<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 May 4, 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
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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 May 4, 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>
MAY 4, FEBRUARY 3, APRIL 29,
1996 1996 1995
----------- ------------ -----------
ASSETS (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $12,870 $17,040 $16,543
Income taxes receivable 2,000 2,719 0
Accounts receivable 1,898 1,770 2,876
Inventory 47,191 40,401 45,486
Prepaid rents 4,583 4,473 4,146
Other prepaid expenses 2,681 2,936 2,669
Deferred income taxes - - 671
----------- ------------ -----------
Total current assets 71,223 69,339 72,391
Property and equipment, net 60,004 60,737 60,470
Deferred charges and other intangible assets,
net of accumulated amortization of $1,318, $1,265
and $1,110 7,053 6,846 7,001
Deferred income taxes 839 811 3,829
Other assets 1,146 1,300 584
----------- ------------ -----------
Total assets $140,265 $139,033 $144,275
=========== ============ ===========
LIABILITIES
Current liabilities:
Current portion of distribution center financing $918 $901 $850
Accounts payable, trade 17,901 15,210 18,945
Accrued expenses 14,303 14,834 12,920
Income taxes payable - - 1,974
----------- ------------ -----------
Total current liabilities 33,122 30,945 34,689
Distribution center financing 12,097 12,333 13,015
Other long-term liabilities 9,313 9,472 5,714
----------- ------------ -----------
Total liabilities 54,532 52,750 53,418
----------- ------------ -----------
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 78,242 78,182 78,001
Retained earnings 8,060 8,670 13,425
Treasury stock (490,000 shares) at cost (582) (582) (582)
----------- ------------ -----------
Total stockholders' equity 85,733 86,283 90,857
----------- ------------ -----------
Total liabilities and stockholders' equity $140,265 $139,033 $144,275
=========== ============ ===========
</TABLE>
The accompanying notes are an integral part of the Consolidated
Financial Statements.
<PAGE> 4
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
---------------------------
MAY 4, APRIL 29,
1996 1995
---------- ----------
<S> <C> <C>
Net sales $88,873 $84,854
Cost of goods sold, including
buying and occupancy costs 70,172 65,784
---------- ----------
Gross profit 18,701 19,070
General, administrative and
store operating expenses 19,418 18,863
---------- ----------
Operating (loss) income (717) 207
Interest expense (income), net 245 (10)
---------- ----------
(Loss) income before income taxes (962) 217
(Benefit) provision for income taxes (352) 101
---------- ----------
Net (loss) income ($610) $116
========== ==========
Net (loss) income per
common share ($0.05) $0.01
========== ==========
Weighted average number of
common and common equivalent
shares outstanding 12,190,375 13,375,690
</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>
THIRTEEN WEEKS ENDED
-------------------------
MAY 4, APRIL 29,
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income ($610) $116
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
Depreciation and amortization of property and equipment 2,534 2,472
Amortization of deferred charges and other
intangible assets 53 70
Loss on disposal of assets 44 4
Compensation expense 60 60
Benefit from deferred income taxes (28) (44)
Deferred lease assumption revenue amortization (138) -
Changes in operating assets and liabilities:
Accounts receivable (128) (459)
Income taxes receivable 719 -
Inventory (6,790) (7,968)
Accounts payable and accrued expenses 2,493 5,480
Prepaid expenses 145 (410)
Income taxes payable - 347
Other assets and liabilities (136) (1)
--------- ---------
Net Cash Used in Operating Activities (1,782) (333)
--------- ---------
INVESTING ACTIVITIES:
Capital expenditures (1,845) (2,252)
Deferred payment for property and equipment (324) -
--------- ---------
Net Cash Used for Investing Activities (2,169) (2,252)
--------- ---------
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock - 9
Repayments of long-term debt (219) (201)
--------- ---------
Net Cash Used in Financing Activities (219) (192)
--------- ---------
Net decrease in cash and cash equivalents (4,170) (2,777)
Cash and cash equivalents, beginning of period 17,040 19,320
--------- ---------
Cash and cash equivalents, end of period $12,870 $16,543
========= =========
</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 weeks
ended May 4, 1996 and April 29, 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) INCOME PER SHARE
Net loss per common share excludes common equivalent shares (stock
options), because their effect is anti-dilutive. Net income per common share
is computed using the weighted average number of common and common equivalent
shares (stock options) outstanding during the period.
3. FINANCING ARRANGEMENTS
In March 1994, the Company executed a fifteen-year $8.0 million loan
bearing interest at 8.64%. Interest and principal are payable in equal monthly
installments beginning May 1, 1994. The loan is collateralized by a mortgage on
the national distribution center owned by the Company in Troy, Ohio.
On March 5, 1996, the Company and the Chase Manhattan Bank (N.A.)
("Chase") amended agreements providing two credit facilities and extended the
term of each to February 1999. The first facility now 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
<PAGE> 7
which $15.0 million was utilized at May 4, 1996. The second facility now
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 May 4, 1996, the Company has not drawn upon
its revolving credit facility except to issue standby letters of credit
totaling $4.5 million as collateral for obligations under casualty insurance
policies.
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 will
be amortized against rent expense over the life of the assumed leases.
5. INCOME TAXES
The (benefit) provision for income taxes consists of (dollars in
thousands):
<TABLE>
<CAPTION>
Thirteen Weeks Ended
---------------------------
May 4, April 29,
1996 1995
---------- ----------
<S> <C> <C>
Currently payable:
Federal ($242) $112
State (82) 33
---- -------
(324) 145
----- ------
Deferred:
Federal (23) (36)
State (5) (8)
--- --------
(28) (44)
---- -------
($352) $101
====== =====
</TABLE>
<PAGE> 8
Reconciliation of the (benefit) provision for income taxes from the U.S.
Federal statutory rate to the Company's effective rate is as follows:
<TABLE>
<CAPTION>
Thirteen Weeks Ended
---------------------------------------------
May 4, 1996 April 29, 1995
------------------ ------------------
<S> <C> <C> <C> <C>
Tax at Federal rate (34%) ($327) (34.0%) $74 34.0%
State income taxes, net of (58) (6.0%) 21 9.6%
federal benefit
Goodwill amortization 18 1.8% 17 8.1%
Other 15 1.6% (11) (5.0)%
------- ------- ------ ------
($352) (36.6%) $101 46.7%
====== ======= ==== =====
</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 246
Compensation 2,061
------
2,588
Liabilities:
Depreciation 1,749
-----
Net deferred tax asset $839
=====
</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 May 4,
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 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 May 4, 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.
<PAGE> 9
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
----------------------------
May 4, April 29,
1996 1995
---------- ---------
<S> <C> <C>
Cash interest:
Interest expense
(income), net per
statements of income $245 ($10)
Less: Non-cash
interest expense (14) (45)
----- ----
Net cash interest expense
(income), including interest
income of $196 and $389 $231 ($55)
===== =====
Net income tax refunds ($1,043) ($161)
======== ======
</TABLE>
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FIRST QUARTER FISCAL 1996 VERSUS FIRST QUARTER FISCAL 1995
Net sales for the first quarter of Fiscal 1996 increased 4.7% from the
first quarter of Fiscal 1995, to $88.9 million from $84.9 million, principally
from an increase in sales volume rather than price changes. Average stores
open increased from 528 to 580; see, however, "Properties," regarding the
Company's plan for future store openings. (Net sales for May 1996 increased
4.2% from May 1995 to $33.5 million from $32.2 million.) There is no
assurance that sales 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, also, "A Single Merchandise Assortment in Mid-Spring 1996." The
industry is also 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.
Comparable store sales decreased 1.5% for the first quarter of Fiscal 1996
(and decreased 2.5% for May 1996). There is no assurance that comparable store
sales will not continue to decrease. The transition during the first quarter
of Fiscal 1996 from two separate merchandise assortments to a single
merchandise assortment is believed to have contributed to the decrease in
comparable store sales. See, "A Single Merchandise Assortment in Mid-Spring
1996." The Company also believes that consumer pressure to reduce prices
throughout the specialty apparel industry has become a permanent influence on
the retail marketplace.
