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EXHIBIT 10.1
THIS AGREEMENT MUST BE RETURNED TO THE COMPANY IN THE EVENT THAT THE OPTION
GRANTED HEREUNDER IS EXERCISED IN WHOLE OR IN PART.
1998 STOCK OPTION AGREEMENT
This 1998 STOCK OPTION AGREEMENT, dated May 21, 1998, between XXXXXXX XXXXXXXX,
residing at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 (the "Optionee"),
and UNITED RETAIL GROUP, INC., with offices at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxx
Xxxx, Xxx Xxxxxx 00000 (the "Company").
WHEREAS, the Company desires to attract and retain the best available associates
and to provide long range inducements for them to remain associated with the
Company; and
WHEREAS, on May 21, 1998, the stockholders of the Company authorized the
execution and delivery of this Agreement by the Company;
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. DEFINITIONS. The following terms have the following meanings when
used in this Agreement, in both singular and plural forms:
"ASSIGNEE" means a Charity or a member of the immediate family of the Optionee,
to whom the Optionee shall have assigned one or more Options.
"ASSOCIATE" means a full time employee of the Company.
"CHANGE IN CONTROL" means (a) the acquisition after the Date of Grant by any
person (defined for the purposes of this subsection to mean any person within
the meaning of Section 13(d) of the Securities Exchange Act of 1934 (the
"Exchange Act")), other than the Company, the Chief Executive Officer of the
Company, or an employee benefit plan created by the Board of Directors of the
Company for the benefit of its associates, either directly or indirectly, of the
beneficial ownership (determined under Rule 13d-3 of the Regulations promulgated
by the Securities and Exchange Commission ("SEC") under Section 13(d) of the
Exchange Act) of any securities issued by the Company if, after such
acquisition, such person is the beneficial owner of securities issued by the
Company having 20% or more of the voting power in the election of Directors at
the next meeting of the holders of voting securities to be held for such purpose
of all of the voting securities issued by the Company, if such person acquired
such beneficial ownership without the prior consent of the Board of Directors of
the Company; (b) the election of a majority of the Directors, elected at any
meeting of the holders of voting securities of the Company, who were not
nominated for such election by the Board of Directors or a duly constituted
committee of the Board of Directors; or (c) the merger or consolidation with or
transfer of substantially all of the assets of the Company to another person if
the Board of Directors does not adopt a resolution,
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before the Company enters into any agreement for such merger, consolidation or
transfer, determining that it is not a Change in Control.
"CHARITY" means a public charity or a Code Section 501(c) private foundation
meeting the requirements of Code Section 170(c).
"CODE" means the Internal Revenue Code of 1986, as now in effect or hereafter
amended and as now or hereafter interpreted, construed and applied by
regulations, rulings and cases.
"COMMITTEE" means (a) the members of the Compensation Committee of the Board of
Directors of the Company who are non-employee directors within the meaning of
SEC Rule 16b-3(b)(3)(i), who, if they are fewer than all the members, shall
constitute an ad hoc committee of the Board of Directors, or (b) if the
Compensation Committee has fewer than two members who are such non-employee
directors, such other committee of the Board of Directors of the Company having
at least two members who are such non-employee directors as may be designated
from time to time by the Board of Directors of the Company, provided, however,
that if any such committee is not composed exclusively of such non-employee
directors, the Committee will consist only of those members who are such
non-employee directors.
"DATE OF GRANT" means February 15, 1998.
"DISABILITY" means a disability as defined under the Company's long-term
disability benefits plan in effect on the Date of Grant.
"HOLDER" means the person who is, at the time of reference, entitled to exercise
an Option.
"INCENTIVE OPTION" means an Option which meets the requirements of Section 422
of the Code.
"NONINCENTIVE OPTION" means an Option which is not an Incentive Option.
"NOTICE OF EXERCISE" means a notice of exercise of any Option in a form
determined by the Committee.
"OPTION" means any right to purchase Shares granted under this Agreement.
"OPTION PRICE" means $6.3125 per Share, as adjusted pursuant to Section 7.1.2.
"SHARES" means shares of Common Stock, with par value equal to $.001 per share,
of the Company, as adjusted pursuant to Section 7.1.1.
"TAX PAYMENT LOAN GUARANTY" shall mean a guaranty of payment made by the Company
in the amount and under the circumstances described in Section 4.
