Exhibit 10.2

UNITED RETAIL GROUP, INC.
FALL 2007 INCENTIVE COMPENSATION PLAN

Section 1.       Purpose.
 
The purpose of this Fall 2007 Incentive Compensation Plan is to provide
incentives to key associates of the Company to stimulate their efforts toward
the continued success of the Company and its Subsidiaries and to manage the
business in a manner that will provide for the long-term growth and
profitability of the Company and its Subsidiaries.
 
Section 2.       Definitions.
 
As used in this Plan, the following terms shall have the respective meanings
specified below.
 
(a)         "Award" means an award granted pursuant to Section 3.
 
(b)         "Award Agreement" means a document described in Section 4 setting
forth the terms and conditions applicable to the Award granted to the
Participant.
 
(c)         "Board" means the Board of Directors of the Company, as it may be
comprised from time to time.
 
(d)         "Company" means United Retail Group, Inc., a Delaware corporation,
and any successor thereto.
 
(e)         "Participant" means any person who has been granted an Award.
 
(f)          "Plan" means this Fall 2007 Incentive Compensation Plan as adopted
by the Company.
 
(g)         "Subsidiary" means (i) any company or other entity in which the
Company, directly or indirectly, controls 50% or more of the total combined
voting power of such company or other entity and (ii) any company or other
entity in which the Company has a significant equity interest and which the
Compensation Committee of the Board has determined to be a Subsidiary for
purposes of the Plan.
 

 

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Section 3.       Awards.
 
(i) The Board shall determine the nature, length and starting date of the
Performance Period for Awards, which may be a six-month merchandising season or
any longer period, and shall determine the range of performance objectives to be
used.  Awards may vary from Participant to Participant and between groups of
Participants and shall be based upon revenues; revenue growth; earnings per
share; operating income; operating income before extraordinary items and
accruals for expenses arising from equity-based compensation awards or otherwise
measured by the price of a share of Stock; net income; cash flow; gross profit
return on investment; gross margin return on investment; gross margin; working
capital; earnings before interest and tax; earnings before interest, tax,
depreciation and amortization; return on equity; return on assets; return on
capital; total shareholder return; or economic value added; or any combination
thereof; whether applicable to the Company or any Subsidiary or business unit,
or any combination thereof, as the Board may deem appropriate.  The Board shall
determine for each Award subject to such Performance Period the range of dollar
values to be received by the Participant at the end of the Performance Period if
and to the extent that one of the relevant measures of performance for such
Award is met.  The measures must include a minimum performance standard below
which no payment will be made and a maximum performance level above which no
increased payment will be made.  No Award having an aggregate potential payment
in excess of $1,000,000 may be granted to any individual Participant in any
fiscal year.
 
(ii)   The Compensation Committee of the Board may reduce the performance
measures applicable to Awards to take into account changes in law and accounting
and tax rules and the inclusion or exclusion of the impact of unusual items,
events or circumstances, provided that no such reduction shall be made which
would result in (x) an increase in the compensation that would otherwise be
payable pursuant to such Awards to any Participant whose compensation is subject
to the limitation on deductibility under Code Section 162(m), or any successor
provision, for the applicable year or (y) a decrease in the compensation that
would otherwise be payable to any Participant pursuant to such Awards.
 
(iii)   Unless otherwise provided in an Award Agreement, if hiring or
Termination by reason of the Participant's death or Disability occurs during a
Performance Period, such Participant shall be entitled to a prorated payment
with respect to an outstanding Award at the end of the applicable Performance
Period based on the portion of the Performance Period that followed hiring or
preceded Termination, as the case may be.  Unless otherwise provided in an
 

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Award Agreement, if Termination occurs during a Performance Period other than by
reason of the Participant's death or Disability, then such Participant shall not
be entitled to any payment with respect to the Award relating to such
Performance Period, provided, however, that in the event of such Termination,
the Compensation Committee of the Board may provide for partial payment based on
such factors or criteria as the Committee may determine.
 
(iv)  The earned portion of an Award shall be paid promptly after the
Performance Period in a lump sum of cash.
 