Gross profits decreased by $0.4 million to $18.7 million in the first
quarter of Fiscal 1996 from $19.1 million in the first quarter of Fiscal 1995,
decreasing as a percentage of net sales to 21.0% from 22.5%. 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. The Company expects that in the long term consumer
pressure to reduce prices will continue, making it necessary for the Company to
increase productivity and continue to reduce costs in order to increase profit
margins. There is no assurance that gross profits will not continue to
decrease.
General, administrative and store operating expenses were $19.4 million in
the first quarter of Fiscal 1996, compared to $18.9 million in the first
quarter of the previous year, principally from higher payroll costs, resulting
principally from an increase in the number of stores (see, "Properties"),
partially offset by lower benefits expenses. As a percentage of net sales,
general, administrative and store operating expenses decreased to 21.8% from
22.2%.
During the first quarter of Fiscal 1996, the Company incurred an operating
loss of $0.7 million compared to operating income of $0.2 million for the first
quarter of Fiscal 1995. The operating loss was 0.8% of net sales. There is no
assurance that the Company will not continue to incur operating losses.
Net interest expense was $0.2 million for the first quarter of Fiscal
1996, compared to net interest income of $10,000 in the first quarter of Fiscal
1995. The net interest expense resulted from bank fees in connection with the
extension of the Company's credit facilities.
The Company had an income tax benefit of $0.4 million in the first quarter
of Fiscal 1996 and a provision for income taxes of $0.1 million in the first
quarter of Fiscal 1995.
<PAGE> 11
The Company incurred a net loss of $0.6 million for the first quarter of
Fiscal 1996, compared to net income of $0.1 million for the first quarter of
Fiscal 1995.
A SINGLE MERCHANDISE ASSORTMENT COMMENCING IN MID-SPRING 1996
The Company's merchandising had a divisional structure in the first
quarter 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 with more
specialized functions 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 began arriving in Mid-Spring 1996 and put greater
emphasis on The Avenue(R) label than on Forelli(R) and Adrian Jordan(R)
labels.
The new unified merchandising structure has three specialized components:
product development, product quality and merchandising. The Company-wide
merchandising function and the expanded product quality function were staffed
from within. The Company recruited an experienced executive for the product
development function in April 1996. There is no assurance that the new
merchandising structure will increase sales and improve merchandise margin
rates.
Economies of scale are expected to result from having a single merchandise
assortment and fewer merchants. Savings were not the objective of the new
structure, however, and may not be material. Moreover, the Company intends to
improve product quality and marketing and any savings from restructuring may be
offset by the increased cost of higher product quality and better marketing.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash on hand was $12.9 million at May 4, 1996; $16.8 million
at February 3, 1996; and $16.5 million at April 29, 1995. The Company had
income taxes receivable of $2.0 million at May 4, 1996 and $2.7 million at
February 3, 1996.
Inventory was $47.2 million at May 4, 1996; $40.4 million at February 3,
1996; and $45.5 million at April 29, 1995. During the year ended May 4, 1996,
retail square footage increased 9%. The Company's inventory levels peak in
early May and December. During Fiscal 1995, the highest inventory level was
$54.9 million. Import purchases are made in U.S. dollars and are generally
financed by trade letters of credit. Short-term trade credit represents a
significant source of financing for domestic merchandise purchases. Trade
credit arises from the willingness of the Company's domestic vendors to grant
extended payment terms for inventory purchases and is generally financed either
by the vendor or a third-party factor. In Fiscal 1995, domestic purchases and
import purchases each constituted one-half of total purchases.
In March 1996, the Company and The Chase Manhattan Bank (N.A.) ("Chase")
amended agreements providing two credit facilities and extended the term of
each to February 1999. The first facility now 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 $15.0 million was utilized
at May 4, 1996. The second facility now 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 continue to be secured by a pledge of the stock of the
Company's subsidiaries. Merchandise in transit under trade letters of credit
is subject to a security interest pursuant to the Letter of Credit Agreement.
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
<PAGE> 12
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 $4.5 million at May 4, 1996 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 $73.0 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 $10.0 million per annum plus, during the period from
February 4, 1996 the sum of (A) $10.0 million plus (B) if adjusted cash flow
(as defined in the agreements) 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 1.0 to 1.0, and (iii) the ratio of
current assets to current liabilities not be less than 1.25 to 1.0. The
agreements also include certain restrictive covenants that impose limitations
(subject to certain exceptions) on the Company with respect to, among other
things, (i) making or owning certain investments, declaring or paying
dividends, acquiring Common Stock or preferred stock of the Company, or making
loans, involving more than $5 million in the aggregate of investments,
dividends, purchase prices and loan proceeds, (ii) engaging in any line of
business other than apparel retailing, (iii) engaging in certain transactions
with affiliates and (iv) consolidating, merging or making acquisitions outside
the ordinary course of business involving assets with a value in excess of $5
million. The Company does not believe that continued compliance with the
covenants under the agreements for the credit facilities will materially
restrict its anticipated operations. 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 believes that its credit facilities, together with cash flows
from operating activities, will be adequate to meet anticipated working capital
needs, including seasonal financing needs, for the next 12 months.
The accounts receivable from the Company's proprietary credit cards are
purchased daily by Citibank (South Dakota), N.A. 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.
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 May 4, 1996 (583 stores at June 3,
1996), of which 305 stores were located in strip shopping centers, 246 stores
were located in malls and 31 were located in downtown shopping districts.
During the year ended May 4, 1996, the Company increased its retail square
footage to 2.3 million square feet, an increase of 9% that included 21 closed
retail stores that were formerly operated by another chain of specialty apparel
retail stores and were reopened by the Company. The increase in retail square
footage led to an increase in net sales.
The Company presently plans to maintain its retail square footage at
approximately 2.2 million square feet and to obtain further increases in net
sales from higher sales per square foot. There is no
<PAGE> 13
assurance, however, that net sales will continue to 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.
New stores and newly remodeled stores will use The Avenue(R) trade name.
In the first quarter of Fiscal 1995, the Company was conducting an
experiment with a total of 55 new stores and remodeled stores ("tandem stores")
that sold both large size merchandise and smaller "missy" sizes in separate
departments. At May 4, 1996, only 10 tandem stores were still selling "missy"
sizes. The Company discontinued "missy" assortments in those stores and sells
large sizes there exclusively.
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 (i) rapid changes in, or miscalculation of, fashion trends, (ii) extreme
or unseasonable weather conditions, (iii) economic downturns, weakness in
overall consumer demand, inflation and cyclical variations in the retail market
for women's fashion apparel, (iv) an acceleration in the rate of business
failures and inventory liquidations in the women's specialty retail industry,
(v) an increase in the rate of bad debt expense among the Company's proprietary
credit card holders, (vi) the risks 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,
(vii) an increase in minimum wage rates, and (viii) the imposition of more
onerous payment terms for merchandise purchases.
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
(a) The fourth Annual Meeting of Stockholders was held on May 28, 1996.
(b) The fourth Annual Meeting of Stockholders elected directors for terms
ending at the fifth Annual Meeting of Stockholders, as follows:
<TABLE>
<CAPTION>
Voting Authority
Name Votes For Withheld
---- --------- --------
<S> <C> <C>
Joseph A. Alutto 10,430,816 641,512
Raphael Benaroya 10,441,613 630,715
Russell Berrie 10,441,616 630,712
Joseph Ciechanover 10,441,452 630,876
Ilan Kaufthal 10,441,616 630,712
Vincent Langone 10,441,616 630,712
Christina A. Mohr 10,441,616 630,712
George R. Remeta 10,441,513 630,815
Richard W. Rubenstein 10,430,816 641,512
</TABLE>
(c) Votes on approval of the adoption of the 1996 Stock Option Plan were
10,044,634 for; 956,445 against; 1,542 abstain; 69,707 not voting
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
Number Description
------- -----------
<S> <C>
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.
