<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 2, 1998
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 00019774
United Retail Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 51 0303670
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
365 West Passaic Street, Rochelle Park, NJ 07662
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 845-0880
_____________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
<PAGE> 2
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "1934 Act") during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. YES X NO ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the 1934 Act
subsequent to the distribution of securities under a plan confirmed by a court.
YES ____ NO ____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
As of May 2, 1998, 13,085,388 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 2, JANUARY 31, MAY 3,
1998 1998 1997
--------- --------- ---------
ASSETS (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 31,221 $ 31,122 $ 11,997
Income taxes receivable -- -- 231
Accounts receivable 1,625 571 1,627
Inventory 48,326 38,003 46,638
Prepaid rents 4,007 3,999 4,438
Other prepaid expenses 2,757 2,607 2,720
--------- --------- ---------
Total current assets 87,936 76,302 67,651
Property and equipment, net 47,221 48,231 53,088
Deferred charges and other intangible assets,
net of accumulated amortization of $1,878, $1,784
and $1,522 6,964 7,058 6,971
Deferred income taxes 971 2,685 --
Other assets 375 451 711
--------- --------- ---------
Total assets $ 143,467 $ 134,727 $ 128,421
========= ========= =========
LIABILITIES
Current liabilities:
Current portion of distribution center financing $ 1,072 $ 1,052 $ 992
Accounts payable, trade 17,182 12,596 16,474
Accrued expenses 20,808 18,779 13,335
--------- --------- ---------
Total current liabilities 39,062 32,427 30,801
Distribution center financing 10,033 10,308 11,104
Other long-term liabilities 6,749 6,948 7,892
--------- --------- ---------
Total liabilities 55,844 49,683 49,797
--------- --------- ---------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; authorized
1,000,000; none issued
Common stock, $.001 par value; authorized 30,000,000; issued 13,759,100,
12,680,375, 12,680,375; outstanding 13,085,388,
12,190,375, 12,190,375 14 13 13
Additional paid-in capital 77,345 78,259 78,259
Retained earnings 11,924 7,354 934
Treasury stock (673,712, 490,000, 490,000
shares) at cost (1,660) (582) (582)
--------- --------- ---------
Total stockholders' equity 87,623 85,044 78,624
--------- --------- ---------
Total liabilities and stockholders' equity $ 143,467 $ 134,727 $ 128,421
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE> 4
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------------------
MAY 2, MAY 3,
1998 1997
------------ ------------
<S> <C> <C>
Net sales $ 94,943 $ 87,022
Cost of goods sold, including
buying and occupancy costs 67,823 68,815
------------ ------------
Gross profit 27,120 18,207
General, administrative and
store operating expenses 19,907 19,680
------------ ------------
Operating income (loss) 7,213 (1,473)
Interest (income) expense, net (140) 102
------------ ------------
Income (loss) before income taxes 7,353 (1,575)
Provision for income taxes 2,783 14
------------ ------------
Net income (loss) $ 4,570 $ (1,589)
============ ============
Net income (loss) per share
Basic $ 0.35 $ (0.13)
============ ============
Diluted $ 0.34 $ (0.13)
============ ============
Weighted average number of
shares outstanding
Basic 12,957,041 12,190,375
Common stock equivalents
(stock options) 537,045 --
------------ ------------
Diluted 13,494,086 12,190,375
============ ============
</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 2, MAY 3,
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 4,570 $ (1,589)
Adjustments to reconcile net income (loss) to net cash
provided from (used in) operating activities:
Depreciation and amortization of property and equipment 1,907 2,325
Amortization of deferred charges and other
intangible assets 88 59
Loss on disposal of assets 17 50
Benefit from deferred income taxes 1,714 --
Deferred lease assumption revenue amortization (126) (129)
Changes in operating assets and liabilities:
Accounts receivable (1,054) (330)
Income taxes 619 (2)
Inventory (10,323) (5,860)
Accounts payable and accrued expenses 5,972 (29)
Prepaid expenses (158) (17)
Other assets and liabilities 3 16
-------- --------
Net Cash Provided from (Used in) Operating Activities 3,229 (5,506)
-------- --------
INVESTING ACTIVITIES:
Capital expenditures (914) (571)
Deferred payment for property and equipment 30 47
-------- --------
Net Cash Used for Investing Activities (884) (524)
-------- --------
FINANCING ACTIVITIES:
Repayments of long-term debt (255) (237)
Issuance of loans to officers (1,993) --
Exercise of stock options 2 --
-------- --------
Net Cash Used in Financing Activities (2,246) (237)
-------- --------
Net increase (decrease) in cash and cash equivalents 99 (6,267)
Cash and cash equivalents, beginning of period 31,122 18,264
-------- --------
Cash and cash equivalents, end of period $ 31,221 $ 11,997
======== ========
</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 balances and transactions have been eliminated.
The consolidated financial statements as of and for the thirteen weeks
ended May 2, 1998 and May 3, 1997 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 1997 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.
2. NET INCOME (LOSS) PER SHARE
At the end of fiscal 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128 "Earnings Per Share". Basic
per share data has been computed based on the weighted average number of shares
of common stock outstanding. Diluted per share data has been computed on the
basic plus the dilution of stock options. Shares issuable upon the exercise of
stock options have not been included in the diluted earnings per share
computation for the thirteen weeks ended May 3, 1997 because the effect of such
would be anti-dilutive.
<PAGE> 7
3. FINANCING ARRANGEMENTS
In 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.
In 1993, the Company executed a ten-year $7.0 million note bearing
interest at 7.3%. Interest and principal are payable in equal monthly
installments beginning November 1993. The note is collateralized by the material
handling equipment in the distribution center.
The Company and United Retail Incorporated, its subsidiary,
(collectively, the "Companies") are parties to a Financing Agreement, dated
August 15, 1997, as amended September 15, 1997 (the "Financing Agreement"), with
The CIT Group/Business Credit, Inc.("CIT"). The Financing Agreement provides a
revolving line of credit for a term of three years in the aggregate amount of
$40 million for the Companies, subject to availability of credit according to a
borrowing base computation. The line of credit may be used on a revolving basis
by either of the Companies to support trade letters of credit and standby
letters of credit and to finance loans.
The Companies are required to maintain unused at all times combined
availability of at least $5 million. Except for the maintenance of a minimum
availability of $5 million and a limit on capital expenditures, the Financing
Agreement does not contain any financial covenants.
In the event a loan is made to one of the Companies, interest is
payable monthly based on a 360-day year at the prime rate or at two percent plus
the LIBOR rate on a per annum basis, at the borrower's option.
The line of credit is secured by a security interest in inventory and
proceeds and by the balance on deposit from time to time in an account that has
been pledged to the lenders.
At May 2, 1998, the combined availability of the Companies was $17.5
million, no balance was in the pledged account, the aggregate outstanding amount
of letters of credit arranged by CIT was $20.3 million and no loan had been
drawn down. The Company's cash on hand was unrestricted.
<PAGE> 8
4. INCOME TAXES
The provision for income taxes consists of (dollars in
thousands):
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------
May 2, May 3,
1998 1997
------ ------
<S> <C> <C>
Currently payable:
Federal $1,012 $ --
State 56 14
------ ------
1,068 14
------ ------
Deferred:
Federal 1,411 --
State 304 --
------ ------
1,715 --
------ ------
$2,783 $ 14
====== ======
</TABLE>
Reconciliation of the 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 2, 1998 May 3, 1997
----------------- -------------------
<S> <C> <C> <C> <C>
Tax at Federal rate $ 2,573 35.0% $ (536) (34.0%)
State income taxes, net of 234 3.2% (36) (2.2%)
federal benefit
Goodwill amortization 18 0.2% 18 1.1%
Other (42) (0.6%) 4 0.2%
Valuation Allowance 0 0.0% 564 35.8%
------- ---- ------- ----
$ 2,783 37.8% $ 14 0.9%
======= ==== ======= ====
</TABLE>
<PAGE> 9
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 $ 184
Accruals and reserves 1,897
Compensation 17
NOL and credit carryforwards 1,439
------
3,537
------
Liabilities:
Depreciation 2,566
------
2,566
------
Net deferred tax asset $ 971
======
</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 carryforward period available under the tax
law at the time of the tax deduction. Based on management's assessment, it is
more likely than not that the net deferred tax asset will be realized through
future taxable earnings or available carrybacks.
At May 2, 1998, the Company has pre-acquisition net operating loss
carryforwards, aggregating approximately $0.5 million, available to reduce
future taxable income in certain states, expiring through 2004.
The Company's federal income tax returns for fiscal 1994, fiscal 1995
and fiscal 1996 are being audited by the Internal Revenue Service. Management
believes that the results of the audits will not have a material adverse effect
on the Company's financial condition or results of operations.
5. ADVANCES TO OFFICERS
Advances were made on February 13, 1998 in the amount of $1.6 million
to Raphael Benaroya, the Company's Chairman of the Board, President and Chief
Executive Officer, and $0.2 million to George R. Remeta, the Company's Vice
Chairman and Chief Financial Officer. The purpose of the advances was to finance
payment of income taxes incurred in connection with their exercise of stock
options. Interest is payable annually in cash at the prime rate. The advances
have a term of four years subject to acceleration under certain circumstances
and to call by the Company after two years with respect to half of the principal
amount. Payment of the advances is secured by a pledge of the shares of the
Company's Common Stock issued upon the option exercises in the amount of 777,925
shares issued to Mr. Benaroya and 116,888 shares issued to Mr. Remeta. Each
advance is a full recourse obligation of the borrower.