Section 4.       Award Agreements.
 
Each Award under the Plan shall be evidenced by an Award Agreement.  Each Award
Agreement shall set forth the terms and conditions applicable to the Award.
 
Section 5.       Amendment and Termination.
 
(a)         The Board shall have the power to amend this Plan.
 
(b)         The Board may suspend or terminate this Plan at any time.  No such
suspension or termination shall affect Awards then in effect.
 
Section 6.       Administration.
 
(a)          This Plan and all Awards shall be administered by the Compensation
Committee of the Board.  The Committee shall have full and complete authority,
in its sole and absolute discretion, (i) to exercise all of the powers granted
to it under this Plan, (ii) to construe, interpret and implement this Plan and
any related document, (iii) to prescribe, amend and rescind rules relating to
this Plan, (iv) to make all determinations necessary or advisable in
administering this Plan, and (v) to correct any defect, supply any omission and
reconcile any inconsistency in this Plan.  The actions and determinations of the
Committee on all matters relating to this Plan and any Awards will be final and
conclusive.  The Committee's determinations under this Plan need not be uniform
and may be made by it selectively among persons who receive, or who are eligible
to receive, Awards under this Plan, whether or not such persons are similarly
situated.
 

 

 

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(b)         The Compensation Committee of the Board and others to whom the
Committee has delegated such duties shall keep a record of all their proceedings
and actions and shall maintain all such books of account, records and other data
as shall be necessary for the proper administration of this Plan.
 
(c)         The Company shall pay all reasonable expenses of administering this
Plan, including but not limited to the payment of professional fees.
 
(d)         The Compensation Committee of the Board may appoint such
accountants, counsel, and other experts as it deems necessary or desirable in
connection with the administration of this Plan.
 
Section 7.       Miscellaneous.
 
(a)         Transferability.  Except as otherwise provided by the Compensation
Committee of the Board, no Award shall be transferable or assignable except by
will or by the laws of descent and distribution.
 
(b)         Other Payments or Awards.  Nothing contained in this Plan shall be
deemed in any way to limit or restrict the Company or a Subsidiary from making
any award or payment to any person under any other plan, arrangement or
understanding.
 
(c)         Payments to Other Persons.  If payments are legally required to be
made to any person other than the person to whom any amount is made available
under this Plan, payments shall be made accordingly.  Any such payment shall be
a complete discharge of the liability of the Company and its Subsidiaries
hereunder.
 
(d)         Unfunded Plan.  This Plan shall be unfunded.  No provision of this
Plan or any Award Agreement shall require the Company or a Subsidiary, for the
purpose of satisfying any obligations under this Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made or
otherwise to segregate any assets, nor shall the Company or a Subsidiary
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for such
purposes.  Participants shall have no rights under this Plan other than as
unsecured general creditors of the Company.
 
(e)         Limits of Liability.  Any liability of the Company or a Subsidiary
to any Participant with respect to an Award shall be based solely upon
contractual obligations created by this Plan and the Award Agreement applicable
to such Award.  Neither the Company or its Subsidiaries, nor any member of the
Board or of the Compensation Committee, nor any other person participating in
any
 

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determination of any question under this Plan, or in the interpretation,
administration or application of this Plan, shall have any liability to any
party for any action taken, or not taken, in good faith under this Plan.
 
(f)          Withholding.  The Company shall deduct from all cash distributions
under this Plan any taxes required to be withheld by federal, state or local
governments.
 
(g)         Invalidity.  If any term or provision contained herein or in any
Award Agreement shall to any extent be invalid or unenforceable, such term or
provision will be reformed so that it is valid or shall be considered void ab
initio, and such invalidity or unenforceability shall not affect any other
provision or part thereof.
 
(h)         Applicable Law.  This Plan and the Award Agreements and all actions
taken hereunder or thereunder shall be governed by, and construed in accordance
with, the laws of the State of New Jersey without regard to the conflict of law
principles thereof.
 

 

 

 

 

 

 

 

 

 

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