Exhibit No. 10

 

FREESTANDING

STOCK APPRECIATION RIGHT AGREEMENT

(Settled in Cash)

 

(Date)

No. of Shares: __,000

Grant Price per Share: $              

Date of Grant: _______________

Expiration Date: _____________

Serial Number: ______

 

PERSONAL AND CONFIDENTIAL:

(Name and Address)

Dear (Salutation):

We are pleased to inform you that, as a key associate of United Retail Group,
Inc. (herein called the “Company”) or one of its subsidiaries, you have been
granted a stock appreciation right (herein called a “right”) under the Company’s
2006 Equity-Based Compensation and Performance Incentive Plan (herein called the
“Plan”). The right gives you the opportunity to receive a lump sum cash payment
at the time of exercise of the right, equal to the amount by which the market
value of all shares in respect of which the right is exercised exceeds the grant
price set forth above multiplied by the number of shares in respect of which the
right is exercised, subject to your acceptance of the award as provided in
Section 1 below and the terms and conditions that follow in this letter
agreement or are contained in the Plan. The date of the grant evidenced by this
letter agreement (herein called the date of grant) and the date the right
expires are set forth above. A copy of the Plan and a Notice of Exercise of
Right form are enclosed. The terms and conditions of the right, including
non-standard provisions permitted by the Plan, are set forth below, provided,
however, that in the event of any inconsistency between the provisions of this
letter agreement and the Plan, the provisions of the Plan shall prevail.

1.            Acceptance of Right. The right cannot be exercised unless you sign
your name in the space provided on the enclosed copies of this letter agreement
and cause one signed copy to be delivered to the Secretary of the Company, 365
West Passaic Street, Rochelle Park, New Jersey, 07662, before 4:30 p.m. Eastern
time on the 30th day after the date of grant. If the Secretary does not receive
your properly executed copy of this letter agreement before 4:30 p.m. Eastern
time on the 30th day after the date of grant, then, anything in this letter
agreement to the contrary notwithstanding, the right will be void ab initio and
of no effect. (Your signing and delivering a copy of this letter agreement will
evidence your acceptance of the right upon the terms and conditions herein
stated.)

 

2.

Exercise.

(a)                                Subject to the provisions of this Section 2
and of Sections 4, 5(b) and 8, the right shall be exercisable as to 20% of the
number of shares set forth above on the completion of the first full year after
the date of grant and as to an additional 20% of the number of shares on the
completion of each of the next four years. Except as otherwise provided in
Section 4, the right shall lapse on the seventh anniversary of the date of
grant.

(b)                                The right shall not become exercisable unless
you shall have remained continuously in the employ or service of the Company or
of one or more of its subsidiaries (as defined in the Plan) for at least one
year beginning with the date of grant, except as provided in Sections 4 and 8.

3.            Transferability of Right. The right shall not be transferable by
you otherwise than (i) by will, (ii) by the laws of descent and distribution,
(iii) pursuant to a domestic relations order or (iv) by gift to a family member.
During your lifetime the right shall be exercisable only by you or your
permitted transferee. Any transferred right shall continue to be subject to the
terms and conditions of this Agreement, including, without limitation, the
provisions of Section 5 and shall be reported in writing promptly to the
Treasury Desk at the Home Office.

4.            Death or Disability. Section 2 to the contrary notwithstanding, if
your employment by or service with the Company or a subsidiary terminates by
reason of your death or disability (as defined in the Plan), the right will
become immediately exercisable in full and non-forfeitable and shall continue to
be exercisable for a period of one year from the date of termination.

 

 

5.

Other Termination of Employment.

(a)                                Subject to Section 5(b), if your employment
with the Company or a subsidiary terminates otherwise than by reason of your
death or disability, the right shall be exercisable only with respect to the
number of shares with respect to which it was exercisable on the date of
termination of employment and shall terminate and cease to be exercisable three
months after termination, except in the case of termination by the Company for
cause (as defined in the Plan), in which case, subject to Section 8, the right
shall be forfeited and no longer exercisable.

