UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

Filed by the Registrantx

Filed by a Party other than the Registrant¨

Check the appropriate box:

The Wet Seal, Inc.THE WET SEAL, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

THE WET SEAL, INC.

26972 Burbank

Foothill Ranch, California 92610

May·, 20042005

Dear Stockholder:

I am pleased to invite youYou are cordially invited to attend a special meeting (the “Special Meeting”)the Annual Meeting of stockholdersStockholders of The Wet Seal, Inc. to be held on, December, 2004, at 10:00 a.m., local time, at ourthe company’s principal executive offices located at 26972 Burbank, Foothill Ranch, California, 92610, to vote upon the stockholder proposals contained in this proxy statement.at 10:00 a.m., local time, on Thursday, July 7, 2005.

On November 9, 2004, we announced that we had entered into a series of financing transactions with S.A.C. Capital Associates, LLC, an entity managed by S.A.C. Capital Advisors, LLC, and other participating investors (collectively,During the “Investors”). In these financings we have agreed, among other things, to issue:

Any holder of the Convertible Notes, Additional Investment Right Warrants and Warrants will be prohibited from exercising such securities if such holder (together with its affiliates) would beneficially own in excess of 9.99% of our outstanding common stock as a result of such exercise (or a lower percentage pursuant to notice from the applicable Investor).

In addition, certain Investors have provided us with an interim secured bridge loan in the amount of $10,000,000 which will be used for working capital purposes through the closing of our transactions with the Investors. At this closing the outstanding principal amount (together with accrued and unpaid interest) of the bridge loan will be applied as partial payment of the aggregate purchase price for the securities to be issued to the Investors.

We have undertaken these transactions to address our need to significantly improve our liquidity position and to return our company to profitability. We believe the financing arrangements provided by the Investors offer us a comprehensive response to our financial condition that has been deteriorating for several quarters. In particular, without the interim bridge loan provided by the Investors, we would have faced significant liquidity problems in the near term that most likely would have required us to file for bankruptcy protection.

However, prior to consummating the transactions with the Investors, we need to obtain the approval of our stockholders with regard to the following proposals described in more detail in this proxy statement:

considered. In addition to these proposals, wethe formal items of business to be brought before the Annual Meeting, there will seek your approval of The Wet Seal, Inc. 2004 Stock Incentive Plan which will allow us to offer new incentive arrangements to management who will assist us inbe a report regarding the turn-aroundprogress of our Wet Seal operations.company and there will be an opportunity to ask questions of general interest to you as a stockholder.

After careful review, our Board of Directors unanimously determined that each of the proposals is advisable and in the best interest of our company. Therefore, our Board of Directors recommends thatI hope you votewill be able to approve each of the proposals to be consideredjoin us at the SpecialAnnual Meeting.

We encourage Whether or not you expect to read this proxy statement which explains each proposal in greater detail. We hopeattend, you attend the Special Meeting in person,are urged to sign and we encourage you to vote your shares by marking, signing and datingreturn the enclosed proxy if you are not ablecard in the envelope provided in order to attend. You may revokemake certain that your proxy at any time before it is exercisedshares will be represented at the Special Meeting, or vote your shares personally if you attend the SpecialAnnual Meeting. If you sign, date and mail your proxy without indicating how you want to vote, your proxy will be counted as a voteFOR the approval of the ratification and issuance of the new securities described in this proxy statement,FOR the approval of an amendment to our Restated Certificate of Incorporation, as amended, relating to an increase in the number of authorized shares of our Class A Common Stock andFOR the approval of The Wet Seal, Inc. 2004 Stock Incentive Plan.

Thank you in advance for your participation and prompt attention.

THE WET SEAL, INC.

26972 Burbank

Foothill Ranch, California 92610

NOTICE OF SPECIALANNUAL MEETING OF STOCKHOLDERS

DECEMBER, 2004JULY 7, 2005

10:00 a.m.

This proxy statement relates toNotice is hereby given that the special meetingAnnual Meeting of Stockholders (the “Special“Annual Meeting”) of stockholders of The Wet Seal, Inc. to(the “Company”) will be held on, December, 2004, at 10:00 a.m., local time, at ourthe Company’s principal executive offices located at 26972 Burbank, Foothill Ranch, California, 92610,on Thursday, July 7, 2005 at 10:00 a.m., local time, or at such other time and place to which the SpecialAnnual Meeting may be adjourned or postponed. This notice, the attached proxy statementpostponed, to consider and form of proxy card are being first mailed to our stockholders on or about, 2004.THE ENCLOSED PROXY IS SOLICITED BY OUR BOARD OF DIRECTORS.

Each of the matters submitted to our stockholders at the Special Meeting is described in more detail in the accompanying proxy statement. We encourage you to read the proxy statement in its entirety, together with the exhibits to the accompanying proxy statement.

At the Special Meeting, you and our other stockholders will be asked to:vote upon:

We will not be able to complete our financing transactions with S.A.C. Capital Associates, LLC and the other participating investors described in the accompanying proxy statement unless you approve Proposals 1 and 2.

You may vote at the Special Meeting if you were a stockholderThe Board of record atDirectors has fixed the close of business on, 2004. May 27, 2005 as the record date for the determination of the stockholders entitled to notice of, and to vote at, the Annual Meeting. A list of such stockholders will be available for examination by any stockholder for any purpose germane to the Annual Meeting, during normal business hours, at the principal executive offices of the Company for a period of ten days prior to the Annual Meeting.

Your vote is important. You may vote on these matters in person or by proxy. We ask that you complete and return the enclosed proxy card promptly – whether or not you plan to attend the Special Meeting – in the enclosed addressed, postage-paid envelope, soTo assure that your shares will be represented and voted at the special meetingAnnual Meeting, please sign and promptly return the accompanying proxy card in accordance with your wishes.the enclosed envelope. You canmay revoke your proxy at any time prior to its exercise by written notice received by us, by delivering to us a duly executed proxy bearing a later date, or by attending the Special Meeting and voting your shares in person. If you sign, date and mail your proxy without indicating how you want to vote, your proxy will be counted as a voteFOR the approval of the issuance of the new securities described herein,FOR the approval of an amendment to our Restated Certificate of Incorporation, as amended, relating to an increase in the number of authorized shares of our Class A Common Stock andFOR the approval of The Wet Seal, Inc. 2004 Stock Incentive Plan.

Foothill Ranch, California

, 2004before it is voted.

If you have any questions about the proposals, including the procedures for voting your shares, please contact Douglas C. Felderman, the Executive Vice President and Chief Financial Officer of the Company, at (949) 699-3919.

BY ORDER OF THE BOARD OF DIRECTORS

JOEL N. WALLER

President and Chief Executive Officer

Foothill Ranch, California

Dated: May·, 2005

TABLE OF CONTENTS

i

ii

THE WET SEAL, INC.

26972 Burbank

Foothill Ranch, California 92610

PROXY STATEMENT

FOR

SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON DECEMBER, 2004GENERAL INFORMATION

TableThis Proxy Statement is furnished by the Board of Contents

CAUTIONARY STATEMENT CONCERNING

FORWARD-LOOKING INFORMATION

This proxy statement contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements that relate to our company’s opening and closing of stores, profitability and growth, demand for our products or any other statements that relate to the intent, belief, plans or expectations of our company or our management. All forward-looking statements made by our company involve material risks and uncertainties and are subject to change based on factors beyond our company’s control. Accordingly, our future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Such factors include, but are not limited to, those described in our filings with the Securities and Exchange Commission (the “SEC”). We will not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION

Within this proxy statement, we have made reference to documents related to the financing transactions with the Investors which have been attached as exhibits to our Current Report on Form 8-K filed with the SEC on November 12, 2004 (our “Transaction 8-K Report”). Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports and the proxy statement for our annual meeting of stockholders are made available, free of charge, on our website, http://www.wetsealinc.com, as soon as reasonably practicable after such reports have been filed with or furnished to the SEC. The content of our website is not intended to be incorporated by reference to this proxy statement. You may read and copy any document we file, including a copy of our Transaction 8-K Report, without charge at the SEC’s Public Reference Room, 450 Fifth Street, N.W., Room 1024, Washington D.C. 20549. You can also obtain these documents from the SEC website, http://www.sec.gov. We will also provide without charge to each person to whom this proxy statement has been delivered, upon written or oral request, copies of the documents attached as exhibits to our Transaction 8-K Report. Written or telephone requests for such copies should be directed to Douglas C. Felderman, Chief Financial Officer, The Wet Seal, Inc. 26972 Burbank, Foothill Ranch California 92610, (949) 699-3919.

i

PROXY STATEMENT SUMMARY

We have included, a Delaware corporation (the “Company”), in connection with the following summarysolicitation of our financing agreements with S.A.C. Capital Associates, LLC and other participating investors to provide background information aboutproxies for use at the proposalsAnnual Meeting of Stockholders (the “Annual Meeting”) to be presentedheld at the Special Meeting of our stockholders. You are encouraged to read this proxy statement in its entirety, together with the exhibits to this proxy statement.

Special Meeting

Time and Place of Special Meeting

We have sent you this proxy statement and the enclosed proxy card because our Board of Directors is soliciting your proxy to vote at our special meeting (the “Special Meeting”) of stockholders or any adjournment or postponement of the Special Meeting. The Special Meeting will be held on, December, 2004, at 10:00 a.m. local time, at ourCompany’s principal executive offices located at 26972 Burbank, Foothill Ranch, California.California, on Thursday, July 7, 2005, beginning at 10:00 a.m., local time, and at any adjournments or postponements thereof. This Proxy Statement and related materials are first being mailed to stockholders on or about May·, 2005.

Matters to be Voted Upon

The Annual Meeting has been called to consider and vote upon:

Number of Common Shares Outstanding; Voting Rights

You may vote atOnly holders of record of the Special Meeting if you were a stockholder of recordCompany’s common stock at the close of business on, 2004, May 27, 2005, the record date for this Proxy Statement, are entitled to receive notice of, and to vote at, the SpecialAnnual Meeting. On that date, there were·shares of ourthe Company’s Class A Common Stock, $0.10 par value per share, issued and outstanding. On that date, no shares of ourthe Company’s Class B Common Stock, $0.10 par value per share, were issued and outstanding. There are currently no shares of common stock held as treasury stock. Holders of our Class A Common Stock are entitled to one vote per share and, while both our Class A Common Stock and our Class B Common Stock vote together as a single class, holders of our Class B Common Stock are entitled to two votes per share. According to our Restated Certificate of Incorporation, as amended, stockholders do not have anyThere is no cumulative voting rights.voting.

QuorumQuorum; Voting Requirements

The presence, in person or by proxy, of the holders of a majority of the shares of our capital stock (which includes each share of our Class A Common Stock and Class B Common Stock (on a converted basis)) issued and outstanding and entitled to vote is necessary to constitute a quorum at the SpecialAnnual Meeting. Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the Annual Meeting. Broker non-votes relate to shares of Class A Common Stock that are not voted by the broker or other nominee who is the record holder of the shares of Class A Common Stock because the broker or nominee has not been instructed by the beneficial owner to vote and the broker or nominee does not have the discretionary authority to vote on the matter.

Assuming that a quorum is present, (i) the affirmative vote of the holders of a majority of the outstanding shares entitled to vote at the Annual Meeting is required to approve the amendment to the Company’s Restated Certificate of Incorporation, (ii) the affirmative vote of the holders of a majority of the outstanding shares present

1

or represented by proxy and entitled to vote at the Annual Meeting is required to (A) elect the nominees to the Board of Directors and (B) ratify the appointment of the independent auditors and (iii) the affirmative majority of the votes cast at the Annual Meeting is required to approve the amendment to the 2005 Stock Incentive Plan.

Abstentions and Non-votesVoting Procedures; Abstentions; Non-Votes

The shares represented by each properly executed unrevoked proxy received in time for the SpecialAnnual Meeting will be voted in accordance with the instructions specified therein. In the absence of instructions, the unrevoked proxieseach proxy will be votedFOR all six nominees andFORProposals 1, 2 and 34 and will be voted in accordance with the discretion of the proxy holders upon all other matters which may properly come before the SpecialAnnual Meeting.

Pursuant to Delaware law, abstentions are treated as present and entitled to vote for purposes of determining a quorum at the SpecialAnnual Meeting, and therefore would have the effect of a vote against a proposal which requiresproposal.

