-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fh2bUIWVjXkopd21gw1egI1CV16fWdY6mOR34tS5Hfyi/xVoLqlYwkj9SkTtpaKL osqQiNwYDeBy1eKVopJO2w== 0000950123-98-010396.txt : 19981203 0000950123-98-010396.hdr.sgml : 19981203 ACCESSION NUMBER: 0000950123-98-010396 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19981202 GROUP MEMBERS: BENAROYA RAPHAEL/GRR/CRW/FS/JFW/CAL/JS GROUP MEMBERS: BRADLEY ORLOFF GROUP MEMBERS: ELLEN DEMAIO GROUP MEMBERS: FREDERIC E. STERN GROUP MEMBERS: GEORGE R. REMETA SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: UNITED RETAIL GROUP INC/DE CENTRAL INDEX KEY: 0000881905 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-WOMEN'S CLOTHING STORES [5621] IRS NUMBER: 510303670 STATE OF INCORPORATION: DE FISCAL YEAR END: 0201 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-42996 FILM NUMBER: 98762627 BUSINESS ADDRESS: STREET 1: 365 WEST PASSAIC ST CITY: ROCHELLE PARK STATE: NJ ZIP: 07662 BUSINESS PHONE: 2018450880 MAIL ADDRESS: STREET 1: 365 W PASSAIC STREET STREET 2: 365 W PASSAIC STREET CITY: ROCHELLE PARK STATE: NJ ZIP: 07662 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BENAROYA RAPHAEL/GRR/CRW/FS/JFW/CAL/JS CENTRAL INDEX KEY: 0000903414 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 365 WEST PASSAIC ST CITY: ROCHELLE PARK STATE: NJ ZIP: 07662 SC 13D/A 1 AMENDMENT #4 TO SCHEDULE 13D 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 4)* United Retail Group, Inc. ------------------------- (Name of Issuer) Common Stock ($.001 Par Value) ------------------------------ (Title of Class of Securities) 911380103 --------- (CUSIP Number) George R. Remeta, 365 West Passaic Street, Rochelle Park, NJ 07662 (201) 909-2110 -------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 20, 1998 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box ___. Check the following box if a fee is being paid with the statement ___. (A fee is not required only if reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 2 SCHEDULE 13D CUSIP NO. 911380103 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON RAPHAEL BENAROYA 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) (b) X 3. SEC USE ONLY 4. SOURCE OF FUNDS (SEE INSTRUCTIONS) OO 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ] PURSUANT TO ITEMS 2(d) or 2(E) 6. CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A.; ISRAEL 7. SOLE VOTING POWER -0- NUMBER OF SHARES 8. SHARED VOTING POWER BENEFICIALLY 5,275,574 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 5,275,574 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,275,574 12. CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ] CERTAIN SHARES (SEE INSTRUCTIONS) 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 38.8% 14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IN 3 13D CUSIP NO. 911380103 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GEORGE R. REMETA 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) (b) X 3. SEC USE ONLY 4. SOURCE OF FUNDS (SEE INSTRUCTIONS) OO 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ] PURSUANT TO ITEMS 2(d) or 2(E) 6. CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. 7. SOLE VOTING POWER -0- NUMBER OF SHARES 8. SHARED VOTING POWER BENEFICIALLY 5,275,574 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 5,275,574 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,275,574 12. CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ] CERTAIN SHARES (SEE INSTRUCTIONS) 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 38.8% 14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IN 4 13D CUSIP NO. 911380103 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON ELLEN DEMAIO 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) (b) X 3. SEC USE ONLY 4. SOURCE OF FUNDS (SEE INSTRUCTIONS) OO 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ] PURSUANT TO ITEMS 2(d) or 2(E) 6. CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. 7. SOLE VOTING POWER -0- NUMBER OF SHARES 8. SHARED VOTING POWER BENEFICIALLY 5,275,574 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 5,275,574 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,275,574 12. CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ] CERTAIN SHARES (SEE INSTRUCTIONS) 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 38.8% 14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IN 5 13D CUSIP NO. 911380103 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON BRADLEY ORLOFF 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) (b) X 3. SEC USE ONLY 4. SOURCE OF FUNDS (SEE INSTRUCTIONS) OO 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ] PURSUANT TO ITEMS 2(d) or 2(E) 6. CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. 7. SOLE VOTING POWER -0- NUMBER OF SHARES 8. SHARED VOTING POWER BENEFICIALLY 5,275,574 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 5,275,574 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,275,574 12. CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ] CERTAIN SHARES (SEE INSTRUCTIONS) 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 38.8% 14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IN 6 13D CUSIP NO. 911380103 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON FREDRIC E. STERN 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) (b) X 3. SEC USE ONLY 4. SOURCE OF FUNDS (SEE INSTRUCTIONS) OO 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ] PURSUANT TO ITEMS 2(d) or 2(E) 6. CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. 7. SOLE VOTING POWER -0- NUMBER OF SHARES 8. SHARED VOTING POWER BENEFICIALLY 5,275,574 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 5,275,574 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,275,574 12. CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ] CERTAIN SHARES (SEE INSTRUCTIONS) 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 38.8% 14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IN 7 CUSIP No. 911380103 STATEMENT ON SCHEDULE 13D - AMENDMENT NO. 4 ITEM 1. SECURITY AND ISSUER. Common Stock, $.001 par value per share ("Shares"), of United Retail Group, Inc. (the "Issuer"), 365 West Passaic Street, Rochelle Park, NJ 07662 ITEM 2. IDENTITY AND BACKGROUND. (a) See Item 1 of the cover pages for the names of the reporting persons. (b) The business address of the reporting persons is: c/o United Retail Group, Inc. 365 West Passaic Street Rochelle Park, NJ 07662 (c) The present principal occupation or employment of each of the reporting persons is employee of the Issuer. The Issuer operates a chain of retail specialty stores selling large size women's apparel and accessories. (d) None of the reporting persons has been convicted in a criminal proceeding during the last five years. (e) None of the reporting persons has during the last five years been a party to a civil proceeding of a judicial or administrative body and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) See Item 6 of the cover pages for the citizenship of the reporting persons. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Not Applicable. 8 ITEM 4. PURPOSE OF TRANSACTION. All the reporting persons purchased Shares and acquired employee stock options for investment. (Certain of the reporting persons sold the Shares they purchased.) The reporting persons have no plans or proposals that relate to or would result in: (a) The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer, except the exercise of employee stock options; (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; 9 (d) Any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors, except to fill one vacancy; (e) Any material change in the present capitalization or dividend policy of the Issuer; (f) Any other material change in the Issuer's business or corporate structure; (g) Changes in the Issuer's certificate of incorporation or bylaws or other actions which may impede the acquisition of control of the Issuer by any person; (h) Causing a class of securities of the Issuer to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) A class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g) of the Securities Exchange Act (the "Act"); or (j) Any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) The aggregate number of Shares beneficially owned by each reporting person, identifying Shares which there is a right to acquire upon exercise of vested employee stock options, and the percentage of the Shares owned beneficially by each reporting person is as follows:
Outstanding Vested Total % Name Shares Owned Options Number of Class ---- ------------ ------- ------ -------- Raphael Benaroya 2,277,937 341,570 2,619,507 19.5% Ellen Demaio -0- 20,000 20,000 0.2% Bradley Orloff -0- 14,000 14,000 0.1% George R. Remeta 341,888 139,000 480,888 3.6% Fredric E. Stern 26,300 6,000 32,300 0.2%
The reporting persons believe that the other persons who might comprise a group with the reporting persons within the meaning of Section 13(d) (3) of the Act are the beneficial owners of the following shares: 10
Outstanding Vested Total % Name Shares Owned Options Number of Class ---- ------------ ------- ------ -------- Mort Greenberg 3,500 -0- 3,500 -- Limited Direct Assoc. L.P. 2,100,000 -0- 2,100,000 16.0% Cheryl A. Lutz 79 -0- 79 -- Jerry Silverman 5,300 -0- 5,300 --
(b) the persons named in the preceding subsection, together with the Issuer and Centre Capital Investors L.P. ("CCI"), are parties to the Restated Stockholders' Agreement, dated December 23, 1992 (as amended the "Restated Stockholders' Agreement"), which is incorporated herein by reference to Exhibit No. 2 hereto. The Restated Stockholders' Agreement provides, among other things, that the parties other than the Issuer and CCI shall take such action, including the voting of Shares, as may be necessary to cause the Board to be elected in the following manner: (i) the Board shall consist of nine members, of whom two are persons ("Management Directors") nominated by the Chairman of the Board, one is a person nominated by Limited Direct Associates, L.P. ("LDA") and six are persons ("Public Directors") who are not affiliates of (w) Mr. Benaroya, (x) certain executives of the Issuer or (y) Mr. Benaroya's or such executives' Permitted Transferees under the Restated Stockholders' Agreement (collectively, "Management Investors") or (z) LDA, named by the Nominating Committee and approved by the Board; (ii) if the holdings of the Management Investors increase to at least 3,010,000 Shares, the Chairman of the Board shall be entitled to nominate one additional Management Director, for a total Board membership of 10, for so long as he and his family continue to hold at least 500,000 Shares, he remains Chairman of the Board and the Management Investors continue to hold at least 2,010,000 Shares, provided, that in the event the number of Shares held by the Chairman (and his family) and the Management Investors falls below 500,000 Shares and 2,010,000 Shares, respectively, the Chairman shall thereafter nominate two persons, rather than three persons, for election as Directors; (iii) in the event of Mr. Benaroya's termination as Chairman of the Board under any circumstances, (x) he shall be entitled to nominate one Director so long as he and his family continue to hold at least 100,000 Shares, (y) one other person, who would otherwise have been nominated by him as a Director, shall be named instead by the Nominating Committee and approved by the Board and (z) if the Board then has 10 members, the Board membership shall be decreased to nine; and 11 (iv) the rights of Mr. Benaroya and LDA to nominate a Director shall expire if their stockholdings fall below 100,000 Shares and, in the case of Mr. Benaroya, he no longer serves as Chairman of the Board; in which case the Director who would otherwise be nominated by such party shall be named instead by the Nominating Committee and approved by the Board. The Restated Stockholders' Agreement provides that the parties other than the Issuer and CCI shall act together in connection with the election of the Board, the removal of directors and certain amendments to the by-laws of the Issuer. Accordingly, the stockholders of the Issuer who are parties to the Restated Stockholders' Agreement might be deemed to share voting power with respect to all the Shares beneficially owned by them. The voting arrangement under the Restated Stockholders' Agreement described above expires on July 17, 1999. Except for the provisions of the Restated Stockholders' Agreement, each of the reporting persons has the power, either solely or jointly with a spouse, to vote the Shares he owns and believes that the other stockholders of the Issuer who are parties to the Restated Stockholders' Agreement have the power, either solely or jointly with a spouse, to vote the Shares they own. The Restated Stockholders' Agreement contains certain restrictions on transfers of Shares held by the stockholders of the Issuer who are parties to the Restated Stockholders' Agreement