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"TERMINATION" means the termination of the Optionee's relationship with the
Company as an Associate, provided, however, that absence from employment with
the Company for a reason or purpose and for a period of time approved by the
Committee, in its sole discretion, shall not for the period of such absence be
deemed, solely because of such absence, to constitute Termination.
"VALUE" means (a) if the Shares are listed or admitted to trading on a national
securities exchange (including the National Market System of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ")), the
closing price of Shares on the principal securities exchange on which the Shares
are listed or admitted to trading on the day prior to the date of determination,
or if no closing price can be determined for the date of determination, the most
recent date for which such price can reasonably be ascertained, or (b) if the
Shares are not listed or admitted to trading on a national securities exchange
but are publicly traded, the mean between the representative bid and asked
prices of the Shares in the over-the-counter market at the closing of the day
prior to the date of determination or the most recent such bid and asked prices
then available, as reported by NASDAQ or if the Shares are not then quoted by
NASDAQ as furnished by any market maker selected from time to time by the
Company for that purpose, or (c) if neither (a) nor (b) is applicable, the fair
market value on the applicable date as determined by the Committee in good faith
using factors the Committee deems to be relevant including but not limited to
any sale of Shares to an independent third party.
SECTION 2. GRANT.
2.1. GRANT. The Optionee shall have the right from time to time until
February 15, 2008 to purchase a total of 200,000 Shares at the Option Price,
subject to the following terms and conditions.
2.2. TERMS.
2.2.1. The Option is a Nonincentive Option.
2.2.2. The Option will become exercisable as to 40,000 Shares
on the completion of the first full year of employment after the Date of Grant
and as to an additional 40,000 Shares on the completion of each full year of
employment thereafter until the entire 200,000 Shares are exercisable.
2.2.3. Notwithstanding Section 2.2.2 but subject to Section
3.2, the Option will become immediately exercisable as to 100% of the Shares
subject to the Option upon (a) a Change in Control or (b) the Optionee's death
or Disability, provided, however, that the Committee within 90 days after
Termination for a reason other than death or Disability may make the Option
immediately exercisable as to 100% of the Shares subject to the Option.
2.2.4. The Option will lapse on the earliest of (a) the date
10 years and one day after the Date of Grant, (b) the date one year after the
Termination if the Termination is due to
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death or Disability or if the Optionee dies within 90 days of Termination, or
(c) the date 90 days after Termination if the Termination is for any reason
other than death or Disability, provided, however, that the Committee within 90
days after Termination may defer the lapse of the Option to the date 10 years
and one day after the Date of Grant.
2.2.5. If the Optionee shall so direct at least 60 days prior
to the date of exercise, either (i) the Shares issued upon exercise of the
Option shall be issued and registered on the Company's stockholder list as
follows: the number of Shares having a Value on the date of exercise equal to
the exercise price paid in connection with the exercise shall be issued to and
registered in the name of the Optionee and the remainder of the Shares shall be
issued to and registered in the name of the trustee under the Company's
Supplemental Retirement Savings Plan, or (ii) the number of Shares otherwise
issuable upon exercise of the Option shall be reduced by the number of Shares
having a Value on the date of exercise equal in the aggregate to the exercise
price of the gross number of Options and the net number of Shares after such
reduction shall be issued to and registered in the name of the trustee under the
Company's Supplemental Retirement Savings Plan.
SECTION 3. RESTRICTIONS.
3.1. REGULATORY COMPLIANCE. No Shares will be issued unless and until
all applicable requirements imposed by federal and state securities laws and by
any stock exchanges or NASDAQ market upon which the Shares may be listed have
been fully met.
3.2. SIX-MONTH RULE. Anything in this Agreement to the contrary
notwithstanding, the Option will not be exercisable within six months of the
Date of Grant except in the case of the Optionee's death.
SECTION 4. TAX PAYMENT LOAN GUARANTY. The Committee will have authority on the
exercise of the Option to authorize an unconditional guaranty of payment by the
Company of a full recourse loan on terms acceptable to the Committee obtained by
the Optionee from a commercial bank or a registered broker-dealer for the
exclusive purpose of paying personal income or excise taxes incurred as a result
of such exercise. Loan guaranties will be issued if the Committee, in its sole
discretion, determines them to be appropriate and in the best interests of the
Company to assist in the payment of income and excise taxes incurred on exercise
of the Option.