(b)                                Section 2 to the contrary notwithstanding but
subject to Section 8, if the Compensation Committee of the Company’s Board of
Directors (the “Committee”) determines that you violated a non-competition
agreement with the Company in any material respect, the right shall be forfeited
at the time the Committee’s determination is made.

(c)          For the purposes of this letter agreement, your employment by a
subsidiary of the Company shall be considered terminated on the date that the
company by which you are employed is no longer a subsidiary of the Company

6.            Transfer of Employment; Leave of Absence. A transfer of your
employment from the Company to a subsidiary or vice versa, or from one
subsidiary to another, without an intervening period, shall not be deemed a
termination of employment. If you are granted an authorized leave of absence,
you shall be deemed to have remained in the employ of the Company or a
subsidiary during such leave of absence.

 

7.

Adjustments in Right.

(a)                                The existence of this letter agreement and
the right shall not affect or restrict in any way the right or power of the
Board of Directors or the stockholders of the Company to make or authorize any
reorganization or other change in its capital or business structure, any merger
or consolidation of the Company, any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the shares or the rights thereof,
the dissolution or liquidation of the Company or any sale or transfer of all or
any part of its assets or business.

(b)                                In the event of any change in or affecting
the outstanding shares by reason of a stock dividend or split, merger or
consolidation (whether or not the Company is the surviving corporation),
recapitalization, spin-off, reorganization, combination or exchange of shares or
other similar corporate changes or an extraordinary dividend in cash, securities
or other property, the Board of Directors shall make such amendments to the
Plan, this letter agreement and the right and make such adjustments and take
actions

thereunder as it deems appropriate, in its sole discretion, under the
circumstances. Such amendments, adjustments and actions may include, but are not
limited to, (i) changes in the number and kind of shares set forth above, (ii)
changes in the grant price per share, and (iii) accelerating the vesting of the
right. The determination by the Board as to the terms of any of the foregoing
adjustments shall be conclusive and binding.

8.            Change in Control. In the event a change in control of the Company
occurs, the right, if then outstanding, shall automatically become fully
exercisable and non-forfeitable, Sections 2 and 5 to the contrary
notwithstanding.

 

9.

Notice of Exercise.

(a)                                Subject to the terms and conditions of this
letter agreement, the right may be exercised, in whole at any time or in part
from time to time, during the period permitted by the terms of this letter
agreement. Rights are exercised by delivering a signed Notice of Exercise of
Right form to the Treasury Desk at the Home Office (a fax received there
qualifies as delivery). Delivery of a signed form constitutes your legally
binding irrevocable exercise of rights, as indicated on the form. In the case of
any such delivery by facsimile transmission, the original Notice of Exercise of
Right form shall be promptly forwarded by you by hand or mail to the Treasury
Desk, but delivery thereof to the Treasury Desk shall not be a condition to
exercise of the right and the receipt of the facsimile transmission by the
Treasury Desk shall be sufficient therefor. If a properly executed Notice of
Exercise of Right form is not received by the Treasury Desk of the Company by
the applicable expiration date specified in Sections 2(a), 4 or 5, such notice
will be deemed void and of no effect. If notice of exercise of the right is
given by a person other than you, the Company may require as a condition to
exercise of the right the submission to the Company of appropriate proof of the
right of such person to exercise the right.

(b)          To the extent that the right shall have become exercisable and
shall not have been exercised or cancelled or, by reason of any termination of
employment, shall have become non-exercisable, it shall be deemed to have been
exercised automatically, without any notice of exercise, on the last day on
which it is exercisable, provided that any conditions or limitations on its
exercise other than notice of exercise are satisfied and the right shall then
have value.

 

 

10.

Tax Matters.

(a)                                You should consult your tax accountant about
the tax consequences of receiving the right, its becoming exercisable and
exercising the right.

