<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended November 2, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to ______________________
Commission file number 019774
United Retail Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 51 0303670
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
365 West Passaic Street, Rochelle Park, NJ 07662
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 845-0880
_____________________________________
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE> 2
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "1934 Act") during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
YES X NO
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the 1934 Act
subsequent to the distribution of securities under a plan confirmed by a court.
YES NO
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
As of November 2, 1996, 12,190,375 shares of the registrant's common
stock, $.001 par value per share, were outstanding.
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NOVEMBER 2, FEBRUARY 3, OCTOBER 28,
1996 1996 1995
--------- --------- ------------
ASSETS (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 6,458 $ 17,040 $ 11,655
Income taxes receivable 953 2,719 --
Accounts receivable 2,243 1,770 3,089
Inventory 49,565 40,401 52,682
Prepaid rents 4,592 4,473 4,380
Other prepaid expenses 3,671 2,936 3,202
Deferred income taxes 116 -- 854
--------- --------- ------------
Total current assets 67,598 69,339 75,862
Property and equipment, net 57,164 60,737 61,866
Deferred charges and other intangible assets,
net of accumulated amortization of $1,430, $1,265
and $1,213 7,091 6,846 6,898
Deferred income taxes 600 811 3,890
Other assets 1,035 1,300 1,234
--------- --------- ------------
Total assets $ 133,488 $ 139,033 $ 149,750
========= ========= ============
LIABILITIES
Current liabilities:
Current portion of distribution center financing $ 952 $ 901 $ 883
Accounts payable, trade 16,489 15,210 21,836
Accrued expenses 13,919 14,834 15,160
Income taxes payable -- -- 967
--------- --------- ------------
Total current liabilities 31,360 30,945 38,846
Distribution center financing 11,613 12,333 12,565
Other long-term liabilities 8,773 9,472 8,563
--------- --------- ------------
Total liabilities 51,746 52,750 59,974
--------- --------- ------------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; authorized
1,000,000; none issued
Common stock, $.001 par value; authorized 13 13 13
30,000,000; issued 12,680,375; outstanding
12,190,375
Additional paid-in capital 78,259 78,182 78,117
Retained earnings 4,052 8,670 12,228
Treasury stock (490,000 shares) at cost (582) (582) (582)
--------- --------- ------------
Total stockholders' equity 81,742 86,283 89,776
--------- --------- ------------
Total liabilities and stockholders' equity $ 133,488 $ 139,033 $ 149,750
========= ========= ============
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE> 4
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
--------------------------- ----------------------------
NOVEMBER 2, OCTOBER 28, NOVEMBER 2, OCTOBER 28,
1996 1995 1996 1995
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 84,249 $ 82,623 $ 269,300 $ 266,599
Cost of goods sold, including
buying and occupancy costs 67,668 67,237 216,504 210,133
-------- -------- --------- ---------
Gross profit 16,581 15,386 52,796 56,466
General, administrative and
store operating expenses 19,364 19,404 59,262 58,341
-------- -------- --------- ---------
Operating loss (2,783) (4,018) (6,466) (1,875)
Interest expense (income), net 84 (62) 295 (151)
-------- -------- --------- ---------
Loss before income taxes (2,867) (3,956) (6,761) (1,724)
Benefit from income taxes (847) (1,583) (2,143) (643)
-------- -------- --------- ---------
Net loss ($ 2,020) ($ 2,373) ($ 4,618) ($ 1,081)
======== ======== ========= =========
Net loss per
common share ($ 0.17) ($ 0.18) ($ 0.38) ($ 0.08)
======== ======== ========= =========
Shares outstanding 12,190 13,196 12,190 13,279
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE> 5
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
---------------------------
NOVEMBER 2, OCTOBER 28,
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($ 4,618) ($ 1,081)
Adjustments to reconcile net loss to net cash
(used for) provided by operating activities:
Depreciation and amortization of property and equipment 7,547 7,498
Amortization of deferred charges and other
intangible assets 165 173
Loss on disposal of assets 324 27
Compensation expense 77 181
Benefit from deferred income taxes 95 (288)
Deferred lease assumption revenue amortization (358) (211)
Lease assumption proceeds -- 3,523
Changes in operating assets and liabilities:
Accounts receivable (473) (672)
Income taxes receivable 1,766 --
Inventory (9,164) (15,164)
Accounts payable and accrued expenses 872 10,046
Prepaid expenses (854) (1,177)
Income taxes payable -- (660)
Other assets and liabilities (498) (549)
-------- --------
Net Cash (Used For) Provided By Operating Activities (5,119) 1,646
-------- --------
INVESTING ACTIVITIES:
Capital expenditures (4,298) (8,697)
Deferred payment for property and equipment (496) --
-------- --------
Net Cash Used for Investing Activities (4,794) (8,697)
-------- --------
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock -- 4
Repayments of long-term debt (669) (618)
-------- --------
Net Cash Used for Financing Activities (669) (614)
-------- --------
Net decrease in cash and cash equivalents (10,582) (7,665)
Cash and cash equivalents, beginning of period 17,040 19,320
-------- --------
Cash and cash equivalents, end of period $ 6,458 $ 11,655
======== ========
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE> 6
UNITED RETAIL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of United
Retail Group, Inc. and its subsidiaries (the "Company"). All significant
intercompany accounts and transactions have been eliminated.
The consolidated financial statements as of and for the thirteen and
thirty-nine weeks ended November 2, 1996 and October 28, 1995 are unaudited and
are presented pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, the consolidated financial statements should
be read in conjunction with the financial statement disclosures contained in the
Company's 1995 Annual Report. In the opinion of management, the accompanying
consolidated financial statements reflect all adjustments necessary (which are
of a normal recurring nature) to present fairly the financial position and
results of operations and cash flows for the interim periods, but are not
necessarily indicative of the results of operations for a full fiscal year.
Certain prior year balances have been reclassified to conform with the
fiscal 1996 presentation.
2. NET LOSS PER SHARE
Net loss per common share in fiscal 1996 excludes common equivalent
shares (stock options), because their effect is anti-dilutive. Net income per
common share, in each fiscal quarter in which income is realized, is computed
using the weighted average number of common and common equivalent shares (stock
options) outstanding during the quarter.
3. FINANCING ARRANGEMENTS
The Company and The Chase Manhattan Bank ("Chase") are parties to
agreements providing two credit facilities, the term of which expires in
February 1999. The first facility provides for the issuance by Chase of trade
letters of credit for the account of the Company in an aggregate amount at any
time of up to $25.0 million, of which $16.9 million was utilized at November 2,
1996. The second facility provides for revolving credit loans totaling a maximum
of $15.0 million, of which up to $10.0 million would be available for standby
letters of credit for general corporate purposes. As of November 2, 1996, the
Company has not drawn upon its revolving credit facility except to issue standby
letters of credit totaling $4.0 million as collateral for obligations under
casualty insurance policies.
<PAGE> 7
The Company is obligated to maintain several financial covenants,
including a current ratio and a fixed charges ratio, and has restrictions on
paying dividends, as well as a limitation on aggregate capital expenditures.
4. OTHER OPERATING ACTIVITIES
In July 1995, the Company agreed to assume the lease obligations of 21
stores previously operated by another retail chain. In order to induce the
Company to assume these leases, the assignor of the leases paid the Company
approximately $3.5 million. This payment has been recorded as accrued rent
payable and is being amortized against rent expense over the life of the assumed
leases.
5. INCOME TAXES
The benefit from income taxes consists of (dollars in thousands):
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
-------------------------- --------------------------
November 2, October 28, November 2, October 28,
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Currently payable:
Federal ($1,421) ($1,553) ($2,335) ($ 80)
State 64 (407) 97 (275)
------ ------ ------ ------
(1,357) (1,960) (2,238) (355)
------ ------ ------ ------
Deferred:
Federal 417 308 77 (371)
State 93 69 18 83
------ ------ ------ ------
510 377 95 (288)
------ ------ ------ ------
($ 847) ($1,583) ($2,143) ($ 643)
====== ====== ====== ======
</TABLE>
<PAGE> 8
Reconciliation of the benefit from income taxes from the U.S. Federal
statutory rate to the Company's effective rate is as follows:
<TABLE>
<CAPTION>
Thirteen Weeks Ended
---------------------------------------------------
November 2, 1996 October 28, 1995
---------------------- ------------------------
<S> <C> <C> <C> <C>
Tax at Federal rate (34%) ($975) (34.0%) ($1,345) (34.0%)
State income taxes, net of 104 3.6% (252) (6.4%)
federal benefit
Goodwill amortization 17 0.6% 17 0.5%
Other 7 0.3% (3) (0.1%)
---- ---- ------ ----
($847) (29.5%) ($1,583) (40.0%)
==== ==== ====== ====
</TABLE>
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
---------------------------------------------------
November 2, 1996 October 28, 1995
------------------------ ----------------------
<S> <C> <C> <C> <C>
Tax at Federal rate (34%) ($2,299) (34.0%) ($586) (34.0%)
State income taxes, net of 76 1.1% (127) (7.4%)
federal benefit
Goodwill amortization 53 0.8% 52 3.1%
Other 27 0.4% 18 1.0%
----- ---- --- ----
($2,143) (31.7%) ($643) (37.3%)
===== ==== === ====
</TABLE>
The net deferred tax asset reflects the tax impact of temporary
differences. The components of the net deferred tax asset are as follows:
<TABLE>
<S> <C>
Assets:
Inventory $ 281
Accruals and reserves 170
Compensation 2,052
-------
2,503
Liabilities:
Depreciation (1,787)
-------
Net deferred tax asset $ 716
=======
</TABLE>
Future realization of the tax benefits attributable to these existing
deductible temporary differences ultimately depends on the existence of
sufficient taxable income within the carryback and/or carryforward period
available under the tax law at the time of the tax deduction. As of November 2,
1996, the compensation related deferred tax asset will be fully realizable upon
the exercise of all of the outstanding options only if (i) the market price of
the stock equals or exceeds $3.875 per share upon exercise and (ii) the
compensation
<PAGE> 9
expense deduction is not limited by future enacted tax laws. The underlying
options of the compensation related deferred tax asset are exercisable through
December 31, 1999.
At November 2, 1996, the Company has pre-acquisition net operating loss
carryforwards, aggregating approximately $0.6 million, available to reduce
future taxable income in certain states, expiring through 2004.
6. SUPPLEMENTAL CASH FLOW INFORMATION
Net cash flow from operating activities includes cash payments for
interest and income taxes as follows (dollars in thousands):
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
-------------------- -----------------------
November 2, October 28, November 2, October 28,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash interest:
Interest expense
(income), net per
statements of operations $ 84 ($ 62) $ 295 ($ 151)
Less: Non-cash
interest income(expense) 33 (11) 53 (64)
---- ----- ------- -----
Net cash interest expense
(income), including interest
income of $234, $392,
$729 and $1,189 $117 ($ 73) $ 348 ($ 215)
==== ===== ======= =====
Income tax payments (refunds) $ 21 $ 903 ($ 4,017) $ 480
==== ===== ======= =====
</TABLE>
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIRD QUARTER FISCAL 1996 VERSUS THIRD QUARTER FISCAL 1995
Net sales for the third quarter of Fiscal 1996 increased 2.0% from the
third quarter of Fiscal 1995, to $84.2 million from $82.6 million, principally
from an increase in sales volume rather than a change in average price. Average
stores open increased from 564 to 581; see, however, "Properties," regarding the
Company's plan for future store openings. There is no assurance that sales will
continue to increase. Comparable store sales for the third quarter of Fiscal
1996 were flat. (In November 1996 net sales decreased 2.0% from November 1995,
to $29.6 million from $30.2 million; comparable store sales for November 1996
declined 3.3%.)