27 Financial Data Schedule
</TABLE>
The registrant's 1996 Stock Option Plan set forth as Exhibit A to the
registrant's proxy statement on Schedule 14A for its 1996 annual meeting of
stockholders is incorporated herein by reference.*
<PAGE> 15
The following exhibits to the registrant's Current Report on Form 8-K, dated
March 22, 1996, are incorporated herein by reference:
<TABLE>
<CAPTION>
Number Description
------ -----------
<S> <C>
10.1 Amendment No. 7, dated March 5, 1996, to
Letter of Credit Agreement among the
Corporation, its subsidiaries and The
Chase Manhattan Bank (N.A.) ("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
</TABLE>
The following exhibits to the registrant's Quarterly Report on Form 10-Q for
the period ended July 29, 1995 are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
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
</TABLE>
The following exhibits to the registrant's Amended Current Report on Form 8-KA,
dated May 22, 1995, are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
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
</TABLE>
The following exhibits to the registrant's Annual Report on Form 10-K for the
year ended January 28, 1995 are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
10.1* Incentive Compensation Program Summary
21 Subsidiaries of the Corporation
</TABLE>
The following exhibits to the registrant's Quarterly Report on Form 10-Q for
the period ended October 29, 1994 are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
10.1* Restated Retirement Savings Plan
10.2* Restated Supplemental Retirement Savings
Plan
</TABLE>
<PAGE> 16
The following exhibit to the registrant's Quarterly Report on Form 10-Q for the
period ended July 30, 1994 is incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
------------------ -----------
<S> <C>
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
</TABLE>
The following exhibits to the registrant's amended Annual Report on Form 10-KA
for the year ended January 29, 1994 are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
----------------- -----------
<S> <C>
10.3 Amendment, dated December 6, 1993, to
Credit Agreement between the Corporation
and Citibank (South Dakota) N.A.
10.4 Term Sheet Agreement, dated as of May 4,
1993, with respect to Amended and
Restated Gloria Vanderbilt Hosiery
Sublicense Agreement
</TABLE>
The following exhibits to the registrant's Quarterly Report on Form 10-Q for
the period ended October 30, 1993 are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
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
</TABLE>
The following exhibits to the registrant's Quarterly Report on Form 10-Q for
the period ended July 31, 1993 are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
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
</TABLE>
The registrant's Restated 1990 Stock Option Plan set forth as Exhibit A to the
registrant's proxy statement on Schedule 14A for its 1993 annual meeting of
stockholders is incorporated herein by reference.*
The following exhibits to the registrant's Current Report on Form 8-K, dated
January 6, 1993, are incorporated herein by reference:
<PAGE> 17
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
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.
</TABLE>
The following exhibits to the registrant's Registration Statement on Form S-1
(Registration No. 33-44499), as amended, are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
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
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
</TABLE>
<PAGE> 18
<TABLE>
<S> <C>
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 as of
August 31, 1989 between the Corporation
and ALGLP
10.40 Credit Agreement, dated as of February
24, 1992, among the Corporation, its
subsidiaries and Chase
10.41 Letter of Credit Agreement, dated as of
February 24, 1992, among the Corporation,
its subsidiaries and Chase
</TABLE>
- -------------------------
*A compensatory plan for the benefit of the registrant's
management or a management contract.
-------------
(b) No Current Reports on Form 8-K were filed by the registrant
during the fiscal quarter ended May 4, 1996.
<PAGE> 19
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: June 17, 1996
<PAGE> 20
EXHIBIT INDEX
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
Number Description
------- -----------
<S> <C>
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.
27 Financial Data Schedule
</TABLE>
The registrant's 1996 Stock Option Plan set forth as Exhibit A to the
registrant's proxy statement on Schedule 14A for its 1996 annual meeting of
stockholders is incorporated herein by reference.*
The following exhibits to the registrant's Current Report on Form 8-K, dated
March 22, 1996, are incorporated herein by reference:
<TABLE>
<CAPTION>
Number Description
------ -----------
<S> <C>
10.1 Amendment No. 7, dated March 5, 1996, to
Letter of Credit Agreement among the
Corporation, its subsidiaries and The
Chase Manhattan Bank (N.A.) ("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
</TABLE>
The following exhibits to the registrant's Quarterly Report on Form 10-Q for
the period ended July 29, 1995 are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
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
</TABLE>
The following exhibits to the registrant's Amended Current Report on Form 8-KA,
dated May 22, 1995, are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
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")
</TABLE>
<PAGE> 21
<TABLE>
<S> <C>
10.2 Gloria Vanderbilt Sleepwear Sublicense
Agreement, dated May 22, 1995, between
United Retail Incorporated and ALGLP
</TABLE>
The following exhibits to the registrant's Annual Report on Form 10-K for the
year ended January 28, 1995 are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
10.1* Incentive Compensation Program Summary
21 Subsidiaries of the Corporation
</TABLE>
The following exhibits to the registrant's Quarterly Report on Form 10-Q for
the period ended October 29, 1994 are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
10.1* Restated Retirement Savings Plan
10.2* Restated Supplemental Retirement Savings
Plan
</TABLE>
The following exhibit to the registrant's Quarterly Report on Form 10-Q for the
period ended July 30, 1994 is incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
------------------ -----------
<S> <C>
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
</TABLE>
The following exhibits to the registrant's amended Annual Report on Form 10-KA
for the year ended January 29, 1994 are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
----------------- -----------
<S> <C>
10.3 Amendment, dated December 6, 1993, to
Credit Agreement between the Corporation
and Citibank (South Dakota) N.A.
10.4 Term Sheet Agreement, dated as of May 4,
1993, with respect to Amended and
Restated Gloria Vanderbilt Hosiery
Sublicense Agreement
</TABLE>
The following exhibits to the registrant's Quarterly Report on Form 10-Q for
the period ended October 30, 1993 are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
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
</TABLE>
<PAGE> 22
<TABLE>
<S> <C>
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
</TABLE>
The following exhibits to the registrant's Quarterly Report on Form 10-Q for
the period ended July 31, 1993 are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
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
</TABLE>
The registrant's Restated 1990 Stock Option Plan set forth as Exhibit A to the
registrant's proxy statement on Schedule 14A for its 1993 annual meeting of
stockholders is incorporated herein by reference.*
The following exhibits to the registrant's Current Report on Form 8-K, dated
January 6, 1993, are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
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.
</TABLE>
The following exhibits to the registrant's Registration Statement on Form S-1
(Registration No. 33-44499), as amended, are incorporated herein by reference:
<TABLE>
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
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.
</TABLE>
<PAGE> 23
<TABLE>
<S> <C>
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
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 as of
August 31, 1989 between the Corporation
and ALGLP
10.40 Credit Agreement, dated as of February
24, 1992, among the Corporation, its
subsidiaries and Chase
10.41 Letter of Credit Agreement, dated as of
February 24, 1992, among the Corporation,
its subsidiaries and Chase
</TABLE>
- -------------------------
*A compensatory plan for the benefit of the registrant's
management or a management contract.
<PAGE> 1
EXHIBIT NO. 10.1
SEVERANCE PAY AGREEMENT
Agreement made as of the 28th day of May, 1996, between United Retail
Group, Inc., a Delaware corporation, with principal offices at 365 West Passaic
Street, Rochelle Park, New Jersey 07662-6563 (the "Company"), and Raphael
Benaroya, residing 197 Lincoln Street, Englewood, New Jersey 07631 (the
"Executive")
WHEREAS, the Executive has been employed by the Company as its Chairman of
the Board, President and Chief Executive Officer; and
WHEREAS, the Company desires to continue the services of the Executive,
and the Executive desires to continue to provide such services to the Company.
NOW, THEREFORE, in consideration of $10, receipt of which by the Company
is acknowledged, and of the mutual covenants and obligations hereinafter set
forth, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions.
(a) Board of Directors shall mean the Board of Directors of the Company.