Brokers have discretionary authority to vote on Proposal 1 (Amendment to the majorityRestated Certificate), Proposal 3 (Election of Directors) and Proposal 4 (Ratification of Auditors) and thus broker non-votes will not result on these proposals. Brokers do not have discretionary authority to vote on Proposal 2 (Amendment to the votes presentStock Incentive Plan) and entitled to vote. Aa broker non-vote on athis proposal is considered not entitled to vote on that matter and thus is not counted in determining whether a proposal requiring approval of a majority of the shares present or represented by proxy and entitled to vote has been approved or whether a majority of the vote of the shares present and entitled to vote has been cast.approved.

Revocation of Proxy

Any proxy received by our companythe Company may be subsequently revoked by the stockholder at any time before it is voted at the meeting eitherAnnual Meeting by delivering a subsequent proxy or other written notice of revocation to our companythe Company at its principal executive offices or by attending the SpecialAnnual Meeting and voting in person.

The Financing

Background of the Financing(see discussion beginning on page7)

Beginning in the third quarter of our 2002 fiscal year, we began experiencing a significant decline in sales in our Wet Seal division and these declines continue to date. The continuing decline in sales has led to significant losses and the deterioration in our working capital position, raising concerns about our ability to fund our operations and to continue as a going concern. Despite a private placement completed in June 2004, which raised $27,200,000 in gross proceeds, we continue to experience liquidity problems which impact our ability to successfully sell merchandise in our stores and, if not solved, could lead to a bankruptcy filing by our company.

In August 2004, our Board of Directors established a special committee of independent directors (the “Special Committee”), consisting of Henry Winterstern, as chairman, Alan Siegel and Howard Gross, to analyze alternatives to enhance stockholder value. In September 2004, the Special Committee engaged Rothschild Inc. (“Rothschild”) to provide the Special Committee and, at its request, our company with financial advisory services as the Special Committee evaluated a series of business strategies. Over the next several weeks, the Special Committee and Rothschild reviewed and analyzed a number of business transactions including a transaction proposed by a competitor of our company.

On October 31, 2004, the advisor to S.A.C. Capital Associates, LLC (“SAC”), a participant in our June private placement, delivered a term sheet to us in connection with the transactions described in this proxy statement. After evaluating the term sheet and engaging in discussions with SAC and its representatives, the Special Committee unanimously recommended to our Board of Directors to pursue the financing alternative presented by the advisor to SAC primarily due to the provision of interim financing for our company, the aggregate amount of capital to be provided at closing and the likelihood of closing. In the opinion of the Special Committee, the financing alternative offered by our competitor did not provide us with the sufficient short term and long term capital or certainty of closure necessary for the continued viability of our company.

On November 3, 2004, we entered into an exclusivity agreement with the advisor to SAC pursuant to which we agreed not to accept any competing offer or proposal from any other entity (other than the Investors (as defined below)) until November 14, 2004. On November 8, 2004, our entire Board of Directors participated in a telephonic meeting to consider the terms of the financing proposal with SAC and other participating investors (collectively, the “Investors”). During this meeting, Rothschild provided our Board of Directors with an analysis of the available alternatives and of the merits of the financing with the Investors in light of the then existing alternatives. Rothschild advised our Board of Directors that the Investors’ transaction would, in summary:

For a more detailed discussion of the Rothschild presentation see page8.

On November 8, 2004, our Board of Directors, based on the unanimous recommendation of the Special Committee, unanimously approved and authorized the financing transactions with the Investors (the “Principal Financing”). On November 9, 2004, we entered into a securities purchase agreement (the “Securities Purchase Agreement”) with the Investors, pursuant to which we agreed to issue seven (7) year secured convertible notes (convertible into shares of our Class A

Common Stock), additional investment right warrants (exercisable into additional secured convertible notes) and warrants (exercisable into shares of our Class A Common Stock). The securities may be issued pursuant to an indenture, warrant agreements and/or related documents.

Participants’ Rights Pursuant to the June 2004 Private Placement(see discussion on page 8)

Pursuant to the terms of a securities purchase agreement, dated as of June 29, 2004, by and among our company, SAC and certain other participants (collectively with SAC, the “Participants”), the Participants have the right to purchase up to one-third (25% exclusive of SAC’s right) of the securities in the Principal Financing. As a result the Investors’ purchase obligation in the Principal Financing will be reduced to accommodate any election by any Participant to participate in the Principal Financing. The allocation of any such reduction shall be made ratably among the Investors. Nevertheless, in no event shall the purchase obligation of SAC be reduced to an amount that would be less than a majority of the securities to be purchased in the Principal Financing.

The Interim Financing (see discussion on page 8)

In connection with the execution of the Securities Purchase Agreement, we entered into a $10,000,000 bridge loan credit facility. Certain of the Investors (the “Bridge Loan Participants”) agreed to provide us with this loan to enable our company to have access to sufficient capital to meet our financial obligations through the closing of our transactions with the Investors.

The annual interest rate on this loan is 25% for the term of the facility. The maturity date is the earlier of (i) February 28, 2005 (or as determined in SAC’s sole discretion, March 31, 2005 or April 29, 2005), (ii) the closing of the Principal Financing or (iii) the termination of the Securities Purchase Agreement. The loan is secured by a junior lien against all of the collateral that currently secures all borrowing obligations owed to our present lenders under our existing working capital and term loan credit facilities. In connection with this loan, certain of our current lenders, including Fleet Retail Group, Inc. and Fleet National Bank (currently Bank of America Corporation) and Back Bay Capital Funding LLC, entered into an intercreditor agreement and a subordination agreement pursuant to which the Bridge Loan Participants agreed, among other things, to subordinate their respective rights under the bridge loan credit facility to our debt obligations under our current credit facilities.

At the closing of the Principal Financing, the outstanding principal amount (together with accrued and unpaid interest) of the bridge loan will be applied as partial payment of the aggregate purchase price for the securities to be issued to the Investors.

Material Terms of the Convertible Notes(see discussion on page9)

Pursuant to the terms of the Securities Purchase Agreement, we have agreed to issue $40,000,000 in aggregate principal amount of secured seven (7) year convertible notes (the “Convertible Notes”). The Convertible Notes will bear interest at the federal midterm rate as defined in the Internal Revenue Code of 1986 for the month in which the Convertible Notes will be issued (currently 3.55%). The interest will be payable in cash or may be capitalized on the outstanding principal amount at our option; provided, that, no capitalized interest may be converted into shares of Class A Common Stock and any unpaid capitalized interest will cease to exist upon such conversion. The Convertible Notes are convertible initially into 26,666,666 shares of our Class A Common Stock at an initial conversion price of $1.50.

The conversion price of the Convertible Notes will have full-ratchet anti-dilution protection which means the conversion price will be adjusted from time to time in the event of the issuance of shares of our Class A Common Stock, or securities convertible or exercisable into shares of our Class A Common Stock, at prices below the conversion price of the Convertible Notes. In the event such an adjustment is required, the then current conversion price of the Convertible Notes will be reduced to the price per share at which the Class A Common Stock has been issued or upon which the convertible security (e.g. options, warrants, convertible debt instruments) may be converted or exercised into Class A Common Stock in the future.

Material Terms of the Additional Investment Right Warrants(see discussion on page 11)

In connection with the financing, we have agreed to issue two tranches of additional investment right warrants (collectively, the “Additional Investment Right Warrants”) to acquire:

We have the right to require the Investors to exercise all or a portion of the Additional Investment Right Warrants into Series A Notes and/or Series B Notes (triggering the $9,900,000 and $5,950,000 payment by the Investors to us) beginning six months after the issuance of the Series A AIR and twelve months after the issuance of the Series B AIR. This right terminates on the third anniversary of the issuance of the Additional Investment Right Warrants. In the event of a mandatory exercise, the conversion prices of the Series A Notes and the Series B Notes into Class A Common Stock will be the lesser of (x) the current market price (as defined in the Series A and Series B Notes) of the Class A Common Stock at the time of mandatory exercise and (y) $1.65 and $1.75, respectively.

The conversion prices of the Series A and Series B Notes will have full-ratchet anti-dilution protection which means the respective conversion prices will be adjusted from time to time in the event of the issuance of shares of our Class A Common Stock or securities convertible or exercisable into shares of our Class A Common Stock at prices below the respective conversion prices of the Series A and Series B Notes. In the event such an adjustment is required, the then current conversion price will be reduced to the price per share at which the Class A Common Stock has been issued or upon which the convertible security (e.g. options, warrants, convertible debt instruments) may be converted or exercised into Class A Common Stock in the future.

Material Terms of the Warrants(see discussion on page 12)

In connection with the financing, on November 9, 2004, we issued to the Investors one tranche of four (4) year warrants with an initial exercise price of $1.75 per share for our Class A Common Stock (exercisable initially into 2,300,000 shares of our Class A Common Stock). In addition, we have agreed to issue to the Investors three additional tranches of warrants exercisable into an aggregate of 11,300,000 shares of our Class A Common Stock (collectively, the “Warrants”) as follows:

The exercise prices of the Warrants will also have full-ratchet anti-dilution protection which means the respective exercise prices of the Warrants will be adjusted from time to time in the event of the issuance of shares of our Class A Common Stock or securities convertible or exercisable into shares of our Class A Common Stock at prices below the respective exercise prices of the Warrants. In the event such an adjustment is required, the then current exercise price will be reduced to the price per share at which the Class A Common Stock has been issued or upon which the convertible security (e.g. options, warrants, convertible debt instruments) may be converted or exercised into Class A Common Stock in the future.

Class A Common Stock Ownership Limitations and Your Dilution(see discussion on page 15)

Pursuant to the terms of the Convertible Notes, the Series A Notes, the Series B Notes and the Warrants, a holder of such notes or warrants is prohibited from converting or exercising the notes or warrants if as a result such holder (together with its affiliates) would beneficially own (as that term is defined in Rule 13d-3 of the Securities Exchange Act of 1934 (as amended)) more than 9.99% of our outstanding Class A Common Stock (or a lower percentage pursuant to notice from the applicable Investor).

NEVERTHELESS, YOU SHOULD BE AWARE THAT IF (I) ALL OF THE CONVERTIBLE NOTES, THE SERIES A NOTES, AND THE SERIES B NOTES ARE CONVERTED, (II) THE WARRANTS ARE EXERCISED IN FULL AND (III) ALL 10,000,000 SHARES OF OUR CLASS A COMMON STOCK ARE ISSUED UNDER OUR NEW STOCK INCENTIVE PLAN, THE CURRENT STOCKHOLDERS’ PERCENTAGE OWNERSHIP IN OUR COMPANY OF OUR CLASS A COMMON STOCK, ON A FULLY DILUTED BASIS, WILL BE REDUCED FROM 76.4% TO 33.7%.

Board of Directors Matters

We have agreed, as conditions to the closing of our Principal Financing, that our Board of Directors will consist of no more than 9 members and that the Investors must be satisfied with the identity of (i) the Chairman of the Board of Directors of our company and (ii) 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 our company at closing. Our Board of Directors currently consists of 7 members and at this time there is no intention to fill any vacancies on our Board of Directors.

Consulting Agreements and Other Arrangements(see discussion on page 14)

We are currently negotiating the terms of a short-term consulting agreement with Michael Gold. Mr. Gold is a seasoned specialty retail executive who currently operates over 400 retail clothing stores in Canada and the United States. We intend to enter into a long term consulting arrangement with Mr. Gold prior to the closing of the Principal Financing.

We have also entered into a short-term consulting agreement with RT Management & Consulting Services, LLC, of which Thomas Brosig is president. Pursuant to the consulting agreement, RT Management has been engaged to provide an on-site analysis of all non-merchandising departments, an analysis of administrative costs, employee and compensation issues, organizational structure and information systems, and a physical inspection of buildings, equipment and distribution centers.

Concurrently with this transaction, we are also reevaluating our merchandising history, the viability of each of our stores, the value of our real estate and leases and the strengths and weaknesses of our general operations. We are engaging consultants to assist in this analysis and will be preparing a revised business plan in connection therewith, which will include the closing of certain stores.