but it unconditionally permits sales on the NASDAQ National Market System and donations to charity. Accordingly, the stockholders of the Issuer who are parties to the Restated Stockholders' Agreement might be deemed to share the power to dispose of all the Shares beneficially owned by them. Except for the provisions of the Restated Stockholders' Agreement and the pledges of shares of Common Stock referred to in Item 6 below, each of the reporting persons has the power, either solely or jointly with a spouse, to dispose of the Shares he owns and he believes that the other stockholders of the Issuer who are parties to the Restated Stockholders' Agreement have the power, either solely or jointly with a spouse, to dispose of the Shares they own. Each of the reporting persons disclaims beneficial ownership of the Shares held by all the other parties to the Restated Stockholders' Agreement. In addition to the reporting persons, CCI and the Issuer, the current parties to the Restated Stockholders' Agreement are: (i) Mort Greenberg 6866 Touchtown Circle Palm Beach Gardens, FL 33418 12 (ii) Limited Direct Associates, L.P. Three Limited Parkway Columbus, OH 43230 (iii) Cheryl A. Lutz 4408 F Street Sacramento, CA 95819 (iv) Jerry Silverman 3017 Caminito Carboneras Del Mar, CA 92014 Mr. Greenberg is retired and is a citizen of the United States. LDA is a Delaware limited partnership. The reporting persons believe that LDA is controlled by The Limited, Inc. Ms. Lutz is an employee of the Issuer and is a citizen of the United States. Mr. Silverman is the proprietor of Silverman & Associates, a real estate consultancy, with offices at 3017 Caminito Carboneras, Del Mar, CA 92014. He is a citizen of the United States. The reporting persons have no reason to believe that Mr. Greenberg, LDA, Ms. Lutz or Mr. Silverman during the last five years has either been convicted in a criminal proceeding or was a party to a civil proceeding before a judicial or administrative body and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (c) None of the reporting persons effected any transaction involving Shares during the last 60 days. (d) No other person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, Shares owned by the reporting persons. 13 ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. The reporting persons are parties to the Restated Stockholders' Agreement, which is incorporated herein by reference to Exhibit No. 2 hereto. The Shares purchased on February 13, 1998 by each of Mr. Benaroya and Mr. Remeta have been pledged to the Company to secure payment of a loan to him by the Company to finance the withholding taxes incurred by him in connection with the purchase. Mr. Benaroya purchased 777,925 Shares. Mr. Remeta purchased 116,888 Shares.The loans were in the amounts of $1,637,087 to Mr. Benaroya and $245,543 to Mr. Remeta; have a term of four years; and provide for full recourse. The Employment Agreements, dated November 20, 1998, between the Company and Raphael Benaroya and George R. Remeta, respectively, contain provisions that accelerate the exercisability of unvested employee stock options in the event of termination without cause, as defined in the Employment Agreements. In the event of termination without cause, unvested employee stock options to purchase 258,430 shares by Mr. Benaroya and 121,000 shares by Mr. Remeta will become fully exercisable immediately. The Employment Agreements, and the stock option agreements between the Company and Messrs. Benaroya and Remeta, respectively, also provide for the acceleration of unvested options in the event of a change of control of the Company, as defined therein. The Employment Agreements are incorporated herein by reference to Exhibit Nos. 3.7 and 3.8 ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 1. Joint Filing Agreement among the reporting persons (filed on July 22, 1993). 2. Restated Stockholders' Agreement among the Issuer, CCI, LDA and the Management Stockholders, and Amendment Nos. 1,2 and 3 thereto (filed on November 16, 1998). 3.1. Restated 1990 Stock Option Plan as of March 6, 1998 (filed on November 16, 1998). 3.2. Restated 1990 Stock Option Plan as of May 28, 1996 (filed on November 16, 1998). 3.3. Restated 1996 Stock Option Plan as of March 6, 1998 (filed on November 16, 1998). 3.4. Restated 1989 Management Stock Option Plan as of May 6, 1998 (filed on November 16, 1998). 3.5. 1998 Stock Option Agreement between the Issuer and Raphael Benaroya (filed on November 16, 1998). 3.6. 1998 Stock Option Agreement between the Issuer and George R. Remeta (filed on November 16, 1998). 3.7 Employment Agreement, dated November 20, 1998, between the Issuer and Raphael Benaroya. 3.8 Employment Agreement, dated November 20, 1998, between the Issuer and George R. Remeta. 14 SIGNATURE: This joint Schedule 13D Amendment No. 4 is filed on behalf of each of the following stockholders of the Issuer. After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in Schedule 13D Amendment No. 4 is true, complete and correct. Name Date ---- ---- RAPHAEL BENAROYA * December 2, 1998 ---------------------- Raphael Benaroya /s/ GEORGE R. REMETA December 2, 1998 ---------------------- George R. Remeta ELLEN DEMAIO * December 2, 1998 ---------------------- Ellen Demaio BRADLEY ORLOFF * December 2, 1998 ---------------------- Bradley Orloff FREDRIC E. STERN * December 2, 1998 ---------------------- Fredric E. Stern *By /s/ GEORGE R. REMETA, as attorney-in-fact pursuant to the power of attorney contained in Exhibit 1 to the Statement on Schedule 13D filed on July 22, 1993. Attention: Intentional misstatement or omissions of fact constitute federal criminal violations (see U.S.C. 1001). 15 EXHIBIT INDEX ------------- Exhibit No. Description ----------- ----------- 1. Joint Filing Agreement among the reporting persons (filed on July 22, 1993). 2. Restated Stockholders' Agreement among the Issuer, CCI, LDA and the Management Stockholders and Amendment Nos. 1,2 and 3 thereto (filed on November 16, 1998). 3.1. Restated 1990 Stock Option Plan as of March 6, 1998 (filed on November 16, 1998). 3.2. Restated 1990 Stock Option Plan as of May 28, 1996 (filed on November 16, 1998). 3.3. Restated 1996 Stock Option Plan as of March 6, 1998 (filed on November 16, 1998). 3.4. Restated 1989 Management Stock Option Plan as of May 6, 1998 (filed on November 16, 1998). 3.5. 1998 Stock Option Agreement between the Issuer and Raphael Benaroya (filed on November 16, 1998). 3.6. 1998 Stock Option Agreement between the Issuer and George R. Remeta (filed on November 16, 1998). 3.7 Employment Agreement, dated November 20, 1998, between the Issuer and Raphael Benaroya. 3.8 Employment Agreement, dated November 20, 1998, between the Issuer and George R. Remeta. EX-99.3.7 2 EMPLOYMENT AGREEMENT: RAPHAEL BENAROYA 1 Exhibit No. 3.7 EMPLOYMENT AGREEMENT Agreement made as of the 20th day of November, 1998, between UNITED RETAIL GROUP, INC., a Delaware corporation, with principal offices at 365 West Passaic Street, Rochelle Park, New Jersey 07662-6563 (the "Company"), and RAPHAEL BENAROYA, residing at 179 Lincoln Street, Englewood, New Jersey 07631 (the "Executive"). WHEREAS, the Executive has been employed by the Company as its Chairman of the Board, President and Chief Executive Officer; WHEREAS, the Company desires to continue the services of the Executive, and the Executive desires to continue to provide such services to the Company, on the terms set forth in this Agreement; WHEREAS, the provisions of this Agreement were recommended by the Compensation Committee of the Company's Board of Directors on November 9, 1998; and WHEREAS, this Agreement was reviewed by special counsel to the Company and approved by the Company's Board of Directors on November 20, 1998. NOW, THEREFORE, in consideration of the mutual covenants and obligations hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows: 1. DEFINITIONS. (a) Affiliated Companies shall mean, with respect to the Company, any corporation, limited partnership, general partnership, association, joint-stock company, joint venture, trust, bank, trust company, land trust, business trust, fund or any organized group of persons, whether or not a legal entity, that is directly or indirectly controlled by the Company. (b) Base Salary shall have the meaning set forth in Section 4(a). (c) Board of Directors shall mean the Board of Directors of the Company. (d) Business of the Company shall mean the operation of a retail store chain which markets and sells apparel for women principally in sizes 14 and larger and any other future business in which the Company and its subsidiaries and Affiliated Companies engage that produces more than 10% of the Company's consolidated sales. 2 (e) By-laws shall mean the Restated By-laws of the Company as currently in force. (f) Cause shall mean the occurrence of one or more of the following events: (i) a judgment of conviction against the Executive or a plea of guilty has been entered for any felony which is both based on his personal actions (excluding liability imputed to him by reason of his position as an executive of the Company) and involves common law fraud, embezzlement, willful dishonesty or moral turpitude (the entry of a judgment or plea being the only event or circumstance sufficient to constitute Cause under this subparagraph (i)), provided, however, that any felony an essential element of which is predicated on the operation of a vehicle shall be deemed not to involve moral turpitude; (ii) (A) the Executive has willfully and continuously failed to perform his duties to the Company in any material respect, or (B) the Executive has failed in any material respect to follow specific directions of the Board of Directors in the performance of his duties; (iii) the Executive has demonstrated willful misconduct in the performance of his duties to the Company in any material respect and material economic harm to the Company has resulted; or (iv) there has been a breach in any material respect of any of the provisions of Section 11; provided, however, that the judgment of conviction or a plea of guilty referred to in subparagraph (i), the failure of performance referred to in subparagraph (ii), the misconduct referred to in subparagraph (iii), and the breach referred to in subparagraph (iv) shall constitute Cause for a maximum of only 90 days after the judgment of conviction or plea of guilty was entered, the failure of performance commenced, the material economic harm resulted, or the breach first took place, as the case may be. (g) Change of Control shall mean (i) the acquisition after the date first set forth above by any person (defined for the purposes of this paragraph to mean any person within the meaning of Section 13(d) of the Securities Exchange Act of 1934 ("Exchange Act")), other than the Company, the Executive or an employee benefit plan created by the Board of Directors for the benefit of the Company's 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 30% or more of the voting power in the election of Directors at the next meeting of the holders of voting 2 3 securities to be held for such purpose of all of the voting securities issued by the Company; (ii) the election of a majority of the Directors, elected at any meeting of the holders of voting securities of the Company, who were not nominated for such election by the Board of Directors or a duly constituted committee of the Board of Directors, or (iii) the merger or consolidation of the Company with, or transfer of substantially all of the assets of the Company to, another person; provided, however that any such acquisition, election, merger, consolidation or transfer that is approved in advance in writing by the Executive shall not constitute a Change of Control. (h) CPI shall have the meaning set forth in Section 4(a). (i) Cure Period shall have the meaning set forth in Section 14(c). (j) Group Benefits shall have the meaning set forth in Section 6(a). (k) Individual Disability Policy shall have the meaning set forth in Section 6(c). (l) Individual Life Policy shall have the meaning set forth in Section 6(b). (m) Options shall mean employee stock options under a benefit plan or arrangement between the Company and the Executive, including those which may be granted during the Term of Employment, held by the Executive or his assigns or donees. (n) Performance Bonus shall have the meaning set forth in Section 4(b). (o) Permanent Disability shall mean the inability of the Executive to perform his duties and responsibilities to the Company by reason of a physical or mental disability or infirmity (i) for a continuous period of four months or (ii) at such earlier time as the Executive submits medical evidence satisfactory to the Company that the Executive has a physical or mental disability or infirmity that will likely prevent him from substantially performing his duties and responsibilities for four months or longer (the date of such Permanent Disability shall be on the last day of such four-month period or the day on which the Executive submits such evidence, as the case may be). (p) Protected Information shall mean trade secrets, confidential or proprietary information, and all other knowledge, know-how, information, documents or materials, owned or developed by the Company, or otherwise in the possession of the Company, whether in tangible or intangible form, pertaining to the Business of the Company, the confidentiality of which the Company takes reasonable measures to protect, including, but not limited to, the Company's research and development, store operating results, identities and habits of customers and prospective 3 4 customers, suppliers, business relationships, products (including prices, costs, sales or content), processes, techniques, machinery, contracts, financial information or measures, business methods, future business plans, data bases, computer programs, designs, models, operating procedures, knowledge of the organization, and other information owned, developed or possessed by the Company; provided, however, that Protected Information shall not include information that shall become generally known to the public or the trade without violation of Section 11. (q) Resignation Compensation shall have the meaning set forth in Section 14(d). (r) Severance Pay shall have the meaning set forth in Section 14(c). (s) Successor shall have the meaning set forth in Section 20. (t) Tax shall mean all taxes on income, which shall be assumed to be at a rate equal to the sum of the highest marginal rates, including any applicable surcharges, of federal income tax, state income tax, local income tax, Medicare payroll tax and any similar income or payroll tax for a married citizen filing a joint return from the county of the Executive's residence, as now in effect or as amended from time to time. (u) Term of Employment shall mean the period of time commencing on the date first set forth above and ending on August 3, 2003 or such later date as may be mutually agreed upon by the Board of Directors and the Executive. (v) Termination Without Cause shall have the meaning set forth in Section 14(c). (w) Unauthorized shall mean: (i) in contravention of the Company's policies or procedures; (ii) otherwise inconsistent with the Company's measures to protect its interests in its Protected Information; or (iii) in contravention of any duty existing under law or contract. 2. TERM; AND LOCATION. (a) The Company hereby employs the Executive, and the Executive hereby accepts such employment, in the capacities and upon the terms and conditions hereinafter set forth, during the Term of Employment. (b) In no event shall the Executive's office be relocated without his prior consent. 4 5 3. DUTIES. (a) During the Term of Employment, the Executive shall serve as the President and Chief Executive Officer of the Company. In such capacity, the Executive shall perform such duties and shall have such responsibilities as are set forth in the By-laws and such additional duties and responsibilities, commensurate with his position and title, as may be determined and assigned to the Executive from time to time by the Board of Directors. Notwithstanding the above, the Executive shall not be required to perform any duties and responsibilities which would be likely to result in a non-compliance with or violation of any applicable law or regulation. The Executive shall report solely and directly to the Board of Directors; all other officers and other employees of the Company shall report directly to the Executive or the Executive's designees. No other employee of the Company or any subsidiary shall have authority and responsibilities that are generally equal to or greater than those of the Executive. (b) The Executive accepts such employment and hereby agrees to serve the Company faithfully, industriously and to the best of his ability in such capacities, with undivided loyalty, devoting substantially all of his business time, attention, knowledge, energy and skills to such employment as President and Chief Executive Officer of the Company except during vacation not to exceed three weeks in any year. The Executive may engage in the following additional activities: (i) continuing through a controlled corporation, Raphael Benaroya, Inc., to manage American Licensing Group Limited Partnership, subject to the restrictions contained in Section 11(h); (ii) serving as a director of not more than four business corporations in addition to Raphael Benaroya, Inc. that do not engage in the Business of the Company; (iii) overseeing personal and family investments in a manner in which the Executive does not actively operate portfolio companies in the ordinary course of business; and (iv) engaging in local, national and international charitable, relief, human rights, civic, religious, military and related activities on behalf of private organizations and governmental agencies; 5 6 provided, however, that the Executive's duties and responsibilities as President and Chief Executive Officer of the Company shall take precedence over his other activities except for not more than 45 consecutive days of military service in the event he is called to active duty in the armed forces of the United States or any other country. 4. COMPENSATION. As compensation to the Executive for performance of the services required hereunder and as consideration for his execution and delivery of this Agreement, the Company shall pay him (subject to Sections 7 and 14), and the Executive agrees to accept, the following salary and other compensation: (a) A base salary, payable in accordance with the regular executive payroll practices of the Company, at a rate of $550,000 per annum during the period ending on January 31, 1999 and thereafter at such higher rate as may be determined by the Compensation Committee of the Board of Directors, but in any event base salary shall increase as of February 1, 1999 by a percentage at least equal to the increase, if any, in the Consumer Price Index for All Urban Consumers for New York and Northern New Jersey published by the Bureau of Labor Statistics of the Department of Labor ("CPI") during the four-year period ending on January 31, 1999 and shall increase as of each anniversary of February 1, 1999 by a percentage at least equal to the increase, if any, in the CPI since the previous January 31st (as increased from time to time, the "Base Salary"). (b) The Executive shall continue to be eligible to receive, and the Company shall continue to pay, a semi-annual cash incentive compensation payment ("Performance Bonus") based on the Company's consolidated operating income for the six-month periods ending January 31st and July 31st, respectively, with a semi-annual award ranging from zero to 120% of Base Salary for the six-month period in accordance with past practice, provided, however, that the Performance Bonus shall be earned and fully vested in the Executive as of January 31st or July 31st, as the case may be, whether or not the Executive shall remain in the Company's employ after the Performance Bonus shall have vested and provided, further, that the Performance Bonus shall be paid to the Executive as soon as practicable after the consolidated operating income for the period in question shall be determined. (c) If the federal excise tax pursuant to Section 280G of the Code or any successor provision on "golden parachute" payments applies to any acceleration of the vesting of Options during the Term of Employment, the Company shall immediately pay the Executive (w) an amount equal to the excise tax incurred plus (x) an amount equal to the Tax with respect to the payment made pursuant to clause (w) of this sentence, plus (y) an amount equal to the federal excise tax on "golden parachute" payments with respect to the payment, if any, made pursuant to clause (x) of this sentence plus (z) an amount equal to the Tax with respect to the payment made pursuant to clause (y) of this sentence. 6 7 5. EXPENSES. The Executive will continue to be required to incur reasonable and necessary travel, business entertainment and other business expenses. The Company agrees to reimburse the Executive for all reasonable and necessary travel, business entertainment and other business expenses incurred or expended by the Executive incident to the performance of the Executive's duties hereunder, upon submission by the Executive to the Company of vouchers or expense statements satisfactorily evidencing such expenses. 6. EXECUTIVE BENEFITS. (a) The Company shall provide the Executive with benefits ("Group Benefits"), taken as a whole, that are at least equal to those provided by the Company to the other senior executives of the Company, including, without limitation, enhanced group disability insurance benefits at the level insured on the date first set forth above (or, if the group disability insurance can not be continued in force, the Company shall provide other disability benefits equivalent to the benefits under the group policy). (b) In addition to Group Benefits, the Company shall maintain in force the existing term life insurance policy on the Executive or a similar policy issued by an insurance company with an equal or higher rating (the "Individual Life Policy") in an amount of $3 million at the Company's expense. The Executive shall have the right to select and change the beneficiary(ies) of such life insurance policy. (c) The Company shall reimburse the Executive in the amount of $20,000 per annum with respect to the premium on the existing special supplemental long-term disability insurance policy covering the Executive (the "Individual Disability Policy") and the federal and state income taxes on such premium amount. (d) Group Benefits and the Individual Life Policy shall be provided while the Executive is employed by the Company under this Agreement and thereafter as provided pursuant to the terms of this Agreement. (e) The Executive will cooperate with the Company in maintaining key man life insurance up to $4 million during the Term of Employment. (f) All Options shall be fully vested and immediately exercisable after either Termination Without Cause or a Change of Control, anything in any stock option agreement between the Company and the Executive to the contrary notwithstanding. In the event of Termination Without Cause, Options shall be exercisable for the lesser of 90 days thereafter or the remainder of the term of the 7 8 Option. In the event of Change of Control, Options shall be exercisable until the earlier of 90 days after the termination of the Executive's employment hereunder (including resignation) or the expiration of the term of the Option. 7. PERMANENT DISABILITY; DEATH. (a) In the event of the Permanent Disability of the Executive during the Term of Employment, the Board of Directors shall, upon written notice to the Executive, have the right to terminate the Executive's employment hereunder by reason of Permanent Disability. (b) In the event of the death of the Executive during the Term of Employment, this Agreement shall automatically terminate. 8. BENEFITS UPON DEATH OR DISABILITY. In the event of the Executive's death or a termination of the Executive's employment by the Company due to Permanent Disability, the Executive, his executor or his heirs at law, as the case may be, shall be entitled to: (a) any Base Salary accrued or any Performance Bonus vested but not yet paid; (b) a pro rata Performance Bonus for the season in which death or Permanent Disability occurs determined and payable on the basis of the number of days worked during the season and the bonus percentage established for the season; (c) any accrued vacation pay; (d) reimbursement for expenses incurred but not yet paid prior to such death or Permanent Disability; (e) in the case of death, the proceeds of the Individual Life Policy and other compensation and benefits as may be provided in accordance with the terms and provisions of the Group Benefits or of this Agreement; (f) in the case of Permanent Disability, for five years following the date of Permanent Disability, first, COBRA health insurance benefits for the Executive and his dependents at the Company's expense until the COBRA benefits expire and thereafter, for the remainder of such five-year period, equivalent reimbursement of healthcare expenses directly by the Company; and (g) in the case of Permanent Disability, six monthly payments after the date of Permanent Disability, each equal to one-twelfth of the Base Salary in effect on the date of Permanent Disability, offset by any payments in accordance with the terms and provisions of the Group Benefits, the Individual Disability Policy or Supplementary Social Security Benefits. 8 9 The provisions of this Section 8 shall survive the termination of the Executive's employment hereunder. 