<PAGE> 10
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 2, May 3,
1998 1997
----- -----
<S> <C> <C>
Cash interest:
Interest (income) expense,
net per statements of
operations $(140) $ 102
Less: Non-cash
interest expense (11) (15)
Net cash interest (income)
expense, including interest
income of $438 and $177 $(151) $ 87
===== =====
Net income tax
payments $ 449 $ 16
===== =====
</TABLE>
Non-cash financing activities include the exercise of 1,078,125 stock
options in exchange for 183,512 shares of common stock.
7. CONTINGENCY FOOTNOTE
The Company is involved in legal actions and claims arising in the
ordinary course of business. Management believes (based on advice of legal
counsel) that such litigation and claims will not have a material effect on the
Company's financial condition or results of operations.
8. SUBSEQUENT EVENTS
In May 1998, the Company realized a capital gain of $3.1 million on the
sale of its minority equity interest in a privately held apparel design and
manufacturing firm for cash. The gain will be reported as non-operating income.
<PAGE> 11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FIRST QUARTER FISCAL 1998 VERSUS FIRST QUARTER FISCAL 1997
Net sales for the first quarter of Fiscal 1998 increased 9.1% from the
first quarter of Fiscal 1997, to $94.9 million from $87.0 million, principally
from an increase in average price. Average stores open decreased from 567 to 522
as underperforming stores were closed. (For the month of May 1998, net sales
increased 20.7% from May 1997, to $37.0 million from $30.6 million.) Comparable
store sales for the first quarter of Fiscal 1998 increased 15.0%. (For the month
of May 1998, comparable store sales increased 27.0%.) There is no assurance that
comparable store sales will continue to increase.
Gross profit increased by $8.9 million to $27.1 million in the first
quarter of Fiscal 1998 from $18.2 million in the first quarter of Fiscal 1997,
increasing as a percentage of net sales to 28.6% from 20.9%. The increase in
gross profit as a percentage of net sales was primarily attributable to an
increase in the merchandise margin rate and a decrease in buying and occupancy
costs as a percentage of net sales. (The merchandise margin rate increased
substantially in May 1998 compared with May 1997.) There is no assurance that
the merchandise margin rate will continue to increase.
General, administrative and store operating expenses were $19.9 million
in the first quarter of Fiscal 1998, compared to $19.7 million in the first
quarter of Fiscal 1997, principally as a result of increases in bonus
compensation and in insurance costs, partially offset by premiums received on
proprietary credit card purchases (see, "- Liquidity and Capital Resources"). As
a percentage of net sales, general, administrative and store operating expenses
decreased to 21.0% from 22.6%.
During the first quarter of Fiscal 1998, the Company had operating
income of $7.2 million (7.6% of sales), compared to an operating loss of $1.5
million in the first quarter of Fiscal 1997.
Net interest income was $0.1 million in the first quarter of Fiscal
1998 compared to net interest expense of $0.1 million in the first quarter of
Fiscal 1997, primarily from larger bank deposits.
The Company had a provision for income taxes of $2.8 million in the
first quarter of Fiscal 1998 and of $14,000 in the first quarter of Fiscal 1997.
The Company had net income of $4.6 million for the first quarter of
Fiscal 1998 compared with a net loss of $1.6 million in the first quarter of
Fiscal 1997. There is no assurance that the Company will continue to be
profitable.
<PAGE> 12
TREND IN TRANSACTIONS
The Company's average number of transactions per store declined in each
of the last five fiscal years. The cumulative adverse effect on net sales per
store has been material. (The average number of transactions per store in the
first quarter of Fiscal 1998 was slightly higher than in the first quarter of
Fiscal 1997 but there is no assurance that the annual average for Fiscal 1998
will be higher.)
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided from operating activities in the first quarter of
Fiscal 1998 was $3.2 million.
The Company's cash on hand was $31.2 million at May 2, 1998, $12.0
million at May 3, 1997 and $31.1 million at January 31, 1998.
Inventory increased to $48.3 million at May 2, 1998 from $46.6 million
at May 3, 1997 and $38.0 million at January 31, 1998. The Company's inventory
levels peak in early May and November/December. During Fiscal 1997, the highest
inventory level was $52.1 million.
Import purchases are made in U.S. dollars and are generally financed by
trade letters of credit. As of May 2, 1998, trade letters of credit for the
account of the Company were outstanding in the amount of $17.5 million. (A
standby letter of credit was also outstanding for $2.0 million as collateral for
obligations in the ordinary course of business under casualty insurance
policies.) Import purchases constituted approximately 48% of total purchases in
Fiscal 1997.
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.
United Retail Group, Inc. and United Retail Incorporated, its
subsidiary (collectively, the "Companies"), are parties to a Financing
Agreement, dated August 15, 1997, as amended September 15, 1997 (the "Financing
Agreement"), with The CIT Group/Business Credit, Inc. ("CIT"). The Financing
Agreement provides a revolving line of credit for a term of three years in the
aggregate amount of $40 million for the Companies, subject to availability of
credit as described in the following paragraphs. The line of credit may be used
on a revolving basis by either of the Companies to support trade letters of
credit and standby letters of credit and to finance loans.
Subject to the following paragraph, the availability of credit (within
the aggregate $40 million line of credit) to either of the Companies at any time
is the excess of its borrowing base over the sum of (x) the aggregate
outstanding amount of its letters of credit and its revolving loans, if any, and
(y) at CIT's
<PAGE> 13
option, the sum of (i) unpaid sales taxes, and (ii) up to $500,000 in total
liabilities of the Companies under permitted encumbrances (as defined in the
Financing Agreement). The borrowing base, as to either of the Companies, is the
sum of (x) a percentage of the book value of its eligible inventory (both on
hand and unfilled purchase orders financed with letters of credit), ranging from
60% to 65% depending on the season, and (y) the balance in an account in its
name that has been pledged to the lenders (a "Pledged Account"). (At May 2,
1998, the combined availability of the Companies was $17.5 million; no balance
was in a Pledged Account; no loan had been drawn down; and the Company's cash on
hand was unrestricted.)
The provisions of the preceding paragraph to the contrary
notwithstanding, the Companies are required to maintain unused at all times
combined availability of at least $5 million. Except for the maintenance of a
minimum availability of $5 million and a limit on capital expenditures, the
Financing Agreement does not contain any financial covenants.
In the event a revolving loan is made to one of the Companies, interest
is payable monthly based on a 360-day year at the prime rate or at two percent
plus the LIBOR rate on a per annum basis, at the borrower's option.
The line of credit is secured by a security interest in inventory and
proceeds and by the balance from time to time in the Pledged Account.
The Financing Agreement also includes certain restrictive covenants
that impose limitations (subject to certain exceptions) on the Companies with
respect to, among other things, making certain investments, declaring or paying
dividends, acquiring Common Stock or preferred stock of the Company, making
loans, engaging in certain transactions with affiliates, or consolidating,
merging or making acquisitions outside the ordinary course of business.
Purchases of Company merchandise made by customers with the Company's
proprietary credit cards were paid for daily at a discount by a bank through
November 30, 1997. Commencing December 1, 1997, however, the bank has paid a
premium, instead of taking a discount, on proprietary credit card purchases.
The Credit Plan Agreement between the Companies and the bank (the
"Credit Agreement") provides for the issuance of the Company's proprietary
credit cards by the bank and contains financial covenants that require that the
Company's (i) consolidated tangible net worth not be less than the sum of $32
million plus for each complete fiscal year ended after February 1, 1992 for
which net income has been positive, 50% of net income, and (ii) consolidated
fixed charges ratio for the four preceding fiscal quarters combined not be less
than 1.0:1.0.
The Companies terminated the Credit Agreement effective January 30,
1999 and entered into a contract with another bank to issue the Company's
proprietary credit cards after January 30, 1999 and to purchase from the first
bank the accounts receivable from credit card customers.
The Company believes that its cash on hand, the availability of credit
under the Financing Agreement and cash flows from operating activities,
including payments by the bank under the Credit Agreement, will be adequate to
meet anticipated working capital needs, including seasonal financing needs, for
the next 12 months. This paragraph constitutes forward-looking information under
the Reform Act and is subject to the uncertainties and other risk factors
referred to under the caption "Future Results."
In May 1998, the Company realized a capital gain of $3.1 million on the
sale of its minority equity interest in a privately held apparel design and
manufacturing firm for cash. The gain will be reported as non-operating income.
<PAGE> 14
STORES
The Company leased 521 retail stores at May 2, 1998, of which 302
stores were located in strip shopping centers, 196 stores were located in malls
and 23 stores were located in downtown shopping districts. Total retail square
footage was 2.1 million square feet compared to 2.2 million square feet at May
3, 1997.
The Company intends to pay the costs of opening new stores and
remodeling existing stores from its cash on hand. New stores and newly remodeled
stores will use the Avenue Plus trade name.
The preceding paragraph contains forward-looking information under the
Reform Act, which is subject to the uncertainties and other risk factors
referred to under the caption "Future Results".
TAX MATTERS
The Company's federal income tax returns for Fiscal 1994, Fiscal 1995
and Fiscal 1996 are being audited by the Internal Revenue Service. Management
believes that the results of the audits will not have a material adverse effect
on the Company's financial condition or results of operations.
COMPUTER SYSTEMS
The Company is modifying the applications software programs that are
essential to its operations to accommodate dates after 1999 and its vendor is
modifying the operating systems used by the Company. The cost of future
modifications is expected to be less than $1.0 million.
