AMENDED AND RESTATED EMPLOYMENT AGREEMENT

Exhibit 10.1

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“ Agreement ”) by and between The Wet Seal, Inc., a Delaware corporation (the “ Company ”), and Dyan M. Jozwick (the “ Executive ”) (collectively, the “ Parties ”) is amended and restated as of April 3, 2008.

W I T N E S S E T H:

WHEREAS , Executive entered into this Agreement with the Company on May 2, 2006; and

WHEREAS , the Parties desire to amend and restate this Agreement to the extent necessary to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”) and the guidance promulgated thereunder and to make additional changes with respect to the annual bonus program.

NOW THEREFORE , the Parties agree as follows:

1. EMPLOYMENT

The Company hereby employs Executive and Executive hereby accepts employment upon the terms and conditions set forth below.

2. TERM

The term of this Agreement shall begin on May 2, 2006 (the “ Effective Date ”) and end on May 2, 2009 (the “ Term ”).

3. COMPENSATION

3.1 Base Compensation . For the services to be rendered by Executive under this Agreement, Executive shall be entitled to receive, commencing on April 1, 2007, a base salary at the annual rate of Four Hundred Fifteen Thousand Dollars ($415,000) (“ Base Compensation ”) payable in twenty-six (26) substantially equal installments per year. The Base Compensation shall be reviewed annually for possible increase by the Company’s Board of Directors (the “ Board ”).

3.2 Bonus .

(a) Subject to the achievement of performance objectives pre-determined by the Compensation Committee of the Board (the “ Committee ”), Executive shall be eligible to receive annual bonus compensation targeted at fifty percent (50%) of Base Compensation, a portion of which shall be based on the Spring operating income results and the remaining portion shall be based on the Fall operating income results (each a “ Seasonal Bonus ”). The maximum bonus opportunity shall be up to 100% of Executive’s Base Compensation. In order to earn a Seasonal Bonus, Executive must be employed on the date the Company pays the applicable Seasonal Bonus. Any Fall bonus under this provision shall be paid no later than the fifteenth (15th) day of the third month following the end of the fiscal year for which it is earned and any Spring bonus earned hereunder

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shall be paid in the third quarter of such fiscal year. Prior to the commencement of any Seasonal Bonus period, the Company reserves the right to change the operating metric(s) for purposes of measuring the Seasonal Bonus earned.

(b) The Committee may in its sole discretion replace this Seasonal Bonus program with an annual bonus program under which such annual bonus shall be based on the achievement of annual metrics established by the Company each fiscal year (such metrics to be determined as late as seventy-five (75) days following the beginning of each applicable fiscal year). In order to earn this annual bonus, Executive must be employed on the date the Company pays such annual bonus and any annual bonus so earned shall be paid no later than the fifteenth (15 ^th ) day of the third month following the end of the fiscal year for which it is earned and following certification by the Committee of the achievement of the applicable performance metrics and the amount of the annual bonus to be paid to Executive for the applicable fiscal year.

3.3 Options . Subject to the approval of the Board, pursuant to and subject to the terms of the Company’s stock option plan(s), Executive shall be granted non-qualified stock options to purchase 90,000 shares of common stock of the Company (“ Common Stock ”). The options shall vest in three equal installments over three (3) years, on the first, second and third anniversaries of the Effective Date and the exercise price shall be set in accordance with the terms of the plan under which such options are granted and shall be subject to a written option agreement in a form acceptable to the Company.

3.4 Restricted Grant . Subject to the approval of the Board, pursuant to and subject to the terms of the Company’s plan, Executive shall be granted 30,000 restricted shares of Common Stock. These restricted shares will vest in three equal installments over three (3) years, on the first, second and third anniversaries of the Effective Date.

3.5 Benefits . Executive shall be entitled to participate in all pension, medical, dental, vision, life insurance, disability and any other benefit or insurance plans established by the Company and made available to other executives at her level, in accordance with the terms of such plans that are or may be in effect during the Term.

3.6 Vacation . Executive shall be entitled to three (3) weeks of paid vacation per year in accordance with the Company’s vacation policy that is or may be in effect during the Term.

3.7 Expense Reimbursement . Executive shall be reimbursed for reasonable business expenses actually incurred, in accordance with the Company’s expense reimbursement policy that is or may be in effect during the Term.

4. POSITION AND DUTIES

4.1 Position . Executive shall serve as Chief Merchandise Officer of the Wet Seal division of the Company and report to the Company’s Chief Executive Officer. This position is considered a 16(b) officer of the Company and subject to all insider trading, blackout periods and fiduciary responsibilities associated with such.