Gross profits increased by $1.2 million to $16.6 million in the third
quarter of Fiscal 1996 from $15.4 million in the third quarter of Fiscal 1995,
increasing as a percentage of net sales to 19.7% from 18.6%. The increase in
gross profits as a percentage of net sales was primarily attributable to an
increase in the merchandise margin rate. There is no assurance that gross
profits will continue to increase.
The women's apparel industry is subject to rapidly changing consumer
fashion preferences. The Company's performance depends on the operational
flexibility to respond to such changes quickly. See, "A Single Merchandise
Assortment in Mid-Spring 1996." The industry has also been subject to shifting
shopping patterns, both within the Company's sector (the specialty store sector)
and in other channels of distribution, such as department stores, catalogues and
electronic media. The Company also believes that consumer pressure to reduce
prices throughout the women's apparel industry has become a permanent influence
on the retail marketplace. Finally, in Fiscal 1996, the Company replaced its
older proprietary brands with its new Avenue brand; there is no assurance that
the new brand will not have an adverse effect on sales and merchandise margin
rates in the fourth quarter of Fiscal 1996.
General, administrative and store operating expenses were $19.4 million
in the third quarter of Fiscal 1996, unchanged from the third quarter of the
previous year in spite of an increase in the number of stores. As a percentage
of net sales, general, administrative and store operating expenses decreased to
23.0% from 23.5%.
During the third quarter of Fiscal 1996, the Company incurred an
operating loss of $2.8 million compared to an operating loss of $4.0 million for
the third quarter of Fiscal 1995. The operating loss was 3.3% of net sales
during the third quarter of Fiscal 1996. There is no assurance that the Company
will not continue to incur operating losses.
Net interest expense was $84,000 for the third quarter of Fiscal 1996,
compared to net interest income of $62,000 in the third quarter of Fiscal 1995.
The Company had an income tax benefit of $0.8 million in the third
quarter of Fiscal 1996 and an income tax benefit of $1.6 million in the third
quarter of Fiscal 1995.
The Company incurred a net loss of $2.0 million for the third quarter
of Fiscal 1996, compared to a net loss of $2.4 million for the third quarter of
Fiscal 1995.
<PAGE> 11
FIRST 39 WEEKS FISCAL 1996 VERSUS FIRST 39 WEEKS FISCAL 1995
Net sales for the first 39 weeks of Fiscal 1996 increased 1.0% from the
first 39 weeks of Fiscal 1995, to $269.3 million from $266.6 million,
principally from an increase in sales volume. Average stores open increased from
543 to 581. Comparable store sales decreased 3.6% for the period.
Gross profits decreased by $3.7 million to $52.8 million in the first
39 weeks of Fiscal 1996 from $56.5 million in the first 39 weeks of Fiscal 1995,
decreasing as a percentage of net sales to 19.6% from 21.2%. The decrease in
gross profits as a percentage of net sales was primarily attributable to a
decrease in the merchandise margin rate and higher occupancy costs as a
percentage of net sales, partially offset by a reduction in the payroll expense
for merchants and planners.
General, administrative and store operating expenses were $59.3 million
in the first 39 weeks of Fiscal 1996, compared to $58.3 million in the first 39
weeks of the previous year, principally from higher payroll costs, resulting
principally from an increase in the number of stores, partially offset by lower
administrative expenses. As a percentage of net sales, general, administrative
and store operating expenses increased to 22.0% from 21.9%.
During the first 39 weeks of Fiscal 1996, the Company incurred an
operating loss of $6.5 million compared to an operating loss of $1.9 million for
the first 39 weeks of Fiscal 1995. The operating loss was 2.4% of net sales
during the first 39 weeks of Fiscal 1996.
Net interest expense was $0.3 million for the first 39 weeks of Fiscal
1996, compared to net interest income of $0.2 million in the first 39 weeks of
Fiscal 1995. The net interest expense resulted principally from reduced interest
income (lower rates on smaller invested cash balances) combined with bank fees
associated with the extension of the term of the Company's credit facilities.
The Company had an income tax benefit of $2.1 million in the first 39
weeks of Fiscal 1996 and an income tax benefit of $0.6 million in the first 39
weeks of Fiscal 1995.
The Company incurred a net loss of $4.6 million for the first 39 weeks
of Fiscal 1996, compared to a net loss of $1.1 million for the first 39 weeks of
Fiscal 1995.
A SINGLE MERCHANDISE ASSORTMENT COMMENCING IN MID-SPRING 1996
The Company's merchandising had a divisional structure in most of
Fiscal 1995, with one team of merchants providing inventory for stores located
principally in malls and a separate team of merchants providing different
inventory for stores concentrated in strip shopping centers. In order to improve
its merchandise assortments, the Company changed from a divisional merchandising
methodology to one in which a single team provides the same inventory for all
the Company's stores. The separate teams of merchants for mall stores and strip
shopping center stores were unified in the third quarter of Fiscal 1995. The
first unified merchandise assortment arrived in Mid-Spring 1996. The Company
believes Fiscal 1996 is a transitional period for the unified team of merchants.
A new product development function was added to the existing
merchandising function and product quality function in April 1996.
There is no assurance that the new merchandising structure will
increase sales and improve merchandise margin rates.
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash on hand was $6.5 million at November 2, 1996; $17.0
million at February 3, 1996; and $11.7 million at October 28, 1995.
Inventory was $49.6 million at November 2, 1996; $40.4 million at
February 3, 1996; and $52.7 million at October 28, 1995. The Company's inventory
levels peak in early May and December. During Fiscal 1995, the highest inventory
level was $54.9 million. In Fiscal 1995, domestic purchases and import purchases
each constituted approximately one-half of total purchases. Import purchases
were made in U.S. dollars and were generally financed by trade letters of
credit. Short-term trade credit represented a significant source of financing
for domestic merchandise purchases. Trade credit arose from the willingness of
the Company's domestic vendors to grant extended payment terms for inventory
purchases and was generally financed either by the vendor or a third-party
factor.
The Company has agreements with The Chase Manhattan Bank ("Chase")
providing two credit facilities until February 1999. The first facility provides
for the issuance by Chase of trade letters of credit for the account of the
Company in an aggregate amount at any time of up to $25.0 million, of which
$16.9 million was utilized at November 2, 1996. The second facility provides for
revolving credit loans totaling a maximum of $15.0 million, of which up to $10.0
million would be available for standby letters of credit for general corporate
purposes. The credit facilities are secured by a pledge of the stock of the
Company's subsidiaries and the Company's investments in cash equivalents. Also,
merchandise purchased under trade letters of credit is subject to a security
interest pursuant to the Letter of Credit Agreement. Finally, the Company is
required to maintain most of its deposit account balances at Chase, where the
deposits are subject to a right of offset by Chase. Loans under the revolving
credit facility will bear interest, at the option of the Company, at either (i)
the higher of the Federal Funds Rate plus 0.5% or the prime commercial lending
rate of Chase, or (ii) the London Interbank Offered Rate plus 1.5%. The Company
has not drawn upon its revolving credit facility except to issue standby letters
of credit totaling $4.0 million as collateral for obligations in the ordinary
course of business under casualty insurance policies.
The agreements for the credit facilities contain a number of financial
covenants, including (i) tangible net worth to equal at least $70.0 million
plus, for each fiscal year ending after February 3, 1996, for which net income
shall be positive, an amount equal to 50% of net income, and (ii) capital
expenditures not to exceed (A) $6.5 million in Fiscal 1996 and (B) after Fiscal
1996, $10.0 million per annum plus, during the period after Fiscal 1996 the sum
of (x) $10.0 million plus (y) if adjusted cash flow (as defined in the
agreements) after February 4, 1996 is positive, 75% of adjusted cash flow for
the period. The agreements also require: (i) the ratio of total debt (excluding
accrued and payable expenses incurred in the ordinary course of business) to
tangible net worth not be .45 to 1.0 or more, (ii) the fixed charges ratio (as
defined in the agreements) not be less than 0.9 to 1.0 through January 4, 1997
and thereafter not be less than 1.0 to 1.0, (iii) the ratio of current assets to
current liabilities not be less than 1.25 to 1.0, (iv) cash flow not be less
than minimum amounts specified in the agreements, and (v) liquidity, defined as
the sum of cash plus cash equivalents plus the unused commitment under the
revolving credit facility, in Fiscal 1996 not be less than:
<TABLE>
<CAPTION>
Month Amount
----- ------
<S> <C>
10/6-11/2 $13 million
11/3-11/30 $10 million
12/1-1/4 $27 million
1/5-2/1 $21 million
</TABLE>
<PAGE> 13
The agreements also include certain restrictive covenants that impose
limitations (subject to certain exceptions) on the Company with respect to,
among other things, making or owning certain investments, declaring or paying
dividends, acquiring Common Stock or preferred stock of the Company, making
loans, engaging in any line of business other than apparel retailing, engaging
in certain transactions with affiliates, or consolidating, merging or making
acquisitions outside the ordinary course of business. It would constitute an
event of default under the agreements if a majority of the Company's outstanding
Common Stock were to be held by one person, or an investment group, other than
an affiliate of The Limited, Inc., or Raphael Benaroya, the Chairman of the
Board, President and Chief Executive Officer of the Company.
The Company does not believe that continued compliance with the
covenants under the agreements for the credit facilities will materially
restrict its anticipated operations. The Company also believes that its credit
facilities, together with anticipated cash flows from operating activities, will
be adequate to meet anticipated working capital needs, including seasonal
financing needs, for the next 12 months. The preceding sentences in this
paragraph constitute forward-looking information under the 1995 Private
Securities Litigation Reform Act (the "Reform Act") and are subject to the
factors referred to under the caption "Future Results."
The accounts receivable from the Company's proprietary credit cards are
purchased daily by Citibank (South Dakota), N.A. ("Citibank") at a discount that
is adjusted annually. There is no assurance that the annual adjustment in the
discount rate will not increase materially the cost of the Company's proprietary
credit card programs.
The Company's agreements with Chase and with Citibank have been
incorporated by reference as exhibits to this Report. The above summaries of
these agreements are qualified in their entirety by reference to these exhibits.
Overseas production of merchandise purchased by the Company is mainly
in South Asia (principally Hong Kong, Taiwan, India, and South Korea) and Turkey
and is obtained through independent agents. The Company's operations may be
adversely affected by political instability resulting in disruption of trade
with foreign countries in which the Company's foreign suppliers are located, the
adoption of additional regulations relating to imports or duties, the imposition
of taxes or other charges on imports, any significant fluctuation of the value
of the dollar against foreign currencies, and restrictions on the transfer of
funds.
PROPERTIES
The Company leased 582 retail stores at November 2, 1996, of which 313
stores were located in strip shopping centers, 239 stores were located in malls
and 30 stores were located in downtown shopping districts. The Company's retail
square footage was 2.3 million square feet at November 2, 1996 and 2.2 million
square feet at October 28, 1995.
The Company presently plans to maintain approximately the same amount
of retail square footage and to obtain increases in net sales from higher sales
per square foot. There is no assurance, however, that net sales will increase.
The Company plans to open new mall stores only in exceptional circumstances and
to decrease the retail square footage in mall locations gradually by letting
underperforming leases expire. Subject to space availability, the Company plans
to open stores in strip shopping centers to replace mall stores that close. The
Company intends to pay the costs of new store openings from net cash provided by
operating activities. The preceding sentences of this paragraph constitute
forward-looking information under the Reform Act and are subject to the factors
referred to under the caption "Future Results."
<PAGE> 14
New stores and newly remodeled stores will use The Avenue(R) trade
name.