(b) Business of the Company shall mean the operation of a retail store
chain which markets and sells apparel for women principally in sizes
14 and larger and any other future business in which the Company and
its subsidiaries and Affiliated Companies engage that produces more
than 10% of the Company's consolidated sales.
(c) By-laws shall mean the Restated By-laws of the Company as currently
in force.
(d) Change of Control shall mean either (i) the acquisition after the
date first set forth above by any person (defined for the purposes of
this paragraph to mean any person within the meaning of Section 13(d)
of the Securities Exchange Act of 1934 ("Exchange Act")), other than
the Company, the Executive or an employee benefit plan created by
the Board of Directors for the benefit of its Associates, either
directly or indirectly, of the beneficial ownership (determined under
Rule 13d-3 of the Regulations promulgated by the Securities and
Exchange Commission under Section 13(d) of the Exchange Act) of any
securities issued by the Company if, after such acquisition, such
person is the beneficial owner of securities issued by the Company
having 30% or more of the voting power in the election of Directors
at the next meeting of the holders of voting securities to be held
for such purpose of all of the voting securities issued by the
Company; (ii)
<PAGE> 2
the election of a majority of the Directors, elected at any meeting
of the holders of voting securities of the Company, who were not
nominated for such election by the Board of Directors or a duly
constituted committee of the Board of Directors, or (iii) the merger
or consolidation of the Company with, or transfer of substantially
all of the assets of the Company, to another person; provided,
however, that any such acquisition, election, merger, consolidation
or transfer that is approved in advance in writing by the Executive
shall not constitute a Change of Control.
(e) Protected Information shall mean trade secrets, confidential or
proprietary information, and all other knowledge, know-how,
information, documents or materials, owned or developed by the
Company, or otherwise in the possession of the Company, whether in
tangible or intangible form, pertaining to the Business of the
Company, the confidentiality of which the Company takes reasonable
measures to protect, including, but not limited to, the Company's
research and development operations, identities and habits of
customers and prospective customers, suppliers, business
relationships, products (including prices, costs, sales or content),
processes, techniques, machinery, contracts, financial information or
measures, business methods, future business plans, data bases,
computer programs, designs, models, operating procedures, knowledge
of the organization, and other information owned, developed or
possessed by the Company, provided, however, that Protected
Information shall not include information that shall become generally
known to the public or the trade without violation of Section 3.
(f) Resignation for Good Cause shall have the meaning set forth in
Section 6(a).
(g) Severance Pay shall have the meaning set forth in Section 6(a).
(h) Term of Employment shall mean the period of time commencing on the
date first set forth above and ending on May 20, 1999 or such later
date as may be mutually agreed upon by the Board of Directors and the
Executive.
(i) Unauthorized shall mean: (i) in contravention of the Company's
policies or procedures; (ii) otherwise inconsistent with the
Company's measures to protect its interests in its Protected
Information; or (iii) in contravention of any duty existing
under law or contract.
2. Representation, Warranty and Covenant of the Company. The Company
represents and warrants that this Agreement constitutes a valid and legally
binding obligation of the Company enforceable in accordance with the terms
herein set forth, except to the extent that the enforceability of this
Agreement may be affected by bankruptcy, insolvency, reorganization,
moratorium, or similar laws or equitable principles affecting creditors' rights
generally. The
<PAGE> 3
Company covenants that is shall give notice promptly to the Executive of the
occurrence of Change of Control pursuant to Section 13.
3. Restrictive Covenants and Confidentiality.
(a) The Executive agrees that he shall not:
(i) solicit, raid, entice, encourage or induce any person, firm or
corporation that at any time within one year prior to the
Resignation for Good Cause shall have been an exclusive supplier
to the Company, or any of its subsidiaries or Affiliated
Companies, to become a supplier to any other person, firm or
corporation that derives more than 10% of its sales, directly or
indirectly, from a business the same as the Business of the
Company and the Executive shall not approach any such person,
firm or corporation for such purpose or authorize or knowingly
approve the taking of such actions by any other person, firm or
corporation or assist any such person, firm or corporation in
taking such action; or
(ii) solicit, raid, entice, encourage or induce any person who at any
time within one year prior to Resignation for Good Cause shall
have been an employee of the Company, or any of its subsidiaries
or Affiliated Companies, to become employed by any person, firm
or corporation, and the Executive shall not approach any such
employee for such purpose or authorize or knowingly approve the
taking of such actions by any other person, firm or corporation
or assist any such person, firm or corporation in taking such
action.
(b) During the Term of Employment and thereafter, the Executive will not
use, disclose or divulge, furnish or make accessible to anyone,
directly or indirectly, any Protected Information in any Unauthorized
manner or for any Unauthorized purpose, provided, however, that in
the event that the Executive is required to disclose any Protected
Information by court order or decree or in compliance with the rules
and regulations of a governmental agency or in compliance with law,
the Executive will provide the Company with prompt notice of such
required disclosure so that the Company may seek an appropriate
protective order and/or waive the Executive's compliance with the
provisions of this Section 3 and provided, further, that if, in the
absence of a protective order or the receipt of a waiver hereunder,
the Executive is advised by his counsel that such disclosure is
necessary to comply with such court order, decree, rules, regulation
or law, he may disclose such information without liability hereunder.
(c) The Executive agrees that all processes, techniques, know-how,
inventions, plans, products, and devices developed, made or invented
by the Executive, alone or with others in connection with the
Executive's employment hereunder, during the
<PAGE> 4
Term of Employment, shall become and be the sole property of the
Company unless released in writing by the Company.
(d) The Executive agrees that the Executive shall not, directly or
indirectly, within any area in the United States or elsewhere where
the Company or any of its subsidiaries or Affiliated Companies is
transacting business during the Term of Employment, engage or
participate or make any financial investments in or become employed
by, or act as an agent or principal of, or render advisory or other
services to or for any person, firm or corporation, or in connection
with any business activity (other than that of the Company and its
subsidiaries or Affiliated Companies) that derives more than 10% of
its sales, directly or indirectly, from a business the same as the
Business of the Company. Nothing herein contained, however, shall
restrict the Executive from overseeing personal and family
investments, including any investments in not more than 3% of the
voting securities in any company whose stock is listed on a national
securities exchange or actively traded in the over-the-counter
market, so long as in connection with such investments the Executive
does not actively operate any such business or enterprise that
derives more than 10% of its sales, directly or indirectly, from a
business the same as the Business of the Company.
(e) The Executive shall be bound by the provisions of Section 3(a) and
(d), and shall perform his obligations pursuant to Section 3(a) and
(d), while employed by the Company and, in the event of Resignation
for Good Cause, for so long as, and only for so long as, the Company
pays his Severance Pay in accordance with the provisions of Section
6(a).
(f) The provisions of this Section 3 shall survive the termination of the
Executive's employment, irrespective of the reason therefor.
(g) The Executive acknowledges that the services to be rendered by the
Executive are of a special, unique and extraordinary character and,
in connection with such services, the Executive will have access to
confidential information vital to the Company's and its subsidiaries
and Affiliated Companies' businesses. By reason of this, the
Executive consents and agrees that if the Executive violates any of
the provisions of this Section 3, the Company and its subsidiaries
and Affiliated Companies would sustain irreparable harm and, and
therefore, in addition to any other remedies which the Company may
have under this Agreement or otherwise, the Company shall be entitled
to an injunction from any court of competent jurisdiction restraining
the Executive from committing or continuing any such violation of
this Section 3. The Executive acknowledges that damages at law would
not be an adequate remedy for violation of this Section 3, and the
Executive therefore agrees that the provisions of this Section 3 may
be specifically enforced against the Executive in any court of
competent jurisdiction. Nothing herein shall be construed as
prohibiting the Company from pursuing any
<PAGE> 5
other remedies available to the Company for such breach or threatened
breach, including the recovery of damages from the Executive.