The Company has scheduled 268 projects to analyze and, if necessary,
modify applications software programs to ensure that all systems are Year 2000
compliant. As of May 2, 1998, 187 projects were completed, 33 projects were
underway and 48 projects were scheduled to begin later in Fiscal 1998. The
programs being modified are being installed as part of each project. Integrated
testing of all the Company's systems, including operating systems, is scheduled
to be completed in Fiscal 1998. There is no assurance, however, that integrated
testing will not reveal the need for further modifications.
The preceding paragraphs contain forward-looking information under the
Reform Act, which is subject to the uncertainties and other risk factors
referred to under the caption "Future Results."
FUTURE RESULTS
Future results could differ materially from those currently anticipated
by the Company due to (i) miscalculation of fashion trends, (ii) shifting
shopping patterns, both within the specialty store sector and in other channels
of distribution, (iii) extreme or unseasonable weather conditions, (iv)
imposition by the bank that now issues the Company's proprietary credit cards of
more onerous fees and finance charges to be paid by credit card customers (the
late fees charged to delinquent credit card customers were increased
substantially by the bank in February 1998), (v) inability of the computer links
between the Company and certain of its banks to accommodate dates after 1999,
(vi) economic downturns, weakness in overall consumer demand, and variations in
the demand for women's fashion apparel, (vii) imposition by vendors, or their
third-party factors, of more onerous payment terms for domestic merchandise
purchases, (viii) acceleration in the rate of business failures and inventory
liquidations in the specialty store sector of the women's apparel industry, (ix)
disruptions in the sourcing of merchandise abroad, including (a) political
instability and economic distress in South Asia, (b) China's claims to
sovereignty over Taiwan, (c) North Korea's claims to sovereignty over South
Korea, (d) exchange rate fluctuations, (e) trade sanctions or restrictions, (f)
changes in quota and duty regulations, (g) delays in shipping or (h) increased
costs of transportation, and (x) disruptions in the telecommunications, banking,
transportation and utilities industries caused by the inability of their systems
to accommodate dates after 1999.
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
The following options to purchase shares of the Company's common stock
were issued without registration under the Securities Act of 1933 (the
"Securities Act"):
<TABLE>
<CAPTION>
Number of
Date of Grant Class of Grantee Underlying Shares Exercise Price
<S> <C> <C> <C> <C>
5/21/98 Directors 20,000 $11.50 to $12.08
5/21/98 Officers 300,000 $6.3125
-------
Total: 320,000
=======
</TABLE>
The grantees were one non-employee director and two senior officers of
the Company.
Options become exercisable in five equal annual installments commencing
one year after the date of grant except for one grant of 17,000 options to a
director that becomes exercisable as to 11,000 shares after six months, an
additional 1,500 shares after one year and 1,500 shares annually thereafter.
The above grants were exempt from the registration provisions of the
Securities Act under Section 4(2) thereof because all the grantees are members
of the management of the issuer. Nevertheless, the Company intends to file a
registration statement with respect to the options before they become
exercisable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The sixth Annual Meeting of Stockholders (the "Meeting") was held
on May 21, 1998.
(c) The Meeting elected directors for terms ending at the seventh
Annual Meeting of Stockholders, as follows:
Name For Withhold Authority to Vote
- ---- --- --------------------------
Joseph A. Alutto 12,063,833 454,707
Raphael Benaroya 12,060,064 458,476
Russell Berrie 12,063,833 454,707
Joseph Ciechanover 12,052,833 465,707
Ilan Kaufthal 12,051,780 466,760
Vincent Langone 12,064,100 454,440
George R. Remeta 12,060,119 458,421
Richard W. Rubenstein 12,063,833 454,707
The grant of additional employee stock options to purchase a total of
300,000 shares of the Company's common stock at an exercise price of $6.3125 per
share was approved by a vote of 10,615,519 for, 1,851,256 against and 51,765
abstain at the Meeting.
<PAGE> 16
ITEM 6. EXHIBITS
The following exhibits are filed herewith:
Number Description
10.1* 1998 Stock Option Agreement, dated May 21,
1998, between the Corporation and Raphael
Benaroya
10.2* 1998 Stock Option Agreement, dated May 21,
1998, between the Corporation and George R.
Remeta
27 Financial Data Schedule
The following exhibits to the Corporation's Annual Report on
Form 10-K for the year ended January 31, 1998 are incorporated herein by
reference:
Number in Filing Description
4.1 Amended By-Laws of the Corporation
10.1 Restated Stockholders' Agreement, dated
December 23, 1992, between the Corporation
and certain of its stockholders and
Amendment No. 1, Amendment No. 2 and
Amendment No. 3 thereto
10.2 Private Label Credit Program Agreement,
dated January 27, 1998, between the
Corporation, United Retail Incorporated and
World Financial Network National Bank
(Confidential portions have been deleted and
filed separately with the Secretary of the
Commission)
10.4* Restated 1990 Stock Option Plan as of March
6, 1998
10.5* Restated 1990 Stock Option Plan as of May
28, 1996
10.6* Restated 1996 Stock Option Plan as of March
6, 1998
10.7* Restated 1989 Performance Option Plan as of
March 6, 1998
13 Sections of 1997 Annual Report to
Stockholders (including opinion of
Independent Public Accountants) that are
incorporated by reference in response to the
items of the Annual Report on Form 10-K
The following exhibit to the Corporation's Quarterly Report on
Form 10-Q for the period ended November 1, 1997 is incorporated herein by
reference:
Number in Filing Description
10.1 Amendment, dated September 15, 1997, to
Financing Agreement among the Corporation,
United Retail Incorporated and The CIT
Group/Business Credit, Inc. ("CIT")
The following exhibits to the Corporation's Quarterly Report
on Form 10-Q for the period ended August 2, 1997 are incorporated herein by
reference:
Number in Filing Description
10.1 Financing Agreement, dated August 15, 1997,
among the Corporation, United Retail
Incorporated and CIT
10.2* Amendment No. 1 to Restated Supplemental
Retirement Savings Plan
<PAGE> 17
The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the
period ended November 2, 1996 is incorporated herein by reference:
Number in Filing Description
10.1* Restated Supplemental Retirement Savings
Plan
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended May 4, 1996 are incorporated herein by reference:
Number in Filing Description
10.1* Severance Pay Agreement, dated May 28, 1996,
between the Corporation and Raphael Benaroya
10.2* Severance Pay Agreement, dated May 28, 1996,
between the Corporation and George R. Remeta
10.3 Amended and Restated Term Sheet Agreement
for Hosiery, dated as of December 29, 1995,
between The Avenue, Inc. and American
Licensing Group, Inc. (Confidential portions
have been deleted and filed separately with
the Secretary of the Commission)
The following exhibit to the Corporation's Current Report on Form 8-K, dated
March 22, 1996, is incorporated herein by reference:
Number in Filing Description
10.3* Employment Agreement, dated March 1, 1996,
between the Corporation and Kenneth P.
Carroll
The following exhibits to the Corporation's Amended Current Report on Form 8-KA,
dated May 22, 1995, are incorporated herein by reference:
Number in Filing Description
10.1 Amended and Restated Gloria Vanderbilt
Intimate Apparel Sublicense Agreement, dated
May 22, 1995, between United Retail
Incorporated and American Licensing Group
Limited Partnership ("ALGLP")
10.2 Gloria Vanderbilt Sleepwear Sublicense
Agreement, dated May 22, 1995, between
United Retail Incorporated and ALGLP
The following exhibits to the Corporation's Annual Report on Form 10-K for the
year ended January 28, 1995 are incorporated herein by reference:
Number in Filing Description
10.1* Incentive Compensation Program Summary
21 Subsidiaries of the Corporation
<PAGE> 18
The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the
period ended July 30, 1994 is incorporated herein by reference:
Number in Filing Description
10.2* Letter from the Corporation to Raphael
Benaroya and George R. Remeta, dated May 20,
1994, regarding their respective Restated
Employment Agreements, dated November 1,
1991
The following exhibits to the Corporation's amended Annual Report on Form 10-KA
for the year ended January 29, 1994 are incorporated herein by reference:
Number in Filing Description
10.3 Amendment, dated December 6, 1993, to Credit
Agreement between the Corporation and
Citibank
10.4 Term Sheet Agreement, dated as of May 4,
1993, with respect to Amended and Restated
Gloria Vanderbilt Hosiery Sublicense
Agreement
The following exhibits to the Corporation's Registration Statement on Form S-1
(Registration No. 33-44499), as amended, are incorporated herein by reference:
Number in Filing Description
3.1 Amended and Restated Certificate of
Incorporation of Registrant
4.1 Specimen Certificate for Common Stock of
Registrant
10.2.1 Software License Agreement, dated as of
April 30, 1989, between The Limited Stores,
Inc. and Sizes Unlimited, Inc. (now known as
United Retail Incorporated)
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)
10.12 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
10.33* 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
<PAGE> 19
10.43 Credit Plan Agreement, dated June 3, 1992,
among the Corporation, Sizes Unlimited, Inc.
and Citibank
-------------
(b) No Current Reports on Form 8-K were filed by the Corporation during
the fiscal quarter ended May 2, 1998.
<PAGE> 20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
(Registrant) UNITED RETAIL GROUP, INC.