In Fiscal 1995, the Company was conducting an experiment with a total
of 55 new stores and remodeled stores that sold both large size merchandise and
smaller "missy" sizes in separate departments. The Company discontinued "missy"
assortments in those stores and sells large sizes there exclusively. (No
writeoff was taken in connection with the discontinuance of the "missy"
assortments.) The conversion was completed in the second quarter of Fiscal 1996.
SEASONALITY
The Company's business is seasonal, with the first half of each fiscal
year usually providing a greater portion of the Company's annual net sales and
operating income.
INFLATION AND CHANGING PRICES
Inflation has not had a significant effect on the Company's operations.
FUTURE RESULTS
Future results could differ materially from those currently anticipated
due to possible (i) miscalculation of fashion trends by the Company's newly
unified team of merchants, (ii) shifting shopping patterns, both within the
specialty store sector and in other channels of distribution, (iii) consumer
pressure to reduce prices, (iv) extreme or unseasonable weather conditions, (v)
economic downturns, weakness in overall consumer demand and variations in the
demand for women's fashion apparel, (vi) imposition by vendors, or their
third-party factors, of more onerous payment terms for domestic merchandise
purchases, (vii) acceleration in the rate of business failures and inventory
liquidations in the specialty store sector, (viii) increase in the rate of bad
debt expense among the Company's proprietary credit card holders, (ix)
disruption attendant to the sourcing of merchandise abroad, including (a)
China's assumption of control of Hong Kong in 1997, (b) China's claims to
sovereignty over Taiwan, (c) North Korea's claims to sovereignty over South
Korea, (d) exchange rate fluctuations, (e) political instability, (f) trade
sanctions or restrictions, (g) changes in quota and duty regulations, (h) delays
in shipping or (i) increased costs of transportation, and (x) adverse reaction
to the replacement of the Company's older proprietary brands with its new Avenue
brand.
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
The following exhibits are filed herewith:
Number Description
10.1* Restated Supplemental Retirement Savings
Plan
27 Financial Data Schedule
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended August 3, 1996 are incorporated herein by reference:
Number in Filing Description
10.1 Amendment No. 8, dated August 22, 1996, to
Letter of Credit Agreement among United
Retail Group, Inc. (the "Corporation"), its
subsidiaries and The Chase Manhattan Bank
("Chase")
10.2 Amendment No. 7, dated August 22, 1996, to
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.3 Letter, dated August 23, 1996, with respect
to Credit Agreement between the Corporation
and Citibank (South Dakota) N.A.
("Citibank")
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended May 4, 1996 are incorporated herein by reference:
Number in Filing Description
10.1* Severance Pay Agreement, dated May 28, 1996,
between the Corporation and Raphael Benaroya
10.2* Severance Pay Agreement, dated May 28, 1996,
between the Corporation and George R. Remeta
10.3 Amended and Restated Term Sheet Agreement
for Hosiery, dated as of December 29, 1995,
between The Avenue, Inc. and American
Licensing Group, Inc. (Confidential portions
have been deleted and filed separately with
the Secretary of the Commission)
The Corporation's 1996 Stock Option Plan set forth as Exhibit A to the
Corporation's proxy statement on Schedule 14A for its 1996 annual meeting of
stockholders is incorporated herein by reference.*
<PAGE> 16
The following exhibits to the Corporation's Current Report on Form 8-K, dated
March 22, 1996, are incorporated herein by reference:
Number in Filing Description
10.1 Amendment No. 7, dated March 5, 1996, to
Letter of Credit Agreement among the
Corporation, its subsidiaries and Chase
10.2 Amendment No. 6, dated March 5, 1996, to the
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.3* Employment Agreement, dated March 1, 1996 ,
between the Corporation and Kenneth P.
Carroll
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended July 29, 1995 are incorporated herein by reference:
Number in Filing Description
10.1 Amendment No. 5, dated January 31, 1995, to
the Credit Agreement among the Corporation,
its subsidiaries and Chase
10.2 Amendment No. 6, dated January 31, 1995, to
the Letter of Credit Agreement among the
Corporation, its subsidiaries and Chase
The following exhibits to the Corporation's Amended Current Report on Form 8-KA,
dated May 22, 1995, are incorporated herein by reference:
Number in Filing Description
10.1 Amended and Restated Gloria Vanderbilt
Intimate Apparel Sublicense Agreement, dated
May 22, 1995, between United Retail
Incorporated and American Licensing Group
Limited Partnership ("ALGLP")
10.2 Gloria Vanderbilt Sleepwear Sublicense
Agreement, dated May 22, 1995, between
United Retail Incorporated and ALGLP
The following exhibits to the Corporation's Annual Report on Form 10-K for the
year ended January 28, 1995 are incorporated herein by reference:
Number in Filing Description
10.1* Incentive Compensation Program Summary
21 Subsidiaries of the Corporation
<PAGE> 17
The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the
period ended July 30, 1994 is incorporated herein by reference:
Number in Filing Description
10.2* Letter from the Corporation to Raphael
Benaroya and George R. Remeta, dated May 20,
1994, regarding their respective Restated
Employment Agreements, dated November 1,
1991
The following exhibits to the Corporation's amended Annual Report on Form 10-KA
for the year ended January 29, 1994 are incorporated herein by reference:
Number in Filing Description
10.3 Amendment, dated December 6, 1993, to Credit
Agreement between the Corporation and
Citibank
10.4 Term Sheet Agreement, dated as of May 4,
1993, with respect to Amended and Restated
Gloria Vanderbilt Hosiery Sublicense
Agreement
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended October 30, 1993 are incorporated herein by reference:
Number in Filing Description
10.1 Amendment Nos. 3 and 4, dated September 30,
1993 and November 18, 1993, respectively, to
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.2 Amendment Nos. 4 and 5, dated September 30,
1993 and November 18, 1993, respectively, to
Letter of Credit Agreement among the
Corporation, its subsidiaries and Chase
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended July 31, 1993 are incorporated herein by reference:
Number in Filing Description
4.1 Amended By-Laws of the Corporation, as
amended June 1, 1993
4.2 Amendment No. 1, dated June 1, 1993, to
Restated Stockholders' Agreement, dated
December 23, 1992, between the Corporation
and certain of its stockholders
The Corporation's Restated 1990 Stock Option Plan set forth as Exhibit A to the
Corporation's proxy statement on Schedule 14A for its 1993 annual meeting of
stockholders is incorporated herein by reference.*
<PAGE> 18
The following exhibits to the Corporation's Current Report on Form 8-K, dated
January 6, 1993, are incorporated herein by reference:
Number in Filing Description
4.2 Restated Stockholders' Agreement, dated
December 23, 1992, between the Corporation
and certain of its stockholders
10.1 Amendment No. 1, dated March 17, 1992, to
Letter of Credit Agreement between the
Corporation, its subsidiaries and Chase
10.2 Amendment No. 2, dated May 4, 1992, to
Letter of Credit Agreement between the
Corporation its subsidiaries and Chase
10.3 Amendment No. 3, dated July 2, 1992, to
Letter of Credit Agreement between the
Corporation , its subsidiaries and Chase
10.4 Amendment No. 1, dated May 4, 1992, to
Credit Agreement between the Corporation,
its subsidiaries and Chase
10.5 Amendment No. 2, dated July 2, 1992, to
Credit Agreement between the Corporation,
its subsidiaries and Chase
10.6 Second Amendment to Lease, dated June 30,
1992, to Office Lease between Mack Passaic
Street Properties Co. and Sizes Unlimited,
Inc. (now known as United Retail
Incorporated)
10.7 Guaranty of Lease, dated June 30, 1992, made
by Sizes Unlimited Holding Corporation (now
known as United Retail Holding Corporation)
to Mack Passaic Street Properties Co.
The following exhibits to the Corporation's Registration Statement on Form S-1
(Registration No. 33-44499), as amended, are incorporated herein by reference:
Number in Filing Description
3.1 Amended and Restated Certificate of
Incorporation of the Corporation
4.1 Specimen Certificate for Common Stock of the
Corporation
10.2.1 Software License Agreement, dated as of
April 30, 1989, between The Limited Stores,
Inc. and Sizes Unlimited, Inc.
10.2.2 Amendment to Software License Agreement,
dated December 10, 1991
10.7 Amended and Restated Gloria Vanderbilt
Hosiery Sublicense Agreement, dated as of
April 30, 1989, between American Licensing
Group, Inc. (Licensee) and Sizes Unlimited,
Inc. (Sublicensee)
10.11 Office Lease, dated June 12, 1987, between
Mack Passaic Street Properties Co. and Sizes
Unlimited, Inc. and Amendment thereto dated
August 21, 1988
10.12 Amended and Restated Master Affiliate
Sublease Agreement, dated as of July 17,
1989, among Lane Bryant, Inc., Lerner
Stores, Inc. (Landlord) and Sizes Unlimited,
Inc. (Tenant) and Amendment thereto, dated
July 17, 1989
10.23* Restated Employment Agreement, dated
November 1, 1991, between the Corporation
and Raphael Benaroya
10.25* Restated Employment Agreement, dated
November 1, 1991, between the Corporation
and George R. Remeta
10.29* Restated 1989 Management Stock Option Plan,
dated November 1, 1991
<PAGE> 19
10.30* Performance Option Agreement, dated July 17,
1989, between Lernmark, Inc. (now known as
United Retail Group, Inc.) and Raphael
Benaroya and First Amendment thereto, dated
November 1, 1991
10.31* Performance Option Agreement, dated July 17,
1989, between Lernmark, Inc. and George R.
Remeta and First Amendment thereto, dated
November 1, 1991
10.32* Second Amendment, dated November 1, 1991, to
Performance Option Agreements with Raphael
Benaroya and George R. Remeta
10.33* 1991 Stock Option Agreement, dated November
1, 1991, between the Corporation and Raphael
Benaroya
10.34* 1991 Stock Option Agreement, dated November
1, 1991, between the Corporation and George
R. Remeta
10.38 Management Services Agreement, dated August
26, 1989, between American Licensing Group,
Inc. and ALGLP
10.39 First Refusal Agreement, dated August 31,
1989, between the Corporation and ALGLP
10.40 Credit Agreement, dated February 24, 1992,
among the Corporation, its subsidiaries and
Chase
10.41 Letter of Credit Agreement, dated February
24, 1992, among the Corporation, its
subsidiaries and Chase
- -------------------------
*A compensatory plan for the benefit of the Corporation's management or
a management contract.
-------------
(b) No Current Reports on Form 8-K were filed by the Corporation during
the fiscal quarter ended November 2, 1996.
<PAGE> 20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
(Registrant) UNITED RETAIL GROUP, INC.
By: /S/ GEORGE R. REMETA
------------------------------------------------------
George R. Remeta, Vice Chairman of the Board and Chief
Financial Officer - Authorized Signatory
By: /S/ JON GROSSMAN
------------------------------------------------------
Jon Grossman, Vice President - Finance and Chief
Accounting Officer
Date: December 6, 1996
<PAGE> 21
EXHIBIT INDEX
The following exhibits are filed herewith:
Number Description
10.1* Restated Supplemental Retirement Savings
Plan
27 Financial Data Schedule
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended August 3, 1996 are incorporated herein by reference:
Number in Filing Description
10.1 Amendment No. 8, dated August 22, 1996, to
Letter of Credit Agreement among United
Retail Group, Inc. (the "Corporation"), its
subsidiaries and The Chase Manhattan Bank
("Chase")
10.2 Amendment No. 7, dated August 22, 1996, to
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.3 Letter, dated August 23, 1996, with respect
to Credit Agreement between the Corporation
and Citibank (South Dakota) N.A.