9. REPRESENTATION, WARRANTY AND COVENANT OF EXECUTIVE. The Executive represents, warrants and covenants to the Company that he is not and will not become a party to any agreement, contract or understanding, whether employment or otherwise, which would in any way restrict or prohibit him from undertaking or performing his employment in accordance with the terms and conditions of this Agreement. 10. REPRESENTATION, WARRANTY AND COVENANT OF THE COMPANY. The Company represents and warrants that this Agreement constitutes a valid and legally binding obligation of the Company enforceable in accordance with the terms herein set forth, except to the extent that the enforceability of this Agreement may be affected by bankruptcy, insolvency, reorganization, moratorium, or similar laws or equitable principles affecting creditors' rights generally. The Company covenants that it shall give notice promptly to the Executive of the occurrence of Change of Control pursuant to Section 21. 11. RESTRICTIVE COVENANTS AND CONFIDENTIALITY. (a) The Executive agrees that he shall not: (i) solicit, raid, entice, encourage or induce any person, firm or corporation that at any time within one year prior to the termination of this Agreement shall have been an exclusive supplier to the Company, or any of its subsidiaries or Affiliated Companies, to become a supplier to any other person, firm or corporation that derives more than 10% of its sales, directly or indirectly, from a business the same as the Business of the Company and the Executive shall not approach any such person, firm or corporation for such purpose or authorize or knowingly approve the taking of such actions by any other person, firm or corporation or assist any such person, firm or corporation in taking such action; or (ii) solicit, raid, entice, encourage or induce any person who at any time within one year prior to the termination of this Agreement shall have been an employee of the Company, or any of its subsidiaries or Affiliated Companies, to become employed by any person, firm or corporation, and the Executive shall not approach any such employee for such purpose or authorize or knowingly approve the taking of such actions by any other person, firm or corporation or assist any such person, firm or corporation in taking such action. 9 10 (b) During the Term of Employment and thereafter, the Executive will not use, disclose or divulge, furnish or make accessible to anyone, directly or indirectly, any Protected Information in any Unauthorized manner or for any Unauthorized purpose, provided, however, that in the event that the Executive is required to disclose any Protected Information by court order or decree or in compliance with the rules and regulations of a governmental agency or in compliance with law, the Executive will provide the Company with prompt notice of such required disclosure so that the Company may seek an appropriate protective order and/or waive the Executive's compliance with the provisions of this Section 11 and provided, further, that if, in the absence of a protective order or the receipt of a waiver hereunder, the Executive is advised by his counsel that such disclosure is necessary to comply with such court order, decree, rules, regulation or law, he may disclose such information without liability hereunder. (c) The Executive agrees that all processes, techniques, know-how, inventions, plans, products, and devices developed, made or invented by the Executive, alone or with others in connection with the Executive's employment hereunder, during the Term of Employment, shall become and be the sole property of the Company unless released in writing by the Company. (d) The Executive agrees that the Executive shall not, directly or indirectly, within any area in the United States or elsewhere where the Company or any of its subsidiaries or Affiliated Companies is transacting business during the Term of Employment, engage or participate or make any financial investments in or become employed by, or act as an attorney, agent or principal of, or render advisory or other services to or for any person, firm or corporation, or in connection with any business activity (other than that of the Company and its subsidiaries or Affiliated Companies), that derives more than 10% of its sales, directly or indirectly, from a business the same as the Business of the Company. Nothing herein contained, however, shall restrict the Executive from overseeing personal and family investments, including any investments in not more than 3% of the voting securities in any company whose stock is listed on a national securities exchange or actively traded in the over-the-counter market, so long as in connection with such investments the Executive does not actively operate any such business or enterprise that derives more than 10% of its sales, directly or indirectly, from a business the same as the Business of the Company. (e) The Executive shall be bound by the provisions of Section 11(a) and (d), and shall perform his obligations pursuant to Section 11(a) and (d), during the Term of Employment and for 18 months thereafter, provided, however, that in the event of Termination Without Cause or resignation by the Executive in accordance with Section 14(d), the Executive shall be bound by the provisions of Section 11(a) and (d), and shall perform his obligations pursuant to Section 11(a) and (d), only in the event that the Company shall pay his Severance Pay in accordance with the provisions of Section 14(c) no later than the 15th day after the termination of the 10 11 Executive's employment under this Agreement or his Resignation Compensation in accordance with the provisions of Section 14(d) no later than the 15th day after the effective date of the Executive's resignation, as the case may be. For purposes of the proviso in the preceding sentence only, payment of Severance Pay or Resignation Compensation within the time specified above in an amount at least equal to the amount determined in advance to be due and owing to the Executive by a firm of independent public accountants of nationally recognized standing shall satisfy the condition of said proviso, and cause the Executive to be bound by the provisions of Section 11(a) and (d) and shall obligate the Executive to perform his obligations pursuant to Section 11(a) and (d) even if such amount is less than the amount actually due and owing. (f) The provisions of this Section 11 shall survive the termination of the Executive's employment hereunder, irrespective of the reason therefor. (g) The Executive acknowledges that the services to be rendered by the Executive are of a special, unique and extraordinary character and, in connection with such services, the Executive will have access to confidential information vital to the Company's and its subsidiaries and Affiliated Companies' businesses. By reason of this, the Executive consents and agrees that if the Executive violates any of the provisions of this Section 11, the Company and its subsidiaries and Affiliated Companies would sustain irreparable harm, and therefore, in addition to any other remedies which the Company may have under this Agreement or otherwise, the Company shall be entitled to an injunction from any court of competent jurisdiction restraining the Executive from committing or continuing any such violation of this Section 11. The Executive acknowledges that damages at law would not be an adequate remedy for violation of this Section 11, and the Executive therefore agrees that the provisions of this Section 11 may be specifically enforced against the Executive in any court of competent jurisdiction. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to the Company for such breach or threatened breach, including the recovery of damages from the Executive. (h) The provision of paragraphs (a), (b) and (d) of this Section 11 shall not apply to or restrict the activities of the Executive as the chief executive officer, a director and a principal stockholder of Raphael Benaroya, Inc., which is the sole general partner of American Licensing Group Limited Partnership ("ALG"), for so long as, and only for so long as, Raphael Benaroya, Inc. and ALG do not engage in the Business of the Company. The Executive's duties and responsibilities as President and Chief Executive Officer of the Company shall at all times take precedence over his activities on behalf of ALG. 11 12 12. DEDUCTIONS AND WITHHOLDING. The Executive agrees that the Company shall withhold from any and all compensation required to be paid to the Executive pursuant to this Agreement all Federal, state, local and/or other taxes which the Company determines are required to be withheld in accordance with applicable statues and/or regulations from time to time in effect. 13. MUTUAL NON-DISPARAGEMENT. Neither the Executive nor the Company will make or authorize any public statement disparaging the other in its or his business interests and affairs. Notwithstanding the foregoing, neither party shall be (i) required to make any statement which it or he believes to be false or inaccurate, or (ii) restricted in connection with any litigation, arbitration or similar proceeding or with respect to its response to any legal process. The provisions of this Section shall survive the termination of the Executive's employment hereunder, irrespective of the reason therefor. 14. TERMINATION. (a) Subject to Section 7(a), the Company shall terminate the Executive's employment under this Agreement prior to the expiration of the Term of Employment only if the Board of Directors of the Company removes the Executive from office by the affirmative vote of a majority of the directors of the Company who have not disqualified themselves because of a potential conflict of interest, at a meeting at which the Executive is accorded an opportunity to speak. In such case, this Agreement shall terminate and the Executive shall be removed from office effective when such vote is taken by the Board or on such later date as may be specified by the Board. (b) For purposes of this Agreement, removal of the Executive from office in accordance with subparagraph (a) shall be deemed to be for "Cause" as defined in Section 1(f) only if the Company delivers to the Executive within a reasonable time before the removal of the Executive from office a notice of termination for Cause specifying in reasonable detail the conviction or plea, material failure, misconduct and economic harm or breach by the Executive that is the basis for termination and the Executive shall have failed prior to his removal to correct the stated failure, misconduct and economic harm or breach in all material respects. (c) Subject to Section 7(a), in the event: (i) the Company terminates the Executive's employment under this Agreement pursuant to Section 14(a) without Cause, (ii) the Company terminates the Executive's employment under this Agreement for Cause by reason of a conviction that is later reversed on appeal and fails to reinstate him with full back pay, 12 13 (iii) (A) the Company breaches any of the covenants and agreements set forth in Sections 3(a), 4(a), (b) or (c), 5, 6(c) or (d), 14(a) or 15 (a) or (c), in any material respect, and (B) the Executive tenders to the Company a letter of resignation specifying such breach in reasonable detail and demanding Severance Pay, or (iv) a person other than the Executive is elected Chairman or Cochairman of the Board of the Company and the Executive tenders to the Company a letter of resignation specifying such election and demanding Severance Pay, (any termination or resignation under the circumstances referred to in Section 14(c)(i) through (iv) above being referred to as "Termination Without Cause" whether or not Cause shall exist) the Company shall pay the Executive within 15 days following the termination of the Executive's employment under this Agreement, an amount equal to three times the sum of (A) the annual Base Salary at the rate payable immediately prior to termination plus (B) the aggregate Performance Bonus with respect to the two consecutive most recently completed six-month seasons immediately prior to termination, plus (c) $20,000. If the federal excise tax pursuant to Section 280G of the Code or any successor provision on "golden parachute" payments applies to the payment made pursuant to the preceding sentence, to any acceleration of vesting of Options or to any other benefit or distribution to the Executive from the Company, the Company shall immediately pay the Executive an amount equal to the excise tax incurred plus (x) an amount equal to the Tax with respect to the amount of the excise tax, plus (y) an amount equal to the federal excise tax on "golden parachute" payments with respect to the payment, if any, made pursuant to clause (x) of this sentence plus (z) an amount equal to the Tax with respect to the payment made pursuant to clause (y) of this sentence (collectively with the payment made pursuant to