EMPLOYMENT AGREEMENT

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “ Agreement ”) is dated as of July 22, 2008, and is made and entered into by and between The Wet Seal, Inc., a Delaware corporation (the “ Company ”), and Maria Comfort (“ Executive ”) (collectively, the “ Parties ”).

IN CONSIDERATION of the premises and the mutual covenants set forth below, the Parties hereby agree as follows:

The Company hereby agrees to employ Executive as the President and Chief Merchandise Officer of the Wet Seal division and Executive hereby accepts such employment upon the terms and conditions set forth below.

The term of this Agreement shall begin on August 25, 2008 (the “ Effective Date ”), and, unless sooner terminated as provided herein, shall end on August 25, 2011 (the “ Term ”). The Term may be sooner terminated by either party in accordance with the provisions of Section 5. The principal place of employment of Executive shall be at the Company’s headquarters in Foothill Ranch, California (or at such other locations within the fifty (50) mile radius of its current location as it may be relocated); provided , that , Executive shall be required to travel from time to time on the business of the Company during the Term.

3.1 Base Compensation . For the services to be rendered by Executive under this Agreement, Executive shall be entitled to receive, commencing as of the Effective Date, salary at the annual rate of Five Hundred Thousand Dollars ($500,000) (the “ Base Compensation ”), less all applicable tax withholdings by the Company. The Base Compensation shall be payable in accordance with the Company’s customary payroll practices. The Compensation Committee of the Board of Directors of the Company (the “ Committee ”) shall review Executive’s Base Compensation annually and may make adjustments to increase but not decrease such Base Compensation, in accordance with the compensation practices and guidelines of the Company.

3.2 Annual Bonus; Guaranteed 2008 Annual Bonus .

(a) Subject to the achievement of performance objectives pre-determined by 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 for the Company as a whole and the remaining portion shall be based on the Fall operating income results for the Company as a whole (each a “ Seasonal Bonus ”). The maximum annual bonus compensation 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 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 (15th) 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.

(c) Executive shall be guaranteed a bonus of $75,000 for fiscal year 2008, subject to tax withholdings by the Company, for the partial year that Executive will be employed. In addition, Executive shall be eligible to receive an additional bonus based on performance metrics identified to her by the Company’s Chief Executive Officer. Executive shall be paid the guaranteed bonus and any additional bonus within 75 days following fiscal year 2008; provided , that , she has not been terminated by the Company for Cause (as defined below) or tendered her notice of resignation on or before the bonus payment date.

3.3 Options . Pursuant to and subject to the terms of The Wet Seal Inc. 2005 Stock Incentive Plan, as amended and/or restated from time to time (the “ Plan ”), on the Effective Date, Executive shall be awarded an option to purchase 60,000 shares of Class A common stock of the Company (“ Common Stock ”) in accordance with the stock option agreement attached hereto as Exhibit B , as may be amended and/or restated from time to time (the “ Stock Option Agreement ”).

3.4 Performance Shares . Pursuant to and subject to the terms of the Plan, on the Effective Date, Executive shall be awarded 90,000 shares of Common Stock, all of which shall be subject to the performance-based vesting terms and conditions set forth in the Performance Share Award Agreement attached hereto as Exhibit C , as may be amended and/or restated from time to time (the “ Award Agreement ”).

3.5 Vacation . During the Term, Executive shall be entitled to three (3) weeks of paid vacation per year to be used and accrued in accordance with the Company’s vacation policy as it may be established from time to time.

3.6 Benefits . During the Term, Executive shall be entitled to participate in such employee benefit plans and insurance programs offered by the Company to its employees generally, or which it may adopt from time to time for its employees generally, in accordance with the eligibility requirements for participation therein.

3.7 Expenses . While Executive is employed by the Company hereunder, the Company shall reimburse Executive for all reasonable and necessary out-of-pocket business, travel and entertainment expenses incurred by Executive in the performance of her duties and responsibilities hereunder, subject to the Company’s normal policies and procedures for expense verification and documentation.

3.8 Automobile Perquisite . During the Term, the Company shall provide Executive with a luxury sedan automobile for her use and shall provide customary insurance coverage for such automobile. The Company shall also pay for all maintenance costs, including gasoline, repairs and service for such automobile.