("Citibank")
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended May 4, 1996 are incorporated herein by reference:
Number in Filing Description
10.1* Severance Pay Agreement, dated May 28, 1996,
between the Corporation and Raphael Benaroya
10.2* Severance Pay Agreement, dated May 28, 1996,
between the Corporation and George R. Remeta
10.3 Amended and Restated Term Sheet Agreement
for Hosiery, dated as of December 29, 1995,
between The Avenue, Inc. and American
Licensing Group, Inc. (Confidential portions
have been deleted and filed separately with
the Secretary of the Commission)
The Corporation's 1996 Stock Option Plan set forth as Exhibit A to the
Corporation's proxy statement on Schedule 14A for its 1996 annual meeting of
stockholders is incorporated herein by reference.*
<PAGE> 22
The following exhibits to the Corporation's Current Report on Form 8-K, dated
March 22, 1996, are incorporated herein by reference:
Number in Filing Description
10.1 Amendment No. 7, dated March 5, 1996, to
Letter of Credit Agreement among the
Corporation, its subsidiaries and Chase
10.2 Amendment No. 6, dated March 5, 1996, to the
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.3* Employment Agreement, dated March 1, 1996,
between the Corporation and Kenneth P.
Carroll
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended July 29, 1995 are incorporated herein by reference:
Number in Filing Description
10.1 Amendment No. 5, dated January 31, 1995, to
the Credit Agreement among the Corporation,
its subsidiaries and Chase
10.2 Amendment No. 6, dated January 31, 1995, to
the Letter of Credit Agreement among the
Corporation, its subsidiaries and Chase
The following exhibits to the Corporation's Amended Current Report on Form 8-KA,
dated May 22, 1995, are incorporated herein by reference:
Number in Filing Description
10.1 Amended and Restated Gloria Vanderbilt
Intimate Apparel Sublicense Agreement, dated
May 22, 1995, between United Retail
Incorporated and American Licensing Group
Limited Partnership ("ALGLP")
10.2 Gloria Vanderbilt Sleepwear Sublicense
Agreement, dated May 22, 1995, between
United Retail Incorporated and ALGLP
The following exhibits to the Corporation's Annual Report on Form 10-K for the
year ended January 28, 1995 are incorporated herein by reference:
Number in Filing Description
10.1* Incentive Compensation Program Summary
21 Subsidiaries of the Corporation
<PAGE> 23
The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the
period ended July 30, 1994 is incorporated herein by reference:
Number in Filing Description
10.2* Letter from the Corporation to Raphael
Benaroya and George R. Remeta, dated May 20,
1994, regarding their respective Restated
Employment Agreements, dated November 1,
1991
The following exhibits to the Corporation's amended Annual Report on Form 10-KA
for the year ended January 29, 1994 are incorporated herein by reference:
Number in Filing Description
10.3 Amendment, dated December 6, 1993, to Credit
Agreement between the Corporation and
Citibank
10.4 Term Sheet Agreement, dated as of May 4,
1993, with respect to Amended and Restated
Gloria Vanderbilt Hosiery Sublicense
Agreement
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended October 30, 1993 are incorporated herein by reference:
Number in Filing Description
10.1 Amendment Nos. 3 and 4, dated September 30,
1993 and November 18, 1993, respectively, to
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.2 Amendment Nos. 4 and 5, dated September 30,
1993 and November 18, 1993, respectively, to
Letter of Credit Agreement among the
Corporation, its subsidiaries and Chase
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended July 31, 1993 are incorporated herein by reference:
Number in Filing Description
4.1 Amended By-Laws of the Corporation, as
amended June 1, 1993
4.2 Amendment No. 1, dated June 1, 1993, to
Restated Stockholders' Agreement, dated
December 23, 1992, between the Corporation
and certain of its stockholders
The Corporation's Restated 1990 Stock Option Plan set forth as Exhibit A to the
Corporation's proxy statement on Schedule 14A for its 1993 annual meeting of
stockholders is incorporated herein by reference.*
<PAGE> 24
The following exhibits to the Corporation's Current Report on Form 8-K, dated
January 6, 1993, are incorporated herein by reference:
Number in Filing Description
4.2 Restated Stockholders' Agreement, dated
December 23, 1992, between the Corporation
and certain of its stockholders
10.1 Amendment No. 1, dated March 17, 1992, to
Letter of Credit Agreement between the
Corporation, its subsidiaries and Chase
10.2 Amendment No. 2, dated May 4, 1992, to
Letter of Credit Agreement between the
Corporation its subsidiaries and Chase
10.3 Amendment No. 3, dated July 2, 1992, to
Letter of Credit Agreement between the
Corporation , its subsidiaries and Chase
10.4 Amendment No. 1, dated May 4, 1992, to
Credit Agreement between the Corporation,
its subsidiaries and Chase
10.5 Amendment No. 2, dated July 2, 1992, to
Credit Agreement between the Corporation,
its subsidiaries and Chase
10.6 Second Amendment to Lease, dated June 30,
1992, to Office Lease between Mack Passaic
Street Properties Co. and Sizes Unlimited,
Inc. (now known as United Retail
Incorporated)
10.7 Guaranty of Lease, dated June 30, 1992, made
by Sizes Unlimited Holding Corporation (now
known as United Retail Holding Corporation)
to Mack Passaic Street Properties Co.
The following exhibits to the Corporation's Registration Statement on Form S-1
(Registration No. 33-44499), as amended, are incorporated herein by reference:
Number in Filing Description
3.1 Amended and Restated Certificate of
Incorporation of the Corporation
4.1 Specimen Certificate for Common Stock of the
Corporation
10.2.1 Software License Agreement, dated as of
April 30, 1989, between The Limited Stores,
Inc. and Sizes Unlimited, Inc.
10.2.2 Amendment to Software License Agreement,
dated December 10, 1991
10.7 Amended and Restated Gloria Vanderbilt
Hosiery Sublicense Agreement, dated as of
April 30, 1989, between American Licensing
Group, Inc. (Licensee) and Sizes Unlimited,
Inc. (Sublicensee)
10.11 Office Lease, dated June 12, 1987, between
Mack Passaic Street Properties Co. and Sizes
Unlimited, Inc. and Amendment thereto dated
August 21, 1988
10.12 Amended and Restated Master Affiliate
Sublease Agreement, dated as of July 17,
1989, among Lane Bryant, Inc., Lerner
Stores, Inc. (Landlord) and Sizes Unlimited,
Inc. (Tenant) and Amendment thereto, dated
July 17, 1989
10.23* Restated Employment Agreement, dated
November 1, 1991, between the Corporation
and Raphael Benaroya
10.25* Restated Employment Agreement, dated
November 1, 1991, between the Corporation
and George R. Remeta
10.29* Restated 1989 Management Stock Option Plan,
dated November 1, 1991
<PAGE> 25
10.30* Performance Option Agreement, dated July 17,
1989, between Lernmark, Inc. (now known as
United Retail Group, Inc.) and Raphael
Benaroya and First Amendment thereto, dated
November 1, 1991
10.31* Performance Option Agreement, dated July 17,
1989, between Lernmark, Inc. and George R.
Remeta and First Amendment thereto, dated
November 1, 1991
10.32* Second Amendment, dated November 1, 1991, to
Performance Option Agreements with Raphael
Benaroya and George R. Remeta
10.33* 1991 Stock Option Agreement, dated November
1, 1991, between the Corporation and Raphael
Benaroya
10.34* 1991 Stock Option Agreement, dated November
1, 1991, between the Corporation and George
R. Remeta
10.38 Management Services Agreement, dated August
26, 1989, between American Licensing Group,
Inc. and ALGLP
10.39 First Refusal Agreement, dated August 31,
1989, between the Corporation and ALGLP
10.40 Credit Agreement, dated February 24, 1992,
among the Corporation, its subsidiaries and
Chase
10.41 Letter of Credit Agreement, dated February
24, 1992, among the Corporation, its
subsidiaries and Chase
- -------------------------
*A compensatory plan for the benefit of the Corporation's management or
a management contract.
<PAGE> 1
UNITED RETAIL GROUP
SUPPLEMENTAL RETIREMENT SAVINGS PLAN
(1997 Restatement)
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
Section 1. Definitions.................................................1
Section 2. Participation...............................................5
2.1. Eligibility.................................................5
2.2. Waiver of Participation.....................................6
2.3. Change in Status............................................6
2.4. Omission of Eligible Associate..............................6
2.5. Inclusion of Ineligible Associate...........................6
Section 3. Contributions...............................................6
3.1. Supplemental Savings Contributions..........................6
3.2. Supplemental Matching Contributions.........................7
3.3. Transitional Contributions..................................7
3.4. Crediting of Contributions..................................8
Section 4. Investment of Accounts......................................8
4.1. Investment Direction........................................8
4.2. Investment Funds............................................9
4.3. Investment Managers.........................................9
Section 5. Valuations and Crediting....................................9
5.1. Valuations..................................................9
5.2. Credits to and Charges Against Accounts.....................9
5.3. Expenses...................................................10
Section 6 Vesting and Separation from Service........................10
6.1. Vested Percentage..........................................10
6.2. Forfeiture and Restoration.................................10
6.3. Effect of Breaks in Service on Vesting.....................10
6.4. Amendments to Vesting Schedule.............................11
Section 7. Benefits...................................................11
7.1. Forms of Benefit Payments..................................11
7.2. Retirement Benefit.........................................11
7.3. Death Benefit..............................................11
7.4. Beneficiary Designation ...................................11
7.5. In-Service Distributions...................................12
7.6. Post-Distribution Credits..................................12
7.7. Prevention of Escheat......................................12
7.8. Payments on Taxability.....................................13
7.9. Withholding................................................13
Section 8. The Administrative Committee...............................13
8.1. Appointment and Tenure.....................................13
8.2. Meetings; Majority Rule....................................13
8.3. Delegation.................................................13
8.4. Reporting and Disclosure...................................14
i
<PAGE> 3
8.5. Construction of the Plan...................................14
8.6. Engagement of Assistants and Advisors......................14
8.7. Compensation...............................................14
8.8. Indemnification of the Administrative Committee............14
Section 9. Authority and Responsibilities of the Company..............15
Section 10. Claims Procedures..........................................15
10.1. Application for Benefits...................................15
10.2. Appeals of Denied Claims for Benefits......................15
10.3. Review of Decisions........................................16
Section ll. Amendment, Termination, Mergers and Consolidations.........16
11.1. Amendment..................................................16
11.2. Termination................................................16
11.3. Permanent Discontinuance of Contributions..................17
11.4. Suspension of Employer Contributions.......................17
Section 12. Participating Employers....................................17
12.1. Adoption by Other Corporations.............................17
12.2. Requirements of Participating Employers....................17
12.3. Designation of Agent.......................................17
12.4. Associate Transfers........................................17
12.5. Discontinuance of Participation............................18
12.6. Administrative Committee's Authority.......................18
Section 13. Miscellaneous Provisions...................................18
13.1. Nonalienation of Benefits..................................18
13.2. No Contract of Employment..................................18
13.3. Severability...............................................18
13.4. Successors.................................................18
13.5. Captions...................................................18
13.6. Gender and Number..........................................19
13.7. Controlling Law............................................19
13.8 Title to Assets............................................19
13.9. Payments to Minors, Etc....................................19
13.10. Acknowledgments............................................19
13.11. Entire Agreement; Successors...............................19
13.12. Tax Effects................................................20
ii
<PAGE> 4
UNITED RETAIL GROUP
SUPPLEMENTAL RETIREMENT SAVINGS PLAN
(1997 Restatement)
WHEREAS, United Retail Group, Inc., a Delaware corporation (the
"Company"), maintains the United Retail Group Retirement Savings Plan (the
"Qualified Plan') for the benefit of its eligible associates; and
WHEREAS, the Company established the United Retail Group Supplemental
Retirement Savings Plan (the "Plan") to allow certain associates who are members
of a select group of highly compensated or management employees under Title I of
ERISA to receive benefits equal to the benefits they would have been entitled to
receive under the Qualified Plan if such benefits were not limited by Sections
401(a)(17), 402(g) and 415 of the Code and the nondiscrimination requirements of
Sections 401(k) and 401(m) of the Code; and
WHEREAS, the Company wishes to amend the Plan;
NOW, THEREFORE, effective January 1, 1997, the Company amends and
restates the Plan to provide as follows:
SECTION 1. DEFINITIONS. The following terms will have the meanings
assigned in this Section , which will be equally applicable to the singular and
plural forms of such terms, unless the context requires otherwise, when used in
this Plan;
"ACCOUNT means the account maintained for a Participant under the Plan.