the preceding sentence, "Severance Pay"). No demand or other notice from the Executive with respect to Severance Pay shall be necessary in connection with Section 14(c) (i) above. Anything in this Section 14(c) to the contrary notwithstanding, the Executive shall not be entitled to Severance Pay, and the Company shall have no obligation to pay Severance Pay, if: (x) within 15 days after the delivery of a letter of resignation (the "Cure Period"), the Company shall cure the Company's breach specified in the letter of resignation in all material respects (or shall begin in good faith to cure a breach of a nature that requires more than 15 days to cure in all material respects) and shall deliver to the Executive a notice to that effect; (y) the Board of Directors shall approve a resolution during the Cure Period requesting the Executive to withdraw his letter of resignation; and 13 14 (z) the Company shall deliver to the Executive during the Cure Period a certified copy of the Board resolution referred to in clause (y) hereof and a written offer to reinstate the Executive with full back pay and uninterrupted Group Benefits and other benefits under this Agreement, including eligibility for a Performance Bonus. (d) In the event (A) a Change of Control occurs on a day at the beginning of which the Executive is an employee of the Company, and (B) the Executive within 10 business days after first receiving notice from the Company of the Change of Control tenders a letter of resignation to the Company specifying such Change of Control (whether or not the Executive shall be an employee of the Company during the period between the end of the day preceding Change of Control and the tender of such letter) and demanding Resignation Compensation, the Company shall pay the Executive immediately upon the resignation of the Executive under this Section 14(d), an amount equal to three times the sum of (A) the annual Base Salary at the rate payable immediately prior to resignation, plus (B) $20,000. If the federal excise tax pursuant to Section 280G of the Code or any successor provision on "golden parachute" payments applies to the payment made pursuant to the preceding sentence, or to any other benefit or distribution to the Executive from the Company, the Company shall immediately pay the Executive an amount equal to the excise tax incurred plus (x) an amount equal to the Tax with respect to the amount of the excise tax, plus (y) an amount equal to the federal excise tax on "golden parachute" payments with respect to the payment, if any, made pursuant to clause (x) of this sentence plus (z) an amount equal to the Tax with respect to the payment made pursuant to clause (y) of this sentence (collectively with the payment made pursuant to the preceding sentence, "Resignation Compensation"). Notice of Change of Control shall be given to the Executive by the Company pursuant to Section 21, provided, however, that the Executive, in his discretion, may accept as notice filing with the SEC of reports setting forth facts that, taken together, constitute Change of Control. (e) In the event of Termination Without Cause or resignation by the Executive in accordance with Section 14(d): (i) the Executive shall be under no obligation to seek other employment and there shall be no offset against any amounts due the Executive under this Agreement on account of any remuneration attributable to any subsequent employment that the Executive may obtain (Severance Pay or Resignation Compensation is in the nature of liquidated damages and not in the nature of a penalty); and (ii) the Executive shall be entitled to the following benefits and additional payments: 14 15 (A) any Base Salary accrued or Performance Bonus vested but not yet paid; (B) a pro rata Performance Bonus for the season in which employment is terminated determined and payable on the basis of the number of days worked during the season and the bonus percentage established for the season; (C) any accrued vacation pay; (D) reimbursement for expenses incurred, but not paid prior to such termination of employment; and (E) (w) continuation at the Company's expense through the remainder of the Term of Employment of the Individual Life Policy, (x) COBRA health insurance benefits for the Executive and his dependents at the Company's expense until the COBRA benefits expire and thereafter, through the remainder, if any, of the Term of Employment equivalent reimbursement of healthcare expenses directly by the Company, (y) conversion at the Company's expense through the remainder of the Term of Employment of the group life insurance coverage on the Executive's life and (z) payment to the Executive on April 15th of each year of an amount equal to the Tax with respect to the payments made to the Executive pursuant to clauses (x) and (y) of this sentence in the preceding calendar year. (f) If the Company terminates the Executive's employment hereunder for Cause (except as provided in Section 14(c)(ii)), or in the event the Executive resigns (except as provided in Section 14(c)(iii) or (iv) or 14(d)), the Executive shall be entitled to: (i) any Base Salary accrued and any Performance Bonus vested but not paid; (ii) any accrued vacation pay; (iii) reimbursement for expenses incurred, but not yet paid prior to such termination of employment; and (iv) any other compensation and benefits that accrued prior to termination of employment as may be provided in accordance with the terms and provisions of the Group Benefits. (g) In the event the Company removes the Executive from office, and terminates the Executive's employment under this Agreement, or in the event the Executive resigns, the Executive shall continue to have the obligations provided for in Section 11 hereof. The provisions of this Section 14 shall survive the 15 16 termination of the Executive's employment hereunder, irrespective of the reason therefor. (h) The Executive shall accept the payments referred to in this Section 14 in full discharge and release of the Company of and from any further payment obligations under this Agreement except obligations under Sections 15 and 16. 15. INDEMNIFICATION. (a) The Company shall indemnify the Executive as provided in the By-laws. (b) In the event of payment of indemnities under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Executive. (c) The Company shall use reasonable efforts to obtain a directors' and officers' liability policy covering the Executive at the level insured on the date first set forth above and to maintain the policy during the Term of Employment and for three years thereafter. (d) The provisions of this Section 15 shall survive the termination of the Executive's employment hereunder. 16. ENFORCEMENT; INTEREST. If any amount owing to the Executive under this Agreement is not paid by the Company, or on its behalf, within 15 days after a written demand, claim or request for payment has been delivered or sent to the Company, the Executive may at any time thereafter bring suit against the Company to recover the unpaid amount and interest thereon and, if successful in whole or in part, the Executive shall be entitled to be paid also the expenses of prosecuting such suit, including reasonable attorneys' fees. Interest shall be payable from the date any amount is first due and payable to the Executive at a rate equal to the highest rate payable on any of the Company's indebtedness after the date of this Agreement but in no event at a rate higher than the maximum rate then permitted by law. 17. ENTIRE AGREEMENT. This Agreement, the By-laws, the stock option agreements between the Company and the Executive and the provisions of the Group Benefits embody the entire agreement of the parties with respect to the Executive's employment and shall be interpreted in accordance with the past practice of the parties. This Agreement may not be changed or terminated orally but only by an agreement in writing signed by the parties hereto. This Agreement cancels and supersedes any and all prior agreements and understandings between the parties hereto respecting the employment of the Executive by the Company and/or its subsidiaries or any Affiliated Company and the payment of severance pay. 16 17 18. WAIVER. The waiver by the Company of a breach of any provision of this Agreement by the Executive shall not operate or be construed as a waiver of any subsequent breach by him. The waiver by the Executive of a breach of any provision of this Agreement by the Company shall not operate or be construed as a waiver of any subsequent breach by the Company. 19. GOVERNING LAW. This Agreement shall be subject to, and governed by, the laws of the State of New Jersey. 20. ASSIGNABILITY. The obligations of the Executive may not be delegated and, except as to the designation of beneficiaries of insurance and similar benefits, the Executive may not, without the Company's written consent thereto, assign, transfer, convey, pledge, encumber, hypothecate or otherwise dispose of this Agreement or any interest herein. Any such attempted delegation or disposition shall be null and void ab initio and without effect. This Agreement and all of the Company's rights and obligations hereunder may be assigned or transferred by the Company to, and shall be binding upon and inure to the benefit of, any subsidiary of the Company or any Successor to the Company, but any such assignment shall not relieve the assigning party of any of its obligations hereunder. (The term "Successor" shall mean, with respect to the Company or any of its subsidiaries, any corporation or other business entity which, by merger, consolidation, purchase of the assets, or otherwise, acquires all or substantially all of the assets of the Company or such subsidiary.) 21. NOTICES. All notices, requests, demands and other communications hereunder shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, to the other party hereto at his or its address as set forth at the beginning of this Agreement and, in the case of the Company, addressed to the attention of its Secretary. A copy of each notice, request, demand, and other communication to the Company hereunder shall be sent by first class mail to Richard W. Rubenstein, Esq., Squire, Sanders & Dempsey, Huntington Center, 41 South High Street, 13th Floor, Columbus, Ohio 43215. Either party may change the address to which notices, requests, demands and other communications hereunder shall be sent by sending written notice of such change of address to the other party. 17 18 22. SEVERABILITY. If any provision of this Agreement as applied to either party or to any circumstances shall be adjudged by a court of competent jurisdiction to be void or unenforceable, the same shall in no way affect any other provision of this Agreement or the validity or enforceability of this Agreement. 23. SECTION HEADINGS. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 24. COUNTERPARTS. This Agreement may be executed in one or more counterparts, which shall, collectively and separately, constitute one agreement. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement in Rochelle Park, New Jersey, in duplicate originals on November 20, 1998. UNITED RETAIL GROUP, INC. By:/s/GEORGE R. REMETA Name: George R. Remeta Title: Vice Chairman /s/RAPHAEL BENAROYA Raphael Benaroya empagRB.sam KPC:JM 11/98 18 EX-99.3.8 3 EMPLOYMENT AGREEMENT: GEORGE R. REMETA 1 Exhibit No. 3.8 EMPLOYMENT AGREEMENT Agreement made as of the 20th day of November, 1998, between UNITED RETAIL GROUP, INC., a Delaware corporation, with principal offices at 365 West Passaic Street, Rochelle Park, New Jersey 07662-6563 (the "Company"), and GEORGE R. REMETA, residing at 25 Lee Way, Oakland, New Jersey 07436 (the "Executive"). WHEREAS, the Executive has been employed by the Company as its Vice Chairman, Secretary and Chief Financial Officer; WHEREAS, the Company desires to continue the services of the Executive, and the Executive desires to continue to provide such services to the Company, on the terms set forth in this Agreement; WHEREAS, the provisions of this Agreement were recommended by the Compensation Committee of the Company's Board of Directors on November 9, 1998; and WHEREAS, this Agreement was reviewed by special counsel to the Company and approved by the Company's Board of Directors on November 20, 1998. NOW, THEREFORE, in consideration of the mutual covenants and obligations hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows: 1. DEFINITIONS. (a) Affiliated Companies shall mean, with respect to the Company, any corporation, limited partnership, general partnership, association, joint-stock company, joint venture, trust, bank, trust company, land trust, business trust, fund or any organized group of persons, whether or not a legal entity, that is directly or indirectly controlled by the Company. (b) Base Salary shall have the meaning set forth in Section 4(a). (c) Board of Directors shall mean the Board of Directors of the Company. (d) Business of the Company shall mean the operation of a retail store chain which markets and sells apparel for women principally in sizes 14 and larger and any other future business in which the Company and its subsidiaries and Affiliated Companies engage that produces more than 10% of the Company's consolidated sales. 