4.1 Position . Executive shall serve as the President and Chief Merchandise Officer of the Wet Seal division and shall report to the Company’s Chief Executive Officer. Executive shall perform duties consistent with her title and position and any other reasonably related duties consistent with her position. 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 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. Executive shall perform the duties assigned to her to the best of Executive’s ability and in the best interests of the Company.

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

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 ninety (90) consecutive days or one hundred twenty (120) non-consecutive days in any three hundred sixty five (365) day period, or, if this provision is inconsistent with any applicable law, for such period or periods as permitted by law.

5.2 By the Company Without “Cause” . The Company may terminate Executive’s employment without “Cause” (as defined below) 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 for Good Reason as defined below. In the event Executive seeks to terminate her employment for Good Reason, Executive shall provide thirty (30) days written notice to the Company setting forth Executive’s intention to terminate her employment with the Company. The Company shall have the opportunity to cure the “Good Reason” within thirty (30) days of the Company’s receipt of the written notice from Executive. For purposes of this Agreement, “ Good Reason ” shall mean relocating Executive’s place of work, or the executive offices of the Company, to a location more than fifty (50) miles from the site of the Company’s offices as of the date of this Agreement.

5.5 Resignation . Executive may voluntarily terminate her employment at any time following the Effective Date upon sixty (60) days written notice to the Company.

5.6 Termination Payment .

(a) Amount .

(i) In the event that Executive’s employment is terminated pursuant to Sections 5.1 through 5.5, Executive shall continue to render services to the Company pursuant to this Agreement until the date of termination (“ Termination Date ”) and shall continue to receive compensation and 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 the event Executive’s employment is terminated without “Cause” pursuant to Section 5.2, or Executive terminates her employment for “Good Reason” pursuant to Section 5.4, in each case within the first three years of the Effective Date, and subject to subpart (c) below, Executive shall receive severance pay in an amount equal to one times Executive’s Base Compensation, in equal bimonthly installments paid over a period of twelve (12) months (the “ Severance Period ”) 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 Executive’s execution of the release described in Section 5.6(c) below. Each installment of the severance pay shall be deemed a separate payment for the purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”). Notwithstanding the foregoing, if all or any portion of the severance payments due under this Section 5.6(a) 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 5.6(a)(i), “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 the default presumptions thereof.

(ii) If Executive is terminated (x) without Cause on or after the third anniversary of the Effective Date or (y) for Cause, then Executive shall not receive any severance payments.

(iii) Except as provided in this Section 5.6, Executive shall not be entitled to 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 Executive. In no way does severance payment include any unearned, ineligible bonus compensation.

(b) Benefits . In the event Executive’s employment is terminated, the Executive may timely elect to continue healthcare coverage through COBRA.

(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).

Executive acknowledges that by virtue of Executive’s position as the President and Chief Merchandise Officer of the Wet Seal division, and Executive’s employment hereunder, she will have advantageous familiarity with and knowledge about the Company and will be instrumental in establishing and maintaining goodwill between the Company and its customers, which goodwill is the property of the Company. Therefore, 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 retail clothing business other than through the Company or its subsidiaries and their successors.

(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 (1) 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 5.5.

(c) 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 measurement and that, as a result, the Company will not have an adequate remedy at law to redress the harm which such violations will cause. Therefore, in the event of any violation of any provision of this Section 6 by Executive, Executive agrees that the Company will be entitled to injunctive relief including, but not limited to, temporary and/or permanent restraining orders to restrain any violation of this Section 6 by Executive.

(d) It is the desire and intent of the Parties that the provisions of this Section 6 shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any portion of this Section 6 shall be adjudicated to be invalid or unenforceable, this Section 6 shall be deemed amended either to conform to such restrictions as the court or arbitrator may allow, or to delete therefrom or reform the portion thus adjudicated to be invalid and unenforceable, such deletion or reformation to apply only with respect to the operation of this Section 6 in the particular jurisdiction in which such adjudication is made. It is expressly agreed that the arbitrator in any arbitration hereunder shall have the authority to modify this Section 6 if necessary to render it enforceable, in such manner as to preserve as much as possible the Parties’ original intentions, as expressed herein, with respect to the scope hereof.