4. Deductions and Withholding. The Executive agrees that the Company
and/or its subsidiaries or Affiliated Companies shall withhold from any and all
compensation required to be paid to the Executive pursuant to this Agreement
all Federal, state, local and/or other taxes which the Company determines are
required to be withheld in accordance with applicable statutes and/or
regulations from time to time in effect.
5. Mutual Non-Disparagement. Neither the Executive nor the Company
will make or authorize any public statement disparaging the other in its or his
business interests and affairs. Notwithstanding the foregoing, neither party
shall be (i) required to make any statement which it or he believes to be false
or inaccurate, or (ii) restricted in connection with any litigation,
arbitration or similar proceeding or with respect to its response to any legal
process. The provisions of this Section shall survive the termination of the
Executive's employment, irrespective of the reason therefor.
6. Resignation.
(a) In the event a Change of Control shall occur during the Term of
Employment at a time when the Executive is an employee of the
Company, and the Executive within 10 business days after first
receiving notice of the Change of Control Control tenders a letter of
resignation specifying such Change of Control, (such circumstances
being referred to as "Resignation for Good Cause", whether or not the
Executive shall be an employee of the Company during the period
between the Change of Control and the tender of such letter) the
Company shall pay the Executive (v) $550,000 per annum for three
years, payable in accordance with the regular executive payroll
practices of the Company, plus (w) if the federal excise tax pursuant
to Section 280G of the Internal Revenue Code or any successor
provision on "golden parachute" payments applies to the payment made
pursuant to clause (v) of this sentence, an amount equal to the
excise tax incurred plus (x) an amount equal to the income tax at the
highest federal and state marginal rates for a married man filing a
joint return with respect to the payment made pursuant to clause (w)
of this sentence, plus (y) an amount equal to the federal excise tax
on "golden parachute" payments with respect to the payment, if any,
made pursuant to clause (x) of this sentence plus (z) an amount equal
to the income tax at the highest federal and state marginal rates for
a married man filing a joint return with respect to the payment made
pursuant to clause (y) of this sentence (collectively, "Severance
Pay"). In addition, the Executive shall be entitled to:
(i) any compensation earned but not yet paid at the time the
letter of resignation is tendered;
(ii) a pro rata performance bonus for the season in which
employment is terminated determined and payable on the basis of
the number of days
<PAGE> 6
worked during the season and the bonus percentage
established for the season in accordance with past practices;
(iii) any accrued vacation pay;
(iv) reimbursement for expenses incurred, but not paid prior
to such termination of employment;
(v) continuation at the Company's expense of group benefits
at the level in effect on the date of termination of
employment and continuation at the Company's expense of
the individual life policy and the individual disability
policy covering the Executive, in each case through the
remainder of the Term of Employment (or the Company shall
provide the economic equivalent thereof); and
(vi) conversion of the individual life policy and the
individual disability policy personal policies, with the
premiums paid solely by him, at the of the Term of
Employment.
Notice of Change of Control shall be given pursuant to Section
13, provided, however, that the Executive, in his discretion, may
accept as notice any filing with the Securities and Exchange
Commission of a report setting forth facts constituting Change of
Control.
(b) In the event of Resignation for Good Cause the Executive shall be
under no obligation to seek other employment and there shall be no
offset against any amounts due the Executive under this Agreement on
account of any remuneration attributable to any subsequent employment
that the Executive may obtain (any amounts due under Section 6(a) are
in the nature of severance payments, or liquidated damages, or both,
and are not in the nature of a penalty).
(c) The Executive shall accept the payments referred to in this Section 6
in full discharge and release of the Company of and from any further
payment obligations under this Agreement or any other contract
between the parties hereto relating to employment except obligations
under Sections 7 and 8.
(d) The termination of the Executive's employment by the Company during
the period beginning with a Change of Control and ending 10 business
days after the Company gives notice of the occurrence of Change of
Control shall not affect the Executive's rights under this Agreement.
<PAGE> 7
7. Indemnification.
(a) The Company shall indemnify the Executive as provided in the By-laws.
The provisions of this paragraph shall survive the termination of the
Executive's employment.
(b) In the event of payment of indemnities under this Agreement, the
Company shall be subrogated to the extent of such payment to all of
the rights of recovery of the Executive.
(c) The Company shall use reasonable efforts to obtain and maintain a
directors' and officers' liability insurance policy covering the
Executive.
8. Enforcement.
If any amount owing to the Executive under this Agreement is not paid
by the Company, or on its behalf, within 15 days after a written claim or
request for payment has been received by the Company, the Executive may at any
time thereafter bring suit against the Company to recover the unpaid amount
and, if successful in whole or in part, the Executive shall be entitled to be
paid also the expenses of prosecuting such suit, including reasonable
attorneys' fees.
9. Entire Agreement.
This Agreement and the By-laws embody the entire agreement of the
parties with respect to the Executive's resignation from the Company's employ
by reason of a Change of Control. This Agreement supplements any employment
agreement between the parties hereto. In the event of any inconsistency
between the terms of this Agreement and the terms of any employment agreement,
the terms of this Agreement shall prevail and be enforced. This Agreement may
not be changed or terminated orally but only by an agreement in writing signed
by the parties hereto. Any Severance Pay otherwise due hereunder shall be
reduced dollar-for-dollar by the amount of the severance pay received by the
Executive from the Company pursuant to the provisions of any other contract
between the parties hereto.
10. Waiver.
The waiver by the Company of breach of any provision of this
Agreement by the Executive shall not operate or be construed as a waiver of any
subsequent breach by him. The waiver by the Executive of a breach of any
provision of this Agreement by the Company shall not operate or be construed
as a waiver of any subsequent breach by the Company.
<PAGE> 8
11. Governing Law.
This Agreement shall be subject to, and governed by, the laws of the
State of New York.
12. Assignability.
The obligations of the Executive may not be delegated and, except as
to the designation of beneficiaries of insurance benefits, the Executive may
not, without the Company's written consent thereto, assign, transfer, convey,
pledge, encumber, hypothecate or otherwise dispose of this Agreement or any
interest herein. Any such attempted delegation or disposition shall be null
and void ab initio and without effect. This Agreement and all of the Company's
rights and obligations hereunder may be assigned or transferred by the Company
to, and shall be binding upon and inure to the benefit of, any subsidiary of
the Company or any successor to the Company, but any such assignment shall not
relieve the assigning party of any of its obligations hereunder. The term
"successor" shall mean, with respect to the Company or any of its subsidiaries,
any corporation or other business entity which, by merger, consolidation,
purchase of the assets, or otherwise, acquires all or substantially all of the
assets of the Company or such subsidiary.
13. Notices.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be delivered personally or sent by registered or
certified mail, return receipt requested, to the other party hereto at his or
its address as set forth at the beginning of this Agreement and, in the case of
the Company, addressed to the attention of its Secretary. Either party may
change the address to which notices, requests, demands and other communications
hereunder shall be sent by sending written notice of such change of address to
the other party.
14. Severability.
If any provision of this Agreement as applied to either party or to
any circumstances shall be adjudged by a court of competent jurisdiction to be
void or unenforceable, the same shall in no way affect any other provision of
this Agreement or the validity or enforceability of this Agreement.
15. Section Headings.
The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
<PAGE> 9
16. Counterparts.
This Agreement may be executed in one or more counterparts, which
shall, collectively and separately, constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
in multiple originals.
UNITED RETAIL GROUP, INC.
By: /s/GEORGE R. REMETA
-----------------------------
Name: George R. Remeta
Title: Vice Chairman of the Board
/s/RAPHEAL BENAROYA
------------------------------
Raphael Benaroya
<PAGE> 1
EXHIBIT NO. 10.2
SEVERANCE PAY AGREEMENT
Agreement made as of the 28th day of May, 1996, between United Retail
Group, Inc., a Delaware corporation, with principal offices at 365 West Passaic
Street, Rochelle Park, New Jersey 07662-6563 (the "Company"), and George R.