2 (e) By-laws shall mean the Restated By-laws of the Company as currently in force. (f) Cause shall mean the occurrence of one or more of the following events: (i) a judgment of conviction against the Executive or a plea of guilty has been entered for any felony which is both based on his personal actions (excluding liability imputed to him by reason of his position as an executive of the Company) and involves common law fraud, embezzlement, willful dishonesty or moral turpitude (the entry of a judgment or plea being the only event or circumstance sufficient to constitute Cause under this subparagraph (i)), provided, however, that any felony an essential element of which is predicated on the operation of a vehicle shall be deemed not to involve moral turpitude; (ii) (A) the Executive has willfully and continuously failed to perform his duties to the Company in any material respect, or (B) the Executive has failed in any material respect to follow specific directions of the Board of Directors or the Chief Executive Officer in the performance of his duties; (iii) the Executive has demonstrated willful misconduct in the performance of his duties to the Company in any material respect and material economic harm to the Company has resulted; or (iv) there has been a breach in any material respect of any of the provisions of Section 11; provided, however, that the judgment of conviction or plea of guilty referred to in subparagraph (i), the failure of performance referred to in subparagraph (ii), the misconduct referred to in subparagraph (iii), and the breach referred to in subparagraph (iv) shall constitute Cause for a maximum of only 90 days after the judgment of conviction or plea of guilty was entered, the failure of performance commenced, the material economic harm resulted, or the breach first took place, as the case may be. (g) Change of Control shall mean resignation or removal (including failure to reelect) for any reason of the Chief Executive Officer of the Company, within 90 days after either (i) the acquisition after the date first set forth above by any person (defined for the purposes of this paragraph to mean any person within the meaning of Section 13(d) of the Securities Exchange Act of 1934 ("Exchange Act")), other than the Company, the resigned or removed Chief Executive Officer, the Executive or an employee benefit plan created by the Board of Directors for the benefit of the Company's 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 2 3 acquisition, such person is the beneficial owner of securities issued by the Company having 30% or more of the voting power in the election of Directors at the next meeting of the holders of voting securities to be held for such purpose of all of the voting securities issued by the Company, (ii) the election of a majority of the Directors, elected at any meeting of the holders of voting securities of the Company, who were not nominated for such election by the Board of Directors or a duly constituted committee of the Board of Directors, or (iii) the merger or consolidation of the Company with, or transfer of substantially all of the assets of the Company to, another person; provided, however that any such acquisition, election, merger, consolidation or transfer that is approved in advance in writing by the Executive shall not be a predicate for a Change of Control. (h) CPI shall have the meaning set forth in Section 4(a). (i) Cure Period shall have the meaning set forth in Section 14(b). (j) Group Benefits shall have the meaning set forth in Section 6(a). (k) Individual Disability Policy shall have the meaning set forth in Section 6(c). (l) Individual Life Policy shall have the meaning set forth in Section 6(b). (m) Options shall mean employee stock options under a benefit plan or arrangement between the Company and the Executive, including those which may be granted during the Term of Employment, held by the Executive or his assigns or donees. (n) Performance Bonus shall have the meaning set forth in Section 4(b). (o) Permanent Disability shall mean the inability of the Executive to perform his duties and responsibilities to the Company by reason of a physical or mental disability or infirmity (i) for a continuous period of four months or (ii) at such earlier time as the Executive submits medical evidence satisfactory to the Company that the Executive has a physical or mental disability or infirmity that will likely prevent him from substantially performing his duties and responsibilities for four months or longer (the date of such Permanent Disability shall be on the last day of such four-month period or the day on which the Executive submits such evidence, as the case may be). (p) Protected Information shall mean trade secrets, confidential or proprietary information, and all other knowledge, know-how, information, documents or materials, owned or developed by the Company, or otherwise in the possession of the Company, whether in tangible or intangible form, pertaining to the Business of the Company, the confidentiality of which the Company takes reasonable measures to protect, including, but not limited to, the Company's research and development, 3 4 store operating results, identities and habits of customers and prospective customers, suppliers, business relationships, products (including prices, costs, sales or content), processes, techniques, machinery, contracts, financial information or measures, business methods, future business plans, data bases, computer programs, designs, models, operating procedures, knowledge of the organization, and other information owned, developed or possessed by the Company; provided, however, that Protected Information shall not include information that shall become generally known to the public or the trade without violation of Section 11. (q) Resignation Compensation shall have the meaning set forth in Section 14(c). (r) Severance Pay shall have the meaning set forth in Section 14(b). (s) Successor shall have the meaning set forth in Section 20. (t) Tax shall mean all taxes on income, which shall be assumed to be at a rate equal to the sum of the highest marginal rates, including any applicable surcharges, of federal income tax, state income tax, local income tax, Medicare payroll tax and any similar income or payroll tax for a married citizen filing a joint return from the county of the Executive's residence, as now in effect or as amended from time to time. (u) Term of Employment shall mean the period of time commencing on the date first set forth above and ending on August 3, 2003 or such later date as may be mutually agreed upon by the Company and the Executive. (v) Termination Without Cause shall have the meaning set forth in Section 14(b). (w) Unauthorized shall mean: (i) in contravention of the Company's policies or procedures; (ii) otherwise inconsistent with the Company's measures to protect its interests in its Protected Information; or (iii) in contravention of any duty existing under law or contract. 2. TERM. The Company hereby employs the Executive, and the Executive hereby accepts such employment, in the capacities and upon the terms and conditions hereinafter set forth, during the Term of Employment. 3. DUTIES. (a) During the Term of Employment, the Executive shall serve as the Secretary and Chief Financial Officer of the Company. In such capacity, the Executive shall supervise the preparation of the Company's financial statements and budgets, shall attend all meetings of the Board of Directors and shall perform such other duties 4 5 as may be determined and assigned to the Executive from time to time by the Board of Directors and the Chief Executive Officer. Notwithstanding the above, the Executive shall not be required to perform any duties and responsibilities which would be likely to result in a non-compliance with or violation of any applicable law or regulation. The Executive shall report solely and directly to the Chief Executive Officer. (b) The Executive accepts such employment and hereby agrees to serve the Company faithfully, industriously and to the best of his ability in such capacities, with undivided loyalty, devoting substantially all of his professional time, attention, knowledge, energy and skills to such employment except during vacation not to exceed three weeks in any year. The Executive may oversee personal and family investments in a manner in which the Executive does not actively operate portfolio companies in the ordinary course of business. 4. COMPENSATION. As compensation to the Executive for performance of the services required hereunder and as consideration for his execution and delivery of this Agreement, the Company shall pay him (subject to Sections 7 and 14), and the Executive agrees to accept, the following salary and other compensation: (a) A base salary, payable in accordance with the regular executive payroll practices of the Company, at a rate of $380,000 per annum during the period ending on January 31, 1999 and thereafter at such higher rate as may be determined by the Compensation Committee of the Board of Directors, but in any event base salary shall increase as of February 1, 1999 by a percentage at least equal to the increase, if any, in the Consumer Price Index for All Urban Consumers for New York and Northern New Jersey published by the Bureau of Labor Statistics of the Department of Labor ("CPI") since January 31, 1998 and shall increase as of each anniversary of February 1, 1999 by a percentage at least equal to the increase, if any, in the CPI since the previous January 31st (as increased from time to time, the "Base Salary"). (b) The Executive shall continue to be eligible to receive, and the Company shall continue to pay, a semi-annual cash incentive compensation payment ("Performance Bonus") based on the Company's consolidated operating income for the six-month periods ending January 31st and July 31st, respectively, with a semi-annual award ranging from zero to 100% of Base Salary for the six-month period in accordance with past practice, provided, however, that the Performance Bonus shall be earned and fully vested in the Executive as of January 31st or July 31st, as the case may be, whether or not the Executive shall remain in the Company's employ after the Performance Bonus shall have vested and provided, further, that the Performance Bonus shall be paid to the Executive as soon as practicable after the consolidated operating income for the period in question shall be determined. 5 6 (c) If the federal excise tax pursuant to Section 280G of the Code or any successor provision on "golden parachute" payments applies to any acceleration of the vesting of Options during the Term of Employment, the Company shall immediately pay the Executive (w) an amount equal to the excise tax incurred plus (x) an amount equal to the Tax with respect to the payment made pursuant to clause (w) of this sentence, plus (y) an amount equal to the federal excise tax on "golden parachute" payments with respect to the payment, if any, made pursuant to clause (x) of this sentence plus (z) an amount equal to the Tax with respect to the payment made pursuant to clause (y) of this sentence. 5. EXPENSES. The Executive will continue to be required to incur reasonable and necessary travel, business entertainment and other business expenses. The Company agrees to reimburse the Executive for all reasonable and necessary travel, business entertainment and other business expenses incurred or expended by the Executive incident to the performance of the Executive's duties hereunder, upon submission by the Executive to the Company of vouchers or expense statements satisfactorily evidencing such expenses. 6. EXECUTIVE BENEFITS. (a) The Company shall provide the Executive with benefits ("Group Benefits"), taken as a whole, that are at least equal to those provided by the Company to the other senior executives of the Company, including, without limitation, enhanced group disability insurance benefits at the level insured on the date first set forth above (or, if the group disability insurance can not be continued in force, the Company shall provide other disability benefits equivalent to the benefits under the group policy). (b) In addition to Group Benefits, the Company shall maintain in force the existing term life insurance policy on the Executive or a similar policy issued by an insurance company with an equal or higher rating (the "Individual Life Policy") in the same amount at the Company's expense. The Executive shall have the right to select and change the beneficiary(ies) of such life insurance policy. (c) The Company shall reimburse the Executive in the amount of $4,000 per annum with respect to the premium on the existing special supplemental long-term disability insurance policy covering the Executive (the "Individual Disability Policy") and the federal and state income taxes on such premium amount. (d) Group Benefits and the Individual Life Policy shall be provided while the Executive is employed by the Company under this Agreement and thereafter as provided pursuant to the terms of this Agreement. 