4.2 Devotion of Time and Effort . Executive shall use Executive’s good faith best efforts and judgment (a) in performing Executive’s duties required hereunder and (b) to act in the best interests of the Company. Executive shall work exclusively for the Company during the

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Term and shall devote such time, attention and energies to the business of the Company as are reasonably necessary to satisfy Executive’s required responsibilities and duties hereunder.

4.3 Compliance With Policies . Executive shall observe all Company policies and all reasonable rules and regulations adopted by Company in connection with the conduct of its business, and shall render services in a competent, conscientious and professional manner and as instructed by Company in all matters, including those involving artistic taste and judgment.

5. TERMINATION

5.1 Due to Death or Disability . If Executive dies during the Term, Executive’s employment and this Agreement shall terminate as of the date of her death. The Company also may terminate Executive due to Executive’s “Disability”, as defined below, at any time following the Effective Date, upon written notice to Executive, unless prohibited by law. For purposes of this Agreement, the term “ Disability ” shall mean a physical or mental incapacity as a result of which Executive becomes unable to continue the proper performance of Executive’s duties hereunder for six (6) consecutive calendar months or for shorter periods aggregating one hundred eighty (180) business days in any twelve (12) month period, or, if this provision is inconsistent with any applicable law, for such period or periods as permitted by law.

5.2 By the Company Without “Cause” . The Company may terminate Executive’s employment without “Cause” (as hereinafter defined) at any time following the Effective Date, subject only to compliance by the Company with the provisions of Section 5.5 hereof.

5.3 By the Company for “Cause” . The Company may terminate Executive’s employment for “Cause” at any time. For purposes of this Agreement, “ Cause ” shall mean:

(a) Executive’s conviction of, or plea of nolo contendere to, any felony or any crime involving the Company;

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

(c) The gross neglect, malfeasance or nonfeasance of Executive in the performance of the services contemplated hereunder, when such conduct causes or has the likelihood of causing material economic harm to the Company;

(d) A material breach of this Agreement by Executive;

(e) Any willful misconduct or unethical behavior related to Executive’s duties hereunder or insubordination by Executive;

(f) The sexual or other harassment by Executive of any employee, independent contractor or customer of the Company; and/or

(g) Executive’s use of illegal drugs or abuse of alcohol or legally prescribed drugs.

5.4 By Executive For “Good Reason” . Executive may terminate her employment only for “Good Reason” as defined below. In the event Executive seeks to terminate her

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employment for Good Reason, Executive shall provide thirty (30) days written notice to the Company describing the claimed event or circumstance constituting Good Reason and setting forth Executive’s intention to terminate her employment with the Company. The Company shall have the opportunity to cure any Good Reason identified by Executive within thirty (30) days of the Company’s receipt of the written notice from Executive. For purposes of this Agreement, “ Good Reason ” shall mean:

(a) The Company’s material beach of any of its obligations hereunder;

(b) Relocating Executive’s place of work, or the executive offices of the Company, to a location other than in Orange County or the County of Los Angeles, State of California, without Executive’s written consent; or

(c) A material reduction, without cause, in Executive’s title, responsibilities or duties.

5.5 Termination Payments and Benefits :

(a) Earnings and Benefits Upon Termination . In the event that Executive’s employment is terminated pursuant to Sections 5.1 through 5.4, Executive shall continue to render services to the Company pursuant to this Agreement until her date of termination (“ Termination Date ”) and shall continue to receive payment for any unreimbursed expenses incurred, accrued but unpaid Base Compensation and other accrued employee benefits as provided in this Agreement, through the Termination Date. In addition, as of the Termination Date, Executive shall be eligible to continue her group medical benefits, at her sole expense, in accordance with and subject to applicable law (“ COBRA ”).

(b) Severance . Only in the event that Executive’s employment is terminated by the Company without Cause pursuant to Section 5.2 or there is a “Change in Control” (as defined below) and in each case subject to subpart (c) below, Executive shall be eligible to receive severance pay in an amount equal to six (6) months of Executive’s Base Compensation. Severance payments for the six (6) month period (the “ Severance Period ”) shall be made in bi-weekly installments with the first installment to be paid on the later of the Company’s first regular pay date after the Termination Date or the tenth (10th) day after execution of the release described in subpart (c) below. Each installment of the severance pay shall be deemed a separate payment for the purposes of Section 409A of the Code. Notwithstanding the foregoing, if all or any portion of the severance payments due under this Section 5.5(b) are determined to be “nonqualified deferred compensation” subject to Section 409A of the Code, and the Company determines that Executive is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code and the regulations and other guidance issued thereunder, then such severance payments (or portion thereof) shall commence no earlier than the first day of the seventh month following the month in which Executive’s termination of employment occurs (with the first such payment being a lump sum equal to the aggregate severance payments Executive would have received during such six-month period if no such payment delay had been imposed). For purposes of this Section 5.5(b), “termination of employment” shall mean Executive’s “separation from service” as defined in Section 1.409A-1(h) of the Final Treasury Regulations promulgated under Section 409A of the Code, including