Remeta, residing 25 Lee Way, Oakland, New Jersey 07436 (the "Executive")
WHEREAS, the Executive has been employed by the Company as its Vice
Chairman - Chief Financial Officer; and
WHEREAS, the Company desires to continue the services of the Executive,
and the Executive desires to continue to provide such services to the Company.
NOW, THEREFORE, in consideration of $10, receipt of which by the Company
is acknowledged, and of the mutual covenants and obligations hereinafter set
forth, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions.
(a) Board of Directors shall mean the Board of Directors of the Company.
(b) Business of the Company shall mean the operation of a retail store
chain which markets and sells apparel for women principally in sizes
14 and larger and any other future business in which the Company and
its subsidiaries and Affiliated Companies engage that produces more
than 10% of the Company's consolidated sales.
(c) By-laws shall mean the Restated By-laws of the Company as currently
in force.
(d) Change of Control shall mean the resignation or removal for any
reason of the Chief Executive Officer of the Company, within 90 days
after (i) the acquisition after the date first set forth above by any
person (defined for the purposes of this paragraph to mean any person
within the meaning of Section 13(d) of the Securities Exchange Act of
1934 ("Exchange Act")), other than the Company, the Executive or an
employee benefit plan created by the Board of Directors for the
benefit of its Associates, either directly or indirectly, of the
beneficial ownership (determined under Rule 13d-3 of the Regulations
promulgated by the Securities and Exchange Commission under Section
13(d) of the Exchange Act) of any securities issued by the Company
if, after such acquisition, such person is the beneficial owner of
securities issued by the Company having 30% or more of the voting
power in the election of Directors at the next meeting of the holders
of voting securities to be held
<PAGE> 2
for such purpose of all of the voting securities issued by the
Company; (ii) the election of a majority of the Directors, elected
at any meeting of the holders of voting securities of the Company,
who were not nominated for such election by the Board of Directors or
a duly constituted committee of the Board of Directors, or (iii) the
merger or consolidation of the Company with, or transfer of
substantially all of the assets of the Company, to another person;
provided, however, that any such acquisition, election, merger,
consolidation or transfer that is approved in advance in writing by
the Executive shall not constitute a Change of Control.
(e) Protected Information shall mean trade secrets, confidential or
proprietary information, and all other knowledge, know-how,
information, documents or materials, owned or developed by the
Company, or otherwise in the possession of the Company, whether in
tangible or intangible form, pertaining to the Business of the
Company, the confidentiality of which the Company takes reasonable
measures to protect, including, but not limited to, the Company's
research and development operations, identities and habits of
customers and prospective customers, suppliers, business
relationships, products (including prices, costs, sales or content),
processes, techniques, machinery, contracts, financial information or
measures, business methods, future business plans, data bases,
computer programs, designs, models, operating procedures, knowledge
of the organization, and other information owned, developed or
possessed by the Company, provided, however, that Protected
Information shall not include information that shall become generally
known to the public or the trade without violation of Section 3.
(f) Resignation for Good Cause shall have the meaning set forth in
Section 6(a).
(g) Severance Pay shall have the meaning set forth in Section 6(a).
(h) Term of Employment shall mean the period of time commencing on the
date first set forth above and ending on May 20, 1999 or such later
date as may be mutually agreed upon by the Board of Directors and the
Executive.
(i) Unauthorized shall mean: (i) in contravention of the Company's
policies or procedures; (ii) otherwise inconsistent with the
Company's measures to protect its interests in its Protected
Information; or (iii) in contravention of any duty existing
under law or contract.
2. Representation, Warranty and Covenant of the Company. The Company
represents and warrants that this Agreement constitutes a valid and legally
binding obligation of the Company enforceable in accordance with the terms
herein set forth, except to the extent that the enforceability of this
Agreement may be affected by bankruptcy, insolvency, reorganization,
moratorium, or similar laws or equitable principles affecting creditors' rights
generally. The
<PAGE> 3
Company covenants that it shall give notice promptly to the Executive of the
occurrence of Change of Control.
3. Restrictive Covenants and Confidentiality.
(a) The Executive agrees that he shall not:
(i) solicit, raid, entice, encourage or induce any person, firm or
corporation that at any time within one year prior to the
Resignation for Good Cause shall have been an exclusive supplier
to the Company, or any of its subsidiaries or Affiliated
Companies, to become a supplier to any other person, firm or
corporation that derives more than 10% of its sales, directly or
indirectly, from a business the same as the Business of the
Company and the Executive shall not approach any such person,
firm or corporation for such purpose or authorize or knowingly
approve the taking of such actions by any other person, firm or
corporation or assist any such person, firm or corporation in
taking such action; or
(ii) solicit, raid, entice, encourage or induce any person who at any
time within one year prior to the Resignation for Good Cause
shall have been an employee of the Company, or any of its
subsidiaries or Affiliated Companies, to become employed by any
person, firm or corporation, and the Executive shall not
approach any such employee for such purpose or authorize or
knowingly approve the taking of such actions by any other
person, firm or corporation or assist any such person, firm or
corporation in taking such action.
(b) During the Term of Employment and thereafter, the Executive will not
use, disclose or divulge, furnish or make accessible to anyone,
directly or indirectly, any Protected Information in any Unauthorized
manner or for any Unauthorized purpose, provided, however, that in
the event that the Executive is required to disclose any Protected
Information by court order or decree or in compliance with the rules
and regulations of a governmental agency or in compliance with law,
the Executive will provide the Company with prompt notice of such
required disclosure so that the Company may seek an appropriate
protective order and/or waive the Executive's compliance with the
provisions of this Section 3 and provided, further, that if, in the
absence of a protective order or the receipt of a waiver hereunder,
the Executive is advised by his counsel that such disclosure is
necessary to comply with such court order, decree, rules, regulation
or law, he may disclose such information without liability hereunder.
(c) The Executive agrees that all processes, techniques, know-how,
inventions, plans, products, and devices developed, made or invented
by the Executive, alone or with others in connection with the
Executive's employment hereunder, during the
<PAGE> 4
Term of Employment, shall become and be the sole property of the
Company unless released in writing by the Company.
(d) The Executive agrees that the Executive shall not, directly or
indirectly, within any area in the United States or elsewhere where
the Company or any of its subsidiaries or Affiliated Companies is
transacting business during the Term of Employment, engage or
participate or make any financial investments in or become employed
by, or act as an agent or principal of, or render advisory or other
services to or for any person, firm or corporation, or in connection
with any business activity (other than that of the Company and its
subsidiaries or Affiliated Companies) that derives more than 10% of
its sales, directly or indirectly, from a business the same as the
Business of the Company. Nothing herein contained, however, shall
restrict the Executive from overseeing personal and family
investments, including any investments in not more than 3% of the
voting securities in any company whose stock is listed on a national
securities exchange or actively traded in the over-the-counter
market, so long as in connection with such investments the Executive
does not actively operate any such business or enterprise that
derives more than 10% of its sales, directly or indirectly, from a
business the same as the Business of the Company.
(e) The Executive shall be bound by the provisions of Section 3(a) and
(d), and shall perform his obligations pursuant to Section 3(a) and
(d), while employed by the Company and, in the event of Resignation
for Good Cause, for so long as, and only for so long as, the Company
pays his Severance Pay in accordance with the provisions of Section
6(a).
(f) The provisions of this Section 3 shall survive the termination of the
Executive's employment, irrespective of the reason therefor.
(g) The Executive acknowledges that the services to be rendered by the
Executive are of a special, unique and extraordinary character and,
in connection with such services, the Executive will have access to
confidential information vital to the Company's and its subsidiaries
and Affiliated Companies' businesses. By reason of this, the
Executive consents and agrees that if the Executive violates any of
the provisions of this Section 3, the Company and its subsidiaries
and Affiliated Companies would sustain irreparable harm and, and
therefore, in addition to any other remedies which the Company may
have under this Agreement or otherwise, the Company shall be entitled
to an injunction from any court of competent jurisdiction restraining
the Executive from committing or continuing any such violation of
this Section 3. The Executive acknowledges that damages at law would
not be an adequate remedy for violation of this Section 3, and the
Executive therefore agrees that the provisions of this Section 3 may
be specifically enforced against the Executive in any court of
competent jurisdiction. Nothing herein shall be construed as
prohibiting the Company from pursuing any
<PAGE> 5
other remedies available to the Company for such breach or threatened
breach, including the recovery of damages from the Executive.