6 7 (e) All Options shall be fully vested and immediately exercisable after either Termination Without Cause or a Change of Control, anything in any stock option agreement between the Company and the Executive to the contrary notwithstanding. In the event of Termination Without Cause, Options shall be exercisable for the lesser of 90 days thereafter or the remainder of the term of the Option. In the event of Change of Control, Options shall be exercisable until the earlier of 90 days after the termination of the Executive's employment hereunder (including resignation) or the expiration of the term of the Option. 7. PERMANENT DISABILITY; DEATH. (a) In the event of the Permanent Disability of the Executive during the Term of Employment, the Company shall, upon written notice to the Executive, have the right to terminate the Executive's employment hereunder by reason of Permanent Disability. (b) In the event of the death of the Executive during the Term of Employment, this Agreement shall automatically terminate. 8. BENEFITS UPON DEATH OR DISABILITY. In the event of the Executive's death or a termination of the Executive's employment by the Company due to Permanent Disability, the Executive, his executor or his heirs at law, as the case may be, shall be entitled to: (a) any Base Salary accrued or any Performance Bonus vested but not yet paid; (b) a pro rata Performance Bonus for the season in which death or Permanent Disability occurs determined and payable on the basis of the number of days worked during the season and the bonus percentage established for the season; (c) any accrued vacation pay; (d) reimbursement for expenses incurred but not yet paid prior to such death or Permanent Disability; (e) in the case of death, the proceeds of the Individual Life Policy and any other compensation and benefits as may be provided in accordance with the terms and provisions of the Group Benefits or of this Agreement; (f) in the case of Permanent Disability, for five years following the date of Permanent Disability, first, COBRA health insurance benefits for the Executive and his dependents at the Company's expense until the COBRA benefits expire and thereafter, for the remainder of such five-year period, equivalent reimbursement of healthcare expenses directly by the Company; and 7 8 (g) in the case of Permanent Disability, six monthly payments after the date of Permanent Disability, each equal to one-twelfth of the Base Salary in effect on the date of Permanent Disability, offset by any payments in accordance with the terms and provisions of the Group Benefits, the Individual Disability Policy or Supplemental Social Security benefits. The provisions of this Section 8 shall survive the termination of the Executive's employment hereunder. 9. REPRESENTATION, WARRANTY AND COVENANT OF EXECUTIVE. The Executive represents, warrants and covenants to the Company that he is not and will not become a party to any agreement, contract or understanding, whether employment or otherwise, which would in any way restrict or prohibit him from undertaking or performing his employment in accordance with the terms and conditions of this Agreement. 10. REPRESENTATION, WARRANTY AND COVENANT OF THE COMPANY. The Company represents and warrants that this Agreement constitutes a valid and legally binding obligation of the Company enforceable in accordance with the terms herein set forth, except to the extent that the enforceability of this Agreement may be affected by bankruptcy, insolvency, reorganization, moratorium, or similar laws or equitable principles affecting creditors' rights generally. The Company covenants that it shall give notice promptly to the Executive of the occurrence of Change of Control pursuant to Section 21. 11. RESTRICTIVE COVENANTS AND CONFIDENTIALITY. (a) The Executive agrees that he shall not: (i) solicit, raid, entice, encourage or induce any person, firm or corporation that at any time within one year prior to the termination of this Agreement shall have been an exclusive supplier to the Company, or any of its subsidiaries or Affiliated Companies, to become a supplier to any other person, firm or corporation that derives more than 10% of its sales, directly or indirectly, from a business the same as the Business of the Company and the Executive shall not approach any such person, firm or corporation for such purpose or authorize or knowingly approve the taking of such actions by any other person, firm or corporation or assist any such person, firm or corporation in taking such action; or (ii) solicit, raid, entice, encourage or induce any person who at any time within one year prior to the termination of this Agreement shall have been an employee of the Company, or any of its subsidiaries or Affiliated Companies, to become employed by any person, firm or corporation, and 8 9 the Executive shall not approach any such employee for such purpose or authorize or knowingly approve the taking of such actions by any other person, firm or corporation or assist any such person, firm or corporation in taking such action. (b) During the Term of Employment and thereafter, the Executive will not use, disclose or divulge, furnish or make accessible to anyone, directly or indirectly, any Protected Information in any Unauthorized manner or for any Unauthorized purpose, provided, however, that in the event that the Executive is required to disclose any Protected Information by court order or decree or in compliance with the rules and regulations of a governmental agency or in compliance with law, the Executive will provide the Company with prompt notice of such required disclosure so that the Company may seek an appropriate protective order and/or waive the Executive's compliance with the provisions of this Section 11 and provided, further, that if, in the absence of a protective order or the receipt of a waiver hereunder, the Executive is advised by his counsel that such disclosure is necessary to comply with such court order, decree, rules, regulation or law, he may disclose such information without liability hereunder. (c) The Executive agrees that all processes, techniques, know-how, inventions, plans, products, and devices developed, made or invented by the Executive, alone or with others in connection with the Executive's employment hereunder, during the Term of Employment, shall become and be the sole property of the Company unless released in writing by the Company. (d) The Executive agrees that the Executive shall not, directly or indirectly, within any area in the United States or elsewhere where the Company or any of its subsidiaries or Affiliated Companies is transacting business during the Term of Employment, engage or participate or make any financial investments in or become employed by, or act as an attorney, agent or principal of, or render advisory or other services to or for any person, firm or corporation, or in connection with any business activity (other than that of the Company and its subsidiaries or Affiliated Companies), that derives more than 10% of its sales, directly or indirectly, from a business the same as the Business of the Company. Nothing herein contained, however, shall restrict the Executive from overseeing personal and family investments, including any investments in not more than 3% of the voting securities in any company whose stock is listed on a national securities exchange or actively traded in the over-the-counter market, so long as in connection with such investments the Executive does not actively operate any such business or enterprise that derives more than 10% of its sales, directly or indirectly, from a business the same as the Business of the Company. 9 10 (e) The Executive shall be bound by the provisions of Section 11(a) and (d), and shall perform his obligations pursuant to Section 11(a) and (d), during the Term of Employment and for 18 months thereafter, provided, however, that in the event of Termination Without Cause or resignation by the Executive in accordance with Section 14(c), the Executive shall be bound by the provisions of Section 11(a) and (d), and shall perform his obligations pursuant to Section 11(a) and (d), only in the event that the Company shall pay his Severance Pay in accordance with the provisions of Section 14(b) no later than the 15th day after the termination of the Executive's employment under this Agreement or his Resignation Compensation in accordance with the provisions of Section 14(c) no later than the 15th day after the effective date of the Executive's resignation, as the case may be. For purposes of the proviso in the preceding sentence only, payment of Severance Pay or Resignation Compensation within the time specified above in an amount at least equal to the amount determined in advance to be due and owing to the Executive by a firm of independent public accountants of nationally recognized standing shall satisfy the condition of said proviso, and cause the Executive to be bound by the provisions of Section 11(a) and (d) and shall obligate the Executive to perform his obligations pursuant to Section 11(a) and (d) even if such amount is less than the amount actually due and owing. (f) The provisions of this Section 11 shall survive the termination of the Executive's employment hereunder, irrespective of the reason therefor. (g) The Executive acknowledges that the services to be rendered by the Executive are of a special, unique and extraordinary character and, in connection with such services, the Executive will have access to confidential information vital to the Company's and its subsidiaries and Affiliated Companies' businesses. By reason of this, the Executive consents and agrees that if the Executive violates any of the provisions of this Section 11, the Company and its subsidiaries and Affiliated Companies would sustain irreparable harm, and therefore, in addition to any other remedies which the Company may have under this Agreement or otherwise, the Company shall be entitled to an injunction from any court of competent jurisdiction restraining the Executive from committing or continuing any such violation of this Section 11. The Executive acknowledges that damages at law would not be an adequate remedy for violation of this Section 11, and the Executive therefore agrees that the provisions of this Section 11 may be specifically enforced against the Executive in any court of competent jurisdiction. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to the Company for such breach or threatened breach, including the recovery of damages from the Executive. 10 11 12. DEDUCTIONS AND WITHHOLDING. The Executive agrees that the Company shall withhold from any and all compensation required to be paid to the Executive pursuant to this Agreement all Federal, state, local and/or other taxes which the Company determines are required to be withheld in accordance with applicable statues and/or regulations from time to time in effect. 13. MUTUAL NON-DISPARAGEMENT. Neither the Executive nor the Company will make or authorize any public statement disparaging the other in its or his business interests and affairs. Notwithstanding the foregoing, neither party shall be (i) required to make any statement which it or he believes to be false or inaccurate, or (ii) restricted in connection with any litigation, arbitration or similar proceeding or with respect to its response to any legal process. The provisions of this Section shall survive the termination of the Executive's employment hereunder, irrespective of the reason therefor. 