 9.16. Confidentiality. Each of the Lenders agrees that it will use its best efforts not to disclose without the prior
consent of the Lead Borrower (other than to its employees, auditors, counsel or other professional advisors, to Affiliates, to another Lender or to such Lender’s holding or parent company) any information with respect to the Borrowers or any
other Loan Party which is furnished pursuant to this Agreement and which is designated by the Lead Borrower to the Lenders in writing as confidential provided that any Lender may disclose any such information (a) as has become
generally available to the public, (b) as may be required or appropriate in any report, statement or testimony submitted to any municipal, state or federal regulatory body having or claiming to have jurisdiction over such Lender or to the Federal

  

 65 

 
Reserve Board or the Federal Deposit Insurance Corporation or similar organizations (whether in the United States or elsewhere) or their successors, (c) as
may be required or appropriate in response to any summons or subpoena or in connection with any litigation, (d) in order to comply with any law, order, regulation or ruling applicable to such Lender, (e) in connection with the enforcement of
remedies under this Agreement and the other Loan Documents, and (f) to any prospective transferee in connection with any contemplated transfer of any portion of the Term Loan or any Note or any interest therein by such Lender provided
that such prospective transferee agrees to be bound by the provisions of this Section. The Loan Parties hereby agree that the failure of a Lender to comply with the provisions of this Section 9.16 shall not relieve the Loan Parties of any of
its obligations to such Lender under this Agreement and the other Loan Documents. Notwithstanding anything to the contrary contained herein, all Persons may disclose to any and all Persons, without limitation of any kind, the U.S. federal, state and
local income tax treatment of the transaction, any fact relevant to understanding the U.S. federal, state and local tax treatment of the transaction, and all materials of any kind (including opinions or other tax analyses) relating to such U.S.
federal, state and local tax treatment; provided, that no Person may disclose the name of or identifying information with respect to any party identified herein or any pricing terms or other nonpublic business or financial information that is
unrelated to the purported or claimed U.S. federal income tax treatment of the transaction and is not relevant to understanding the purported or claimed U.S. federal, state and local income tax treatment of the transaction. 
  
 9.17. Publicity. Each Borrower by executing this Agreement agrees that
neither it nor its Affiliates will in the future issue any press releases or other written public disclosure not otherwise required by law using the name of the Agents or the Lenders or their Affiliates or referring to this Agreement or the other
Loan Documents without at least one (1) Business Day’s prior notice to the Agents and without the prior written consent (which may include electronic mail communication) of the Agents unless (and only to the extent that) such Borrower or
Affiliate is required to do so under law and then, in any event, such Borrower or Affiliate will consult with the Agent before issuing such press release or other public disclosure. Each Borrower consents to the publication by any Agent or any
Lender of a tombstone or similar advertising material irrespective of how such advertising material shall be disseminated relating to the financing transactions contemplated by this Agreement. The Agents reserve the right to provide to industry
trade organizations information necessary and customary for inclusion in league table measurements. 
  
 9.18. Intercreditor Arrangements. 
  
 (a) EACH AGENT AND LENDER HEREBY GRANTS TO EACH AGENT ALL REQUISITE AUTHORITY TO ENTER INTO OR OTHERWISE BECOME OR REMAIN BOUND BY THE
WORKING CAPITAL INTERCREDITOR AGREEMENT AND TO BIND THE AGENTS AND LENDERS THERETO BY SUCH AGENT’S ENTERING INTO OR OTHERWISE BECOMING BOUND THEREBY, AND NO FURTHER CONSENT OR APPROVAL ON THE PART OF THE AGENTS OR LENDERS IS OR WILL BE REQUIRED
IN CONNECTION WITH THE PERFORMANCE OF THE WORKING CAPITAL INTERCREDITOR AGREEMENT. EACH AGENT AND EACH LENDER HEREBY ACKNOWLEDGES THAT IT HAS 

  

 66 

 
RECEIVED A COPY OF THE WORKING CAPITAL INTERCREDITOR AGREEMENT AND AGREES TO BE BOUND BY THE TERMS AND PROVISIONS THEREOF. 
  
 (b) Notwithstanding anything herein to the contrary, the
liens and security interests securing the indebtedness and other obligations incurred or arising under or evidenced by this instrument and the rights and obligations evidenced hereby with respect to such liens are subordinate in the manner and to
the extent set forth in the Working Capital Intercreditor Agreement to the liens and security interests securing indebtedness (including interest) owed by the Loan Parties pursuant to the Working Capital Credit Agreement, and certain guarantees of
the indebtedness evidenced thereby, as such Working Capital Credit Agreement and such guarantees have been and hereafter may be amended, restated, supplemented or otherwise modified from time to time as permitted under the Working Capital
Intercreditor Agreement to the liens and security interests securing indebtedness refinancing the indebtedness under such agreements as permitted by the Working Capital Intercreditor Agreement; and each holder of this instrument, by its acceptance
hereof, irrevocably agrees to be bound by the provisions of the Working Capital Intercreditor Agreement. 
  