SECTION 5. EXERCISE OF OPTION.
5.1. NOTICE OF EXERCISE. The Option may be exercised only by delivery
to the Vice President-Finance or such other person designated by the Committee
of this Agreement, a Notice of Exercise and payment under Section 5.2 for the
Shares and, if the Holder is an Assignee, an instrument of assignment signed by
the Optionee. Except as otherwise specifically provided, an Option shall be
exercisable during the Optionee's lifetime only by the Optionee or his Assignee.
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5.2. DELIVERIES ON EXERCISE.
5.2.1. Any Notice of Exercise will be effective only if the
Holder pays to the Company the Option Price for the portion of the Option being
exercised and pays the Company an amount equal to any tax withholding required
to be made.
5.2.2. The Holder may, in his sole discretion, pay all or a
portion of the Option Price for the portion of an Option being exercised by
surrender and delivery of Shares already owned by the Holder for not less than
six months. Any such Shares delivered in full or partial payment of the Option
Price shall be valued at the Value as of the date of receipt of the Shares by
the Company.
5.2.3. The Committee may, in its sole discretion, permit all
or a portion of any amount required to be withheld for taxes to be paid by
surrendering and delivering Shares already owned by the Holder or by withholding
a portion of the Shares that otherwise would be issued to the Holder upon
exercise of the Option. Any such Shares surrendered or withheld will be valued
at the Value as of the date of receipt for surrendered Shares or as of the date
of exercise of the Option for withheld Shares. Any election to have Shares
withheld from the Shares that would otherwise be issued to the Holder upon
exercise must be made during the period beginning on the third business day
following the date of release of quarterly or annual financial data of the
Company and ending on the twelfth business day following such date.
5.3. TIME AND MANNER RESTRICTIONS. The Committee has the right to limit
the time and manner of exercise of Options to comply with applicable law
including but not limited to federal securities laws.
5.4. DELIVERY OF SHARES. As soon as reasonably practicable following
exercise, a certificate representing the Shares purchased will be registered in
the name of the Holder and delivered to the Holder or, as provided in Section
2.2.5, registered in the name of and delivered to the trustee under the
Company's Supplemental Retirement Savings Plan.
SECTION 6. THE COMMITTEE.
6.1. POWERS OF COMMITTEE. The Committee will have the power to do the
following:
6.1.1. To maintain records relating to Assignees and Holders;
6.1.2. To prepare and furnish to the Optionee, Assignees and
Holders all information required by applicable law;
6.1.3. To construe and apply the provisions of this Agreement
and to correct defects and omissions herein;
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6.1.4. To engage assistants and professional advisers;
6.1.5. To provide procedures for determination of claims under
this Agreement; and
6.1.6. To make any factual determinations necessary or useful
hereunder.
6.2. DELEGATION. The Committee may delegate to any one or more of its
number authority to sign any documents on its behalf or to perform ministerial
acts, but no person to whom such authority is delegated shall perform any act
involving the exercise of any discretion without first obtaining the concurrence
of a majority of the members of the Committee, even though he or she alone may
sign any document required by third parties. The Committee may designate a
secretary, who may be a member of the Committee. All third parties may rely on
any communication signed by the secretary, acting as such, as an official
communication from the Committee.
6.3. BINDING EFFECT OF ACTIONS. All actions taken by the Committee will
be final and binding on all persons.
6.4. INDEMNIFICATION. No member of the Committee, nor any associate to
whom ministerial duties have been delegated, shall be personally liable for any
action, interpretation or determination made hereunder, and each member of the
Committee shall be fully indemnified and protected by the Company with respect
to any liability he or she may incur with respect to any such action,
interpretation or determination, to the extent permitted by applicable law and
to the extent provided in the Company's Certificate of Incorporation and
By-laws, as amended from time to time.
SECTION 7. ACTIONS BY COMMITTEE.
7.1. ANTIDILUTION PROVISIONS. If, as a result of a stock split, stock
dividend, combination or exchange of shares, exchange for other securities,
reclassification, reorganization, redesignation, recapitalization or other such
change, the Shares are increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation; then:
7.1.1. The number and kind of shares of stock or other
securities into which each outstanding Share is changed or for which each such
Share may be exchanged, will automatically be substituted for each Share subject
to an unexercised Option.