A Participant's Account will consist of his or her Supplemental Savings and
Supplemental Matching Accounts, plus investment earnings, if any, credited to
those Accounts.
"ADMINISTRATIVE COMMITTEE" means the Supplemental Retirement Savings
Plan Committee appointed by the Company under the Plan or, in the absence of
such appointment, the Company.
"AFFILIATE" means any Employer and any entity if such entity, with the
Employer, constitutes (a) a controlled group of corporations (within the meaning
of Section 414(b) of the Code), (b) a group of trades or businesses under common
control (within the meaning of Section 414(c) of the Code), (c) an affiliated
service group (within the meaning of Section 414(m) of the Code), or (d) a group
of entities required to be aggregated pursuant to Section 414(o) of the Code and
the regulations thereunder.
"ASSOCIATE" means any person employed by the Employer in a category of
employment designated by the Employer as eligible for participation in the Plan
other than a person who is (a) described in Section 410(b)(3)(A) of the Code and
with respect to whom inclusion in this Plan has not been provided for in the
collective bargaining agreement setting forth his or her terms and conditions of
employment, (b) described in Section 410(b)(3)(C) of the Code, or (c) a leased
employee.
<PAGE> 5
"BENEFICIARY" means the beneficiary under the Plan of any deceased
Participant.
"BOARD OF DIRECTORS" means the board of directors of the Company.
"BREAK IN SERVICE" means a Plan Year in which a person not employed by
an Affiliate on the last day of the Plan Year does not have at least 500 Hours
of Service. If an Associate is absent from work for any period by reason of
pregnancy, the birth or placement for adoption of a child, or for caring for a
child for a period immediately following the birth or placement, then for
purposes of determining whether a Break in Service has occurred (and not for
purpose of determining Years of Eligibility Service and Years of Vesting
Service) such Associate will be credited with the Hours of Service which
otherwise normally would have been credited to such Associate, or, if the
Administrative Committee is unable to determine the number of such Hours of
Service, eight Hours of Service for each day of such absence, not to exceed 501
Hours. The Hours of Service credited to an Associate under this definition will
be treated as Hours of Service in the Plan Year in which the absence from work
begins, if the Associate would be prevented from incurring a Break in Service in
such year solely because of such Hours of Service or, in any other case, in the
immediately following Plan Year. The Administrative Committee may require that
the Associate certify and/or supply documentation that his or her absence is for
one of the permitted reasons and the number of days for which there was such an
absence.
"CODE" means the Internal Revenue Code of 1986, as now or hereafter
existing, amended, construed, interpreted, and applied by regulations, rulings
or cases.
"COMPANY" means United Retail Group, Inc., a Delaware corporation, and
any successor thereto.
"COMPENSATION" means amounts received from an Employer while the
Associate is a Participant which are basic salary or wages, overtime payments,
vacation, holiday and sick pay, disability income payments which are paid
through the Employer's payroll system, bonuses, commissions, content earnings or
any other direct current compensation which is required to be reflected on the
Participant's Form W-2 for the Plan Year, without giving effect to any reduction
of compensation resulting from pre-tax saving contributions under the Qualified
Plan or any other salary reduction arrangement pursuant to Section 125 of the
Code, but will not include Employer contributions to Social Security, other
contributions to this or any other deferred compensation plan or program,
severance pay, stock options, disability income payments which are not paid
through the Employer's payroll system, relocation expense reimbursement, or the
value of any other fringe benefits provided at the expense of the Employer. The
Compensation taken into account for a Participant for a Plan Year will include
compensation in excess of the limit under Section 401(a)(17) of the Code.
"EFFECTIVE AMENDMENT DATE" means January 1, 1997.
"EFFECTIVE DATE" means January 1, 1993.
2
<PAGE> 6
"ELIGIBILITY COMPUTATION PERIOD" means: (a) the initial Eligibility
Computation Period of 12 consecutive months commencing on the date during a
period of employment on which an Associate is first credited with an Hour of
Service for the performance of duties for the Employer; and (b) each and every
full Plan Year during which the Associate is in the service of the Employer,
commencing with the Plan Year in which falls the last day of an Associate's
initial Eligibility Computation Period.
"EMPLOYER" means the Company and any Affiliate which, with the consent
of the Board of Directors, adopts this Plan and joins in the Trust Agreement.
"ENROLLMENT AND CHANGE DESIGNATION" means an agreement, on a form or by
a method prescribed by the Administrative Committee, between a Participant and
his or her Employer providing for reduction of the Participant's Compensation
and the crediting of Supplemental Savings Contributions by the Employer to the
Participant's Supplemental Savings Account and for designation of one or more
Investment Funds.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
now or hereafter existing, amended, construed, interpreted, and applied by
regulations, rulings or cases.
"HIGHLY COMPENSATED EMPLOYEE" means any Associate who performs service
for the Employer during the Plan Year of determination and (a) who during the
current Plan Year or the prior Plan Year received compensation in excess of
$80,000 (as adjusted pursuant to Section 415(d) of the Code), or (b) who is a 5%
owner at any time during the current Plan Year or the prior Plan Year. For
purposes of this definition, "compensation" has the meaning set forth in Section
415(c)(3), plus the amount of any pre-tax savings contributions under the
Qualified Plan and any contributions under a cafeteria plan. The determination
of who is a Highly Compensated Employee will be made in accordance with Section
414(q) of the Code.
"HOUR OF SERVICE" means (a) each hour for which a person is paid or
entitled to payment for the performance of duties for an Affiliate during the
applicable computation period, (b) each hour for which a person is paid or
entitled to payment by an Affiliate on account of a period of time during which
no duties are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury or military duty or leave of absence, and (c) each
hour for which back pay, irrespective of mitigation of damages, is either
awarded or agreed to by an Affiliate. Notwithstanding the foregoing, (i) not
more than 501 Hours of Service will be credited to any person on account of any
single continuous period during which such person performs no duties, (ii) no
credit will be granted for any period with respect to which a person receives
payment or is entitled to payment under a plan maintained solely for the purpose
of complying with applicable workers' compensation or disability insurance laws,
and (iii) no credit will be granted for a payment which solely reimburses a
person for medical or medically related expenses incurred by such person. Hours
of Service will be credited to the Plan Year in which payment for such Hours of
Service is made. Determination and crediting
3
<PAGE> 7
of Hours of Service will be under Department of Labor Regulations Sections
2530.200b-2 and 3.
"INVESTMENT FUND" means a segregated fund managed by one or more
investment managers, including a regulated investment company, or any other
investments designated by the Company from time to time.
"NORMAL RETIREMENT DATE" means the date a Participant attains age 65.
"PARTICIPANT" means any person who has been admitted to participation
in the Plan and has not ceased participation in the Plan.
"PLAN" means the United Retail Group Supplemental Retirement Savings
Plan, as set forth herein and as the same may from time to time be amended.
"PLAN YEAR" means the calendar year.
"QUALIFIED PLAN" means the United Retail Group Retirement Savings Plan,
a profit sharing plan with a cash or deferred feature, as the same may from time
to time be amended.
"REQUIRED LIMITATIONS" means the limitations under Sections 401(a)(17),
402(g) and 415 of the Code, the nondiscrimination requirements under Sections
401(k) and 401(m) of the Code and any similar limitations under the Code.
"SEPARATION DATE" means the date a person is no longer employed by any
Affiliate.
"SUPPLEMENTAL MATCHING ACCOUNT" means the portion of the Account of a
Participant consisting of Supplemental Matching Contributions and investment
earnings, if any, credited on those contributions, as adjusted under the Plan.
"SUPPLEMENTAL MATCHING CONTRIBUTION" means the amount contributed by
the Employer under Section 3.2.
"SUPPLEMENTAL SAVINGS ACCOUNT" means the portion of the Account of a
Participant consisting of Supplemental Savings Contributions and investment
earnings, if any, credited on those contributions, as adjusted under the Plan.
"SUPPLEMENT SAVINGS CONTRIBUTION" means the amount credited by the
Employer as a result of a Participant's election on an Enrollment and Change
Designation to reduce his or her Compensation.
"TOTAL AND PERMANENT DISABILITY" means a physical or mental condition
(a) of such severity and probable prolonged duration as to entitle the
Participant to disability retirement benefits under the then-existing federal
Social Security Act, or (b) which (i) qualifies as a
4
<PAGE> 8
total disability under one of the United Retail Group Long Term Disability Plans
and (ii) is expected to be of indefinite or extended duration or result in
death. For purposes of this Plan, a Participant who is found to have incurred a
Total and Permanent Disability will be deemed to have incurred a Separation
Date.
"TRUST AGREEMENT" means the trust agreement entered into between the
Company and the Trustee in connection with this Plan, as the same presently
exists and as it may from time to time hereafter be amended.
"TRUSTEE" means the party or parties acting as such under the Trust
Agreement.
"TRUST FUND" means all of the assets of the Plan held by the Trustee at
any time under the Trust Agreement.
"UNFORESEEABLE EMERGENCY" means a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in Section 152(a) of the Code) of a
Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. The circumstances that will
constitute an Unforeseeable Emergency will be determined by the Administrative
Committee depending upon the facts of each case.
"VALUATION DATE" means the last day of each Plan Year and each other
interim date on which the Administrative Committee directs the allocation of
distributions, contributions and earnings on Participants' Accounts.
"YEAR OF ELIGIBILITY SERVICE" means an Eligibility Computation Period
in which a person has 1,000 or more Hours of Service.
"YEAR OF VESTING SERVICE" means a Plan Year during which a person is
credited with at least 500 Hours of Service. A person's Years of Vesting Service
will include all service taken into account under the Qualified Plan.
SECTION 2. PARTICIPATION.
2.1. ELIGIBILITY.
2.1.1. A person will become a Participant on the
first day of any calendar quarter if, on such day, the person (a) is an
Associate, (b) has completed one Year of Eligibility Service, (c) has attained
age 21 or, in the case of an Associate who completed a Year of Eligibility
Service before January 1, 1992, age 20, (d) is a Highly Compensated Employee,
(e) has elected to make a pre-tax savings contribution that is eligible for a
matching contribution under the Qualified Plan equal to the greatest amount able
to be contributed to the Qualified Plan before such contributions are reduced
due to the Required
5
<PAGE> 9
Limitations, (f) has his or her contributions and/or allocations under the
Qualified Plan limited or reduced by Required Limitations, (g) has completed an
Enrollment and Change Designation, and (h) is approved for participation in the
Plan by the Administrative Committee.
2.1.2. Participation will cease on the earlier of the
Participant's Separation Date or the date the Participant no longer meets the
eligibility requirements of this Section. If an Associate incurs five
consecutive Breaks in Service and was not vested in any portion of his or her
Supplemental Matching Account, the Associate will, upon reemployment, be
required to satisfy the requirements of this Section as though such Associate
had not previously been an Associate. If any Years of Eligibility Service are
not required to be taken into account because of a period of Breaks in Service
to which this Section applies, such Years of Eligibility Service will not be
taken into account in applying this Section to any subsequent Breaks in Service.