Our Business Strategy Following the Principal Financing

The purpose of the Principal Financing and entering into arrangements with Michael Gold, Thomas Brosig and other management additions which may occur is to implement our strategy to return our company to profitability. We believe that the Principal Financing will provide us with the capital needed to effect necessary store closures while maintaining appropriate inventory levels at stores we intend to keep open as well as to absorb operating losses that may be incurred while we implement our plans. With regard to our merchandise, our merchandising strategy will focus on price, while increasing our sales per square foot by offering fresh inventory reflecting current fashion trends.

The Proposals

We are seeking the approval of the following proposals from our stockholders:

The ratification of the issuance of the Series A Warrants and the issuance of our new secured convertible notes, additional investment right warrants, warrants and the shares of our Class A Common Stock that are issuable upon the conversion of our new secured convertible notes and the exercise of our new warrants

Due to the significant number of shares of Class A Common Stock that may be issuable pursuant to the terms of the Convertible Notes, the Series A Notes, the Series B Notes and the Warrants, we are required by applicable rules of our trading market, the Nasdaq National Market, to seek your approval of the issuance of these securities and the underlying shares of Class A Common Stock.

WE WILL NOT BE ABLE TO COMPLETE OUR FINANCING TRANSACTIONS WITH THE INVESTORS DESCRIBED IN THIS PROXY STATEMENT UNLESS YOU APPROVE THIS PROPOSAL AND PROPOSAL 2.

Charter Amendment to Increase the Number of Authorized Shares of our Class A Common Stock

We do not have enough authorized shares of Class A Common Stock to satisfy the conversion and exercise rights associated with securities to be issued in the Principal Financing with the Investors. Accordingly, we seek your approval to amend our Restated Certificate of Incorporation, as amended, to increase the number of authorized shares of Class A Common Stock.

WE WILL NOT BE ABLE TO COMPLETE OUR FINANCING TRANSACTIONS WITH THE INVESTORS DESCRIBED IN THIS PROXY STATEMENT UNLESS YOU APPROVE THIS PROPOSAL AND PROPOSAL 1.

The Wet Seal, Inc. 2004 Stock Incentive Plan

We believe it is essential to attract turn-around and merchandising management to improve the operations of our stores and the financial position of our company. In order to do so, we believe that it is appropriate to provide such individuals with compensation based upon the operating performance of our company. It is our intention to use The Wet Seal, Inc. 2004 Stock Incentive Plan (the “Plan”) to offer equity based incentive arrangements to these managers and consultants. Therefore, we seek your approval of the Plan.

Board Recommendation

THE BOARD OF DIRECTORS OF OUR COMPANY UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSALS 1, 2 AND 3.

PROPOSAL 1

RATIFICATION OF THE ISSUANCE OF THE SERIES A WARRANTS AND APPROVAL OF THE

ISSUANCE OF OUR NEW SECURED CONVERTIBLE NOTES, ADDITIONAL INVESTMENT RIGHT

WARRANTS, WARRANTS AND THE SHARES OF OUR CLASS A COMMON STOCK THAT ARE

ISSUABLE UPON THE CONVERSION OF OUR NEW SECURED CONVERTIBLE NOTES AND

EXERCISE OF OUR NEW WARRANTS

The FinancingDelivery of Proxy Materials and Annual Report

BackgroundOnly one Proxy Statement, proxy card and Annual Report of the Financing

Beginning in the third quarter of fiscal year 2002, we began experiencing a significant decline in sales in our Wet Seal division and these declines continue. The continuing decline in sales has led to significant losses and the deterioration in our working capital position and has raised concerns about our ability to fund our operations and to continue as a going concern. Despite a private placement of our Class A Common Stock completed on June 29, 2004, which raised $27,200,000 in gross proceeds, we continue to experience liquidity issues. The second quarter of fiscal year 2004 represented our eighth consecutive quarter reflecting negative comparable store sales and operating losses.See our Quarterly ReportCompany on Form 10-Q10-K for the fiscal period ending July 31, 2004, as filed withyear ended January 29, 2005 (the “2005 Annual Report”) are being delivered by the SEC on September 9, 2004.Company to multiple stockholders sharing an address, unless the Company receives contrary instructions. The Company will deliver, promptly upon written or oral request, a separate copy of this Proxy Statement and accompanying materials to stockholders at a shared address to which a single copy was delivered.

In additionA stockholder who wishes to our disappointing operational and financial performancereceive a separate copy of this Proxy Statement, proxy card or the 2005 Annual Report now or in the second quarterfuture, or stockholders sharing an address who are receiving multiple copies of 2004, our subsequent Fall back-to-school merchandising efforts have not produced anticipated results. Consequently, we have takenproxy materials and wish to receive a substantial non-cash charge which has resulted in our writing offsingle copy of deferred tax assets and the unamortized portion of certain leasehold improvements. On August 18, 2004, our Board of Directors establishedsuch materials, should submit a Special Committee of independent directors of our companyrequest to analyze appropriate alternatives to enhance stockholder value. The Special Committee was composed of Howard Gross, Alan Siegel and Henry Winterstern, as Chairman. The Special Committee engaged the law firm of Willkie Farr & Gallagher LLP to serve as its legal counsel, and following a series of interviews with investment banking firms, engaged Rothschild in September 2004 to provide financial advisory services. Also, beginning in August 2004, our Board of Directors commenced holding bi-weekly meetings during which the directors were provided with information regarding the financial condition and operations of our company and the alternatives being considered by the Special Committee with the assistance of Rothschild.

After we issued our press release announcing the formation of the Special Committee and following the retention of Rothschild, the Special Committee and Rothschild contacted,Investor Relations at (949) 699-4804, or were contacted by, several interested parties regarding business transactions, including a competitor interested in acquiring most of the operations (including the operating leases) of our Wet Seal division. However, none of these indications of interest were made on business terms or had sufficient clarity, in the opinion of the Special Committee, to warrant additional discussions.

In October 2004, the Special Committee began discussions regarding financing alternatives with the advisor to SAC, a participant in our June 2004 private placement. Following its execution of a customary confidentiality and standstill agreement, the Special Committee began negotiations with the advisor to SAC with respect to the potential purchase of certain notes, investment right warrants and warrants of our company as well as the Investors’ ability to offer interim financing prior to the closing of the proposed transactions.

On October 31, 2004, the advisor to SAC delivered a term sheet to us in connection with the transactions described in this proxy statement. The Special Committee unanimously recommended to our Board of Directors to pursue the financing alternative presented by the advisor to SAC, instead of the alternative proposed by our competitor, primarily due to (i) the commitment to provide interim financing for our company, (ii) the provision of sufficient capital to improve our liquidity position and enable us to attract and retain management with retail and turn-around experience and (iii) a higher likelihood of closure in comparison with the competitor’s proposal. On November 3, 2004, we entered into an exclusivity arrangement with the advisor to SAC,

pursuant to which we agreed not to accept any competing offer or proposal from any other entity (other than the Investors) until November 14, 2004. On November 8, 2004, our entire Board of Directors participated in a telephonic meeting to consider the terms of the financing arrangements offered by the Investors. The Special Committee unanimously concluded that the transaction with the Investors was the best alternative available to our company and our stockholders and recommended to the Board of Directors that it approve this transaction. At the meeting, after considering the recommendation of the Special Committee, our Board of Directors unanimously approved the terms of the financing with the Investors, and, subject to stockholder approval, authorized our company to enter into these transactions. Upon the execution of the Securities Purchase Agreement, the Special Committee was disbanded.

The Rothschild Presentation

In its presentation at our Board of Directors meeting on November 8, 2004, Rothschild offered its analysis of the available alternatives and the merits of the financing with the Investors in light of the then existing alternatives. Rothschild advised our Board of Directors that the transaction with the Investors would, in summary:

Some of the negative considerations of the financing with the Investors identified by Rothschild include:

Our Board of Directors determined that the benefits of the financing proposal presented by the Investors outweighed its negative considerations due to the amount of financing provided by the Investors, the commitment to provide pre-closing financing, the higher degree of certainty of closure and the possibility to enhance stockholder value in connection with executing a successful turn-around strategy.

Participants’ Rights Pursuant to the June 2004 Private Placement

Pursuant to the terms of a securities purchase agreement, dated as of June 29, 2004, by and among our company and the Participants, the Participants have the right to purchase up to one-third (25% exclusive of SAC’s right) of the securities in the Principal Financing. As a result the Investors’ purchase obligation in the Principal Financing will be reduced to accommodate any election by any Participant to participate in the Principal Financing. The allocation of any such reduction shall be made ratably among the Investors. Nevertheless, in no event shall the purchase obligation of SAC be reduced to an amount that would be less than a majority of the securities to be purchased in the Principal Financing.

Interim Financing

In an effort to provide us with additional liquidity through the closing date of the Principal Financing, we entered into an interim financing facility with certain of the Investors in the form of a $10,000,000 bridge term loan (the “Bridge Facility”).Investor Relations, The Wet Seal, Inc. is the lead borrower under the Bridge Facility, with The Wet Seal Retail, Inc. and Wet Seal Catalog, Inc. as additional borrowers (collectively, the “Borrowers”). Wet Seal GC, Inc. is the

guarantor for the Bridge Facility (the “Guarantor”) and SAC serves as the Administrative and Collateral Agent., 26972 Burbank, Foothill Ranch, California 92610.

The bridge loan bears interestThis Proxy Statement and the 2005 Annual Report are available on the Company’s website at an annual ratehttp://www.wetsealinc.com. Information on the Company’s website, other than this Proxy Statement, form of 25% fixed forproxy and the termcharters of the Bridge FacilityCompany’s Audit Committee, Compensation/Option Committee and interest accrues monthly, in arrears. The loan will become dueNominating and payable on the earlier of (i) February 28, 2005 (or as determined in SAC’s sole discretion, March 31, 2005 or April 29, 2005), (ii) the closingCorporate Governance Committee are not part of the Principal Financing and (iii) the termination of the Securities Purchase Agreement. The Bridge Loan Participants have agreed to subordinate any acceleration claims with respect to the Bridge Facility pursuant to the terms of the Intercreditor and Lien Subordination Agreement dated as of November 9, 2004, by and among SAC Capital Associates, as Administrative Agent for the lenders and Collateral Agent under the Bridge Facility, the Borrowers, the Guarantor and Fleet Retail Group, Inc., as Administrative Agent and Collateral Agent under the Existing Credit Agreements (the “Intercreditor and Lien Subordination Agreement”).Company proxy soliciting materials.

The borrowings under the Bridge Facility are secured by a junior lien against all of the collateral that currently secures all of the borrowing obligations owed to the Borrowers’ current lenders (the “Existing Lenders”) under existing working capital and term loan credit facilities (the “Existing Credit Agreements”). The respective rights of the Existing Lenders and the lenders under the Bridge Facility in the shared collateral are set out in the Intercreditor and Lien Subordination Agreement.

At the closing of the Principal Financing, the aggregate purchase price for the securities to be issued to the Investors shall be reduced by the outstanding principal amount (together with accrued and unpaid interest) of the bridge loan.

Material Terms of the Convertible Notes

Pursuant to the terms of the Securities Purchase Agreement, we have agreed to issue $40,000,000 in aggregate principal amount of Convertible Notes to the Investors. For a complete description of the Convertible Notes, please see the Form of Initial Convertible Note attached as Exhibit 10.4 to our Transaction 8-K Report. The Convertible Notes may be issued pursuant to an indenture and/or related documents.

The Convertible Notes:

Anti-dilution Protection

The conversion price of the Convertible Notes will have full-ratchet anti-dilution protection which means the conversion price will be adjusted from time to time in the event of the issuance of shares of our Class A Common Stock, or securities convertible or exercisable into shares of our Class A Common Stock, at prices below the conversion price of the Convertible Notes. In the event such an adjustment is required, the then current conversion price of the Convertible Notes will be reduced to the price per share at which the Class A Common Stock has been issued or upon which the convertible security (e.g. options, warrants, convertible debt instruments) may be converted or exercised into Class A Common Stock in the future.

Optional Redemption upon a Change of Control

Upon a “change of control” (as defined in the Form of Initial Convertible Note), the Investors will have the right to cause us to redeem all or any portion of the Convertible Notes at a price equal to the greater of:

To the extent not redeemed upon a “change in control,” each Investor shall have the right to cause the ultimate parent company of the acquiring or surviving company in the change of control to issue new notes in replacement of the Convertible Notes with terms (including, without limitation, conversion rights, security, rank, covenants and events of defaults) equivalent to those contained in the Convertible Notes.