(b)                                Upon exercise of a right by an associate,
Federal income tax withholding (and state and local income tax withholding, if
applicable) may be required in respect of taxes on income realized.

 

11.

Employment.

Nothing contained in this letter agreement shall confer any right to continue in
the employ or other service of the Company or a subsidiary or limit in any way
the right of the Company or a subsidiary to change your compensation or other
benefits or to terminate your employment or other service with or without cause.

 

12.

Short-Swing Trading.

An executive officer of the Company or one of its subsidiaries who exercises a
right or whose right is cashed out must report the disposition of the right on a
Form 4 Statement of Changes in Beneficial Ownership filed within two trading
days with the EDGAR database of the Securities and Exchange Commission. (The
General Counsel of the Company will draft the Form 4 on request but the filing
is the personal responsibility of the holder.)

 

13.

Recruiting Company Associates.

For a period of ten years after the date of grant set forth above, you shall
not, directly or indirectly, (i) induce or attempt to influence any employee of,
or consultant under contract with, the Company to leave its employ; or (ii) take
an active part in aiding any competitor of the Company or any other person in
any attempt to induce or influence any employee of, or consultant under contract
with, the Company to leave its employ.

 

14.

Confidential Information.

You shall never use, disclose or divulge, furnish or make accessible to anyone,
directly or indirectly, any (i) trade secrets, confidential or proprietary
information, and any other non-public knowledge, information, documents or
materials, owned, developed or possessed by the Company, whether in tangible or
intangible form, and learned or obtained while in the employ of the Company,
including, but not limited to, the Company’s research and development
operations, identities of employees, business relationships, products (including
prices, costs, sales or content), processes, techniques, contracts, financial
information or measures, business methods, future business plans,

data bases, computer programs, designs, models and operating procedures, and
(ii) private information about any of the Company’s other employees learned or
obtained while in the employ of the Company (collectively, “Information”), but
excluding any Information that shall become generally known to the public or in
the trade without violation of this Section 14.

 

15.

Making Disparaging Statements.

Neither you nor the Company shall ever make or authorize any public statement
disparaging the other party, provided, however, that neither party shall be
restricted in responding to any legal process.

 

16.

Time of Essence.

Time is of the essence of the provisions of this letter agreement with respect
to delivering notices. There is no grace period.

 

17.

Successors.

This letter agreement is binding on your heirs and personal representatives and
permitted transferees and on the successors of the Company.

 

18.

Equitable Remedies.

Each party acknowledges and agrees that the other party may be irreparably
injured by a breach of this letter agreement by such party and that money
damages may be an inadequate remedy for breach of this letter agreement because
of the difficulty of ascertaining the amount of damage that may be suffered in
the event that this letter agreement is breached. Accordingly, each party agrees
that the other party may seek specific performance of this letter agreement and
injunctive or other equitable relief as a remedy for any such breach, without
proof of actual damages, and further agrees to waive any requirement for the
securing or posting of any bond in connection with any such remedy. Such remedy
shall not be deemed to be the exclusive remedy for a breach of this letter
agreement, but shall be in addition to all other remedies available at law or
equity. In the event of litigation relating to this letter agreement, the
non-prevailing party (as determined by a court of competent jurisdiction in a
final, nonappealable order) will reimburse the prevailing party for its
reasonable out-of-pocket expenses (including, without limitation, reasonable
out-of-pocket legal fees and expenses) incurred in connection with all such
litigation.

 

 

19.

Counterparts.

This letter agreement may be executed in duplicate counterparts, each of which
shall be deemed to be an original.

Very truly yours,

UNITED RETAIL GROUP, INC.

 

By

 

 

Chief Executive Officer

 

I hereby agree to the terms and conditions set forth above and acknowledge that
I have received and read a copy of the United Retail Group, Inc. 2006
Equity-Based Compensation and Performance Incentive Plan.

 

 

_________________________________

 

(please sign your name)

(date stamp of Company Secretary)