2.2. WAIVER OF PARTICIPATION. An Associate will have the right
to waive participation, effective on a calendar yearly basis.
2.3. CHANGE IN STATUS. In the event that a person who has been
in the employ of an Affiliate in a category of employment not eligible for
participation in this Plan subsequently becomes an Associate by reason of a
change in status to a category of employment eligible for participation, he or
she will become a Participant as of the first day of the next calendar quarter,
if, on such date, he or she has otherwise satisfied the requirements for
participation in the Plan. If, on such date, he or she has not satisfied such
requirements, he or she will become a Participant on the date of satisfaction of
said requirements.
2.4. OMISSION OF ELIGIBLE ASSOCIATE. If, in any Plan year, any
Associate who should have been included as a Participant in the Plan is
erroneously omitted and discovery of such omission is not made until after a
contribution by the Employer for the Plan Year has been made and allocated, the
Employer will make a contribution with respect to the omitted Associate equal to
the amount the Associate would have received as allocations had the Participant
not been omitted and not elected to contribute to the Plan.
2.5. INCLUSION OF INELIGIBLE ASSOCIATE. If, in any Plan Year,
any person who should not have been included as a Participant in the Plan is
erroneously included and discovery of such incorrect inclusion is not made until
after a contribution for the Plan Year has been made and allocated, the amount
contributed, together with any earnings thereon, with respect to the ineligible
person will constitute a forfeiture for the Plan Year in which the discovery is
made.
SECTION 3. CONTRIBUTIONS.
6
<PAGE> 10
3.1. SUPPLEMENTAL SAVINGS CONTRIBUTIONS. If a Participant's
pre-tax savings contributions under the Qualified Plan are limited or reduced by
Required Limitations, the Employer will credit the Participant's Supplemental
Savings Account with, and contribute to the Trust Fund, a Supplemental Savings
Contribution on behalf of the Participant equal to the amount of salary
reduction authorized by the Participant under the Qualified Plan that is reduced
7
<PAGE> 11
due to the Required Limitations. The Enrollment and Change Designation under the
Qualified Plan will automatically provide for reduction of the Compensation of
such Participant and a corresponding credit to the Participant's Supplemental
Savings Account, and contribution to the Trust Fund, of a Supplemental Savings
Contribution. Before the beginning of each calendar year, each Participant will
be entitled to submit or modify an Enrollment and Change Designation which will
change the amount of Supplemental Savings Contributions that will be made to
this Plan for the following year. An Associate who may become a Participant for
the first time may elect to defer an amount equal to any refund that might
become distributable to such Participant because of the Required Limitations,
and have credited any matching contributions thereby forfeited under the
Qualified Plan, if the election is made within 30 days after such Associate
becomes eligible to participate in this Plan. No Enrollment and Change
Designation will be effective unless it designates the Investment Fund in which
Supplemental Savings Contributions and Supplemental Matching Contributions are
to be invested and is made or delivered to the Administrative Committee at least
30 days prior to the first day of the calendar year (or such greater or lesser
period prior to such date as the Administrative Committee may establish for
purposes of administrative convenience).
3.2. SUPPLEMENTAL MATCHING CONTRIBUTIONS. If a Participant's
pre-tax savings contributions that are eligible for a matching contribution
under the Qualified Plan are limited or reduced by Required Limitations, the
Employer will credit the Participant's Supplemental Matching Account with, and
contribute to the Trust Fund, a Supplemental Matching Contribution in an amount
equal to the matching contributions which would have been made under the
Qualified Plan in the absence of Required Limitations to the extent that the
reduced corresponding pre-tax savings contributions under the Qualified Plan are
credited as Supplemental Savings Contributions.
3.3. TRANSITIONAL CONTRIBUTIONS.
3.3.1. A "transitional contribution" of 6% of
Compensation will be made for each calendar quarter for each Associate who (a)
was an officer of the Company achieving status of vice-president or higher
before January 1, 1993, or (b) earned annualized Compensation for 1992 of
$100,000 or more. Such retirement contributions under the Plan will cease for an
eligible Associate when such Associate terminates employment with the Company or
has less than 500 hours of service in a calendar year. If such Associate is
later rehired or increases his or her hours and otherwise meets the requirements
to participate in the Plan, the Associate will again be eligible to receive
retirement contributions under the Plan when he or she is again eligible to
participate in the Qualified Plan.
3.3.2. A "nondeductible compensation contribution"
shall be made for each calendar year with respect to each Associate who would,
but for the application of this paragraph 3.3.2., have total "Applicable
Employee Remuneration" (as that term is defined in Section 162(m)(4) of the
Code) in excess of the amount described in Section 162(m)(1) of the Code. The
amount of the nondeductible compensation contribution will be equal to the
amount by which the Applicable Employee Remuneration otherwise payable to the
Associate for the calendar year exceeds the amount set forth in Section
162(m)(1) of the Code.
8
<PAGE> 12
3.3.3. Transitional contributions described in
paragraph 3.3.1 and nondeductible compensation contributions described in
paragraph 3.3.2., together with supplemental retirement accounts in existence on
January 1, 1993, will be treated in the same manner as the Supplemental Matching
Contributions and Supplemental Matching Accounts for all purposes under the Plan
except for the provisions regarding suspension of contributions contained in
paragraph 7.5.2.
3.4. CREDITING OF CONTRIBUTIONS.
3.4.1. The Employer will establish a Trust Fund of
assets which the Employer may use to offset its liability for payments due to
Participants under the Plan. The Trust Fund shall substantially comply with the
terms of the model trust contained in Revenue Procedure 92-64, or its successor.
The Trust Fund will, at all times, be subject to the claims of judgment
creditors of the Employer and will otherwise be on such terms and conditions as
will prevent taxation to Participants and Beneficiaries of any amounts held in
the Trust Fund or credited to Participant's Accounts prior to the time payments
are made to them. All assets of the Trust Fund, including Supplemental Savings
Contributions, are subject to the claims of Company creditors. The Participants
have the status of general unsecured creditors of the Employer. Rights to
payments will not be limited to assets held in the Trust Fund. The Plan
constitutes a mere promise by the Employer to make benefit payments in the
future. It is the intention of the Employer and the Participants that the Plan
be unfunded for tax purposes and for purposes of Title I of ERISA.
3.4.2. The Employer will contribute to the Trust Fund
an amount equal to all Supplemental Savings Contributions for a quarter within a
reasonable time after the end of the quarter in which Participants' Compensation
is reduced. The Employer will contribute to the Trust Fund an amount equal to
Supplemental Matching Contributions no later than the due date (including
extensions) of the income tax return of the Company for the fiscal year of the
Company including the last day of the Plan Year for which such contribution is
credited to a Participant's Account.
SECTION 4. INVESTMENT OF ACCOUNTS.
4.1. INVESTMENT DIRECTION. Each Participant will have the
right to submit to the Company a request that (a) investment returns on future
Supplemental Savings Contributions and Supplemental Matching Contributions to
the Participant's Account be determined on the basis of the performance of one
or more of the Investment Funds, and (b) investment returns on the existing
balance in the Participant's Supplemental Savings Account and Supplemental
Matching Account be determined on the basis of the performance of one or more of
the Investment Funds. Such Participant request shall not result in any assurance
to a Participant that Supplemental Savings Contributions or Supplemental
Matching Contributions will actually be invested by the Trustee in one or more
of the Investment Funds. A Participant may make or change an investment request
in accordance with rules established by the Administrative Committee, by making
an Enrollment and Change Designation at least 30 days prior to the
effective date of such election or change (or such greater or lesser period
9
<PAGE> 13
prior to such date as the Administrative Committee may establish for purposes of
administrative convenience.)
4.2. INVESTMENT FUNDS. The Administrative Committee will
select three or more Investment Funds according to criteria established by the
Administrative Committee. The Administrative Committee will have the right to
merge or modify any existing Investment Funds, or to create additional
Investment Funds. The assets of the Trust Fund shall be allocated among such
Investment Funds as the Administrator, in its sole and absolute discretion,
shall designate from time to time, unless such investments would cause the Trust
Fund to fail to constitute a valid trust under applicable law, in which case the
Trustee shall determine applicable Trust Fund investments in accordance with the
Trust Agreement.
4.3. INVESTMENT MANAGERS. The Administrative Committee may
manage the investment of any Investment Fund, or may appoint one or more
investment managers to manage all or any portion of all or any of the Investment
Funds, and one or more custodians for all or any portion of any Investment Fund.
The Administrative Committee may also establish investment guidelines for the
Trustee or any one or more investment managers and may direct that all or any
portion of the assets in an Investment Fund be invested in one or more
guaranteed investment contracts having such terms and conditions as the
Administrative Committee deems appropriate. The Administrative Committee or the
Trustee, at the direction of the Administrative Committee, may enter into such
agreements as the Administrative Committee deems advisable to carry out the
purposes of this Section.
SECTION 5. VALUATIONS AND CREDITING.
5.1. VALUATIONS. The amount credited to each Participant's
Accounts will be determined by the Administrative Committee as of the close of
business on each Valuation Date.
5.2. CREDITS TO AND CHARGES AGAINST ACCOUNTS. All crediting to
and charging against Accounts will be made as follows:
5.2.1. First, there will be determined the net
adjusted Account by (a) charging all distributions and withdrawals made during
the period from the previous Valuation Date to the current Valuation Date, (b)
crediting contributions on such time weighted basis as the Administrative
Committee determines, and (c) at the option of the Administrative Committee,
charging specifically against the Accounts of Participants all or a portion of
administrative expenses relating to the maintenance of such Accounts.
5.2.2. Second, all earnings or losses of the
Investment Funds will be allocated by the Administrative Committee in its
discretion among the Participants' Accounts according to their net adjusted
Accounts and the relative portions of such Accounts which are deemed by the
Administrative Committee to be invested in each Investment Fund. All earnings of
the Trust Fund arising out of the investment of Trust Fund assets in investment
vehicles other than the Investment Funds may be allocated by the Administrative
Committee in its discretion to and among the Participants' Accounts according to
their net adjusted Accounts.
10
<PAGE> 14
5.3 EXPENSES. All brokerage fees, transfer taxes, and other
expenses incurred in connection with the investment of the Trust Fund will be
added to the cost of such investments or deducted from the proceeds thereof, as
the case may be. All other costs and expenses of administering the Plan (not to
exceed .25% of the net asset value of the Trust Fund valued as of the last day
of each quarter) will be paid from the Trust Fund, and any remainder will be
paid by the Employer, unless the Employer elects to pay more or all of such
costs and expenses.
SECTION 6. VESTING AND SEPARATION FROM SERVICE.
6.1 VESTED PERCENTAGE.
6.1.1. Except as provided in Section 7 in the event
of certain withdrawals by Participants, a Participant will at all times be fully
vested in his or her Supplemental Savings Account.
6.1.2. A Participant's Supplemental Matching Account
will become fully vested, except as provided in Section 7 in the event of
certain withdrawals by Participants, at the Participant's Normal Retirement
Date, Total and Permanent Disability or death prior to otherwise incurring a
Separation Date. The Normal Retirement Date, Total and Permanent Disability or
death of a Participant after incurring a Separation Date will not increase the
vesting of the Participant's Account.
6.1.3. Except as provided in Section 7 in the event
of certain withdrawals by Participants, and except as otherwise provided in this
Section , a Participant's vested interest in the Participant's Supplemental
Matching Account will be determined under the following table:
Years of Vesting Service Vested Percentage
------------------------ -----------------
less than 7 0%
7 or more 100%
6.2. FORFEITURE AND RESTORATION. When a Participant who has no
vested interest in his or her Supplemental Matching Account incurs a Separation
Date, the Participant's Supplemental Matching Account will be forfeited. If a
former Participant from whose Account an amount has been forfeited again becomes
a Participant prior to incurring five consecutive Breaks in Service, the amount
forfeited will be restored to the Participant's Account at the end of the Plan
Year in which the former Participant again becomes a Participant from the
forfeitures (or, if no such forfeitures occur during that Plan Year, from
additional Employer contributions) for the Plan Year of restoration.