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the default presumptions thereof. Except as provided in this Section 5.5(b), Executive shall not be entitled to severance or any other payments in connection with her employment and/or the termination thereof, and shall have no further right to receive compensation or other consideration from the Company or have any other remedy whatsoever against the Company, as a result of the termination of this Agreement or the termination of her employment.

For purposes of this Agreement, “ Change in Control ” means the sale, transfer or other disposition of more than fifty percent (50%) of the Company’s voting stock or assets, including, without limitation, by way of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, on or following which either (a) Executive terminates her employment following a material adverse change in Executive’s duties; provided , that , Executive has given the Company written notice of this change no later than sixty (60) days following the occurrence of such change and the Company has not cured such change within thirty (30) days of receiving such notice or (b) Executive’s employment is terminated by the Company for any reason.

(c) Separation Agreement and General Release .

(i) Separation Agreement . To be eligible to receive severance pay under Section 5.5(b), Executive must execute and deliver (and not revoke, if a revocation period is required by law) a separation agreement, in a form acceptable to the Company, within thirty (30) days following the Termination Date containing all provisions required by the Company, including but not limited to (A) a provision reducing Executive’s severance pay by any income earned by Executive, whether as an employee, independent contractor or otherwise, for services performed by Executive, during the Severance Period; (B) a confidentiality provision prohibiting disclosure by Executive; (C) a provision prohibiting disparagement of the Company by Executive; and (D) a non admission of liability by the Company provision.

(ii) Release . Notwithstanding any other provision of this Agreement to the contrary, Executive acknowledges and agrees that any and all severance payments to which Executive is entitled under Section 5.5(b) are conditional upon, and subject to, Executive first executing a valid waiver and release of all claims that Executive may have against the Company, its subsidiaries and affiliates (and their respective officers and directors) in a form substantially similar to that attached hereto as Exhibit A , subject to changes as may be warranted to be made to such release to preserve the intent thereof for changes in applicable laws; provided , that , if Executive fails to execute (or revokes) such waiver and release of all claims within thirty (30) days following the Termination Date, the Company shall have no obligation to provide the severance payments contemplated under Section 5.5(b).

6. NON-SOLICITATION, NON-COMPETITION

Executive acknowledges that by virtue of Executive’s position as Chief Merchandise Officer, Wet Seal division of the Company, and Executive’s employment hereunder, she will have advantageous familiarity with and knowledge about the Company and will be instrumental

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in establishing and maintaining goodwill between the Company and its customers, which goodwill is the property of the Company. Therefore, Executive agrees as follows:

(a) During the Term, Executive will not engage (either directly or indirectly, as shareholder, partner, officer, director, consultant, employee or otherwise) in any enterprise, nor perform any services of any kind whatsoever for or provide any financial assistance to any enterprise, in the specialty retail clothing business other than through the Company or its subsidiaries and their successors; provided , however , that this restriction shall not apply following the termination of Executive’s employment prior to the end of the Term pursuant to, and in accordance with, Sections 5.1 through 5.4.

(b) During the Term, and for a period of one (1) year following the end of the Term, Executive will not, either for herself or for any other person or entity, directly or indirectly (i) solicit, induce, recruit or encourage any of the Company’s employees to terminate their relationship with the Company, and/or (ii) attempt to solicit, induce, recruit or encourage any of the Company’s employees to terminate their relationship with the Company; provided , however , that this restriction shall apply for one year following the termination of Executive’s employment, in the event Executive’s employment is terminated prior to the end of the Term pursuant to, and in accordance with, Sections 5.1 through 5.4.

(c) During the Term, except within the final one hundred twenty (120) days of the Term, Executive shall not seek, or negotiate for, employment other than with the Company; provided , however , that this restriction shall not apply following the termination of Executive’s employment prior to the end of the Term pursuant to, and in accordance with, Sections 5.1 through 5.4.

(d) Executive acknowledges that any violation of any provision of this Section 6 by Executive will cause irreparable damages to the Company, that such damages will be incapable of precise