By: /s/ GEORGE R. REMETA
George R. Remeta, Vice Chairman of the Board and Chief
Financial Officer - Authorized Signatory
By: /s/ JON GROSSMAN
Jon Grossman, Vice President - Finance and Chief
Accounting Officer
Date: June 5, 1998
<PAGE> 21
EXHIBIT INDEX
The following exhibits are filed herewith:
Number Description
10.1* 1998 Stock Option Agreement, dated May 21,
1998, between the Corporation and Raphael
Benaroya
10.2* 1998 Stock Option Agreement, dated May 21,
1998, between the Corporation and George R.
Remeta
27 Financial Data Schedule
The following exhibits to the Corporation's Annual Report on Form 10-K
for the year ended January 31, 1998 are incorporated herein by reference:
Number in Filing Description
4.1 Amended By-Laws of the Corporation
10.1 Restated Stockholders' Agreement, dated
December 23, 1992, between the Corporation
and certain of its stockholders and
Amendment No. 1, Amendment No. 2 and
Amendment No. 3 thereto
10.2 Private Label Credit Program Agreement,
dated January 27, 1998, between the
Corporation, United Retail Incorporated and
World Financial Network National Bank
(Confidential portions have been deleted and
filed separately with the Secretary of the
Commission)
10.4* Restated 1990 Stock Option Plan as of March
6, 1998
10.5* Restated 1990 Stock Option Plan as of May
28, 1996
10.6* Restated 1996 Stock Option Plan as of March
6, 1998
10.7* Restated 1989 Performance Option Plan as of
March 6, 1998
13 Sections of 1997 Annual Report to
Stockholders (including opinion of
Independent Public Accountants) that are
incorporated by reference in response to the
items of the Annual Report on Form 10-K
The following exhibit to the Corporation's Quarterly Report on Form
10-Q for the period ended November 1, 1997 is incorporated herein by reference:
Number in Filing Description
10.1 Amendment, dated September 15, 1997, to
Financing Agreement among the Corporation,
United Retail Incorporated and The CIT
Group/Business Credit, Inc. ("CIT")
The following exhibits to the Corporation's Quarterly Report on Form
10-Q for the period ended August 2, 1997 are incorporated herein by reference:
Number in Filing Description
10.1 Financing Agreement, dated August 15, 1997,
among the Corporation, United Retail
Incorporated and CIT
10.2* Amendment No. 1 to Restated Supplemental
Retirement Savings Plan
<PAGE> 22
The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the
period ended November 2, 1996 is incorporated herein by reference:
Number in Filing Description
10.1* Restated Supplemental Retirement Savings
Plan
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended May 4, 1996 are incorporated herein by reference:
Number in Filing Description
10.1* Severance Pay Agreement, dated May 28, 1996,
between the Corporation and Raphael Benaroya
10.2* Severance Pay Agreement, dated May 28, 1996,
between the Corporation and George R. Remeta
10.3 Amended and Restated Term Sheet Agreement
for Hosiery, dated as of December 29, 1995,
between The Avenue, Inc. and American
Licensing Group, Inc. (Confidential portions
have been deleted and filed separately with
the Secretary of the Commission)
The following exhibit to the Corporation's Current Report on Form 8-K, dated
March 22, 1996, is incorporated herein by reference:
Number in Filing Description
10.3* Employment Agreement, dated March 1, 1996,
between the Corporation and Kenneth P.
Carroll
The following exhibits to the Corporation's Amended Current Report on Form 8-KA,
dated May 22, 1995, are incorporated herein by reference:
Number in Filing Description
10.1 Amended and Restated Gloria Vanderbilt
Intimate Apparel Sublicense Agreement, dated
May 22, 1995, between United Retail
Incorporated and American Licensing Group
Limited Partnership ("ALGLP")
10.2 Gloria Vanderbilt Sleepwear Sublicense
Agreement, dated May 22, 1995, between
United Retail Incorporated and ALGLP
The following exhibits to the Corporation's Annual Report on Form 10-K for the
year ended January 28, 1995 are incorporated herein by reference:
Number in Filing Description
10.1* Incentive Compensation Program Summary
21 Subsidiaries of the Corporation
<PAGE> 23
The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the
period ended July 30, 1994 is incorporated herein by reference:
Number in Filing Description
10.2* Letter from the Corporation to Raphael
Benaroya and George R. Remeta, dated May 20,
1994, regarding their respective Restated
Employment Agreements, dated November 1,
1991
The following exhibits to the Corporation's amended Annual Report on Form 10-KA
for the year ended January 29, 1994 are incorporated herein by reference:
Number in Filing Description
10.3 Amendment, dated December 6, 1993, to Credit
Agreement between the Corporation and
Citibank
10.4 Term Sheet Agreement, dated as of May 4,
1993, with respect to Amended and Restated
Gloria Vanderbilt Hosiery Sublicense
Agreement
The following exhibits to the Corporation's Registration Statement on Form S-1
(Registration No. 33-44499), as amended, are incorporated herein by reference:
Number in Filing Description
3.1 Amended and Restated Certificate of
Incorporation of Registrant
4.1 Specimen Certificate for Common Stock of
Registrant
10.2.1 Software License Agreement, dated as of
April 30, 1989, between The Limited Stores,
Inc. and Sizes Unlimited, Inc. (now known as
United Retail Incorporated)
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)
10.12 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
10.33* 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
<PAGE> 24
10.43 Credit Plan Agreement, dated June 3, 1992,
among the Corporation, Sizes Unlimited, Inc.
and Citibank
-----------------
*A compensatory plan for the benefit of the Corporation's management or
a management contract.
<PAGE> 1
EXHIBIT 10.1
THIS AGREEMENT MUST BE RETURNED TO THE COMPANY IN THE EVENT THAT THE OPTION
GRANTED HEREUNDER IS EXERCISED IN WHOLE OR IN PART.
1998 STOCK OPTION AGREEMENT
This 1998 STOCK OPTION AGREEMENT, dated May 21, 1998, between RAPHAEL BENAROYA,
residing at 179 Lincoln Street, Englewood, New Jersey 07631 (the "Optionee"),
and UNITED RETAIL GROUP, INC., with offices at 365 West Passaic Street, Rochelle
Park, New Jersey 07662 (the "Company").
WHEREAS, the Company desires to attract and retain the best available associates
and to provide long range inducements for them to remain associated with the
Company; and
WHEREAS, on May 21, 1998, the stockholders of the Company authorized the
execution and delivery of this Agreement by the Company;
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. DEFINITIONS. The following terms have the following meanings when
used in this Agreement, in both singular and plural forms:
"ASSIGNEE" means a Charity or a member of the immediate family of the Optionee,
to whom the Optionee shall have assigned one or more Options.
"ASSOCIATE" means a full time employee of the Company.
"CHANGE IN CONTROL" means (a) the acquisition after the Date of Grant by any
person (defined for the purposes of this subsection to mean any person within
the meaning of Section 13(d) of the Securities Exchange Act of 1934 (the
"Exchange Act")), other than the Company, the Chief Executive Officer of the
Company, or an employee benefit plan created by the Board of Directors of the
Company 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 ("SEC") 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 20% 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, if such person acquired
such beneficial ownership without the prior consent of the Board of Directors of
the Company; (b) 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 (c) the merger or consolidation with or
transfer of substantially all of the assets of the Company to another person if
the Board of Directors does not adopt a resolution,
<PAGE> 2
before the Company enters into any agreement for such merger, consolidation or
transfer, determining that it is not a Change in Control.
"CHARITY" means a public charity or a Code Section 501(c) private foundation
meeting the requirements of Code Section 170(c).
"CODE" means the Internal Revenue Code of 1986, as now in effect or hereafter
amended and as now or hereafter interpreted, construed and applied by
regulations, rulings and cases.
"COMMITTEE" means (a) the members of the Compensation Committee of the Board of
Directors of the Company who are non-employee directors within the meaning of
SEC Rule 16b-3(b)(3)(i), who, if they are fewer than all the members, shall
constitute an ad hoc committee of the Board of Directors, or (b) if the
Compensation Committee has fewer than two members who are such non-employee
directors, such other committee of the Board of Directors of the Company having
at least two members who are such non-employee directors as may be designated
from time to time by the Board of Directors of the Company, provided, however,
that if any such committee is not composed exclusively of such non-employee
directors, the Committee will consist only of those members who are such
non-employee directors.
"DATE OF GRANT" means February 15, 1998.
"DISABILITY" means a disability as defined under the Company's long-term
disability benefits plan in effect on the Date of Grant.
"HOLDER" means the person who is, at the time of reference, entitled to exercise
an Option.
"INCENTIVE OPTION" means an Option which meets the requirements of Section 422
of the Code.
"NONINCENTIVE OPTION" means an Option which is not an Incentive Option.
"NOTICE OF EXERCISE" means a notice of exercise of any Option in a form
determined by the Committee.
"OPTION" means any right to purchase Shares granted under this Agreement.
"OPTION PRICE" means $6.3125 per Share, as adjusted pursuant to Section 7.1.2.
"SHARES" means shares of Common Stock, with par value equal to $.001 per share,
of the Company, as adjusted pursuant to Section 7.1.1.
"TAX PAYMENT LOAN GUARANTY" shall mean a guaranty of payment made by the Company
in the amount and under the circumstances described in Section 4.
2
<PAGE> 3
"TERMINATION" means the termination of the Optionee's relationship with the
Company as an Associate, provided, however, that absence from employment with
the Company for a reason or purpose and for a period of time approved by the
Committee, in its sole discretion, shall not for the period of such absence be
deemed, solely because of such absence, to constitute Termination.