Covenants

The Convertible Notes will impose certain customary affirmative and negative covenants upon our company and our subsidiaries, including but not limited to:

Events of Default

In connection with the Convertible Notes, an event of default includes, but is not limited to, the following events:

Material Terms of the Additional Investment Right Warrants

Pursuant to the terms of the Securities Purchase Agreement, we agreed to issue to the Investors Additional Investment Right Warrants. For a complete description of the terms of the Additional Investment Right Warrants please refer to the Form of Series A Additional Investment Right Warrant and the Form of Series B Additional Investment Right Warrant attached as Exhibits 10.8 and 10.9, respectively, to our Transaction 8-K Report. The Additional Investment Right Warrants may be issued pursuant to warrant agreements and/or related documents.

Series A and B Additional Investment Right Warrants

The Series A Additional Investment Right Warrants (the “Series A AIRs”) may be exercised for five (5) years following the date of issuance to acquire up to $9,900,000 in principal amount of additional Convertible Notes (the “Series A Notes”). The initial conversion price per share of our Class A Common Stock for the Series A Notes will be $1.65 (the “Series A Rights Conversion Price”).

The Series B Additional Investment Right Warrants (the “Series B AIRs”) may be exercised for up to three (3) years following the date of issuance to acquire up to $5,950,000 in principal amount of additional Convertible Notes (the “Series B Notes”). The initial conversion price per share of our Class A Common Stock for the Series B Notes will be $1.75 (the “Series B Rights Conversion Price”).

Mandatory Conversion of the Additional Investment Right Warrants

At our option, at any time after the six month and twelve month anniversaries of the issuance of the Series A AIRs and the Series B AIRs, respectively, we may require the exercise of the Additional Investment Right Warrants by the respective holders, in whole or in part. We must provide at least thirty (30) days prior written notice of our intention to compel the exercise of the Additional Investment Right Warrants. In addition, we must have satisfied the following conditions on each day during the period beginning three (3) months prior to the mandatory exercise date (the “Measuring Period”):

If we elect to compel the exercise of the Series A AIRs and/or the Series B AIRs, then the conversion prices for the Series A Notes and Series B Notes will be equal to the lower of (i) $1.65 and $1.75, respectively, and (ii) the “Current Market Price” of our Class A Common Stock at the time of the mandatory exercise. For purposes of the Additional Investment Right Warrants, “Current Market Price” has been defined to mean the arithmetic average of the volume weighted average price of our Class A Common Stock over the five (5) consecutive trading days ending on the third trading day immediately prior to the date of mandatory exercise.

Our right to force the exercise of the Additional Investment Right Warrants terminates on the third anniversary of the issuance date of these securities.

Anti-dilution Protection

The conversion prices of the Series A and Series B Notes will have full-ratchet anti-dilution protection which means the respective conversion prices will be adjusted from time to time following the issuance of shares of our Class A Common Stock or securities convertible or exercisable into shares of our Class A Common Stock at prices below the respective conversion prices of the Series A and Series B Notes. In the event such an adjustment is required, the then current price will be reduced to the price per share at which the Class A Common Stock has been issued or upon which the convertible security (e.g. options, warrants, convertible debt instruments) may be converted or exercised into Class A Common Stock in the future.

Material Terms of the Warrants

Pursuant to the terms of the Securities Purchase Agreement, we have issued to the Investors Series A Warrants and have agreed to issue Series B Warrants, Series C Warrants and Series D Warrants upon the closing of the Principal Financing. The Warrants may be issued pursuant to warrant agreements and/or related documents.

Series A Warrants

The Series A Warrants (the “Series A Warrants”), issued pursuant to the Securities Purchase Agreement, may be exercised for the period beginning on the earlier of (i) the approval of our stockholders of this Proposal and Proposal 2 or (ii) May 9, 2005. The Series A Warrants may be exercised to purchase up to 2,300,000 shares of our Class A Common Stock at an exercise price per share equal to $1.75. The exercise period of the Series A Warrants terminates on November 9, 2008.

Series B, Series C and Series D Warrants

The Series B, Series C and Series D warrants will be issued at the closing of the Principal Financing with the Investors. The Series B Warrants may be exercised for a period of four (4) years following the date of issuance to purchase up to 3,400,000 shares of our Class A Common Stock at an initial exercise price per share equal to $2.25. The Series C Warrants may be exercised for a period of five (5) years following the date of issuance to purchase up to 4,500,000 shares of our Class A Common Stock at an initial exercise price per share equal to $2.50. The Series D Warrants may be exercised for a period of five (5) years following the date of their issuance to purchase up to 3,400,000 shares of our Class A Common Stock at an initial exercise price per share equal to $2.75.

Anti-dilution Protection

The exercise prices of the Warrants will also have full-ratchet anti-dilution protection which means the respective exercise prices of the Warrants will be adjusted from time to time following the issuance of shares of our Class A Common Stock or securities convertible or exercisable into shares of our Class A Common Stock at prices below the respective exercise prices of the Warrants. In the event such an adjustment is required, the then current exercise price will be reduced to the price per share at which the Class A Common Stock has been issued or upon which the convertible security (e.g. options, warrants, convertible debt instruments) may be converted or exercised into Class A Common Stock in the future.

Material Terms of the Registration Rights Agreement

Pursuant to the terms of the Securities Purchase Agreement, we entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investors, whereby we granted to each Investor registration rights with respect to the resale of the Convertible Notes, the Additional Investment Right Warrants, the Warrants and the shares of our Class A Common Stock issuable upon the conversion and exercise of such securities.

Pursuant to the Registration Rights Agreement, we are required to file, no later than thirty (30) calendar days after the closing of the Principal Financing (the “Closing Date”) or the termination of the Securities Purchase Agreement (the “Termination Date”), a registration statement with the SEC on Form S-3. We have agreed to use our reasonable efforts to have the registration statement declared effective by the SEC within ninety (90) calendar days (or in the event the SEC reviews the registration statement and requires us to make modifications, 120 calendar days) after the Closing Date or the Termination Date. In the event that registration on Form S-3 is unavailable, we are required to register the resale of the securities on another appropriate form reasonably acceptable to the Investors and undertake to file a registration on Form S-3 as soon as such form is available.

In the event we (i) fail to file a registration statement by the applicable deadline, (ii) fail to have a registration statement declared effective by the applicable deadline, or (iii) due to a breach of our obligations under the Registration Rights Agreement, cause a registration statement to become unavailable to an Investor for the resale of covered securities (each a “Registration Delay”), we are required to pay, upon the occurrence of a Registration Delay and every thirtieth day thereafter until such Registration Delay is cured, to the applicable holder, an amount equal to two percent (2%) of the principal amount paid for any Convertible Note, Series A Note, Series B Note and shares of our Class A Common Stock issued pursuant to those securities, and two percent (2%) of the exercise price of a Warrant or related shares of Class A Common Stock issuable upon the exercise of a Warrant.

At any time after a registration statement has been declared effective by the SEC, we are entitled to delay the disclosure of material non-public information and thereby temporarily suspend the registration statement, if such disclosure is, in the good faith judgment of our Board of Directors, not in the best interest of our company, provided that no such grace period may exceed fifteen (15) consecutive days and the aggregate of such grace periods may not exceed thirty (30) days in any 365-day period. We will pay for the costs associated with any registration under the Registration Rights Agreement.

Rights of First Refusal for Future Equity Issuances

For a period of three years following the closing of the Principal Financing, the Investors will be granted a right of first refusal with respect to any equity or equity-linked financing by our company, subject to the

participation rights held by existing stockholders which were granted under the Securities Purchase Agreement, dated June 29, 2004, entered into in connection with the private placement of our Class A Common Stock.

Conditions Precedent

The obligations of the Investors to consummate the Principal Financing described in this proxy statement are subject to a number of conditions, including the following:

For a detailed discussion of each of the conditions precedent to the closing of the Principal Financing, please refer to the Securities Purchase Agreement attached as Exhibit 10.1 to our Transaction 8-K Report.

Even if stockholder approval is obtained for the Principal Financing, the Principal Financing may not close if the closing conditions are not met or waived.

Consulting Agreements and Other Arrangements

We are currently negotiating the terms of a short-term consulting agreement with Michael Gold. Mr. Gold is a seasoned specialty retail executive who currently operates over 400 retail clothing stores in Canada and the United States. We intend to enter into a long term consulting arrangement with Mr. Gold prior to the closing of the Principal Financing.

We have also entered into a short-term consulting agreement with RT Management & Consulting Services, LLC, of which Thomas Brosig is president. Pursuant to the consulting agreement, RT Management has been engaged to provide an on-site analysis of all non-merchandising departments, an analysis of administrative costs, employee and compensation issues, organizational structure and information systems, and a physical inspection of buildings, equipment and distribution centers.

Concurrently with this transaction, we are also reevaluating our merchandising history, the viability of each of our stores, the value of our real estate and leases and the strengths and weaknesses of our general operations. We are engaging consultants to assist in this analysis and will be preparing a revised business plan in connection therewith, which will include the closing of certain stores.

Our Business Strategy Following the Principal Financing

The purpose of the Principal Financing and entering into arrangements with Michael Gold, Thomas Brosig and other management additions which may occur is to implement our strategy to return our company to profitability. We believe that the Principal Financing will provide us with the capital needed to effect necessary store closures while maintaining appropriate inventory levels at stores we intend to keep open as well as to absorb operating losses that may be incurred while we implement our plans. With regard to our merchandise, our merchandising strategy will focus on price, while increasing our sales per square foot by offering fresh inventory reflecting current fashion trends.

Class A Common Stock Ownership Limitation and Your Dilution

Pursuant to the terms of the Convertible Notes, the Series A Notes, the Series B Notes and the Warrants, each holder is prohibited from converting or exercising any such securities if as a result such holder (together with its affiliates) would beneficially own (as that term is defined in Rule 13d-3 of the Securities Exchange Act of 1934 (as amended) more than 9.99% of our outstanding Class A Common Stock (or a lower percentage pursuant to notice from the applicable Investor).

However, assuming all of the shares of Class A Common Stock issuable upon conversion or exercise of the Convertible Notes or the Warrants were issued absent the ownership limitation agreed to by the Investors, your percentage equity ownership in our company would decrease significantly. In addition, the issuance of additional shares would significantly dilute your voting rights as a holder of our Class A Common Stock. The table below depicts our issued and outstanding shares of Class A Common Stock, Class B Common Stock and common stock equivalents as of November 11, 2004 and, on a pro forma basis, the Class A Common Stock potentially issuable under the terms of the Principal Financing.

YOU SHOULD BE AWARE THAT IF (I) ALL OF THE CONVERTIBLE NOTES, THE SERIES A NOTES, AND THE SERIES B NOTES ARE CONVERTED, (II) THE WARRANTS ARE EXERCISED IN FULL AND (III) ALL 10,000,000 SHARES OF OUR CLASS A COMMON STOCK ARE ISSUED UNDER OUR NEW PLAN, THE CURRENT STOCKHOLDERS’ PERCENTAGE OWNERSHIP IN OUR COMPANY OF OUR CLASS A COMMON STOCK, ON A FULLY DILUTED BASIS, WILL BE REDUCED FROM 76.4% TO 33.7%.

Although the number of shares of Class A Common Stock potentially issuable under the terms of the Principal Financing is significant, our Board of Directors has determined, in consultation with its advisors, that the financing alternative presented by the Investors represents the best alternative for our company in light of our financial condition.

Exclusivity Agreement and Payment of Expenses

We have agreed that during the period from the signing of the Securities Purchase Agreement until the closing of the Principal Financing, we will not, and will cause our directors, officers, agents, representatives, affiliates, stockholders and any other person acting on our behalf not to, directly or indirectly, (i) 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 our company, (B) an acquisition of 5% or more of the then-outstanding equity securities of our company, (C) an acquisition of equity securities, or of debt securities or other securities convertible into or exchangeable for equity securities of our company, which would, after giving effect to such conversion or exchange, constitute more than 5% of the outstanding equity securities of our company, (D) the issuance of debt securities with no equity component or related equity component of, or other borrowing by, our company in an amount in excess of $10,000,000, (E) a sale, transfer, conveyance, lease or disposal of all or any significant portion of the assets of our 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 our company or the adoption of a plan of liquidation or dissolution by our company, (G) the occurrence of individuals who at the beginning of such period constituted the Board of Directors or other governing body of our company (together with any new directors whose election to such Board of Directors or whose nomination for election by our stockholders was approved by a vote of 66 2/3% 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 Directors then in office or (H) any other transaction in lieu of, or which would impede or prevent, the transactions contemplated by the Principal Financing documents (any of the foregoing, a “Competing Transaction”), or (ii) 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 our company from taking a position pursuant to certain rules promulgated under the Securities Exchange Act of 1934 (as amended) with regard to any unsolicited tender offer.