 (c) The obligations of each Lender under any Loan Document are several and not joint with the obligations of any other Lender, and no
Lender shall be responsible in any way for the performance of the obligations of any other Lender under any Loan Document. Nothing contained herein or in any other Loan Document, and no action taken by any Agent or any Lender pursuant hereto or
thereto, shall be deemed to constitute the Agents or the Lenders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Agents or the Lenders are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the Loan Documents. Each Agent and Lender confirms that it has independently participated in the negotiation of the transaction contemplated hereby with the advice of its own
counsel and advisors. Each Agent and Lender, other than SAC, acknowledges that (i) Schulte Roth & Zabel LLP solely represented SAC in connection with the transaction contemplated hereby and (ii) SAC did not provide any advice in connection
herewith and such Agent’s and Lender’s determination to participate herein was based solely on its own evaluation of the risks and merits of the financing contemplated hereby. 
  
 (d) Notwithstanding anything herein to the contrary, to the extent that the Loan Parties are required
(whether at the request of any Agent or any Lender, or otherwise) to deliver or provide any agreement, document, instrument, notice or any information to any Agent or any Lender that shall constitute material, nonpublic information, before seeking
such Agent’s or Lender’s consent hereunder, the Loan Parties shall first confirm with such Agent or Lender, as applicable, that it desires to receive such information (without disclosing the nature of any information that may constitute
material, nonpublic information) and if such Agent or such Lender agrees to receive such information, then such information shall constitute Disclosed Information (as defined in the Securities Purchase Agreement) for all purposes hereof. 

 

 67 

 [SIGNATURE PAGES FOLLOW] 
  

 68 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective
authorized officers as a sealed instrument as of the day and year first above written. 
  

			
	 THE WET SEAL, INC.

		
	 By:
	 	 /s/    Douglas C. Felderman

		
	 Name:
	 	 Douglas C. Felderman

		
	 Title:
	 	 EVP-CFO

  

			
	 THE WET SEAL RETAIL, INC.

		
	 By:
	 	 /s/    Douglas C. Felderman

		
	 Name:
	 	 Douglas C. Felderman

		
	 Title:
	 	 Secretary

  

			
	 WET SEAL CATALOG, INC.

		
	 By:
	 	 /s/    Douglas C. Felderman

		
	 Name:
	 	 Douglas C. Felderman

		
	 Title:
	 	 Secretary

  

			
	 WET SEAL GC, INC.

		
	 By:
	 	 /s/    Douglas C. Felderman

		
	 Name:
	 	 Douglas C. Felderman

		
	 Title:
	 	 Secretary

  

 S-1 

			
	 S.A.C. CAPITAL ASSOCIATES, LLC,
 as Administrative Agent, Collateral Agent,
 and a Lender

	
	 By: S.A.C. Capital Advisors, LLC

		
	 By:
	 	 /s/    PETER NUSSBAUM

	 Name:
	 	 Peter Nussbaum

	 Title:
	 	 General Counsel

	 Address:

	 72 Cunnings Point Road
 Stamford, Connecticut 06902

	 Attn:
	 	 General Counsel

	 Telephone: (203) 890-2000

	 Telecopy: (203) 890-2393

  

 S-2 

			
	 GMM CAPITAL LLC, as a Lender

		
	 By:
	 	/s/    DONALD HECHT        
	 Name:
	 	 Donald Hecht

	 Title:
	 	 Administrative Trustee

	 Address:
	 	 111 West 40th Street, 20th Floor
 New York, NY 10018

	 Attn:
	 	 
	 Telephone:
	 	 (212) 819-8100

	 Telecopy:
	 	 (212) 203-7054

	
	 GOLDFARB CAPITAL PARTNERS LLC, as Lender

		
	 By:
	 	/s/    MORRIS GOLDFARB        
	 Name:
	 	 Morris Goldfarb

	 Title:
	 	 
	 Address:
	 	 21 Fairway Drive
 Mamaroneck, NY 10543

	 Attn:
	 	 
	 Telephone:
	 	 
	 Telecopy:
	 	 
		
	 By:
	 	/s/    CHARLES PHILLIPS        
	 Name:
	 	 Charles Phillips, as a Lender

	 Address:
	 	 777 Park Avenue
 New York, NY 10021

	 Telephone:
	 	 
	 Telecopy:
	 	 

  

 S-1 

 SCHEDULE 1.1 
  
 Lenders and Commitments 
  

							
	 Lender

	  	Commitment

	  	Commitment
Percentage

	 
	 S.A.C. Capital Associates, LLC
	  	$	6,500,000	  	65.0000	%
	 Goldfarb Capital Partners LLC
	  	$	1,250,000	  	12.5000	%
	 GMM Capital LLC
	  	$	1,750,000	  	17.5000	%
	 Charles Phillips
	  	$	500,000	  	5.0000	%
	 Total
	  	$	10,000,000	  	100	%

  

 S-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}]]