"VALUE" means (a) if the Shares are listed or admitted to trading on a national
securities exchange (including the National Market System of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ")), the
closing price of Shares on the principal securities exchange on which the Shares
are listed or admitted to trading on the day prior to the date of determination,
or if no closing price can be determined for the date of determination, the most
recent date for which such price can reasonably be ascertained, or (b) if the
Shares are not listed or admitted to trading on a national securities exchange
but are publicly traded, the mean between the representative bid and asked
prices of the Shares in the over-the-counter market at the closing of the day
prior to the date of determination or the most recent such bid and asked prices
then available, as reported by NASDAQ or if the Shares are not then quoted by
NASDAQ as furnished by any market maker selected from time to time by the
Company for that purpose, or (c) if neither (a) nor (b) is applicable, the fair
market value on the applicable date as determined by the Committee in good faith
using factors the Committee deems to be relevant including but not limited to
any sale of Shares to an independent third party.
SECTION 2. GRANT.
2.1. GRANT. The Optionee shall have the right from time to time until
February 15, 2008 to purchase a total of 200,000 Shares at the Option Price,
subject to the following terms and conditions.
2.2. TERMS.
2.2.1. The Option is a Nonincentive Option.
2.2.2. The Option will become exercisable as to 40,000 Shares
on the completion of the first full year of employment after the Date of Grant
and as to an additional 40,000 Shares on the completion of each full year of
employment thereafter until the entire 200,000 Shares are exercisable.
2.2.3. Notwithstanding Section 2.2.2 but subject to Section
3.2, the Option will become immediately exercisable as to 100% of the Shares
subject to the Option upon (a) a Change in Control or (b) the Optionee's death
or Disability, provided, however, that the Committee within 90 days after
Termination for a reason other than death or Disability may make the Option
immediately exercisable as to 100% of the Shares subject to the Option.
2.2.4. The Option will lapse on the earliest of (a) the date
10 years and one day after the Date of Grant, (b) the date one year after the
Termination if the Termination is due to
3
<PAGE> 4
death or Disability or if the Optionee dies within 90 days of Termination, or
(c) the date 90 days after Termination if the Termination is for any reason
other than death or Disability, provided, however, that the Committee within 90
days after Termination may defer the lapse of the Option to the date 10 years
and one day after the Date of Grant.
2.2.5. If the Optionee shall so direct at least 60 days prior
to the date of exercise, either (i) the Shares issued upon exercise of the
Option shall be issued and registered on the Company's stockholder list as
follows: the number of Shares having a Value on the date of exercise equal to
the exercise price paid in connection with the exercise shall be issued to and
registered in the name of the Optionee and the remainder of the Shares shall be
issued to and registered in the name of the trustee under the Company's
Supplemental Retirement Savings Plan, or (ii) the number of Shares otherwise
issuable upon exercise of the Option shall be reduced by the number of Shares
having a Value on the date of exercise equal in the aggregate to the exercise
price of the gross number of Options and the net number of Shares after such
reduction shall be issued to and registered in the name of the trustee under the
Company's Supplemental Retirement Savings Plan.
SECTION 3. RESTRICTIONS.
3.1. REGULATORY COMPLIANCE. No Shares will be issued unless and until
all applicable requirements imposed by federal and state securities laws and by
any stock exchanges or NASDAQ market upon which the Shares may be listed have
been fully met.
3.2. SIX-MONTH RULE. Anything in this Agreement to the contrary
notwithstanding, the Option will not be exercisable within six months of the
Date of Grant except in the case of the Optionee's death.
SECTION 4. TAX PAYMENT LOAN GUARANTY. The Committee will have authority on the
exercise of the Option to authorize an unconditional guaranty of payment by the
Company of a full recourse loan on terms acceptable to the Committee obtained by
the Optionee from a commercial bank or a registered broker-dealer for the
exclusive purpose of paying personal income or excise taxes incurred as a result
of such exercise. Loan guaranties will be issued if the Committee, in its sole
discretion, determines them to be appropriate and in the best interests of the
Company to assist in the payment of income and excise taxes incurred on exercise
of the Option.
SECTION 5. EXERCISE OF OPTION.
5.1. NOTICE OF EXERCISE. The Option may be exercised only by delivery
to the Vice President-Finance or such other person designated by the Committee
of this Agreement, a Notice of Exercise and payment under Section 5.2 for the
Shares and, if the Holder is an Assignee, an instrument of assignment signed by
the Optionee. Except as otherwise specifically provided, an Option shall be
exercisable during the Optionee's lifetime only by the Optionee or his Assignee.
4
<PAGE> 5
5.2. DELIVERIES ON EXERCISE.
5.2.1. Any Notice of Exercise will be effective only if the
Holder pays to the Company the Option Price for the portion of the Option being
exercised and pays the Company an amount equal to any tax withholding required
to be made.
5.2.2. The Holder may, in his sole discretion, pay all or a
portion of the Option Price for the portion of an Option being exercised by
surrender and delivery of Shares already owned by the Holder for not less than
six months. Any such Shares delivered in full or partial payment of the Option
Price shall be valued at the Value as of the date of receipt of the Shares by
the Company.
5.2.3. The Committee may, in its sole discretion, permit all
or a portion of any amount required to be withheld for taxes to be paid by
surrendering and delivering Shares already owned by the Holder or by withholding
a portion of the Shares that otherwise would be issued to the Holder upon
exercise of the Option. Any such Shares surrendered or withheld will be valued
at the Value as of the date of receipt for surrendered Shares or as of the date
of exercise of the Option for withheld Shares. Any election to have Shares
withheld from the Shares that would otherwise be issued to the Holder upon
exercise must be made during the period beginning on the third business day
following the date of release of quarterly or annual financial data of the
Company and ending on the twelfth business day following such date.
5.3. TIME AND MANNER RESTRICTIONS. The Committee has the right to limit
the time and manner of exercise of Options to comply with applicable law
including but not limited to federal securities laws.
5.4. DELIVERY OF SHARES. As soon as reasonably practicable following
exercise, a certificate representing the Shares purchased will be registered in
the name of the Holder and delivered to the Holder or, as provided in Section
2.2.5, registered in the name of and delivered to the trustee under the
Company's Supplemental Retirement Savings Plan.
SECTION 6. THE COMMITTEE.
6.1. POWERS OF COMMITTEE. The Committee will have the power to do the
following:
6.1.1. To maintain records relating to Assignees and Holders;
6.1.2. To prepare and furnish to the Optionee, Assignees and
Holders all information required by applicable law;
6.1.3. To construe and apply the provisions of this Agreement
and to correct defects and omissions herein;
5
<PAGE> 6
6.1.4. To engage assistants and professional advisers;
6.1.5. To provide procedures for determination of claims under
this Agreement; and
6.1.6. To make any factual determinations necessary or useful
hereunder.
6.2. DELEGATION. The Committee may delegate to any one or more of its
number authority to sign any documents on its behalf or to perform ministerial
acts, but no person to whom such authority is delegated shall perform any act
involving the exercise of any discretion without first obtaining the concurrence
of a majority of the members of the Committee, even though he or she alone may
sign any document required by third parties. The Committee may designate a
secretary, who may be a member of the Committee. All third parties may rely on
any communication signed by the secretary, acting as such, as an official
communication from the Committee.
6.3. BINDING EFFECT OF ACTIONS. All actions taken by the Committee will
be final and binding on all persons.
6.4. INDEMNIFICATION. No member of the Committee, nor any associate to
whom ministerial duties have been delegated, shall be personally liable for any
action, interpretation or determination made hereunder, and each member of the
Committee shall be fully indemnified and protected by the Company with respect
to any liability he or she may incur with respect to any such action,
interpretation or determination, to the extent permitted by applicable law and
to the extent provided in the Company's Certificate of Incorporation and
By-laws, as amended from time to time.
SECTION 7. ACTIONS BY COMMITTEE.
7.1. ANTIDILUTION PROVISIONS. If, as a result of a stock split, stock
dividend, combination or exchange of shares, exchange for other securities,
reclassification, reorganization, redesignation, recapitalization or other such
change, the Shares are increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation; then:
7.1.1. The number and kind of shares of stock or other
securities into which each outstanding Share is changed or for which each such
Share may be exchanged, will automatically be substituted for each Share subject
to an unexercised Option.
7.1.2. The Option Price will be increased or decreased
proportionately so that the aggregate Option Price for the securities subject to
the Option remains the same as immediately prior to such event and the ratio of
the Option Price to the Value of the securities subject to the Option is no more
favorable to the Holder than the ratio of the Option Price to the Value
immediately before such event.
6
<PAGE> 7
7.1.3. The Committee shall make such other adjustments to the
Option and this Agreement as may be appropriate and equitable, and not confer on
the Holder more favorable benefits than those of the Holder before the event,
which adjustments may provide for the elimination of fractional shares or units.