Irrespective of whether the Principal Financing is consummated or the Securities Purchase Agreement is terminated, we have agreed to pay all out-of-pocket costs, fees and expenses (including the fees and expenses of Schulte Roth & Zabel LLP, counsel for SAC and its affiliates) (“Expenses”) incurred by, or on behalf of, SAC in connection with the financing transaction, including, but not limited to, in connection with (i) any accounting, business, environmental, legal, or regulatory due diligence review of our company and our business and (ii) the revision, negotiation, execution and delivery of all Principal Financing documents and the Bridge Facility and any related documents, up to a maximum reimbursement of $600,000 (the “Fee Cap”). However, the Fee Cap will be increased if SAC determines that such amount does not reasonably reflect the actual or reasonably anticipated Expenses and our Board of Directors approves such increase (such approval not to be unreasonably withheld or delayed). Nevertheless, we will not be obligated to pay more than $250,000 in Expenses if we terminate the Securities Purchase Agreement pursuant to a material breach by the Investors having a right to acquire a majority of the Convertible Notes.

Nasdaq National Market Stockholder Approval Requirements and Vote Required

In most instances in which our Board of Directors authorizes the issuance of shares of Class A Common Stock or securities convertible or exercisable into shares of our Class A Common Stock, we are not required to seek the approval of stockholders. However, due to the significant dilution that could result from the issuance of our Class A Common Stock pursuant to the terms of the Convertible Notes, the Series A Notes, the Series B Notes and the Warrants, we are required by our principal trading market, the Nasdaq National Market, to solicit stockholder approval. In particular, NASD Rule 4350 requires stockholder approval in the event of (i) the sale, issuance or potential issuance by the issuer of common stock (or securities convertible into or exercisable for common stock) at a price less than the greater of book or market value which, together with sales by officers, directors or substantial

stockholders of the issuer, equals 20% or more of common stock or 20% or more of the voting power outstanding before the issuance and (ii) any transaction that may be deemed to be a change of control of the issuer.

Therefore, we need to obtain stockholder approval because the conversion or exercise, as applicable, of all of the Convertible Notes, the Series A Notes, the Series B Notes and the Warrants, in accordance with their respective terms, would result in the issuance of more than 20% of our Class A Common Stock and the effect of such issuance of our Class A Common Stock could be deemed for purposes of applicable NASD rules to be a change of control of our company.

The affirmative vote of the holders of a majority of a quorum of the issued and outstanding shares of our voting stock present in person or represented by proxy and entitled to vote at the Special Meeting will be required to approve this proposal.

Board Recommendation

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THIS PROPOSAL.

PROPOSAL 2ONE

CHARTER AMENDMENT TO INCREASE

THE NUMBER OF AUTHORIZED SHARES

OF OUR CLASS A

COMMON STOCK

Purpose of the Share Increase Amendment

After taking into consideration our current outstanding equity obligations, together with our obligations under the Securities Purchase Agreement described in this proxy statement, our Board of Directors determined that it is necessary to amend our Restated Certificate of Incorporation, as amended (“Restated Certificate of Incorporation”) to increase the number of shares of our Class A Common Stock authorized for issuance. Currently, we do not have a sufficient number of shares of our Class A Common Stock authorized to meet the maximum number of shares we would be required to issue if the holders of all of the Convertible Notes, the Series A Notes, the Series B Notes and the Warrants sought to convert and exercise those instruments. Also, if you approve The Wet Seal, Inc. 2004 Stock Incentive Plan, we will reserve 10,000,000 shares of Class A Common Stock for issuance under the terms of that Plan.

Our Restated Certificate of Incorporation currently permits us to issue up to 72,000,000162,000,000 shares of capital stock, of which 2,000,000 shares are designated as preferred stock, having a par value of $0.01 per share, 60,000,000150,000,000 shares are designated as Class A Common Stock, having a par value of $0.10 per share, and 10,000,000 shares are designated as Class B Common Stock, having a par value of $0.10 per share.

AtOn May 12, 2005, the Special Meeting, we will ask ourCompany’s Board of Directors approved, subject to stockholders to approveapproval, an amendment to ourthe Company’s Restated Certificate of Incorporation to increase the number of authorized shares of Class A Common Stock from 60,000,000150,000,000 to 150,000,000.300,000,000 (the “Certificate Amendment”). In order to effect this change, the total number of shares of commoncapital stock authorized in ourthe Company’s Restated Certificate of Incorporation would be increased from 70,000,000162,000,000 to 160,000,000312,000,000 and the total number of capitalshares of common stock authorized in ourthe Company’s Restated Certificate of Incorporation would be increased from 72,000,000160,000,000 to 162,000,000.310,000,000. At the Annual Meeting, the Company’s stockholders will be asked to approve the Certificate Amendment.

In additionAs of the date of this Proxy Statement, we have· shares of Class A Common Stock issued and outstanding. We have an additional· shares of Class A Common Stock reserved for issuance under our existing stock incentive plans and convertible securities issued in our private placement financing entered into since May 2004. The principal purpose of the Certificate Amendment is to our obligations under the securities to be issued to the Investors, we may require thatauthorize additional shares of our capital stockClass A Common Stock to be available for acquisitions and other corporate purposes, such asissuance in the event that the Board of Directors determines that it is in the best interests of the Company to raise additional capital through the sale of securities, to effect future stock dividends, stock splits or recapitalizations, andto acquire another company or its business or assets through the issuance of securities, to establish a strategic relationship with a corporate partner through the exchange of securities or for issuance under the Company’s stock incentive plans. The additional shares would also be available in connection with theany anti-dilution protection afforded to the holders of the Convertible Notes, Series A and Series B Notes and the Warrants. As a result, ourCompany’s securities.

The Board of Directors has deemed it advisable to seekbelieves that approval of additionalthe Certificate Amendment to increase the authorized shares of capital stock for these purposes. While there are no acquisitions pending which would involveis necessary to provide the issuance of such additional shares, we from time to time consider potential acquisitions, some or all of which may involve the issuance of shares of our capital stock.

The text of the proposed amendment to the Restated Certificate of Incorporation is attached to this proxy statement as Exhibit A.

If our stockholders do not approve the amendment to our Restated Certificate of Incorporation, we will be unable to consummate the financing transactionsCompany with the Investors which would significantly impact our abilityflexibility to survive aspursue the opportunities described above without the added delay and expense of having to convene a going concern.

Effectmeeting of stockholders. If the Increase in the Authorized Number of Shares of Class A Common Stock

Until issued, the increase in the number of authorizedCertificate Amendment is adopted, 150,000,000 additional shares of Class A Common Stock will not have any immediate effect on your rights as an existing stockholder. Moreover, pursuant tobe available for issuance by the termsCompany in the discretion of the Convertible Notes, Series A Notes, the Series B Notes and the Warrants each holder is prohibited from converting or exercising any such securities if as a result such holder (together with its affiliates) would beneficially own (as that term is defined in Rule 13d-3 of the Securities Exchange Act of 1934 (as amended) at any time more than 9.99% of our outstanding Class A Common Stock.NEVERTHELESS, YOU SHOULD BE AWARE THAT IF (I) ALL OF THE CONVERTIBLE NOTES, THE SERIES A NOTES, AND THE SERIES B NOTES ARECONVERTED, (II) THE WARRANTS ARE EXERCISED IN FULL AND (III) ALL 10,000,000 SHARES OF OUR CLASS A COMMON STOCK ARE ISSUED UNDER OUR NEW PLAN, THE CURRENT STOCKHOLDERS’ PERCENTAGE OWNERSHIP IN OUR COMPANY OF OUR CLASS A COMMON STOCK, ON A FULLY DILUTED BASIS, WILL BE REDUCED FROM 76.4% TO33.7%. Please refer to our discussion in Proposal 1 under the heading “Class A Common Stock Ownership Limitation and Your Dilution” for analysis of your potential dilution.

Although the number of shares of Class A Common Stock potentially issuable under the terms of the Principal Financing is significant, our Board of Directors without any further stockholder approval, although certain issuances of shares may require stockholder approval in accordance with Nasdaq requirements. The Company has determined, in consultationno present plans or proposals to issue the additional authorized shares.

The text of the Certificate Amendment is attached to this Proxy Statement as Exhibit A. The Certificate Amendment will become effective upon its filing with its advisors, that the financing alternative presented bySecretary of State of the Investors represents the best alternative for our company in lightState of our financial condition.Delaware, which is expected to occur promptly after stockholder approval of this proposal.

Vote Required

Under Delaware law, in order to approveApproval of this proposal we will need (i)requires the affirmative vote of the holders of a majority of the votes attributable, collectively, to the holders of our outstanding Class A Common Stock and Class B Common Stockshares entitled to vote at the Special MeetingAnnual Meeting.

Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE CERTIFICATE OF AMENDMENT TO THE COMPANY’S RESTATED CERTIFICATE OF INCORPORATION.

3

PROPOSAL TWO

APPROVAL OF AMENDMENT NO. 1 TO THE WET SEAL, INC. 2005 STOCK INCENTIVE PLAN

Proposed Amendment to Increase Shares Authorized

The Wet Seal, Inc. 2005 Stock Incentive Plan (the “Plan”) was originally adopted by the Board of Directors in November 2004 and (ii) dueapproved by the stockholders in January 2005, and a total of 10,000,000 shares of the Company’s Class A Common Stock are currently authorized for issuance thereunder.

The Company’s Board of Directors has adopted, subject to our intentionstockholder approval, an amendment to the Plan to increase the number of authorized shares of Class A Common Stock authorized for issuance under the affirmative vote of the holders of a majority of outstandingPlan by 2,500,000 shares of Class A Common Stock entitled to vote at the Special Meeting, voting together as a separate class.(the “Plan Amendment”).

Board RecommendationAs of May 27, 2005, the record date for the Annual Meeting, there have been

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THIS PROPOSAL.·

PROPOSAL 3 shares of restricted stock and performance shares granted under the Plan, leaving only

APPROVAL OF THE WET SEAL, INC. 2004 STOCK INCENTIVE PLAN·

Overview

At shares available for future grants under the Plan. These grants have been made to our BoardPresident and Chief Executive Officer, one of Directors meeting, convened to approve our transactionsExecutive Vice Presidents and our non-employee directors. In the near term, we anticipate granting additional restricted shares in connection with the Investors,hiring or appointment of individuals, as well as company management who will assist us in returning the Board of Directors adoptedCompany to profitability, including Michael Gold who has assisted the Plan, subject to our stockholder approval at the Special Meeting. The Plan was adopted in order to assist our company in attracting managementCompany with turn-around andits merchandising expertise. In addition, the Plan will be used to grant awards to our officers, employees, directors and consultants in order to provide such individuals with (i) additional incentive to work to increase the value of our Class A Common Stock and (ii) a stake in the future of our company. We are asking you to approve the adoption of the Plan and the reservation of a total of 10,000,000 shares of our Class A Common Stock for issuance thereunder.

The Plan provides for the award of options, whether nonqualified or incentive, stock appreciation rights, restricted common stock, restricted common stock units, performance shares, performance share units and cash bonuses.initiatives.

In order to qualify for deductibility under Section 162(m) of the Internal Revenue Code, of 1986, as amended (the “Code”),the amendment to the Plan, including, without limitation, the performance goals for determining performance awards set forth in the Plan with respect to the additional reserved shares, must be approved by ourthe Company’s stockholders. In addition, we are seeking your approval of the amendment to the Plan pursuant to NASD Rule 4350(A)4350 which requires our companythe Company to obtain stockholder approval when a stock option plan is established.amended.

The full text of the Plan Amendment is set forth as Exhibit B to this Proxy Statement. A general description of the principal terms of the Plan, as amended by the Plan Amendment, is set forth below. However, thisThe summary, however, does not purport to be a complete description of all of the provisions of the Plan. Any stockholder of the Company who wishes to obtain a copy of the Plan as proposed to be adopted, which is attached to this proxy statement as Exhibit B.may do so upon the written request of the Corporate Secretary at the Company’s principal executive offices located at 26972 Burbank, Foothill Ranch, California 92610.