4. Deductions and Withholding. The Executive agrees that the Company
and/or its subsidiaries or Affiliated Companies shall withhold from any and all
compensation required to be paid to the Executive pursuant to this Agreement
all Federal, state, local and/or other taxes which the Company determines are
required to be withheld in accordance with applicable statutes and/or
regulations from time to time in effect.
5. Mutual Non-Disparagement. Neither the Executive nor the Company
will make or authorize any public statement disparaging the other in its or his
business interests and affairs. Notwithstanding the foregoing, neither party
shall be (i) required to make any statement which it or he believes to be false
or inaccurate, or (ii) restricted in connection with any litigation,
arbitration or similar proceeding or with respect to its response to any legal
process. The provisions of this Section shall survive the termination of the
Executive's employment, irrespective of the reason therefor.
6. Resignation.
(a) In the event a Change of Control shall occur during the Term of
Employment at a time when the Executive is an employee of the Company,
and the Executive within 10 business days after first receiving
notice of the Change of Control tenders a letter of resignation
specifying such Change of Control, (such circumstances being referred
to as "Resignation for Good Cause", whether or not the Executive
shall be an employee of the Company during the period between the
Change of Control and the tender of such letter) the Company shall
pay the Executive (v) $320,000 per annum for three years, payable in
accordance with the regular executive payroll practices of the
Company, plus (w) if the federal excise tax pursuant to Section 280G
of the Internal Revenue Code or any successor provision on "golden
parachute" payments applies to the payment made pursuant to clause
(v) of this sentence, an amount equal to the excise tax incurred plus
(x) an amount equal to the income tax at the highest federal and
state marginal rates for a married man filing a joint return with
respect to the payment made pursuant to clause (w) of this sentence,
plus (y) an amount equal to the federal excise tax on "golden
parachute" payments with respect to the payment, if any, made
pursuant to clause (x) of this sentence plus (z) an amount equal to
the income tax at the highest federal and state marginal rates for a
married man filing a joint return with respect to the payment made
pursuant to clause (y) of this sentence (collectively, "Severance
Pay"). In addition, the Executive shall be entitled to:
(i) any compensation earned but not yet paid at the time the
letter of resignation is tendered;
(ii) a pro rata performance bonus for the season in which
employment is terminated determined and payable on the
basis of the number
<PAGE> 6
of days worked during the season and the bonus
percentage established for the season in accordance with
past practices;
(iii) any accrued vacation pay;
(iv) reimbursement for expenses incurred, but not paid prior
to such termination of employment;
(v) continuation at the Company's expense of group benefits
at the level in effect on the date of termination of
employment and continuation at the Company's expense of
the individual life policy and the individual disability
policy covering the Executive, in each case through the
remainder of the Term of Employment (or the Company
shall provide the economic equivalent thereof); and
(vi) conversion of the individual life policy and the
individual disability policy to personal policies, with
the premiums paid solely by him, at the end of the Term
of Employment. Notice of Change of Control shall be
given pursuant to Section 13, provided, however, that
the Executive, in his discretion, may accept as notice
any filing with the Securities and Exchange Commission
of a report setting forth facts constituting Change of
Control.
(b) In the event of Resignation for Good Cause the Executive shall be
under no obligation to seek other employment and there shall be no
offset against any amounts due the Executive under this Agreement on
account of any remuneration attributable to any subsequent employment
that the Executive may obtain (any amounts due under Section 6(a) are
in the nature of severance payments, or liquidated damages, or both,
and are not in the nature of a penalty).
(c) The Executive shall accept the payments referred to in this Section 6
in full discharge and release of the Company of and from any further
payment obligations under this Agreement or any other contract
between the parties hereto relating to employment except obligations
under Sections 7 and 8.
(d) The termination of the Executive's employment by the Company during
the period beginning with a Change of Control and ending 10 business
days after the Company gives notice of the occurrence of Change of
Control shall not affect the Executive's rights under this Agreement.
<PAGE> 7
7. Indemnification.
(a) The Company shall indemnify the Executive as provided in the By-laws.
The provisions of this paragraph shall survive the termination of the
Executive's employment.
(b) In the event of payment of indemnities under this Agreement, the
Company shall be subrogated to the extent of such payment to all of
the rights of recovery of the Executive.
(c) The Company shall use reasonable efforts to obtain and maintain a
directors' and officers' liability insurance policy covering the
Executive.
8. Enforcement.
If any amount owing to the Executive under this Agreement is not paid
by the Company, or on its behalf, within 15 days after a written claim or
request for payment has been received by the Company, the Executive may at any
time thereafter bring suit against the Company to recover the unpaid amount
and, if successful in whole or in part, the Executive shall be entitled to be
paid also the expenses of prosecuting such suit, including reasonable
attorneys' fees.
9. Entire Agreement.
This Agreement and the By-laws embody the entire agreement of the
parties with respect to the Executive's resignation from the Company's employ
by reason of a Change of Control. This Agreement supplements any employment
agreement between the parties hereto. In the event of any inconsistency
between the terms of this Agreement and the terms of any employment agreement,
the terms of this Agreement shall prevail and be enforced. This Agreement may
not be changed or terminated orally but only by an agreement in writing signed
by the parties hereto. Any Severance Pay otherwise due hereunder shall be
reduced dollar-for-dollar by the amount of the severance pay received by the
Executive from the Company pursuant to the provisions of any other contract
between the parties hereto.
10. Waiver.
The waiver by the Company of breach of any provision of this
Agreement by the Executive shall not operate or be construed as a waiver of any
subsequent breach by him. The waiver by the Executive of a breach of any
provision of this Agreement by the Company shall not operate or be construed
as a waiver of any subsequent breach by the Company.
<PAGE> 8
11. Governing Law.
This Agreement shall be subject to, and governed by, the laws of the
State of New York.
12. Assignability.
The obligations of the Executive may not be delegated and, except as
to the designation of beneficiaries of insurance benefits, the Executive may
not, without the Company's written consent thereto, assign, transfer, convey,
pledge, encumber, hypothecate or otherwise dispose of this Agreement or any
interest herein. Any such attempted delegation or disposition shall be null
and void ab initio and without effect. This Agreement and all of the Company's
rights and obligations hereunder may be assigned or transferred by the Company
to, and shall be binding upon and inure to the benefit of, any subsidiary of
the Company or any successor to the Company, but any such assignment shall not
relieve the assigning party of any of its obligations hereunder. The term
"successor" shall mean, with respect to the Company or any of its subsidiaries,
any corporation or other business entity which, by merger, consolidation,
purchase of the assets, or otherwise, acquires all or substantially all of the
assets of the Company or such subsidiary.
13. Notices.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be delivered personally or sent by registered or
certified mail, return receipt requested, to the other party hereto at his or
its address as set forth at the beginning of this Agreement and, in the case of
the Company, addressed to the attention of its Secretary. Either party may
change the address to which notices, requests, demands and other communications
hereunder shall be sent by sending written notice of such change of address to
the other party.
14. Severability.
If any provision of this Agreement as applied to either party or to
any circumstances shall be adjudged by a court of competent jurisdiction to be
void or unenforceable, the same shall in no way affect any other provision of
this Agreement or the validity or enforceability of this Agreement.
15. Section Headings.
The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
<PAGE> 9
16. Counterparts.
This Agreement may be executed in one or more counterparts, which
shall, collectively and separately, constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
in multiple originals.
UNITED RETAIL GROUP, INC.