7.2. MERGER OF THE COMPANY. If, directly or indirectly, (a) the Company
is a party to a merger or consolidation agreement with a corporation that is not
a subsidiary of the Company, (b) the Company is a party to an agreement to sell
substantially all of its assets to any person other than a subsidiary of the
Company, or (c) any person other than the Company or one of its subsidiaries has
publicly announced an offer to purchase more than 5% of the outstanding voting
securities of the Company, the Committee, in its sole discretion, may provide
that, for a period beginning on the later of the date six months after the Date
of Grant or 15 days before the closing of any such proposed transaction, and not
extending beyond the earlier of the date on which the Option would otherwise
lapse and the date of the closing of such proposed transaction, notwithstanding
the other provisions of this Agreement, the Option may be exercised by the
Holder during such period as to 100% of the Shares subject to the Option, or
such lesser percentage as the Holder may choose, and upon the closing of such
proposed transaction, the Option will expire and be null and void. At least 15
days prior to the closing of such proposed transaction, the Company must notify
each Holder that the Option is exercisable under this Section. If the agreement
for such proposed transaction is terminated, (a) all exercises under this
Section of the Option will be void ab initio (from the outset), (b) the Company
will refund the applicable Option Price and withholding tax and the Holder will
return any Shares issued, and (c) the Option will be reinstated and exercisable
thereafter on the terms of the Option without regard to that application of this
Section.
7.3. AUTHORITY TO ACCELERATE, ETC. Notwithstanding anything else in
this Agreement to the contrary other than Section 3.2, the Committee may, at any
time or from time to time, accelerate the time at which the Option becomes
exercisable or waive any provisions of this Agreement relating to the manner of
payment or procedures for the exercise of the Option. Any such acceleration or
waiver may be made effective (a) with respect to some or all of the Shares
subject to the Option or (b) for a period of time ending at or before the
expiration date of the Option. If the waiver of any provisions constitutes a new
grant of an Option or the grant of an additional derivative security for
purposes of SEC Rule 16b-3, the date of the waiver will be deemed to be a new
Date of Grant for purposes of Section 3.2.
SECTION 8. AMENDMENT OF THIS AGREEMENT.
8.1. RIGHT TO AMEND, ETC. The Committee may amend this Agreement at any
time, provided that, unless first approved by vote of the stockholders of the
Company, no amendment may be made in this Agreement which:
8.1.1. Materially increases the benefits under this Agreement;
or
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8.1.2. Materially increases the number of securities which may
be issued under this Agreement.
8.2. IMPAIRMENT OF RIGHTS OF HOLDERS. No amendment to this Agreement
shall be made so as to impair or adversely alter the rights of any Holder
without such Holder's consent. Actions by the Committee under Section 7.1 or 7.2
do not constitute an amendment of this Agreement.
SECTION 9. SHARES RESERVED. The maximum number of Shares which may be issued
under this Agreement will be 200,000 Shares, subject to adjustment under Section
7.1.1, and such number of Shares will be reserved for issuance under this
Agreement. The Shares issued on exercise of the Option may be authorized and
unissued Shares or Shares held by the Company as treasury stock.
SECTION 10. MISCELLANEOUS.
10.1 REGISTRATION. The Company shall (a) prepare and file with the SEC
a Registration Statement with respect to this Agreement as may be necessary or
advisable to permit the continued and uninterrupted exercise of the Option and
the resale of Shares purchased pursuant to the exercise of the Option or as may
be required by the SEC, (b) execute such other documents, and take such other
actions, as may be necessary or advisable to cause the Registration Statement,
as the same may be amended, to comply with the Securities Act of 1933 and the
Rules and Regulations thereunder, and (c) register and qualify all Shares
purchased pursuant to the exercise of the Option for resale by the Holder in the
State of New Jersey. An amendment to the Registration Statement necessary for
the resale of Shares purchased pursuant to the exercise of the Option shall be
filed by the Company within five business days after the Secretary of the
Company receives a written request from a Holder to file an amendment. The
Registration Statement shall not be withdrawn by the Company until the Option
shall have lapsed, or until all Shares purchased upon the exercise of the Option
shall have been resold, as the case may be.
10.2. NO RIGHT TO EMPLOYMENT. Nothing in this Agreement will confer
upon the Optionee any right to continue in the Company's employ or to be
entitled to any remuneration or benefits not set forth in this Agreement or
interfere with or limit any right that the Company may otherwise have to
terminate the Optionee's employment.
10.3. SUCCESSORS AND ASSIGNS. The obligations of the Company under this
Agreement will be binding upon any successor corporation or organization
resulting from the merger, consolidation or other reorganization of the Company,
or upon any successor corporation or organization succeeding to substantially
all of the assets and business of the Company.
10.4. RIGHTS AS STOCKHOLDER. No Holder will have any of the rights of a
stockholder of the Company with respect to the Shares issuable under this
Agreement until certificates for such Shares have been issued.
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10.5. EXPENSES. All expenses and costs in connection with
administration of this Agreement will be borne by the Company.
10.6. SECTION 16. Any provision of this Agreement will be deemed
amended and void to the extent it causes a violation under Section 16 of the
Exchange Act and the rules thereunder.
10.7. LIMITATION OF LIABILITY. The liability of the Company under this
Agreement or in connection with any exercise of the Option is limited to the
obligations expressly set forth in this Agreement.
10.8. BENEFICIARIES AND ASSIGNMENT OF RIGHTS. Subject to Section 2.2.5,
no Option or other right under this Agreement may be assigned, pledged,
hypothecated, given, or otherwise transferred by the Holder, except that (a) the
Optionee will be entitled to designate a beneficiary of the Option upon the
Optionee's death by delivering such designation in writing to the Committee, (b)
if no such designation is made by the Optionee, the Option will be transferred
upon the Optionee's death as determined under the applicable laws of descent and
distribution, (c) the Option shall be transferred in accordance with a qualified
domestic relations order (as defined in the Code), and (d) the Optionee will be
entitled to assign the Option, in whole or in part, to an Assignee, who, after
such assignment, shall have all the rights and obligations of the Optionee with
respect to the Option, provided, however, that the provisions of this Agreement
relating to death, Disability, Termination and employment, including vesting
provisions, shall remain unchanged and shall continue to refer to the Optionee
and provided, further, that if the Assignee is a Charity, the Option will lapse
as to the portion transferred 30 days after the transfer is recorded on the
Company's books, after which time the portion transferred shall be null and
void. If the Optionee suffers a Disability and does not have the capacity to
exercise the Option, the Option will be exercisable by the Optionee's guardian
or attorney-in-fact during the Optionee's lifetime.
10.9. NOTICES. Notices required or permitted to be made under this
Agreement will be sufficiently made if personally delivered or sent by
registered or certified mail addressed (a) to the Holder at the Holder's address
as set forth in the books and records of the Company, or (b) to the Company or
the Committee at the principal office of the Company to the attention of the
Vice President-Finance. Any party may change its address through the method
described above.
10.10. CAPTIONS. The captions and section numbers appearing in this
Agreement are inserted only as a matter of convenience. They do not define,
limit, construe or describe the scope or intent of the provisions of this
Agreement.
10.11. APPLICABLE LAW. This Agreement will be governed by and
interpreted, construed, and applied in accordance with the laws of the State of
New Jersey to the extent that they apply.
10.12. SEVERABILITY. If any provisions of this Agreement are held
illegal or invalid for any reason, such illegality or invalidity will not affect
the remaining parts of this Agreement, and this Agreement will be construed and
enforced as if the illegal or invalid provision had not been included.
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IN WITNESS WHEREOF, the parties have executed this Agreement, in the case of the
Company, by an officer thereunto duly authorized.
UNITED RETAIL GROUP, INC.
By: /s/ GEORGE R. REMETA
Vice Chairman of the Board
/s/ RAPHAEL BENAROYA
Raphael Benaroya
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EXHIBIT 10.2
THIS AGREEMENT MUST BE RETURNED TO THE COMPANY IN THE EVENT THAT THE OPTION
GRANTED HEREUNDER IS EXERCISED IN WHOLE OR IN PART.
1998 STOCK OPTION AGREEMENT
This 1998 STOCK OPTION AGREEMENT, dated May 21, 1998, between GEORGE R. REMETA,
residing at 25 Lee Way, Oakland, New Jersey 07436 (the "Optionee"), and UNITED
RETAIL GROUP, INC., with offices at 365 West Passaic Street, Rochelle Park, New
Jersey 07662 (the "Company").
WHEREAS, the Company desires to attract and retain the best available associates
and to provide long range inducements for them to remain associated with the
Company; and
WHEREAS, on May 21, 1998, the stockholders of the Company authorized the
execution and delivery of this Agreement by the Company;
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. DEFINITIONS. The following terms have the following meanings when
used in this Agreement, in both singular and plural forms:
"ASSIGNEE" means a member of the immediate family of the Optionee to whom the
Optionee shall have assigned one or more Options.
"ASSOCIATE" means a full time employee of the Company.
"CHANGE IN CONTROL" means (a) the acquisition after the Date of Grant by any
person (defined for the purposes of this subsection to mean any person within
the meaning of Section 13(d) of the Securities Exchange Act of 1934 (the
"Exchange Act")), other than the Company, the Chief Executive Officer of the
Company, or an employee benefit plan created by the Board of Directors of the
Company 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 ("SEC") 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 20% 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, if such person acquired
such beneficial ownership without the prior consent of the Board of Directors of
the Company; (b) 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 (c) the merger or consolidation with or
transfer of substantially all of the assets of the Company to another person if
the Board of Directors does not adopt a resolution, before the Company enters
into any agreement for such merger, consolidation or transfer, determining that
it is not a Change in Control.
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"CODE" means the Internal Revenue Code of 1986, as now in effect or hereafter
amended and as now or hereafter interpreted, construed and applied by
regulations, rulings and cases.