Summary of the Plan

Number of Shares

Subject to adjustment for certain corporate events, the total of the number of shares of Class A Common Stock which shall be available for the grant of awards (including incentive stock options) under the Plan shall not exceed 10,000,000 shares (12,500,000 shares if the Plan Amendment is approved) of Class A Common Stock; provided, that, for purposes of this limitation, any Class A Common Stock subject to an option which is canceled or expires without exercise shall again become available for award under the Plan. Upon forfeiture of awards in accordance with the provisions of the Plan and the terms and conditions of the award, such shares shall again be available for subsequent awards under the Plan. Subject to adjustment in accordance with the Plan, no employee shall be granted, during any one (1) year period, options, or any other awards eligible for grant under the Plan, to purchase more than [_],000,00010,000,000 shares of our Class A Common Stock and, the number of shares ofCompany’s Class A Common Stock, subject to any awards other than options shall not exceed [_],000,000 shares of Class A Common Stock.availability under the Plan. Shares of Class A Common Stock available for issueissuance or distribution under the Plan shall be authorized and unissued shares, treasury shares or shares reacquired by us in any manner.

4

Administration

The CompensationCompensation/Option Committee (the “Committee”) of ourthe Company’s Board of Directors will administeradministers the Plan. The Committee is currently comprised of Sidney M. Horn, Harold D. Kahn, Kenneth M. Reiss and Henry D. Winterstern, Howard Gross and Walter Loeb, as Chairman, each of whowhom are non-employee directors within the meaning of Rule 16b-3 as promulgated under Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are also outside directors within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended.Code. The Committee will (i) approveapproves the selection of participants, (ii) determinedetermines the type of awards to be made to participants, (iii) determinedetermines the number of shares of Class A Common Stock subject to awards, (iv) determinedetermines the terms and conditions of any awards granted thereunder (including, but not limited to, any restriction and forfeiture conditions on such awards) and (v) havehas the authority to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements entered into thereunder, and to make all other determinations necessary or advisable for the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any

inconsistency in the Plan or in any award in the manner and to the extent it shall deem desirable to carry it into effect.

Eligibility

Employees, officers, directors and consultants of our companythe Company and ourthe Company’s subsidiaries selected by the Committee are eligible to receive grants of awards under the Plan. Only employees of our companythe Company and ourthe Company’s subsidiaries may be granted incentive stock options.

Awards

Awards under the Plan may consist of options, stock appreciation rights, restricted common stock, restricted common stock units, performance shares, performance share units or cash bonuses.

Options

Both nonqualified stock options or (“Nonqualified Stock OptionsOptions”) and “incentive stock options” (“ISOs”) may be granted under the Plan, collectively referred to as the Options. The terms of any such Option shall be set forth in an Option agreement and shall be consistent with the following:

Exercise PricePrice.

The exercise price per share of ourthe Company’s Class A Common Stock to be purchased pursuant to any Option shall be fixed by the Committee at the time such Option is granted and shall not be less than the fair market value of a share of Class A Common Stock on the date the Option is granted; provided, however, in the case of ISOs granted to an employee owning stock possessing more than 10% of the total combined voting power of all classes of shares of our companythe Company and its subsidiaries, the price per share specified in an Option agreement shall not be less than 110% of the fair market value per share of Class A Common Stock on the date of grant.

Option TermTerm.

The term of each Option will be determined by the Committee, but may not exceed ten (10) years from the date of grant; provided, however, that in the case of ISOs granted to 10% stockholders, the term of such Option shall not exceed five (5) years from the date of grant.

VestingVesting.

An Option shall vest and become exercisable at a rate determined by the Committee on the date of grant, with a minimum vesting period of one (1) year.

Method of ExerciseExercise.

Options may be exercised, in whole or in part, by giving written notice of exercise to our companythe Company in a form approved by us specifying the number of shares of Class A Common Stock to be purchased. Such notice shall be accompanied by the payment in full of the exercise price. The exercise price of the Option may be paid by (i) cash or certified or bank check, (ii) surrender of Class A Common Stock held by the optionee for at least six (6) months prior to exercise (or such longer or shorter period as may be required to

5

avoid a charge to earnings for financial accounting purposes) or the attestation of ownership of such shares, in either case, if so permitted by us, (iii) if established by us, through a “same day sale” commitment from the optionee and a broker-dealer selected by us that is a member of the National Association of Securities Dealers, or an NASD Dealer, whereby the optionee irrevocably elects to exercise the Option and to sell a portion of the shares so purchased sufficient to pay for the total exercise price and whereby the NASD Dealer irrevocably commits upon receipt of such shares to forward the total exercise price directly to us, (iv) through additional methods prescribed by the Committee or (v) by any combination of the foregoing, and, in all instances, to the extent permitted by applicable law. Options may not be exercised for fractional shares of ourthe Company’s Class A Common Stock. A participant’s subsequent transfer or disposition of any Class A

Common Stock acquired upon exercise of an Option shall be subject to any federal and state laws then applicable, specifically securities law, and the terms and conditions of the Plan.

Prohibition on RepricingRepricing.

No Option granted under the Plan shall be amended to reduce the exercise price under such Option, or surrendered in exchange for a replacement Option having a lower purchase price per share; provided, that, this prohibition shall not restrict or prohibit any adjustment permitted under the Plan in connection with certain corporate events or changes in the Class A Common Stock.

Stock Appreciation Rights “SARs”

The Plan permits the Committee to award from time to time SARs to an eligible participant either at the time of the grant of an Option or thereafter by amendment to the option. A SAR is the right to receive the increase between the grant price and the market price of ourthe Company’s Class A Common Stock on the date of settlement in Class A Common Stock or cash.

Restricted Common Stock

The Plan permits the Committee to award restricted Class A Common Stock under the Plan to eligible participants. The Committee may also award restricted Class A Common Stock in the form of restricted common stock units having a value equal to an identical number of shares of Class A Common Stock. Payment of restricted common stock units shall be made in Class A Common Stock or in cash or in a combination thereof (based upon the fair market value of the Class A Common Stock on the day the restricted period expires), all as determined by the Committee in its discretion. Restricted Class A Common Stock awards shall vest at a rate determined by the Committee on the date of grant, with a minimum vesting period of one (1) year. Vesting of restricted stock and restricted stock units may be subject to Performance Goals and otherwise structured as a Performance Award (see below).

Performance Awards

Under the Plan, the Committee has the authority to grant Performance Awards (as defined below) which provide participants with the right to an award based upon the achievement of one or more levels of performance required to be attained with respect to a Performance Goal (as defined below) set by the Committee during a Performance Period (as defined below) or the Performance Objective.Objective (as defined in the Plan). Performance shares may be granted in the form of actual shares of Class A Common Stock or common stock units having a value equal to an identical number of shares of Class A Common Stock. In addition, the Committee may make cash bonuses to participants based on the Performance Objectives established by the Committee (performance shares and performance cash bonuses collectively referred to as “Performance Awards”). The Plan contemplates that the following Performance Goals may be selected by the Committee and shall mean or may be expressed in terms of one or more of the following business criteria: revenue, earnings before interest, taxes, depreciation and amortization or EBITDA, funds from operations, funds from operations per share, operating income, pre or after tax income, cash available for distribution, cash available for distribution per share, net earnings, earnings per share, return on equity, return on assets, share price performance, improvements in our company’sthe Company’s attainment of expense levels, and implementing or completion of critical projects, or improvement in cash-flow (before or after

6

tax) (each, a “Performance Goal”). A Performance Goal may be measured over a Performance Period on a periodic, annual, cumulative or average basis and may be established on a corporate-wide basis or established with respect to one or more operating units, divisions, subsidiaries, acquired businesses, minority investments, partnerships or joint ventures. For purposes of the Plan, a Performance Period“Performance Period” shall mean the calendar year, or such other shorter or longer period designated by the Committee, during which performance will be measured in order to determine a participant’s entitlement to receive payment of a Performance Award.

The Committee shall establish the Performance Objective for each Performance Award, consisting of one or more business criteria permitted as Performance Goals under the Plan, one or more levels of performance with respect to each such criterion, and the amount or amounts payable or other rights that the participant will be entitled to upon achievement of such levels of performance. The Performance Objective shall be established by the Committee prior to or reasonably promptly following the inception of a Performance Period but, to the extent

required by Section 162(m) of the Code, by no later than ninety (90) days after the commencement of the Performance Period or the day prior to the date on which 25% of the Performance Period has elapsed.

Subject to adjustment for certain corporate events, the maximum number of Performance Shares subject to any award to any individual who is a covered employee for purposes of Section 162(m) of the Code (“Covered Employee”) is [_],000,00010,000,000, subject to availability under the Plan, for each twelve (12) months during the Performance Period (or, to the extent the award is paid in cash, the maximum dollar amount of any such award is the equivalent cash value, based on the fair market value of the common stock, of such number of shares of Class A Common Stock on the last day of the performance period). If the Performance Award is a cash bonus, a participant shall not be granted performance cash bonuses for all of the Performance Periods commencing in a calendar year that permit the participant, in the aggregate, to earn a cash payment in excess of $3,000,000 per calendar year.

A Performance Award to a participant who is a Covered Employee shall (unless the Committee determines otherwise) provide that in the event of termination of continuous service prior to the end of the Performance Period for any reason, such award will be payable only if the applicable Performance Objectives are achieved and to the extent, if any, as the Committee shall determine. The Committee may reduce or eliminate the amount of payment with respect to any Performance Award to a Covered Employee notwithstanding the achievement of specified Performance Objectives, however, no such adjustments shall be made that would adversely impact a participant following a “Change of Control” (as defined in the Plan).

No payments will be made with respect to any Performance Award unless and until the Committee certifies the achievement of the Performance Goals.

Change of Control

Unless otherwise provided in an award agreement, upon the occurrence of a Change of Control (as defined in the Plan) in which awards are not terminated in accordance with the Plan, all Options, restricted stock and SARs granted prior to such Change of Control shall automatically become vested and exercisable in full and all restrictions or performance conditions, if any, on any other awards shall automatically lapse.

Adjustments

The Plan provides that in the event of certain corporate events or changes in the common stock,Class A Common Stock, awards and the number of shares under the Plan may be adjusted to reflect such event. Any such adjustment made to an ISO shall be made in accordance with Section 424(a) of the Code unless otherwise determined by the Committee.

7

Forfeiture

In the event of a serious breach of conduct by a participant or former participant (including, without limitation, any conduct prejudicial to or in conflict with our companythe Company or any subsidiary), the Committee may (i) cancel any outstanding award granted to such participant or former participant, in whole or in part, whether or not vested, and/or (ii) if such conduct or activity occurs within one (1) year following the exercise or payment of an award, require such participant or former participant to repay our companythe Company any gain realized or payment received upon the exercise or payment of such award (with such gain or payment valued as of the date of exercise or payment).

Amendment and Termination

Our Board of Directors may terminate or amend the Plan in any respect at any time, except that no amendment will be made without stockholder approval if such approval is necessary to comply with any applicable law, regulation or stock exchange rule and, except as otherwise provided in the Plan with respect to adjustments in connection with certain corporate events or changes in ourthe Company’s Class A Common Stock, no amendment will be made that would adversely affect the rights of a participant without such participant’s written consent.

General Federal Tax Consequences

The following is a summary of the material federal tax consequences of receiving Options under the Plan and is based upon an analysis of the present provisions of the Code and the regulations promulgated thereunder, all of which are subject to change. A participant may also be subject to state and local taxes, the consequences of which are not discussed herein, in the jurisdiction in which he or she works and/or resides. This summary is for general information and is not tax advice.

Section 162(m) LimitationLimitation.

Subject to a limited number of exceptions, Section 162(m) of the Code denies a deduction to a publicly held corporation for payments of remuneration to certain employees to the extent the employee’s remuneration for the taxable year exceeds $1,000,000. For this purpose, remuneration attributable to Options is included within the $1,000,000 limitation. However, to the extent that certain procedural requirements are met (e.g., the Plan is approved by ourthe Company’s stockholders, grants are made by the Committee, the exercise price is equal to the fair market value of the underlying shares upon grant, etc.), gain from the exercise of Options should not be subject to the $1,000,000 limitation. We have attempted to structure the Plan in such a manner that the remuneration attributable to the Options will not be subject to the $1,000,000 limitation. We have not, however, requested a ruling from the Internal Revenue Service or an opinion of counsel regarding this issue.