7.1 Executive specifically agrees that Executive will not at any time, whether during or subsequent to the Term, in any fashion, form or manner, except in furtherance of Executive’s duties at the Company or with the specific written consent of the Company, either directly or indirectly use, divulge, disclose or communicate to any person in any manner whatsoever, any confidential information or trade secrets of any kind, nature or description concerning any matters affecting or relating to the business of the Company (the “ Proprietary Information ”), including (a) all information, design or software programs (including object codes and source codes), techniques, drawings, plans, experimental and research work, inventions, patterns, processes and know-how, whether or not patentable, and whether or not at a commercial stage related to the Company or any subsidiary thereof, (b) buying habits or practices of any of its customers or vendors, (c) the Company’s marketing methods,

sales activities, promotion, credit and financial data and related information, (d) the Company’s costs or sources of materials, (e) the prices it obtains or has obtained or at which it sells or has sold its products or services, (f) lists or other written records used in the Company’s business, (g) compensation paid to employees and other terms of employment, or (h) any other confidential information of, about or concerning the business of the Company, its manner of operation, or other confidential data of any kind, nature, or description (excluding any information that is or becomes publicly known or available for use through no fault of Executive or as directed by court order). The Parties hereto stipulate that as between them, Proprietary Information constitutes trade secrets that derive independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value or cause economic harm to the Company from its disclosure or use and that Proprietary Information is the subject of efforts which are reasonable under the circumstances to maintain its secrecy and of which this Section 7.1 is an example, and that any breach of this Section 7.1 shall be a material breach of this Agreement. All Proprietary Information shall be and remain the Company’s sole property.

7.2 Executive agrees to keep confidential and not to use or divulge except in furtherance of Executive’s duties at the Company any confidential or proprietary information of any customer of the Company to which Executive may obtain access during the Term. Executive acknowledges and agrees that a breach of this Section 7.2 shall be a material breach of this Agreement.

8.1 Executive agrees to disclose promptly to the Company any and all concepts, designs, inventions, discoveries and improvements related to the Company’s business that Executive may conceive, discover or make from the beginning of Executive’s employment with the Company until the termination thereof; whether such is made solely or jointly with others, whether or not patentable, of which the conception or making involves the use of the Company’s time, facilities, equipment, personnel, supplies or trade secret information (collectively, “ Inventions ”).

8.2 Executive agrees to assign, and does hereby assign, to the Company (or its nominee) Executive’s right, title and interest in and to any and all Inventions that Executive may conceive, discover or make, either solely or jointly with others, whether or not patentable, from the beginning of Executive’s employment with the Company until the termination thereof of which the conception or making involves the use of the Company’s time, facilities, equipment, personnel, supplies or trade secret information.

8.3 Executive agrees to sign at the request of the Company any instrument necessary for the filing and prosecution of patent applications in the United States and elsewhere, including divisional, continuation, revival, renewal or reissue applications, covering any Inventions and all instruments necessary to vest title to such Inventions in the Company (or its nominee). Executive further agrees to cooperate and assist the Company in preparing, filing and prosecuting any and all such patent applications and in pursuing or defending any litigation upon Inventions covered hereby. The Company shall bear all expenses involved in the prosecution of such patent applications it desires to have filed. Executive agrees to sign at the request of the Company any and all instruments necessary to vest title in the Company (or its nominee) to any specific patent application prepared by the Company and covering Inventions which Executive has agreed to assign to the Company (or its nominee) pursuant to Section 8.2 above.

8.4 The provisions of Sections 8.2 and 8.3 do not apply to any invention which qualifies fully under the provisions of Section 2870 of the California Labor Code, which provides in substance that provisions in an employment agreement providing that an employee shall assign or offer to assign rights in an invention to his or her employer do not apply to an invention for which no equipment, supplies, facilities, or trade secret information of the employer was used and which was developed entirely in the employee’s own time, except for those inventions that either (a) relate, at the time of conception or reduction to practice of the invention: (i) to the business of the employer or (ii) to the employer’s actual or demonstrably anticipated research or development, or (b) result from any work performed by the employee for the employer.