"COMMITTEE" means (a) the members of the Compensation Committee of the Board of
Directors of the Company who are non-employee directors within the meaning of
SEC Rule 16b-3(b)(3)(i), who, if they are fewer than all the members, shall
constitute an ad hoc committee of the Board of Directors, or (b) if the
Compensation Committee has fewer than two members who are such non-employee
directors, such other committee of the Board of Directors of the Company having
at least two members who are such non-employee directors as may be designated
from time to time by the Board of Directors of the Company, provided, however,
that if any such committee is not composed exclusively of such non-employee
directors, the Committee will consist only of those members who are such
non-employee directors.
"DATE OF GRANT" means February 15, 1998.
"DISABILITY" means a disability as defined under the Company's long-term
disability benefits plan in effect on the Date of Grant.
"HOLDER" means the person who is, at the time of reference, entitled to exercise
an Option.
"INCENTIVE OPTION" means an Option which meets the requirements of Section 422
of the Code.
"NONINCENTIVE OPTION" means an Option which is not an Incentive Option.
"NOTICE OF EXERCISE" means a notice of exercise of any Option in a form
determined by the Committee.
"OPTION" means any right to purchase Shares granted under this Agreement.
"OPTION PRICE" means $6.3125 per Share, as adjusted pursuant to Section 7.1.2.
"SHARES" means shares of Common Stock, with par value equal to $.001 per share,
of the Company, as adjusted pursuant to Section 7.1.1.
"TAX PAYMENT LOAN GUARANTY" shall mean a guaranty of payment made by the Company
in the amount and under the circumstances described in Section 4.
"TERMINATION" means the termination of the Optionee's relationship with the
Company as an Associate, provided, however, that absence from employment with
the Company for a reason or purpose and for a period of time approved by the
Committee, in its sole discretion, shall not for the period of such absence be
deemed, solely because of such absence, to constitute Termination.
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"VALUE" means (a) if the Shares are listed or admitted to trading on a national
securities exchange (including the National Market System of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ")), the
closing price of Shares on the principal securities exchange on which the Shares
are listed or admitted to trading on the day prior to the date of determination,
or if no closing price can be determined for the date of determination, the most
recent date for which such price can reasonably be ascertained, or (b) if the
Shares are not listed or admitted to trading on a national securities exchange
but are publicly traded, the mean between the representative bid and asked
prices of the Shares in the over-the-counter market at the closing of the day
prior to the date of determination or the most recent such bid and asked prices
then available, as reported by NASDAQ or if the Shares are not then quoted by
NASDAQ as furnished by any market maker selected from time to time by the
Company for that purpose, or (c) if neither (a) nor (b) is applicable, the fair
market value on the applicable date as determined by the Committee in good faith
using factors the Committee deems to be relevant including but not limited to
any sale of Shares to an independent third party.
SECTION 2. GRANT.
2.1. GRANT. The Optionee shall have the right from time to time until
February 15, 2008 to purchase a total of 100,000 Shares at the Option Price,
subject to the following terms and conditions.
2.2. TERMS.
2.2.1. The Option is a Nonincentive Option.
2.2.2. The Option will become exercisable as to 20,000 Shares
on the completion of the first full year of employment after the Date of Grant
and as to an additional 20,000 Shares on the completion of each full year of
employment thereafter until the entire 100,000 Shares are exercisable.
2.2.3. Notwithstanding Section 2.2.2 but subject to Section
3.2, the Option will become immediately exercisable as to 100% of the Shares
subject to the Option upon (a) a Change in Control or (b) the Optionee's death
or Disability, provided, however, that the Committee within 90 days after
Termination for a reason other than death or Disability may make the Option
immediately exercisable as to 100% of the Shares subject to the Option.
2.2.4. The Option will lapse on the earliest of (a) the date
10 years and one day after the Date of Grant, (b) the date one year after the
Termination if the Termination is due to death or Disability or if the Optionee
dies within 90 days of Termination, or (c) the date 90 days after Termination if
the Termination is for any reason other than death or Disability, provided,
however, that the Committee within 90 days after Termination may defer the lapse
of the Option to the date 10 years and one day after the Date of Grant.
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2.2.5. If the Optionee shall so direct at least 60 days prior
to the date of exercise, either (i) the Shares issued upon exercise of the
Option shall be issued and registered on the Company's stockholder list as
follows: the number of Shares having a Value on the date of exercise equal to
the exercise price paid in connection with the exercise shall be issued to and
registered in the name of the Optionee and the remainder of the Shares shall be
issued to and registered in the name of the trustee under the Company's
Supplemental Retirement Savings Plan, or (ii) the number of Shares otherwise
issuable upon exercise of the Option shall be reduced by the number of Shares
having a Value on the date of exercise equal in the aggregate to the exercise
price of the gross number of Options and the net number of Shares after such
reduction shall be issued to and registered in the name of the trustee under the
Company's Supplemental Retirement Savings Plan.
SECTION 3. RESTRICTIONS.
3.1. REGULATORY COMPLIANCE. No Shares will be issued unless and until
all applicable requirements imposed by federal and state securities laws and by
any stock exchanges or NASDAQ market upon which the Shares may be listed have
been fully met.
3.2. SIX-MONTH RULE. Anything in this Agreement to the contrary
notwithstanding, the Option will not be exercisable within six months of the
Date of Grant except in the case of the Optionee's death.
SECTION 4. TAX PAYMENT LOAN GUARANTY. The Committee will have authority on the
exercise of the Option to authorize an unconditional guaranty of payment by the
Company of a full recourse loan on terms acceptable to the Committee obtained by
the Optionee from a commercial bank or a registered broker-dealer for the
exclusive purpose of paying personal income or excise taxes incurred as a result
of such exercise. Loan guaranties will be issued if the Committee, in its sole
discretion, determines them to be appropriate and in the best interests of the
Company to assist in the payment of income and excise taxes incurred on exercise
of the Option.
SECTION 5. EXERCISE OF OPTION.
5.1. NOTICE OF EXERCISE. The Option may be exercised only by delivery
to the Vice President-Finance or such other person designated by the Committee
of this Agreement, a Notice of Exercise and payment under Section 5.2 for the
Shares and, if the Holder is an Assignee, an instrument of assignment signed by
the Optionee. Except as otherwise specifically provided, an Option shall be
exercisable during the Optionee's lifetime only by the Optionee or his Assignee.
5.2. DELIVERIES ON EXERCISE.
5.2.1. Any Notice of Exercise will be effective only if the
Holder pays to the Company the Option Price for the portion of the Option being
exercised and pays the Company an amount equal to any tax withholding required
to be made.
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5.2.2. The Holder may, in his sole discretion, pay all or a
portion of the Option Price for the portion of an Option being exercised by
surrender and delivery of Shares already owned by the Holder for not less than
six months. Any such Shares delivered in full or partial payment of the Option
Price shall be valued at the Value as of the date of receipt of the Shares by
the Company.
5.2.3. The Committee may, in its sole discretion, permit all
or a portion of any amount required to be withheld for taxes to be paid by
surrendering and delivering Shares already owned by the Holder or by withholding
a portion of the Shares that otherwise would be issued to the Holder upon
exercise of the Option. Any such Shares surrendered or withheld will be valued
at the Value as of the date of receipt for surrendered Shares or as of the date
of exercise of the Option for withheld Shares. Any election to have Shares
withheld from the Shares that would otherwise be issued to the Holder upon
exercise must be made during the period beginning on the third business day
following the date of release of quarterly or annual financial data of the
Company and ending on the twelfth business day following such date.
5.3. TIME AND MANNER RESTRICTIONS. The Committee has the right to limit
the time and manner of exercise of Options to comply with applicable law
including but not limited to federal securities laws.
5.4. DELIVERY OF SHARES. As soon as reasonably practicable following
exercise, a certificate representing the Shares purchased will be registered in
the name of the Holder and delivered to the Holder or, as provided in Section
2.2.5, registered in the name of and delivered to the trustee under the
Company's Supplemental Retirement Savings Plan.
SECTION 6. THE COMMITTEE.
6.1. POWERS OF COMMITTEE. The Committee will have the power to do the
following:
6.1.1. To maintain records relating to Assignees and Holders;
6.1.2. To prepare and furnish to the Optionee, Assignees and
Holders all information required by applicable law;
6.1.3. To construe and apply the provisions of this Agreement
and to correct defects and omissions herein;
6.1.4. To engage assistants and professional advisers;
6.1.5. To provide procedures for determination of claims under
this Agreement; and
6.1.6. To make any factual determinations necessary or useful
hereunder.
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6.2. DELEGATION. The Committee may delegate to any one or more of its
number authority to sign any documents on its behalf or to perform ministerial
acts, but no person to whom such authority is delegated shall perform any act
involving the exercise of any discretion without first obtaining the concurrence
of a majority of the members of the Committee, even though he or she alone may
sign any document required by third parties. The Committee may designate a
secretary, who may be a member of the Committee. All third parties may rely on
any communication signed by the secretary, acting as such, as an official
communication from the Committee.
6.3. BINDING EFFECT OF ACTIONS. All actions taken by the Committee will
be final and binding on all persons.
6.4. INDEMNIFICATION. No member of the Committee, nor any associate to
whom ministerial duties have been delegated, shall be personally liable for any
action, interpretation or determination made hereunder, and each member of the
Committee shall be fully indemnified and protected by the Company with respect
to any liability he or she may incur with respect to any such action,
interpretation or determination, to the extent permitted by applicable law and
to the extent provided in the Company's Certificate of Incorporation and
By-laws, as amended from time to time.
SECTION 7. ACTIONS BY COMMITTEE.