Nonqualified Stock OptionsOptions.

An individual receiving Nonqualified Stock Options should not recognize taxable income at the time of grant. A participant should generally recognize ordinary compensation income in an amount equal to the excess, if any, in the fair market value of the Option shares on exercise of the Nonqualified Stock Options over the exercise price thereof. In general, subject to the limitations set forth in Section 162(m) and discussed above, our companythe Company is entitled to deduct from its taxable income the amount that the participant is required to include in ordinary income at the time of such inclusion.

Incentive Stock OptionsOptions.

An individual granted an ISO will not generally recognize taxable income at the time of grant or, subject to certain conditions, at the time of exercise, although he or she may be subject to alternative minimum tax. In general, if a disqualifying disposition should occur (i.e., the shares acquired upon exercise of the Option are disposed of within the later of two years from the date of grant or one year from the date of exercise), a participant will generally recognize ordinary compensation income in the year of disposition in an amount equal to the excess, if any, of the fair market value of the Option shares at the time of exercise (or, if less, the amount realized on disposition), over the exercise price thereof. Our company is not entitled to any

8

deduction on account of the grant of the ISOs or the participant’s exercise of the option to acquire common stock. However, in the event of a subsequent disqualifying disposition of such shares of Class A Common Stock acquired pursuant to the exercise of an ISO under circumstances resulting in taxable compensation to the participant, subject to the limitations set forth in Section 162(m) and discussed above, in general, our companythe Company should be entitled to a tax deduction equal to the amount treated as taxable compensation to the participant.

Section 280G of the CodeCode.

Under certain circumstances, the accelerated vesting or exercise of Options or the accelerated lapse of restrictions with respect to other awards in connection with a Change of Control (as defined in the Plan) might be deemed an “excess parachute payment” for purposes of the golden parachute tax provisions of Section 280G of the Code. To the extent it is so considered, the grantee may be subject to a 20% excise tax and our companythe Company may be denied a federal income tax deduction.

Registration with SEC

If this Proposal is adopted, our company intends to file a registration statement covering the offering of the shares of Class A Common Stock under the Plan with the SEC pursuant to the Securities Act of 1933, as amended.

New Plan Benefits

The amounts payable under the Plan for 2004 which may be received by each of (a) our executive officers named in the Summary Compensation Table below, (b) our executive officers as a group and (c) our employees who are not executive officers as a group, are not currently determinable.

Vote Required

The affirmative vote of the holders of a majority of the issued and outstanding shares of our voting stock present in person or represented by proxy and entitled to votevotes cast at the SpecialAnnual Meeting will be required to approve this proposal.

Board Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS ATHAT STOCKHOLDERS VOTE “FOR” APPROVAL OF THIS PROPOSAL.THE AMENDMENT TO THE 2005 STOCK INCENTIVE PLAN.

9

PROPOSAL THREE

ELECTION OF DIRECTORS

Nominees

The Company’s Bylaws give the Board of Directors the power to set the number of directors at no less than three nor more than fifteen. The Company’s Board of Directors currently has six members who are elected annually.

The six nominees for the Board of Directors are currently directors of the Company. The directors so elected will serve until the next Annual Meeting of Stockholders or until his earlier resignation, retirement or removal. The Board of Directors knows of no reason why any nominee for director would be unable to serve as a director. In the event that any of them should become unavailable prior to the Annual Meeting, the proxies will be voted for a substitute nominee or nominees designated by the Board of Directors, or the number of directors may be reduced accordingly.

The following table sets forth information regarding the nominees for director:

10

Vote Required

Election of the nominees to the Board of Directors requires the affirmative vote of the holders of a majority of the outstanding shares present or represented by proxy and entitled to vote at the Annual Meeting.

Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION OF EACH OF THE ABOVE NOMINEES.

11

Executive Officers

The executive officers of the Company, as of the date of this Proxy Statement, who are not also directors are set forth below:

The foregoing persons have been deemed by the Company to be “executive officers” as defined under Rule 3b-7 of the Exchange Act.

Corporate Governance Matters

The primary responsibility of the Board of Directors is to foster the long-term success of the Company, consistent with representing the interests of the Company’s stockholders. In accordance with this philosophy, the Board of Directors has taken the following steps, among others, to reinforce the Company’s values by promoting responsible business practices and good corporate citizenship.

Independence Determinations

The Board of Directors continually reviews the relationships that each director has with the Company. The Board of Directors currently has six members, five of whom the Board of Directors has affirmatively determined are not individuals having a relationship that, in the Board’s opinion, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and are therefore “independent” in accordance with Nasdaq National Market listing standards. The sole director that the Board of Directors has determined not to be “independent” in accordance with the foregoing standards is Joel N. Waller, the Company’s President and Chief Executive Officer.

The Board of Directors has affirmatively determined that each member of the Audit Committee, the Compensation/Option Committee and the Nominating and Governance Committee of the Board of Directors is “independent” in accordance with Nasdaq National Market listing standards and that each member of the Audit Committee is “independent” as required by the applicable rules and regulations promulgated under the Exchange Act.

12

Executive Sessions; Meetings with Management

The non-management members of the Board of Directors meet in executive session on a regular basis. The Audit Committee meets in executive session with the independent auditors regularly. All other committees are given the opportunity to meet without management present as they deem necessary.

Senior members of management are invited to make presentations to the Board of Directors or committees to provide management insight into items being discussed by the Board of Directors or committees and to bring managers with high potential into contact with the Board of Directors. In addition, Board members have free access to all other members of management and employees of the Company.

Board and Committee Meeting Agendas

The Chairman of the Board of Directors establishes the agenda for each Board of Directors meeting. Any other member of the Board of Directors is free to suggest the addition of any other item(s). The chairpersons of the committees coordinate committee meeting agendas with appropriate members of management. Henry D. Winterstern, sets the agenda for the meetings of the Compensation/Option Committee, which currently does not have a chairman. Other committee members are free to suggest additional agenda items.

Code of Business Conduct

The Company has adopted The Wet Seal, Inc. Code of Conduct that is applicable to all directors, officers and employees. The purpose of the Code of Conduct is to foster compliance with applicable laws affecting the Company and to set a standard for the Company’s expectations for business conduct. The Company’s Code of Conduct is filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2004 and is available on the Company’s website at http://www.wetsealinc.com.

Meetings and Committees of the Board of Directors

Board of Directors Actions; Attendance

The Board of Directors met or took action by written consent 16 times during the fiscal year ended January 29, 2005. Each of the members of the Board of Directors then in such position attended at least 75% of the Board of Directors meetings and the respective committee meetings on which they served.

The Company’s informal policy is that all of its directors attend the annual meeting of stockholders unless a director gives prior notice to the Chairman of the Board of Directors of his inability to attend due to health or business reasons. All members of the Board of Directors then in office, other than Stephen Gross, attended the 2004 annual meeting of stockholders.

Audit Committee

From February 1, 2004 through August 18, 2004, the Company’s Audit Committee was comprised of George Benter, Barry Entous, Walter Loeb and Wilfred Posluns. On August 18, 2004, Messrs. Entous and Posluns retired from the Board of Directors while Henry D. Winterstern was appointed to the Audit Committee on this date. Messrs. Loeb and Posluns retired from the Board of Directors and the Audit Committee effective January 27, 2005. On this date, Kenneth M. Reiss and Sidney M. Horn were appointed to the Board of Directors and Audit Committee, with Mr. Reiss serving as chairman.

The Board of Directors has affirmatively determined that each member of the Audit Committee is “independent” in accordance with the Nasdaq National Market listing standards and the applicable rules and regulations promulgated under the Exchange Act. Mr. Reiss, a certified public accountant with 38 years of experience in auditing public companies during his tenure at Enrst & Young LLP has been determined by the

13

Board of Directors to be the Audit Committee’s “financial expert” under the regulations of the Securities and Exchange Commission and to be “financially sophisticated” under Nasdaq listing standards. During the fiscal year ended January 29, 2005, the Audit Committee met or took action by written consent 6 times.

The Audit Committee is responsible for reviewing, as it shall deem appropriate, and recommending to the Board of Directors internal accounting and finance controls for the Company and accounting principles and auditing practices and procedures to be employed in the preparation and review of the Company’s financial statements. The Audit Committee is also responsible for recommending to the Board of Directors independent public accountants to audit the annual financial statements of the Company and the scope of the audit to be undertaken by the accountants. The Charter of the Audit Committee, which was amended on May 28, 2003, is set forth on Exhibit A attached to the Company’s proxy statement for its 2004 annual stockholder meeting and is available on the Company’s website at http://www.wetsealinc.com.

Compensation/Option Committee Interlocks and Insider Participation

During the 2004 fiscal year, each of the following individuals served on the Company’s Compensation/Option Committee: Messrs. Benter, Howard Gross, Posluns and Winterstern. Other than Mr. Winterstern, each of these members resigned their appointment on or prior to January 27, 2004. On this date, each of Messrs. Horn, Kahn, Reiss and Siegel were appointed to the Company’s Compensation/Option Committee. On May 12, 2005, Mr. Siegel resigned from the Compensation/Option Committee.

There were no Compensation/Option Committee interlocks or insider participation during the fiscal year ended January 29, 2005.

Compensation/Option Committee

The Company has a Compensation/Option Committee consisting of Sidney M. Horn, Harold D. Kahn, Kenneth M. Reiss and Henry D. Winterstern, each of whom the Board of Directors has affirmatively determined is “independent” in accordance with Nasdaq National Market listing standards. As of the date of this Proxy Statement, the Compensation/Option Committee has not appointed a chairman but plans to do so in the near future. During the fiscal year ended January 29, 2005, the Compensation/Option Committee met or took action by written consent 15 times.

The Compensation/Option Committee is responsible for establishing general compensation policies and specific compensation levels for the Company’s executive officers and is responsible for granting restricted stock, performance shares and stock options to executive officers, other key employees and consultants. See “Report of the Compensation/Option Committee on Executive Compensation.” The Charter of the Compensation/Option Committee, as approved and ratified by the Board of Directors on May 12, 2005, is set forth on Exhibit C to this Proxy Statement and is available on the Company’s website at http://www.wetsealinc.com.

Nominating and Governance Committee

In January 2005, the Company formed a Nominating and Governance Committee consisting of Alan Siegel (Chairman) and Harold D. Kahn, each of whom the Board of Directors has affirmatively determined is “independent” in accordance with the Nasdaq National Market listing standards. Due to its recent formation in January 2005, during the fiscal year ended January 29, 2005, the Nominating and Governance Committee did not meet or take action by written consent.

The Nominating and Governance Committee proposes to the Board of Directors nominees for election to the Board of Directors. The Nominating and Governance Committee identifies nominees through the personal and business relationships of the Company’s existing and former directors and management. In addition, on an as

14

needed basis, the Nominating and Governance Committee will engage outside consultants to assist in the identification of nominees.

The Nominating and Governance Committee is also responsible for advising the Board of Directors with respect to Board composition, compensation, procedures and committees, and for recommending to the Board of Directors a set of corporate governance principles and overseeing the compliance of the Board of Directors with such principles. The Charter of the Nominating and Governance Committee, as approved and ratified by the Board of Directors on May 12, 2005, is set forth on Exhibit D to this Proxy Statement and is available on the Company’s website at http://www.wetsealinc.com.

Nomination of Individuals to the Board of Directors

The Nominating and Governance Committee will consider proposed nominees whose names are submitted to it by stockholders; however, it does not have a formal process for such consideration. The Nominating and Governance Committee has not adopted a formal consideration process because it believes that its informal consideration process has been adequate, given the historically small number of stockholder recommendations. The Nominating and Governance Committee intends to review periodically whether a more formal policy should be adopted.

Any stockholder who desires to recommend a nominee for the Board of Directors must submit a letter, addressed to the Secretary of the Company at 26972 Burbank, Foothill Ranch, California 92610, and which is clearly identified as a “Director Nominee Recommendation.” All recommendation letters must identify the author as a stockholder and provide a brief summary of the candidate’s qualifications, as well as contact information for both the candidate and the stockholder. Any stockholder recommendations for the next Annual Meeting must be submitted by December 15, 2005 to assure time for meaningful consideration and evaluation of the nominees by the Nominating and Governance Committee.