The Company shall also have a perpetual, royalty-free, non-exclusive right to use in its business, and to make, use, license and sell products, processes and/or services derived from any inventions, discoveries, designs, improvements, concepts, ideas, works of authorship, whether or not patentable, including processes, methods, formulae, techniques or know-how related thereto, that are not within the scope of “Inventions” as defined above, but which are conceived or made by Executive during regular working hours or with the Company’s facilities, equipment, personnel, supplies or trade secret information.

Executive acknowledges that any violation of any provision of Sections 6 through 9 and Sections 12 through 14 hereof by Executive will cause irreparable damage to the Company, that such damages will be incapable of precise measurement and that, as a result, the Company will not have an adequate remedy at law to redress the harm which such violations will cause. Therefore, in the event of any violation or threatened violation of any provision of Sections 6 through 9 and Sections 12 through 14 by Executive, in addition to any other rights at law or in equity, Executive agrees that the Company will be entitled to seek injunctive relief including, but not limited to, temporary and/or permanent restraining orders to restrain any violation or threatened violation of such Sections by Executive.

It is the desire and intent of the Parties that the provisions of Section 6 through 9 hereof shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any portion of Sections 6 through 9 shall be adjudicated to be invalid or unenforceable, such provision shall be deemed amended either to conform to such restrictions as the court or arbitrator may allow, or to delete therefrom or reform the portion thus adjudicated to be invalid and unenforceable, such deletion or reformation to apply only with respect to the operation of such Section in the particular jurisdiction in which such adjudication is made. It is expressly agreed that any court or arbitrator shall have the authority to modify any provision of Sections 6 through 9 if necessary to render it enforceable, in such manner as to preserve as much as possible the Parties’ original intentions, as expressed therein, with respect to the scope thereof.

Executive agrees that any work prepared by Executive for the Company that is eligible for copyright protection under any U.S. or foreign law shall be a work made for hire and ownership of all copyrights (including all renewals and extensions therein) shall vest in the Company. In the event any such work prepared by Executive for the Company is deemed not to be a work made for hire for any reason, Executive hereby irrevocably grants, transfers and assigns all right, title and interest in such work and all copyrights in such work and all renewals and extensions thereof to the Company, and agrees to provide all assistance reasonably requested by the Company in the establishment, preservation and enforcement of its copyright in such work, such assistance to be provided at the Company’s expense, but without any additional compensation to Executive. Executive agrees to and does hereby irrevocably waive all moral rights with respect to the work developed or produced hereunder, including any and all rights of identification of authorship and any and all rights of approval, restriction or limitation on use or subsequent modifications.

In the event of termination of Executive’s employment pursuant to Section 5, Executive agrees to deliver promptly to the Company all Proprietary Information which is or has been in Executive’s possession or under Executive’s control. Upon termination of Executive’s employment by the Company for any reason whatsoever and at any earlier time the Company so requests, Executive will deliver to the custody of the person designated by the Company all originals and copies of such documents and other property of the Company in Executive’s possession, under Executive’s control or to which Executive may have access.

During the Term, for any reason, neither Executive nor her agents, on the one hand, nor the Company, or its senior executives or the Board, on the other hand, shall directly or indirectly issue or communicate any public statement, or statement likely to become public, that maligns, denigrates or disparages the other (including, in the case of communications by Executive or her agents, any of the Company’s officers, directors or employees). The foregoing shall not be violated by truthful responses to legal process or governmental inquiry or by private statements to any of the Company’s officers, directors or employees; provided , that , in the case of Executive, such statements are made in the course of carrying out her duties pursuant to this Agreement.

In addition to the foregoing, and not in any way in limitation of any right or remedy otherwise available to the Company, if Executive violates any of Sections 6 through 9, or Sections 12 through 14 hereof, any severance payments then or thereafter due from the Company to Executive shall be terminated immediately and the Company’s obligation to pay, and Executive’s right to receive, such severance payments shall terminate and be of no further force or effect.

The Company shall indemnify, defend and hold Executive harmless from and against any and all causes of action, claims, demands, liabilities, damages, costs and expenses of any nature whatsoever directly or indirectly arising out of or related to Executive’s discharging Executive’s duties hereunder on behalf of the Co