7.1. ANTIDILUTION PROVISIONS. If, as a result of a stock split, stock
dividend, combination or exchange of shares, exchange for other securities,
reclassification, reorganization, redesignation, recapitalization or other such
change, the Shares are increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation; then:
7.1.1. The number and kind of shares of stock or other
securities into which each outstanding Share is changed or for which each such
Share may be exchanged, will automatically be substituted for each Share subject
to an unexercised Option.
7.1.2. The Option Price will be increased or decreased
proportionately so that the aggregate Option Price for the securities subject to
the Option remains the same as immediately prior to such event and the ratio of
the Option Price to the Value of the securities subject to the Option is no more
favorable to the Holder than the ratio of the Option Price to the Value
immediately before such event.
7.1.3. The Committee shall make such other adjustments to the
Option and this Agreement as may be appropriate and equitable, and not confer on
the Holder more favorable benefits than those of the Holder before the event,
which adjustments may provide for the elimination of fractional shares or units.
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7.2. MERGER OF THE COMPANY. If, directly or indirectly, (a) the Company
is a party to a merger or consolidation agreement with a corporation that is not
a subsidiary of the Company, (b) the Company is a party to an agreement to sell
substantially all of its assets to any person other than a subsidiary of the
Company, or (c) any person other than the Company or one of its subsidiaries has
publicly announced an offer to purchase more than 5% of the outstanding voting
securities of the Company, the Committee, in its sole discretion, may provide
that, for a period beginning on the later of the date six months after the Date
of Grant or 15 days before the closing of any such proposed transaction, and not
extending beyond the earlier of the date on which the Option would otherwise
lapse and the date of the closing of such proposed transaction, notwithstanding
the other provisions of this Agreement, the Option may be exercised by the
Holder during such period as to 100% of the Shares subject to the Option, or
such lesser percentage as the Holder may choose, and upon the closing of such
proposed transaction, the Option will expire and be null and void. At least 15
days prior to the closing of such proposed transaction, the Company must notify
each Holder that the Option is exercisable under this Section. If the agreement
for such proposed transaction is terminated, (a) all exercises under this
Section of the Option will be void ab initio (from the outset), (b) the Company
will refund the applicable Option Price and withholding tax and the Holder will
return any Shares issued, and (c) the Option will be reinstated and exercisable
thereafter on the terms of the Option without regard to that application of this
Section.
7.3. AUTHORITY TO ACCELERATE, ETC. Notwithstanding anything else in
this Agreement to the contrary other than Section 3.2, the Committee may, at any
time or from time to time, accelerate the time at which the Option becomes
exercisable or waive any provisions of this Agreement relating to the manner of
payment or procedures for the exercise of the Option. Any such acceleration or
waiver may be made effective (a) with respect to some or all of the Shares
subject to the Option or (b) for a period of time ending at or before the
expiration date of the Option. If the waiver of any provisions constitutes a new
grant of an Option or the grant of an additional derivative security for
purposes of SEC Rule 16b-3, the date of the waiver will be deemed to be a new
Date of Grant for purposes of Section 3.2.
SECTION 8. AMENDMENT OF THIS AGREEMENT.
8.1. RIGHT TO AMEND, ETC. The Committee may amend this Agreement at any
time, provided that, unless first approved by vote of the stockholders of the
Company, no amendment may be made in this Agreement which:
8.1.1. Materially increases the benefits under this Agreement;
or
8.1.2. Materially increases the number of securities which may
be issued under this Agreement.
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8.2. IMPAIRMENT OF RIGHTS OF HOLDERS. No amendment to this Agreement
shall be made so as to impair or adversely alter the rights of any Holder
without such Holder's consent. Actions by the Committee under Section 7.1 or 7.2
do not constitute an amendment of this Agreement.
SECTION 9. SHARES RESERVED. The maximum number of Shares which may be issued
under this Agreement will be 100,000 Shares, subject to adjustment under Section
7.1.1, and such number of Shares will be reserved for issuance under this
Agreement. The Shares issued on exercise of the Option may be authorized and
unissued Shares or Shares held by the Company as treasury stock.
SECTION 10. MISCELLANEOUS.
10.1 REGISTRATION. The Company shall (a) prepare and file with the SEC
a Registration Statement with respect to this Agreement as may be necessary or
advisable to permit the continued and uninterrupted exercise of the Option and
the resale of Shares purchased pursuant to the exercise of the Option or as may
be required by the SEC, (b) execute such other documents, and take such other
actions, as may be necessary or advisable to cause the Registration Statement,
as the same may be amended, to comply with the Securities Act of 1933 and the
Rules and Regulations thereunder, and (c) register and qualify all Shares
purchased pursuant to the exercise of the Option for resale by the Holder in the
State of New Jersey. An amendment to the Registration Statement necessary for
the resale of Shares purchased pursuant to the exercise of the Option shall be
filed by the Company within five business days after the Secretary of the
Company receives a written request from a Holder to file an amendment. The
Registration Statement shall not be withdrawn by the Company until the Option
shall have lapsed, or until all Shares purchased upon the exercise of the Option
shall have been resold, as the case may be.
10.2. NO RIGHT TO EMPLOYMENT. Nothing in this Agreement will confer
upon the Optionee any right to continue in the Company's employ or to be
entitled to any remuneration or benefits not set forth in this Agreement or
interfere with or limit any right that the Company may otherwise have to
terminate the Optionee's employment.
10.3. SUCCESSORS AND ASSIGNS. The obligations of the Company under this
Agreement will be binding upon any successor corporation or organization
resulting from the merger, consolidation or other reorganization of the Company,
or upon any successor corporation or organization succeeding to substantially
all of the assets and business of the Company.
10.4. RIGHTS AS STOCKHOLDER. No Holder will have any of the rights of a
stockholder of the Company with respect to the Shares issuable under this
Agreement until certificates for such Shares have been issued.
10.5. EXPENSES. All expenses and costs in connection with
administration of this Agreement will be borne by the Company.
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10.6. SECTION 16. Any provision of this Agreement will be deemed
amended and void to the extent it causes a violation under Section 16 of the
Exchange Act and the rules thereunder.
10.7. LIMITATION OF LIABILITY. The liability of the Company under this
Agreement or in connection with any exercise of the Option is limited to the
obligations expressly set forth in this Agreement.
10.8. BENEFICIARIES AND ASSIGNMENT OF RIGHTS. Subject to Section 2.2.5,
no Option or other right under this Agreement may be assigned, pledged,
hypothecated, given, or otherwise transferred by the Holder, except that (a) the
Optionee will be entitled to designate a beneficiary of the Option upon the
Optionee's death by delivering such designation in writing to the Committee, (b)
if no such designation is made by the Optionee, the Option will be transferred
upon the Optionee's death as determined under the applicable laws of descent and
distribution, (c) the Option shall be transferred in accordance with a qualified
domestic relations order (as defined in the Code), and (d) the Optionee will be
entitled to assign the Option, in whole or in part, to a member of his immediate
family, who, after such assignment, shall have all the rights and obligations of
the Optionee with respect to the Option, provided, however, that the provisions
of this Agreement relating to death, Disability, Termination and employment,
including vesting provisions, shall remain unchanged and shall continue to refer
to the Optionee. If the Optionee suffers a Disability and does not have the
capacity to exercise the Option, the Option will be exercisable by the
Optionee's guardian or attorney-in-fact during the Optionee's lifetime.
10.9. NOTICES. Notices required or permitted to be made under this
Agreement will be sufficiently made if personally delivered or sent by
registered or certified mail addressed (a) to the Holder at the Holder's address
as set forth in the books and records of the Company, or (b) to the Company or
the Committee at the principal office of the Company to the attention of the
Vice President-Finance. Any party may change its address through the method
described above.
10.10. CAPTIONS. The captions and section numbers appearing in this
Agreement are inserted only as a matter of convenience. They do not define,
limit, construe or describe the scope or intent of the provisions of this
Agreement.
10.11. APPLICABLE LAW. This Agreement will be governed by and
interpreted, construed, and applied in accordance with the laws of the State of
New Jersey to the extent that they apply.
10.12. SEVERABILITY. If any provisions of this Agreement are held
illegal or invalid for any reason, such illegality or invalidity will not affect
the remaining parts of this Agreement, and this Agreement will be construed and
enforced as if the illegal or invalid provision had not been included.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties have executed this Agreement, in the case of the
Company, by an officer thereunto duly authorized.
UNITED RETAIL GROUP, INC.
By: /s/ RAPHAEL BENAROYA
Chairman of the Board
/s/ GEORGE R. REMETA
George R. Remeta
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> MAY-02-1998
<CASH> 31,221
<SECURITIES> 0
<RECEIVABLES> 1,625
<ALLOWANCES> 0
<INVENTORY> 48,326
<CURRENT-ASSETS> 87,936
<PP&E> 109,568
<DEPRECIATION> 62,347
<TOTAL-ASSETS> 143,467
<CURRENT-LIABILITIES> 39,062
<BONDS> 10,033
0
0
<COMMON> 14
<OTHER-SE> 87,609
<TOTAL-LIABILITY-AND-EQUITY> 143,467
<SALES> 94,943
<TOTAL-REVENUES> 94,943
<CGS> 67,823
<TOTAL-COSTS> 67,823
<OTHER-EXPENSES> 19,907
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (140)
<INCOME-PRETAX> 7,353
<INCOME-TAX> 2,783
<INCOME-CONTINUING> 4,570
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,570
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.34
</TABLE>