Stockholder Communications

Any communications to the Board of Directors should be sent to it in care of the Secretary of the Company. There is no screening process, other than to confirm that the sender is a stockholder, and all stockholder communications which are received by the Secretary of the Company for the Board of Directors’ attention are forwarded to the Board of Directors with a copy to the Chairman of the Audit Committee.

15

PROPOSAL FOUR

RATIFICATION OF APPOINTMENT OF THE INDEPENDENT AUDITORS

General

Upon recommendation of the Audit Committee, the Board of Directors proposes that the stockholders ratify the appointment of Deloitte & Touche LLP to serve as the independent auditors of the Company for the 2005 fiscal year until the Company’s annual meeting of stockholders in 2006. Deloitte & Touche LLP served as the independent auditors of the Company for the 2004 fiscal year.

Neither the Company’s Restated Certificate of Incorporation, as amended, nor its Bylaws require that the stockholders ratify the selection of the Company’s independent auditors. We are doing so because we believe it is a matter of good corporate practice. If the stockholders do not ratify the selection, the Board of Directors and the Audit Committee will reconsider whether to retain Deloitte & Touche LLP, but may retain such independent auditors. Even if the appointment is ratified, the Board of Directors and the Audit Committee in their discretion may change the appointment at any time during the year if they determine that such change would be in the best interest of the Company and its stockholders.

Representatives of Deloitte & Touche LLP are expected to be present at the Annual Meeting and will be available to make a statement if they desire and are expected to respond to appropriate inquiries from stockholders.

Vote Required

Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent auditors requires the affirmative vote of the holders of a majority of the outstanding shares present or represented by proxy and entitled to vote at the Annual Meeting.

Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE 2005 FISCAL YEAR.

16

Audit Committee Report

The following Report of the Audit Committee does not constitute soliciting materials and shall not be deemed filed or incorporated by reference into any other filing by the Company with the SEC, except to the extent specifically incorporated by reference.

The Audit Committee is composed of three directors, each of whom the Board of Directors has affirmatively determined is “independent” in accordance with the Nasdaq National Market listing standards and the applicable rules and regulations promulgated under the Exchange Act. Kenneth M. Reiss, Chairman of the Audit Committee, has been determined to be the Audit Committee’s “financial expert” and financially sophisticated under the Securities and Exchange Commission and the Nasdaq listing standards, respectively. The members of the Audit Committee who have delivered this report were appointed by the Company’s Board of Directors on January 27, 2005.

The Audit Committee serves as the representative of the Board of Directors for general oversight of the Company’s financial accounting and reporting, systems of internal control and audit process, and monitoring compliance with laws and regulations and standards of business conduct. Management of the Company has primary responsibility for preparing financial statements of the Company as well as the Company’s financial reporting process.

Deloitte & Touche LLP, acting as independent auditors, is responsible for expressing an opinion on the conformity of the Company’s audited financial statements with generally accepted accounting principles.

In this context, the Audit Committee hereby reports as follows:

17

The Audit Committee acknowledges that due to significant changes in its composition during the 2004 fiscal year it was not practicable to conduct a self-assessment of the Audit Committee’s purpose, duties and responsibilities or review the Company’s Code of Ethical Conduct as required by the Audit Committee Charter. In addition, the Audit Committee acknowledges that for the last two months of the 2004 fiscal year the Company was without a director of the internal audit function. The Audit Committee is actively seeking to identify a qualified individual to fill this role or an outside consultant who can fulfill this function on behalf of the Company.

The Charter of the Audit Committee, which was amended on May 28, 2003, is set forth on Exhibit A attached to the Company’s proxy statement for its 2004 annual stockholder meeting.

Audit Committee:

Kenneth M. Reiss (Chairman)

Sidney M. Horn

Henry D. Winterstern

The foregoing Report of the Audit Committee shall not be deemed to be incorporated by reference in any previous or future documents filed by the Company with the Securities and Exchange Commission under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates the report by reference in any such document.

Fees Paid to the Independent Auditors

The following table presents fees for professional audit services rendered by Deloitte & Touche LLP for the audit of the Company’s annual financial statements for fiscal years 2004 and 2003, and fees billed for other services rendered by Deloitte & Touche LLP during those periods. All of the services for which fees are listed below were pre-approved by the Audit Committee.

18

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

Consistent with the policies of the Securities and Exchange Commission regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the independent auditors. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by the independent auditor.

Prior to engagement of the independent auditors for the following year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval.

Audit services are services rendered by the independent auditor for the audit of financial statements and review of financial statements included in the Company’s Form 10-Q or services that are normally provided by the independent auditor in connection with statutory and regulatory filings or engagements. In addition, the independent auditor engages in a review of the effectiveness of the Company’s internal controls over financial reporting.

Audit-related services are for assurance and related services performed by the independent auditor that are reasonably related to the performance of the audit or review of the financial statements, including the audit of the annual financial statements for the Company’s Retirement Savings Plan and the review and actuarial calculation for the Company’s Supplemental Employee Retirement Plan.

Tax services include all services performed by the independent auditor for tax compliance, tax planning, and tax advice, including professional services rendered for preparation and review of the federal and state corporate income tax returns, preparation of the Puerto Rico corporate income tax return and miscellaneous tax advice and tax planning related to federal and state income tax issues.

Prior to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted and the Audit Committee requires the independent auditors and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage the independent auditors for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging the independent auditors.

19

VOTING SECURITIES AND

PRINCIPAL HOLDERS

The following table sets forth information regarding the beneficial ownership of our company’sthe Company’s Class A Common Stock as of November 19, 2004 for (i) each person known to usthe Company to have beneficial ownership of more than 5% of class of our capital stock;the Company’s Class A Common Stock; (ii) each of ourthe Company’s directors; (iii) each person who served as Chief Executive Officer during fiscal year 2004, including the Company’s former interim Chief Executive Officer and former Chief Executive Officer, the four other most highly compensated executive officers serving as executive officers at the end of the Namedlast fiscal year and one former officer who would have been among the four most highly compensated executive officers but for the fact that such individual was not serving as an executive officer as of the end of the last fiscal year (collectively, the “Named Executive Officers (as defined below)Officers”); and (iv) all directors of the Company and executive officers of our companythe Named Executive Officers as a group. Except for information based upon Schedule 13D or Schedule 13G, as indicated in the footnotes, beneficial ownership is stated as of May 16, 2005

As of November 19, 2004,May 16, 2005, there were 34,660,657 and 1,500,00044,610,579 shares of Class A Common Stock issued and outstanding and no shares of Class B Common Stock were issued and outstanding, respectively.outstanding.

Douglas C. Felderman(11)(12)		6,668		*		—		—		*		*
Henry Winterstern		—		—		—		—		—		—
Joseph Deckop(11)(12)		19,000		*		—		—		*		*
Jennifer Pritchard(11)(12)		31,100				—		—		*		*
Walter F. Loeb(11)		87,084		*		—		—		*		*
Wilfred Posluns(11)		54,084		*		—		—		*		*
Alan Siegel(11)		54,084		*		—		—		*		*
All directors and officers as a group (10 individuals)(11)(12)		737,854		2.1%		1,500,000		100.0%		6.1%		9.7%

20

21

22

private investment partnerships, for which P&S Capital Partners, LLC is the General Partner, (iii) 975,000 shares of Class A Common Stock beneficially owned by a private investment corporation, for which P&S Capital Management, LLC is the Investment Manager, and beneficially owned by a private investment corporation, for which P&S Capital Management, LLC shares voting and dispositive power and (iv) 100,000 shares beneficially owned by a privately managed account, for which PAGS Investing, LLC shares voting power and dispositive power. Mr. Nir is the Managing Member of P&S Capital Partners, LLC, P&S Capital Management, LLC and P&S Credit Management, LLC. Mr. Nir is a Managing Member of PAGS Investing, LLC.

23

EXECUTIVE COMPENSATION AND OTHER INFORMATION

ExecutiveSummary Compensation Table

The following table sets forth the compensation (cash and non cash), for fiscal years 2004, 2003 2002 and 2001, for (i) each person who served as Chief Executive Officer, (ii) the four other most highly compensated executive officers serving as executive officers at end of our 2003 fiscal year and (iii) two former officers who would have been among the four most highly compensated executive officers but for the fact that such individuals were not serving as executive officers as2002 of the end of our 2003 fiscal year (collectively, with (i) and (ii), the “NamedNamed Executive Officers”). In addition, see “Employment Agreements with Executives” for a description of the compensation of our current executive officers.Officers.*

SUMMARY COMPENSATION TABLE

		Annual Compensation							Long-Term Annual Compensation Awards
Name and Principal Position		Fiscal		Salary($)		Bonus($)			Other Annual Compensation($)		Restricted Stock Awards($)		Securities Underlying Stock Options (#)			LTIP Payouts ($)		All other Compensation ($)
									(1)		(2)		(3)
Pamela O’Connor Senior Vice President, Human Resources		2003 2002 2001		163,077 161,760 133,913		20,000 28,000 10,000	(4) (5) (6)		—   —   —		—   —   —		35,700 7,500 11,250			—   —   —		—   —   —
Greg Scott(20) Former Divisional President of Arden B.		2003 2002 2001		456,342 450,000 350,000		—   —   200,000	(6)		—   —   —		—   —   —		39,000 20,000 105,000	(22)		—   —   —		6,200 6,000	(11) (11)
Susan O’Toole(21) Former Chief Merchandise Officer, Wet Seal Division		2003 2002 2001		383,432 337,500 —		—   —   —			—   —   —		—   —   —		169,000 200,000 —			—   —   —		25,074 21,875 —	(12) (13)

		Annual Compensation									Long-Term Compensation Awards
Name and Principal Position		Fiscal Year		Salary			Bonus				Restricted Stock Awards			Securities Underlying Stock Options (#)		All other Compensations ($)
											(2)			(3)
Joseph Deckop (9) Former Interim Chief Executive Officer and Former Executive Vice President		2004 2003 2002		$	350,865 148,173 0		$	100,000 0 0	(4)		$	357,910 0 0		15,000 50,000 0		$	6,250 2,875 0	(5) (5)
Peter D. Whitford (10) Former Chief Executive Officer		2004 2003 2002		$	684,997 420,192 0			0 0 0				0 0 0		600,000 300,000 0		$	2,098,907 202,328 0	(6) (7)
Jennifer Pritchard Divisional President of Arden B.		2004 2003 2002		$	398,103 315,000 87,231		$	245,969 0 0	(4)		$	349,160 0 0		15,000 66,300 50,000		$	6,000 6,000 1,846	(5) (5) (5)
Douglas C. Felderman Executive Vice President and Chief Financial Officer		2004 2003 2002		$	253,484 0 0		$	100,000 0 0	(4)		$	410,050 0 0		60,000 0 0		$	4,925 0 0	(5)
Elayne M. Masterson Divisional Chief Merchandising Officer of Wet Seal		2004 2003 2002		$	300,923 88,385 0		$	30,000 0 0	(4)		$	103,300 0 0		40,000 10,000 0		$	6,500 12,125 0	(5) (8)
Gary White Senior Vice President, Sales and Operations		2004 2003 2002		$	137,769 0 0		$	20,000 0 0	(4)		$	26,400 0 0		30,000 0 0		$	3,400 0 0	(5)
Allan Haims (11) Former Divisional President of Wet Seal		2004 2003 2002		$	437,204 167,115 0			0 0 0			$	357,910 0 0		15,000 100,000 0		$	5,750 2,750 0	(5) (5)

24

(13)	Amount represents (i) payments totaling $5,146 in connection with the provision of an automobile; (ii) reimbursement for moving costs totaling $19,927 for fiscal 2003.

Option Grants in Fiscal Year 20032004

The following table sets forth information regarding options granted in fiscal year 20032004 to each of the named executive officers reflected in the Summary Compensation Table above for fiscal year 2003.Named Executive Officers. All such options were granted pursuant to ourthe Company’s 1996 Long-Term Incentive Plan andwith the exception of Gary White’s options which were granted pursuant to the Company’s 2000 Long-TermStock Incentive Plan.

OPTION GRANTS IN THE LAST FISCAL YEAR 2003

Individual Grants