14. TERMINATION. (a) For purposes of this Agreement, removal of the Executive from office shall be deemed to be for "Cause" as defined in Section 1(f) only if the Company delivers to the Executive within a reasonable time before the removal of the Executive from office a notice of termination for Cause specifying in reasonable detail the conviction or plea, material failure, misconduct and economic harm or breach by the Executive that is the basis for termination and the Executive shall have failed prior to his removal to correct the stated failure, misconduct and economic harm or breach in all material respects. (b) Subject to Section 7(a), in the event: (i) the Company terminates the Executive's employment under this Agreement without Cause, (ii) the Company terminates the Executive's employment under this Agreement for Cause by reason of a conviction that is later reversed on appeal and fails to reinstate him with full back pay, or (iii) (A) the Company breaches any of the covenants and agreements set forth in Sections 3(a), 4, 5, 6(c) or (d), or 15(a) or (c), in any material respect, and (B) the Executive tenders to the Company a letter of resignation specifying such breach in reasonable detail and demanding Severance Pay, (any termination or resignation under the circumstances referred to in Section 14(b)(i) through (iii) above being referred to as "Termination Without Cause" whether or not Cause shall exist) the Company shall pay the Executive within 15 days following the termination of the Executive's employment under this 11 12 Agreement, an amount equal to three times the sum of (A) the annual Base Salary at the rate payable immediately prior to termination plus (B) the aggregate Performance Bonus with respect to the two consecutive most recently completed six-month seasons immediately prior to termination, plus (C) $4,000. If the federal excise tax pursuant to Section 280G of the Internal Revenue Code (the "Code") or any successor provision on "golden parachute" payments applies to the payment made pursuant to the preceding sentence, to any acceleration of vesting of Options or to any other benefit or distribution to the Executive from the Company, the Company shall immediately pay the Executive an amount equal to the excise tax incurred plus (x) an amount equal to the Tax with respect to the amount of the excise tax, plus (y) an amount equal to the federal excise tax on "golden parachute" payments with respect to the payment, if any, made pursuant to clause (x) of this sentence plus (z) an amount equal to the Tax with respect to the payment made pursuant to clause (y) of this sentence (collectively with the payment made pursuant to the preceding sentence, "Severance Pay"). No demand or other notice from the Executive with respect to Severance Pay shall be necessary in connection with Section 14(b) (i) above. Anything in this Section 14(b) to the contrary notwithstanding, the Executive shall not be entitled to Severance Pay, and the Company shall have no obligation to pay Severance Pay, if: (x) within 15 days after the delivery of a letter of resignation to the Company (the "Cure Period") pursuant to Section 14(b)(iii) the Company shall cure the Company's breach specified in the letter of resignation in all material respects (or shall begin in good faith to cure a breach of a nature that requires more than 15 days to cure in all material respects) and shall deliver to the Executive a notice to that effect; (y) during the Cure Period the Chief Executive Officer shall request in writing that the Executive withdraw his letter of resignation pursuant to Section 14(b)(iii); and (z) the Company shall deliver to the Executive during the Cure Period a written offer to reinstate the Executive with full back pay and uninterrupted Group Benefits and other benefits under this Agreement, including eligibility for a Performance Bonus. (c) In the event (A) a Change of Control occurs on a day at the beginning of which the Executive is an employee of the Company, and (B) the Executive within 10 business days after first receiving notice from the Company of the Change of Control tenders a letter of resignation to the Company specifying such Change of Control (whether or not the Executive shall be an employee of the Company during the period between the end of the day preceding Change of Control and the 12 13 tender of such letter) and demanding Resignation Compensation, the Company shall pay the Executive immediately upon the resignation of the Executive under this Section 14(c), an amount equal to three times the sum of (A) the annual Base Salary at the rate payable immediately prior to resignation, plus (B) $4,000. If the federal excise tax pursuant to Section 280G of the Code or any successor provision on "golden parachute" payments applies to the payment made pursuant to the preceding sentence or to any other benefit or distribution to the Executive from the Company, the Company shall immediately pay the Executive an amount equal to the excise tax incurred plus (x) an amount equal to the Tax with respect to the amount of the excise tax, plus (y) an amount equal to the federal excise tax on "golden parachute" payments with respect to the payment, if any, made pursuant to clause (x) of this sentence plus (z) an amount equal to the Tax with respect to the payment made pursuant to clause (y) of this sentence (collectively with the payment made pursuant to the preceding sentence, "Resignation Compensation"). Notice of Change of Control shall be given to the Executive by the Company pursuant to Section 21, provided, however, that the Executive, in his discretion, may accept as notice filing with the SEC of reports setting forth facts that, taken together, constitute Change of Control. (d) In the event of Termination Without Cause or resignation by the Executive in accordance with Section 14(c): (i) the Executive shall be under no obligation to seek other employment and there shall be no offset against any amounts due the Executive under this Agreement on account of any remuneration attributable to any subsequent employment that the Executive may obtain (Severance Pay or Resignation Compensation is in the nature of liquidated damages and not in the nature of a penalty); and (ii) the Executive shall be entitled to the following benefits and additional payments: (A) any Base Salary accrued or Performance Bonus vested but not yet paid; (B) a pro rata Performance Bonus for the season in which employment is terminated determined and payable on the basis of the number of days worked during the season and the bonus percentage established for the season; (C) any accrued vacation pay; (D) reimbursement for expenses incurred, but not paid prior to such termination of employment; and 13 14 (E) (w) continuation at the Company's expense through the remainder of the Term of Employment of the Individual Life Policy, (x) COBRA health insurance benefits for the Executive and his dependents at the Company's expense until the COBRA benefits expire and thereafter, through the remainder, if any, of the Term of Employment equivalent reimbursement of healthcare expenses directly by the Company, (y) conversion at the Company's expense through the remainder of the Term of Employment of the group life insurance coverage on the Executive's life and (z) payment to the Executive on April 15th of each year of an amount equal to the Tax with respect to the payments made to the Executive pursuant to clauses (x) and (y) of this sentence in the preceding calendar year. (e) If the Company terminates the Executive's employment hereunder for Cause (except as provided in Section 14(b)(ii)), or in the event the Executive resigns (except as provided in Section 14(b)(iii) or 14(c)), the Executive shall be entitled to: (i) any Base Salary accrued and any Performance Bonus vested but not paid; (ii) any accrued vacation pay; (iii) reimbursement for expenses incurred, but not yet paid prior to such termination of employment; and (iv) any other compensation and benefits that accrued prior to termination of employment as may be provided in accordance with the terms and provisions of the Group Benefits. (f) In the event the Company removes the Executive from office, and terminates the Executive's employment under this Agreement, or in the event the Executive resigns, the Executive shall continue to have the obligations provided for in Section 11 hereof. The provisions of this Section 14 shall survive the termination of the Executive's employment hereunder, irrespective of the reason therefor. (g) The Executive shall accept the payments referred to in this Section 14 in full discharge and release of the Company of and from any further payment obligations under this Agreement except obligations under Sections 15 and 16. 15. INDEMNIFICATION. (a) The Company shall indemnify the Executive as provided in the By-laws. (b) In the event of payment of indemnities under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Executive. 14 15 (c) The Company shall use reasonable efforts to obtain a directors' and officers' liability insurance policy covering the Executive at the level insured on the date first set forth above and to maintain the policy during the Term of Employment and for three years thereafter. (d) The provisions of this Section 15 shall survive the termination of the Executive's employment hereunder. 16. ENFORCEMENT; INTEREST. If any amount owing to the Executive under this Agreement is not paid by the Company, or on its behalf, within 15 days after a written demand, claim or request for payment has been delivered or sent to the Company, the Executive may at any time thereafter bring suit against the Company to recover the unpaid amount and interest thereon and, if successful in whole or in part, the Executive shall be entitled to be paid also the expenses of prosecuting such suit, including reasonable attorneys' fees. Interest shall be payable from the date any amount is first due and payable to the Executive at a rate equal to the highest rate payable on any of the Company's indebtedness after the date of this Agreement but in no event at a rate higher than the maximum rate then permitted by law. 17. ENTIRE AGREEMENT. This Agreement, the By-laws, the stock option agreements between the Company and the Executive and the provisions of the Group Benefits embody the entire agreement of the parties with respect to the Executive's employment and shall be interpreted in accordance with the past practice of the parties. This Agreement may not be changed or terminated orally but only by an agreement in writing signed by the parties hereto. This Agreement cancels and supersedes any and all prior agreements and understandings between the parties hereto respecting the employment of the Executive by the Company and/or its subsidiaries or any Affiliated Company and the payment of severance pay. 18. WAIVER. The waiver by the Company of a breach of any provision of this Agreement by the Executive shall not operate or be construed as a waiver of any subsequent breach by him. The waiver by the Executive of a breach of any provision of this Agreement by the Company shall not operate or be construed as a waiver of any subsequent breach by the Company. 19. GOVERNING LAW. This Agreement shall be subject to, and governed by, the laws of the State of New Jersey. 15 16 20. ASSIGNABILITY. The obligations of the Executive may not be delegated and, except as to the designation of beneficiaries of insurance and similar benefits, the Executive may not, without the Company's written consent thereto, assign, transfer, convey, pledge, encumber, hypothecate or otherwise dispose of this Agreement or any interest herein. Any such attempted delegation or disposition shall be null and void ab initio and without effect. This Agreement and all of the Company's rights and obligations hereunder may be assigned or transferred by the Company to, and shall be binding upon and inure to the benefit of, any subsidiary of the Company or any Successor to the Company, but any such assignment shall not relieve the assigning party of any of its obligations hereunder. (The term "Successor" shall mean, with respect to the Company or any of its subsidiaries, any corporation or other business entity which, by merger, consolidation, purchase of the assets, or otherwise, acquires all or substantially all of the assets of the Company or such subsidiary.) 21. NOTICES. All notices, requests, demands and other communications hereunder shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, to the other party hereto at his or its address as set forth at the beginning of this Agreement and, in the case of the Company, addressed to the attention of its General Counsel. Either party may change the address to which notices, requests, demands and other communications hereunder shall be sent by sending written notice of such change of address to the other party. 22. SEVERABILITY. If any provision of this Agreement as applied to either party or to any circumstances shall be adjudged by a court of competent jurisdiction to be void or unenforceable, the same shall in no way affect any other provision of this Agreement or the validity or enforceability of this Agreement. 23. SECTION HEADINGS. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 16 17 24. COUNTERPARTS. This Agreement may be executed in one or more counterparts, which shall, collectively and separately, constitute one agreement as of the date first set forth above. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement in Rochelle Park, New Jersey, in duplicate originals on November 20, 1998. UNITED RETAIL GROUP, INC. By:/s/RAPHAEL BENAROYA Name: Raphael Benaroya Title: Chairman of the Board /s/GEORGE R. REMETA George R. Remeta empagGRR.sam KPC:JW 11/98 17 -----END PRIVACY-ENHANCED MESSAGE-----