By: /s/RAPHAEL BENAROYA
-----------------------------
Name: Raphael Benaroya
Title: Chairman of the Board
/s/GEORGE R. REMETA
------------------------------
George R. Remeta
<PAGE> 1
PLEASE NOTE: Portions of this exhibit have been omitted and filed separately
with the Securities and Exchange Commission with a request for confidential
treatment. The portions omitted are marked by asterisks (**).
EXHIBIT 10.3
TERM SHEET AGREEMENT
(Amended and Restated)
TO: The Avenue, Inc.
FROM: American Licensing Group, Inc. ("ALG", also known as Oldco, Inc.)
RE: Renewal of Sublicense for Gloria Vanderbilt mark on hosiery
Term Sheet
(A) Mark: The following Gloria Vanderbilt marks:
(1) GLORIA VANDERBILT (in plain block letters or in script)
[N.B. does not include the right to use "Gloria" or "Vanderbilt"
individually unless Licensor grants specific approval].
(2) Swan logo
(3) Interlocking GV logo
(B) Licensed Items: Women's hosiery (including, without limitation,
pantyhose, knee highs, support hose and socks in all fabrications and
sizes).
(C) Territory: USA, its territories and possessions (including Puerto Rico)
(D) Term: Your sublicense is renewed for the Annual Period beginning on
January 1, 1996 and ending December 31, 1996. Thereafter, subject to
achievement of the Minimum Sales Levels set forth below (and compliance
with the License and the Sublicense), the Sublicense may be renewed by you
for up to 14 consecutive Annual Periods from January 1, 1997 through
December 31, 2010. Your sublicense will be deemed automatically renewed
by you for each such Annual Period unless you deliver to ALG, at least 90
days prior to the commencement of such Annual Period, notice in writing of
your election not to renew.
(E) Royalty: The percentage royalty payable by you for Net Sales made by you
for each Annual Period on or after January 1, 1996 shall be as follows:
<TABLE>
<CAPTION>
Net Sales for the Annual Period Royalty Rate
------------------------------- ------------
<S> <C>
From $0 to $**,000,000 **%
-- --
From $**,000,000 to $**,000,000 **%
-- -- --
From $**,000,000 to $**,000,000 **%
-- -- --
From $**,000,000 to $**,000,000 **%
-- -- --
From $**,000,000 and above **%
-- --
</TABLE>
"Net Sales" means the retail sale price actually paid for the Licensed
Items by retail customers less any sales or use tax, shipping charges
separately itemized to customer and returns actually
<PAGE> 2
allowed and actually received. No deduction for other discounts,
uncollectible accounts or costs incurred.
(F) Minimum Annual Sales and Guaranteed Minimum Royalties: Your Minimum
Annual Sales and Guaranteed Minimum Royalties for each Annual Period will
be as follows:
<TABLE>
<CAPTION>
Annual Period Minimum Sales Guaranteed
Ended December 31 Level Minimum Royalties
----------------- ----- -----------------
<S> <C> <C>
1996 $*****,000 $******
----- ------
1997 $*****,000 $******
----- ------
1998 $*****,000 $******
----- ------
1999 $*****,000 $******
----- ------
2000 $*****,000 $******
----- ------
2001 $*****,000 $******
----- ------
2002 $*****,000 $******
----- ------
2003 $*****,000 $******
----- ------
2004 $*****,000 $******
----- ------
2005 $*****,000 $******
----- ------
2006 $*****,000 $******
----- ------
2007 $*****,000 $******
----- ------
2008 $*****,000 $******
----- ------
2009 $*****,000 $******
----- ------
2010 $*****,000 $******
----- ------
</TABLE>
(G) Non-Exclusive: The License is non-exclusive.
(H) Guaranteed Minimum Royalty Payments: One quarter of the Guaranteed
Minimum Royalties due on the first day of each calendar quarter of an
annual period and credited against percentage royalties for that annual
period. As soon as the sum of royalty payments (both minimum guaranteed
and percentage royalty payments) for any annual period exceed the
Guaranteed Minimum Royalty payments for the entire annual period, no
further guaranteed minimum payment is required for that annual period.
Percentage Royalty Payments and Royalty Statement Schedule: Percentage
royalties to be paid quarterly. Each percentage royalty payment must be
made to ALG within 20 days after the end of the quarter. Your quarterly
sales report will also continue to be due ALG 20 days after the end of the
quarter and must accompany your royalty payment. Thus, percentage royalty
payments and royalty reports must be delivered by you to ALG as follows:
- by April 20 (for quarter ending March 31)
- by July 20 (for quarter ending June 30)
- by October 20 (for quarter ending Sept. 30)
- by January 20 (for quarter ending Dec. 31)
Annual Administration Fee: $***** annual administration fee due ALG in
advance on January 1 of each year through December 31, 1999; $***** annual
administration fee due ALG in advance on January 1, 2000 and January 1 of
each year thereafter.
<PAGE> 3
Direct Expenses: Includes accounting, legal, postage, telephone and like
expenses directly expended on your behalf and shall be billed directly.
Expenses will be allocated, as appropriate, among the sublicensees under
the Gloria Vanderbilt hosiery license.
(I) Interest: Late payments bear interest at *% above the prime rate in
effect from time to time at Chemical Bank, New York, New York.
(J) Resale Restrictions: No sales for export from the U.S.
No wholesale sales, except, in the event that you have manufactured or
acquired Licensed Items in excess of your needs, you may sell or dispose
of them to any of the wholesalers or retailers set forth below, provided
you satisfy each of the following conditions:
(1) Before selling or disposing of the overstocks of Licensed Items at
wholesale:
- you must give notice to ALG of the Licensed Items, the quantity to
be sold, and the lowest price at which to be sold to a retailer or
wholesaler.
- ALG then gives that notice to Licensor.
- Licensor has the option for three business days to purchase those
Licensed Items at that price.
(2) The only wholesalers or retailers to whom you are permitted to sell
such overstocks (if Licensor does not exercise the option to purchase
such overstocks) are listed below:
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(3) The aggregate number of units of Licensed Items which you are
permitted to dispose during an Annual Period through the wholesalers
and retailers listed in subparagraph (2) above, must not exceed 10
percent of the aggregate number of units of Licensed Items sold by
you at retail to your retail customers.
(4) No advertisement by you for sale of Licensed Items to wholesalers or
other retailers.
(5) You pay to ALG percentage royalties of ** percent of the Net Sales
Price, meaning the actual wholesale price actually paid to you by
such wholesaler or retailer, less sales tax and use tax, shipping
charges separately itemized to such wholesaler or retailer, and
returns actually allowed and actually received.
(K) Approval Submissions: Licensor's consent with respect to samples,
packaging, labeling, or advertising is deemed given unless disapproved in
writing within five business days of delivery of sufficient samples to
Licensor to review. All approvals must be sought through ALG. ALG will
make the submission to Licensor for approval and will inform you of
Licensor's response.
<PAGE> 4
Except as expressly modified or amended herein, the Amended and Restated
Sublicense Agreement dated as of April 30, 1989 by and between American
Licensing Group, Inc. as Licensee, and Sizes Unlimited, Inc., (the name of
which has been changed to United Retail, Inc.) as Sublicensee, and the "Term
Sheet Agreement" between Licensee and Sublicensee dated as of May 4, 1989 are
ratified and affirmed in all respects, it being acknowledged and agreed that
The Avenue, Inc. has become the Sublicensee and assumed all duties and
obligations of the Sublicensee thereunder, and that The Avenue, Inc. may
sub-sublicense its rights, duties, and obligations to one or more affiliates of
United Retail Group, Inc.
To acknowledge your agreement to the foregoing, please sign, date, and
return to us a copy of this agreement.
AMERICAN LICENSING GROUP, INC.
By: AMERICAN LICENSING GROUP, L.P.
------------------------------
By: RB, Inc.
--------
By: Raphael Benaroya
----------------
Title: Managing Director
-----------------------
AGREED TO AND ACCEPTED BY:
THE AVENUE, INC.
By: John Garniewski, Jr.
---------------------------------
Title: Vice President
--------------------------------
Dated: As of December 29, 1995
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