7.1.2. The Option Price will be increased or decreased
proportionately so that the aggregate Option Price for the securities subject to
the Option remains the same as immediately prior to such event and the ratio of
the Option Price to the Value of the securities subject to the Option is no more
favorable to the Holder than the ratio of the Option Price to the Value
immediately before such event.
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7.1.3. The Committee shall make such other adjustments to the
Option and this Agreement as may be appropriate and equitable, and not confer on
the Holder more favorable benefits than those of the Holder before the event,
which adjustments may provide for the elimination of fractional shares or units.
7.2. MERGER OF THE COMPANY. If, directly or indirectly, (a) the Company
is a party to a merger or consolidation agreement with a corporation that is not
a subsidiary of the Company, (b) the Company is a party to an agreement to sell
substantially all of its assets to any person other than a subsidiary of the
Company, or (c) any person other than the Company or one of its subsidiaries has
publicly announced an offer to purchase more than 5% of the outstanding voting
securities of the Company, the Committee, in its sole discretion, may provide
that, for a period beginning on the later of the date six months after the Date
of Grant or 15 days before the closing of any such proposed transaction, and not
extending beyond the earlier of the date on which the Option would otherwise
lapse and the date of the closing of such proposed transaction, notwithstanding
the other provisions of this Agreement, the Option may be exercised by the
Holder during such period as to 100% of the Shares subject to the Option, or
such lesser percentage as the Holder may choose, and upon the closing of such
proposed transaction, the Option will expire and be null and void. At least 15
days prior to the closing of such proposed transaction, the Company must notify
each Holder that the Option is exercisable under this Section. If the agreement
for such proposed transaction is terminated, (a) all exercises under this
Section of the Option will be void ab initio (from the outset), (b) the Company
will refund the applicable Option Price and withholding tax and the Holder will
return any Shares issued, and (c) the Option will be reinstated and exercisable
thereafter on the terms of the Option without regard to that application of this
Section.
7.3. AUTHORITY TO ACCELERATE, ETC. Notwithstanding anything else in
this Agreement to the contrary other than Section 3.2, the Committee may, at any
time or from time to time, accelerate the time at which the Option becomes
exercisable or waive any provisions of this Agreement relating to the manner of
payment or procedures for the exercise of the Option. Any such acceleration or
waiver may be made effective (a) with respect to some or all of the Shares
subject to the Option or (b) for a period of time ending at or before the
expiration date of the Option. If the waiver of any provisions constitutes a new
grant of an Option or the grant of an additional derivative security for
purposes of SEC Rule 16b-3, the date of the waiver will be deemed to be a new
Date of Grant for purposes of Section 3.2.
SECTION 8. AMENDMENT OF THIS AGREEMENT.
8.1. RIGHT TO AMEND, ETC. The Committee may amend this Agreement at any
time, provided that, unless first approved by vote of the stockholders of the
Company, no amendment may be made in this Agreement which:
8.1.1. Materially increases the benefits under this Agreement;
or
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8.1.2. Materially increases the number of securities which may
be issued under this Agreement.
8.2. IMPAIRMENT OF RIGHTS OF HOLDERS. No amendment to this Agreement
shall be made so as to impair or adversely alter the rights of any Holder
without such Holder's consent. Actions by the Committee under Section 7.1 or 7.2
do not constitute an amendment of this Agreement.
SECTION 9. SHARES RESERVED. The maximum number of Shares which may be issued
under this Agreement will be 200,000 Shares, subject to adjustment under Section
7.1.1, and such number of Shares will be reserved for issuance under this
Agreement. The Shares issued on exercise of the Option may be authorized and
unissued Shares or Shares held by the Company as treasury stock.
SECTION 10. MISCELLANEOUS.
10.1 REGISTRATION. The Company shall (a) prepare and file with the SEC
a Registration Statement with respect to this Agreement as may be necessary or
advisable to permit the continued and uninterrupted exercise of the Option and
the resale of Shares purchased pursuant to the exercise of the Option or as may
be required by the SEC, (b) execute such other documents, and take such other
actions, as may be necessary or advisable to cause the Registration Statement,
as the same may be amended, to comply with the Securities Act of 1933 and the
Rules and Regulations thereunder, and (c) register and qualify all Shares
purchased pursuant to the exercise of the Option for resale by the Holder in the
State of New Jersey. An amendment to the Registration Statement necessary for
the resale of Shares purchased pursuant to the exercise of the Option shall be
filed by the Company within five business days after the Secretary of the
Company receives a written request from a Holder to file an amendment. The
Registration Statement shall not be withdrawn by the Company until the Option
shall have lapsed, or until all Shares purchased upon the exercise of the Option
shall have been resold, as the case may be.