6.3. EFFECT OF BREAKS IN SERVICE ON VESTING. If a Participant
incurs five consecutive Breaks in Service and subsequently resumes participation
in the Plan, (a) Years of Vesting Service after such Breaks in Service will not
be taken into account in determining the
11
<PAGE> 15
Participant's vested interest in his or her Account accruing prior to the Breaks
in Service; and (b) if the Participant was not vested in his or her Supplemental
Matching Account prior to the Breaks in Service, the Years of Vesting Service
completed by the Participant prior to the Breaks in Service will not be taken
into account in determining the Participant's vested interest in his or her
Account accruing after the Breaks in Service. If any Years of Vesting Service
are not required to be taken into account because of the operation of this
Section , such Years of Vesting Service will not be taken into account in
applying this Section to any subsequent Breaks in Service.
6.4. AMENDMENTS TO VESTING SCHEDULE. The vesting schedule
under this Plan may be amended but no such amendment will either decrease any
Participant's vested percentage or increase the Years of Vesting Service
required for vesting by then current Participants.
SECTION 7. BENEFITS.
7.1. FORMS OF BENEFIT PAYMENTS. A Participant or Beneficiary
will receive any benefit to which he or she is entitled in the form of a single
cash distribution.
7.2. RETIREMENT BENEFIT. Upon incurring a Separation Date, the
Participant will receive a retirement benefit in an amount equal to the
undistributed vested portion of the Participant's Account. The Participant's
Account shall be valued as of the Valuation Date coinciding with or as soon as
administratively practicable preceding the date of the distribution.
Notwithstanding the foregoing, if a Participant dies before receiving a
distribution of his or her vested Account, his or her Beneficiary will receive a
death benefit, as determined under Section 7.3, below.
7.3. DEATH BENEFIT. If a Participant dies before receiving a
distribution of his or her vested Account, the Participant's Beneficiary will
receive a death benefit, in lieu of the retirement benefit, equal to the vested
portion of the undistributed balance in the Participant's Account. The
Participant's Account shall be valued as of the Valuation Date coinciding with
or as soon as administratively practicable preceding the date of the
distribution.
7.4. BENEFICIARY DESIGNATION.
7.4.1. A Participant's death benefit will be paid to
the Beneficiary designated by the Participant under the Qualified Plan unless
the Participant makes a separate Beneficiary designation under this Plan. A
Participant may designate and from time to time change the designation of one or
more Beneficiaries or contingent Beneficiaries to receive any death benefit. The
designation and consent will be on a form supplied by the Administrative
Committee. All records of Beneficiary designations will be maintained by the
Administrative Committee.
12
<PAGE> 16
7.4.2. In the event that the Participant fails to
designate a Beneficiary under both the Qualified Plan and this Plan, or in the
event that the Participant is predeceased by all designated primary and
contingent Beneficiaries under the Qualified Plan and this Plan, (a) if the
Participant is survived by a spouse, the death benefit will be payable to the
Participant's surviving spouse who will be deemed to be the Participant's
designated Beneficiary for all purposes under this Plan, or (b) if the
Participant is not survived by a spouse, the death benefit will be payable to
the Participant's estate.
7.5. IN-SERVICE DISTRIBUTIONS.
7.5.1. A Participant may apply for and receive an
early payment of any or all vested amounts held in the Account of such
Participant upon an Unforeseeable Emergency, to the extent needed to satisfy the
need caused by such Unforeseeable Emergency. Payment may not be made to the
extent that the need caused by the Unforeseeable Emergency is or may be relieved
through reimbursement or compensation by insurance or otherwise, by liquidation
of the Participant's assets, to the extend the liquidation of such assets would
not itself cause severe financial hardship, or by cessation of deferrals under
this Plan and the Qualified Plan. Distributions under this Section will be
deemed to be made as of the Valuation Date coinciding with or as soon as
administratively practicable preceding the date of distribution and will be
charged against a Participant's Account in such manner as the Administrative
Committee determines.
7.5.2. Notwithstanding anything in the Plan to the
contrary, (a) a Participant who has received a distribution from this Plan under
Section 7.5.1. or a hardship distribution from the Qualified Plan will not be
eligible to make any Supplemental Savings Contributions or be credited with any
Supplemental Matching Contributions for 12 months after the distribution, and
(b) a person who would be a participant but for the fact he or she is suspended
from making pre-tax savings contributions under the Qualified Plan or this Plan
due to a hardship distribution from the Qualified Plan or a distribution for an
Unforeseeable Emergency from this Plan may still be credited with contributions
as otherwise provided under paragraphs 3.3.1 and 3.3.2 of the Plan.
7.6. POST-DISTRIBUTION CREDITS. If, after the distribution of
retirement or death benefits under this Plan, there remain in a Participant's
Account any vested funds, or any vested funds will be subsequently credited
thereto, such funds will be paid to the Participant or his or her Beneficiary as
promptly as practicable.
7.7. PREVENTION OF ESCHEAT. If the Administrative Committee
cannot ascertain the whereabouts of any person to whom a payment is due under
the Plan, the Administrative Committee may place the amount of the payment in a
segregated account. If a segregated account is an interest bearing account, the
interest, which may be net of expenses, will be credited to the segregated
account. After two years from the date such payment is due, the Administrative
Committee may mail a notice of the payment to the last known address of such
person as shown on the records of the Plan and all Affiliates. If such person
has not made claim
13
<PAGE> 17
for the payment within three months after the date of the mailing of the notice
or if the notice is returned as undeliverable, then the payment and all
remaining payments which would otherwise be due to such person will be canceled
and treated as a forfeiture. If such person later makes a claim for payment, the
amount so canceled will be restored and paid to such person.
7.8. PAYMENTS ON TAXABILITY. If it is ever determined that any
amount credited to a Participant's Account under this Plan was income and
taxable to him or her, such taxable amounts or any portions thereof will be paid
to the Participant upon written request and be charged against the Participant's
Account.
7.9. WITHHOLDING. The Employer may withhold from payments due
under the Plan any and all taxes of any nature required by any government to be
withheld.
SECTION 8. THE ADMINISTRATIVE COMMITTEE.
8.1. APPOINTMENT AND TENURE. The Administrative Committee will
be a committee of one or more members who will serve at the pleasure of the
Board of Directors. Any Administrative Committee member may be dismissed at any
time with or without cause or may resign. Vacancies arising by reason of the
death, resignation or removal of an Administrative Committee member will be
filled by the Board of Directors. If the Board of Directors fails to act, and in
any event until the Board of Directors so acts, the remaining members of the
Administrative Committee may appoint an interim Administrative Committee member
to fill any vacancy occurring on the Administrative Committee. If no person has
been appointed to the Administrative Committee, or if no person remains on the
Administrative Committee, the Board of Directors will be deemed to be the
Administrative Committee.
8.2. MEETINGS; MAJORITY RULE. The Administrative Committee may
act by majority vote of those present taken in a meeting if all members of the
Administrative Committee have received at least 10 days' written notice of such
meeting or have waived notice and a quorum of a majority of all members is
present.
8.3. DELEGATION. The Administrative Committee may delegate to
any of its members, authority to sign any documents on its behalf, or to perform
ministerial acts, but no person to whom such authority is delegated may perform
any act involving the exercise of any discretion without first obtaining the
concurrence of a majority of the members of the Administrative Committee, even
though he or she alone may sign any document required by third parties. The
Administrative Committee may elect one of its number to serve as chairman. The
chairman will preside at all meetings of the Administrative Committee or may
delegate such responsibility to another Administrative Committee member. The
Administrative Committee may elect one or more persons to serve as secretary or
assistant secretary of the Administrative Committee. The secretary or assistant
secretary may, but need not, be a member of the Administrative Committee. All
third parties may rely on any
14
<PAGE> 18
communication signed by the secretary or assistant secretary, acting as such, as
an official communication from the Administrative Committee.
8.4. REPORTING AND DISCLOSURE. The Administrative Committee
will keep all individual and group records relating to Participants, and
Beneficiaries, and all other records necessary for the proper operation of the
Plan. Such records will be made available to the Employer and to each
Participant and Beneficiary for examination during business hours. A Participant
or Beneficiary may examine only such records as pertain exclusively to the
examining Participant or his or her Beneficiary and the Plan and Trust
Agreement.
8.5. CONSTRUCTION OF THE PLAN. The Administrative Committee
will interpret the Plan and determine in its sole and absolute discretion all
questions arising in the administration, interpretation and application of the
Plan and the amount of benefits payable thereunder. The Administrative
Committee's interpretations and determinations will be final and binding on all
persons absent fraud or the arbitrary and capricious abuse of the wide
discretion granted to the Administrative Committee. The Administrative Committee
will provide the Trustee with instructions regarding payments of benefits. The
Administrative Committee will provide directions to the Trustee with respect to
valuations at dates other than Valuation Dates and all other matters when called
for in the Plan or requested by the Trustee. The Administrative Committee may
waive any period of notice required under the Plan. The Administrative Committee
will provide procedures for the determination of claims for benefits.
8.6. ENGAGEMENT OF ASSISTANTS AND ADVISORS. The Administrative
Committee will have the right to hire such professional assistants and
consultants as it, in its sole discretion, deems necessary or advisable,
including, but not limited to investment managers and/or advisors, accountants,
actuaries, attorneys, consultants, clerical and office personnel, and medical
practitioners. To the extent that the costs for such assistants and advisors are
not paid by the Employer, they will be paid from the Trust Fund as an expense of
the Trust Fund at the direction of the Administrative Committee.
8.7. COMPENSATION. The members of the Administrative Committee
will serve without compensation for their services, but all expenses of the
members in connection with administering the Plan will be paid or reimbursed by
the Employer, and if not so paid or reimbursed will be paid from the Trust Fund.
8.8. INDEMNIFICATION OF THE ADMINISTRATIVE COMMITTEE. Each
member of the Administrative Committee will be indemnified by the Employer
against costs, expenses and liabilities (including reasonable attorneys' fees
but excluding amounts paid in settlements to which the Employer does not
consent) reasonably incurred by him or her in connection with any action or
investigation to which he or she may be a party by reason of his or her service
as a member of the Administrative Committee except in relation to matters as to
which he or she may be adjudged in such action to be personally guilty of
willful misconduct in the
15
<PAGE> 19
performance of his or her duties. The foregoing right to indemnification will be
in addition to such other rights as the Administrative Committee members may
enjoy as a matter of law, under the Company's Certificate of Incorporation or
By-Laws or by reason of insurance coverage of any kind, or otherwise. Service as
an Administrative Committee member will be deemed in partial fulfillment of the
member's function as an Associate, officer and/or director of the Employer, if
he or she serves in such capacity as well. No amendment of this Section
diminishing the right to indemnification provided herein will apply to any
action or investigation commenced prior to the adoption of such amendment.
SECTION 9. AUTHORITY AND RESPONSIBILITIES OF THE COMPANY. The Board of
Directors of the Company will have the following authority and responsibility:
(A) To appoint the Trustee and the Administrative
Committee and to monitor each of their performances;
(B) To communicate such information to the
Administrative Committee and to the Trustee as each needs for the proper
performance of its duties;
(C) To provide mechanisms through which the
Administrative Committee and the Trustee can communicate with Participants and
Beneficiaries; and
(D) To perform such duties as imposed by applicable
law and to serve as the Administrative Committee in the absence of an appointed
Administrative Committee.
SECTION 10. CLAIMS PROCEDURES.
10.1. APPLICATION FOR BENEFITS. Each Participant or Beneficiary
believing himself or herself eligible for benefits under this Plan may apply for
such benefits by completing and filing with the Administrative Committee an
application for benefits in writing. Before the date on which benefit payments
commence, each such application must be supported by such information and data
as the Administrative Committee deems relevant and appropriate.
10.2. APPEALS OF DENIED CLAIMS FOR BENEFITS. In the event that any
claim for benefits is denied, in whole or in part, the claimant will be notified
of such denial in writing by the Administrative Committee within 90 days after
the Administrative Committee receives the claim. The notice advising of the
denial will specify the reason or reasons for denial, make specific reference to
pertinent Plan provisions, describe any additional material or information
necessary for the claimant to perfect the claim (explaining why such material or
information is needed), and will advise the claimant of the procedure for the
appeal of such denial. Appeals may be made only by the following procedure:
10.2.1. The claimant may file with the Administrative
Committee a written notice of appeal of the denial within 60 days of
notification by the Administrative Committee of claim denial, setting forth all
of the facts upon which the appeal is based.
16
<PAGE> 20
10.2.2. The Administrative Committee may, within 30
days of receipt of the notice of appeal, establish a hearing date on which the
claimant may make an oral presentation to the Administrative Committee in
support of his or her appeal and the claimant will be given not less than 10
days' notice of the date set for the hearing.
10.2.3. The Administrative Committee will consider
the claimant's written and oral presentations, any facts or evidence in support
of the denial of benefits, and such other facts and circumstances as the
Administrative Committee may deem relevant. If the claimant elects not to make
an oral presentation, the Administrative Committee will proceed as set forth
below as though an oral presentation of the contents of the claimant's written
presentation had been made.
10.2.4. The Administrative Committee will render a
determination upon the appealed claim accompanied by a written statement as to
the reasons therefor within 60 days after the Administrative Committee receives
the notice of appeal, unless special circumstances or the need to hold a hearing
requires an extension of up to 60 additional days. The determination so rendered
will be final and binding upon all parties absent fraud or the arbitrary and
capricious abuse of the wide discretion granted to the Administrative Committee.
10.3. REVIEW OF DECISIONS. Any final decision of the
Administrative Committee may be reviewed by a court of competent jurisdiction
only if an appeal has been made under Section 10.2.
SECTION 11. AMENDMENT, TERMINATION, MERGERS AND CONSOLIDATIONS.
11.1. AMENDMENT. The provisions of this Plan may be amended at
any time and from time to time by the Company; provided, however, that:
11.1.1. No amendment will increase the duties or
liabilities of the Trustee without the consent of the Trustee;
11.1.2. No amendment will decrease the balance in any
Account.
11.1.3. No amendment shall adversely impact the
Participants' rights to receive payment under the Plan with respect to existing
Participant Accounts unless the Company obtains the written consent of 80% of
the Participants actively employed by the Employer with respect to each change;
provided, however, that written consent of Participants is not required to amend
the Plan to comply with applicable law.
11.1.4. No amendment will decrease any Participant's
vested percentage of his or her Account or increase the Years of Vesting Service
required for vesting by then current Participants as provided for under Section
6.
17
<PAGE> 21
11.2. TERMINATION. While it is the Company's intention to
continue the Plan indefinitely in operation, the Company nevertheless reserves
the right to terminate the Plan in whole or in part. Termination or partial
termination of the Plan will result in full and immediate vesting in each
affected Participant of the affected portion of his or her Account, and none of
the provisions of any partial termination shall adversely impact the
Participant's rights under the Plan with respect to existing Participant
Accounts unless the Company obtains the written consent of 80% of the
Participants actively employed by the Employer, with respect to each change. On
termination of the Plan, the Trustee will pay over to each Participant (and
deferred vested former Participant) the value of his or her vested interest, and
thereupon dissolve the Trust Fund.
11.3. PERMANENT DISCONTINUANCE OF CONTRIBUTIONS. The Company
reserves the right at any time to permanently discontinue all Employer
contributions. Such permanent discontinuance will have the same effect as a
termination of the Plan.
11.4. SUSPENSION OF EMPLOYER CONTRIBUTIONS. The Company will
have the right, at any time and from time to time, to suspend contributions to
the Trust Fund. Such suspension will have no effect on the operation of the Plan
except as set forth below:
11.4.1. If the Company determines that such
suspension will be permanent, a permanent discontinuance of contributions will
be deemed to have occurred as of the date of such determination or such earlier
date as is specified.
11.4.2 If a temporary suspension continues during two
consecutive Plan Years, the last day of the Plan Year next following the first
Plan Year during the period of suspension shall be deemed to be the date on
which the Company terminated the Plan.
SECTION 12. PARTICIPATING EMPLOYERS.
12.1. ADOPTION BY OTHER CORPORATIONS. With the consent of the
Board of Directors, any other corporation, whether or not an Affiliate, may
adopt this Plan and all of the provisions hereof as to all or any category of
its Associates, as a participating Employer, by a properly executed document
evidencing the intent and will of the board of directors of the other
corporation.
12.2. REQUIREMENTS OF PARTICIPATING EMPLOYERS. Each
participating Employer will be required to use the same Trustee and Trust
Agreement as provided in this Plan, and the Trustee will commingle, hold and
invest as the Trust Fund all contributions made by participating Employers, as
well as all increments thereof.
12.3. DESIGNATION OF AGENT. With respect to all relations with
the Trustee and Administrative Committee, each participating Employer will be
deemed to have irrevocably designated the Company as its agent.
18
<PAGE> 22
12.4. ASSOCIATE TRANSFERS. If an Associate is transferred
between Employers, the Associate involved will carry with him or her the
Associate's accumulated service and eligibility, no such transfer will effect a
termination of employment hereunder, and the participating Employer to which the
Associate is transferred will thereupon become obligated with respect to such
Associate in the same manner as was the participating Employer from whom the
Associate was transferred.
12.5. DISCONTINUANCE OF PARTICIPATION. Any participating
Employer may discontinue or revoke its participation in the Plan. At the time of
any such discontinuance or revocation, satisfactory evidence thereof and of any
applicable conditions imposed will be delivered to the Trustee.
12.6. ADMINISTRATIVE COMMITTEE'S AUTHORITY. The Administrative
Committee will have authority to make any and all necessary rules or
regulations, binding upon all participating Employers and all Participants, to
effectuate the purposes of the Plan.
SECTION 13. MISCELLANEOUS PROVISIONS.
13.1 NONALIENATION OF BENEFITS. None of the payments,
benefits, or rights of any Participant or Beneficiary will be subject to any
claim of any creditor of such Participant or Beneficiary, and, to the fullest
extent permitted by law, all such payments, benefits, and rights will be free
from attachment, garnishment, or any other legal or equitable process available
to any creditor of such Participant or Beneficiary. No Participant or
Beneficiary will have the right to alienate, anticipate, commute, pledge,
encumber, or assign any of the benefits or payments which he or she may expect
to receive, contingently or otherwise, under the Plan, except the right to
designate a Beneficiary.
13.2. NO CONTRACT OF EMPLOYMENT. All benefits created by the
Plan constitute a voluntary act on the part of the Employer and are not to be
deemed or construed to be a part of any contract of employment. Neither the
action of the Employer in establishing the Plan nor any action hereafter taken
by the Employer or by any committees in connection with the Plan will be
construed as giving to any Associate a right to be retained in the service of
the Employer or any right or claim to any benefits under the Plan except as
expressly provided in the Plan. The establishment of the Plan does not imply any
continuation of benefits under the Qualified Plan.
13.3 SEVERABILITY. If any provision of this Plan is held
invalid or unenforceable, such invalidity or unenforceability will not affect
any other provision hereof, and this Plan will be construed and enforced as if
such invalid or unenforceable provision had not been included.
13.4 SUCCESSORS. This Plan will be binding upon the heirs,
executors, administrators, personal representatives, successors, and assigns of
the parties, including each Participant and Beneficiary, present and future.
19
<PAGE> 23
13.5 CAPTIONS. The headings and captions herein are provided
for convenience only, will not be considered a part of the Plan, and will not be
employed in the construction of the Plan.
13.6. GENDER AND NUMBER. Except where otherwise clearly
indicated by context, the masculine gender will include the feminine gender, the
singular will include the plural, and vice versa.
13.7. CONTROLLING LAW. This Plan will be construed and
enforced according to the laws of the State of New Jersey to the extent not
preempted by federal law, which will otherwise control.
13.8. TITLE TO ASSETS. No Participant or Beneficiary will have
any right to, or interest in, any assets of the Trust Fund, upon termination of
his or her employment or otherwise, except to the extent of the benefits payable
under the Plan to such Participant out of the assets of the Trust Fund. The
Employer will remain primarily liable to pay benefits under the Plan. However,
the Employer's liability under the Plan will be reduced or offset to the extent
benefit payments are made from the Trust Fund. The provisions of the Trust Fund
are incorporated by reference.
13.9. PAYMENTS TO MINORS, ETC. Any benefit payable to or for
the benefit of a minor, an incompetent person or other person incapable of
receipting therefor will be deemed paid when paid to such person's guardian, to
a trustee holding assets for such person or to the party providing, or
reasonably appearing to provide, for the care of such person, and such payments
will fully discharge the Trustee, the Administrative Committee, the Employer and
all other parties with respect thereto.
13.10. ACKNOWLEDGMENTS. The Participants specifically
understand and acknowledge that the value of the Accounts may increase or
decrease and that any such decrease will reduce the benefits payable under this
Plan.
13.11. ENTIRE AGREEMENT; SUCCESSORS. This Plan, including any
election agreements and any amendments thereto, will constitute the entire
agreement between the Company and the Participant with respect to the amounts
payable under the Plan. No oral statement regarding the Plan may be relied upon
by the Participant. This Plan and any amendment will be binding on the parties
thereto and their respective heirs, administrators,
20
<PAGE> 24
trustees, successors and assigns, and on all Beneficiaries. By becoming a
Participant, each Associate will be conclusively deemed to have assented to the
provisions of the Plan and the Trust Agreement and to any amendments thereto.
13.12. TAX EFFECTS. None of the Employer, the Administrative
Committee, and any firm, person, or corporation, represents or guarantees that
any particular federal, state or local tax consequences will occur as a result
of any Participant's participation in this Plan. Each Participant should consult
with his or her own advisors regarding the tax consequences of participation in
this Plan.
UNITED RETAIL GROUP, INC.
By: /s/ JON GROSSMAN
-------------------------------
Title: Vice President - Finance
21
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-START> FEB-04-1996
<PERIOD-END> NOV-02-1996
<CASH> 6,458
<SECURITIES> 0
<RECEIVABLES> 3,196
<ALLOWANCES> 0
<INVENTORY> 49,565
<CURRENT-ASSETS> 67,598
<PP&E> 117,485
<DEPRECIATION> 60,321
<TOTAL-ASSETS> 133,488
<CURRENT-LIABILITIES> 31,360
<BONDS> 11,613
0
0
<COMMON> 13
<OTHER-SE> 81,729
<TOTAL-LIABILITY-AND-EQUITY> 133,488
<SALES> 269,300
<TOTAL-REVENUES> 269,300
<CGS> 216,504
<TOTAL-COSTS> 216,504
<OTHER-EXPENSES> 59,262
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 295
<INCOME-PRETAX> (6,761)
<INCOME-TAX> (2,143)
<INCOME-CONTINUING> (4,618)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,618)
<EPS-PRIMARY> (0.38)
<EPS-DILUTED> 0
</TABLE>