10.2. NO RIGHT TO EMPLOYMENT. Nothing in this Agreement will confer
upon the Optionee any right to continue in the Company's employ or to be
entitled to any remuneration or benefits not set forth in this Agreement or
interfere with or limit any right that the Company may otherwise have to
terminate the Optionee's employment.
10.3. SUCCESSORS AND ASSIGNS. The obligations of the Company under this
Agreement will be binding upon any successor corporation or organization
resulting from the merger, consolidation or other reorganization of the Company,
or upon any successor corporation or organization succeeding to substantially
all of the assets and business of the Company.
10.4. RIGHTS AS STOCKHOLDER. No Holder will have any of the rights of a
stockholder of the Company with respect to the Shares issuable under this
Agreement until certificates for such Shares have been issued.
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10.5. EXPENSES. All expenses and costs in connection with
administration of this Agreement will be borne by the Company.
10.6. SECTION 16. Any provision of this Agreement will be deemed
amended and void to the extent it causes a violation under Section 16 of the
Exchange Act and the rules thereunder.
10.7. LIMITATION OF LIABILITY. The liability of the Company under this
Agreement or in connection with any exercise of the Option is limited to the
obligations expressly set forth in this Agreement.
10.8. BENEFICIARIES AND ASSIGNMENT OF RIGHTS. Subject to Section 2.2.5,
no Option or other right under this Agreement may be assigned, pledged,
hypothecated, given, or otherwise transferred by the Holder, except that (a) the
Optionee will be entitled to designate a beneficiary of the Option upon the
Optionee's death by delivering such designation in writing to the Committee, (b)
if no such designation is made by the Optionee, the Option will be transferred
upon the Optionee's death as determined under the applicable laws of descent and
distribution, (c) the Option shall be transferred in accordance with a qualified
domestic relations order (as defined in the Code), and (d) the Optionee will be
entitled to assign the Option, in whole or in part, to an Assignee, who, after
such assignment, shall have all the rights and obligations of the Optionee with
respect to the Option, provided, however, that the provisions of this Agreement
relating to death, Disability, Termination and employment, including vesting
provisions, shall remain unchanged and shall continue to refer to the Optionee
and provided, further, that if the Assignee is a Charity, the Option will lapse
as to the portion transferred 30 days after the transfer is recorded on the
Company's books, after which time the portion transferred shall be null and
void. If the Optionee suffers a Disability and does not have the capacity to
exercise the Option, the Option will be exercisable by the Optionee's guardian
or attorney-in-fact during the Optionee's lifetime.
10.9. NOTICES. Notices required or permitted to be made under this
Agreement will be sufficiently made if personally delivered or sent by
registered or certified mail addressed (a) to the Holder at the Holder's address
as set forth in the books and records of the Company, or (b) to the Company or
the Committee at the principal office of the Company to the attention of the
Vice President-Finance. Any party may change its address through the method
described above.
10.10. CAPTIONS. The captions and section numbers appearing in this
Agreement are inserted only as a matter of convenience. They do not define,
limit, construe or describe the scope or intent of the provisions of this
Agreement.
10.11. APPLICABLE LAW. This Agreement will be governed by and
interpreted, construed, and applied in accordance with the laws of the State of
New Jersey to the extent that they apply.
10.12. SEVERABILITY. If any provisions of this Agreement are held
illegal or invalid for any reason, such illegality or invalidity will not affect
the remaining parts of this Agreement, and this Agreement will be construed and
enforced as if the illegal or invalid provision had not been included.
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IN WITNESS WHEREOF, the parties have executed this Agreement, in the case of the
Company, by an officer thereunto duly authorized.
UNITED RETAIL GROUP, INC.
By: /s/ XXXXXX X. XXXXXX
Vice Chairman of the Board
/s/ XXXXXXX XXXXXXXX
Xxxxxxx Xxxxxxxx
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