<PAGE>   1
                                                                 EXHIBIT 10.6



                       RESTATED UNITED RETAIL GROUP, INC.
                             1996 STOCK OPTION PLAN
                              (DATED MARCH 6, 1998)


WHEREAS, United Retail Group, Inc., a Delaware corporation (the "Company"),
desires to attract and retain the best available directors, executives, and key
management associates for itself and its direct and indirect subsidiaries, to
provide long range inducements for them to remain associated with the Company
and its direct and indirect subsidiaries, to provide the highest level of
performance by such directors, executives and associates, and to acquire a
permanent stake in the Company with the interest and outlook of owners; and

WHEREAS, the Board of Directors of the Company adopted the United Retail Group,
Inc. 1996 Stock Option Plan and the stockholders of the Company approved the
same; and

WHEREAS, the Compensation Committee of the Board of Directors adopted certain
amendments to the provisions of the United Retail Group, Inc. 1996 Stock Option
Plan, effective March 6, 1998;

NOW, THEREFORE, the Company hereby approves and adopts the Restated United
Retail Group, Inc. 1996 Stock Option Plan on the following terms and conditions:

SECTION 1. DEFINITIONS. The following terms have the following meanings when
used in this Plan, in both singular and plural forms:

"ASSIGNEE" means a member of the immediate family of an Optionee to whom the
Optionee has assigned an Option.

"ASSOCIATE" means any full-time associate of an Employer.

"CHANGE IN CONTROL" means (a) the acquisition after the Effective Date by any
person (defined for the purposes of this Section 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
<PAGE>   2
Board of Directors; or (c) the merger or consolidation with or transfer of
substantially all of the assets of the Company to another person if the Board of
Directors does not adopt a resolution, before the Company enters into any
agreement for such merger, consolidation or transfer, determining that it is not
a Change in Control.

"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.

"COMPANY" means United Retail Group, Inc., a Delaware corporation.

"DATE OF GRANT" means (a) in the case of a formula grant to a Director under
Section 2, the date of the annual meeting of stockholders of the Company to
which the grant relates, (b) in the case of a discretionary Committee grant
under Section 3, generally, the date action is taken by the Committee to grant
an Option, or (c) in the case of a discretionary Committee grant under Section 3
where the grant is being made to an Associate being hired by the Employer, in
the sole discretion of the Committee, the Associate's date of hire rather than
the date on which the Committee subsequently or previously approves the grant of
an Option to him or her; provided, however, that the Date of Grant for purposes
of determining whether or not an Option is an Incentive Option will be the later
of the date of such action or the date of hire.

"DIRECTOR" means a duly elected and acting member of the Board of Directors of
the Company.

"DISABILITY" means a disability as defined under the Company's long-term
disability benefits plan in effect on the Effective Date.

"EFFECTIVE DATE" means May 28, 1996.

"EMPLOYER" means the Company and any corporation which is a subsidiary
corporation of the Company, as defined in Section 424(f) of the Code.

"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 any Option which is not an Incentive Option.


                                       2
<PAGE>   3
"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 the Plan.

"OPTION AGREEMENT" means a written agreement between the Company and an Optionee
setting forth the terms of an Option.

"OPTION PRICE" means the price per Share at which an Option is exercisable.

"OPTIONEE" means an Associate or Director to whom an unexercised Option has been
granted under the Plan.

"PLAN" means this Restated United Retail Group, Inc. 1996 Stock Option Plan.

"PUBLIC DIRECTOR" means a Director who is neither an Associate nor a Director
proposed for nomination by Limited Direct Associates, L.P. (pursuant to the
Restated Stockholders' Agreement dated December 23, 1992 among the Company and
certain of its stockholders, as amended, or any similar arrangement that may
replace such Agreement).

"RETIREMENT" means the Termination of an Associate after the Associate's 65th
birthday.

"SHARES" means shares of Common Stock, with par value equal to $.001 per share,
of the Company.

"TAX PAYMENT LOAN GUARANTY" shall mean a guaranty of payment made by the Company
in the amount and under the circumstances described in Section 5.

"TERMINATION" means the termination of the Optionee's relationship with the
Company including termination of the Optionee's employment and status as
Director. An Optionee who is absent from employment or other relationship 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 have suffered a Termination, unless
and until the Committee otherwise determines.

"TERMINATION DATE" means May 28, 2006.

"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


                                       3
<PAGE>   4
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.        FORMULA GRANTS TO DIRECTORS.

         2.1. ELIGIBILITY AND FORMULA. Beginning on the Effective Date and until
the Termination Date, all Public Directors elected at each year's annual meeting
of the stockholders will automatically be granted an Option to purchase 3,000
Shares. All Options granted under this Section are intended to be formula awards
under SEC Rule 16b-3 and will not be subject to any provision of the Plan that
gives the Committee discretion to change the terms of such Options to the extent
that such Committee discretion will cause the Options granted under this Section
to cease to be formula awards under SEC Rule 16b-3.

         2.2. TERMS. All Options granted to Directors under this Section 2 will
be on the following terms:

                  2.2.1. Each Option will be a Nonincentive Option.

                  2.2.2. Each Option will have an Option Price equal to the
Value of a Share as of the Date of Grant.

                  2.2.3. Each Option will become exercisable as to 20% of the
Shares subject to the Option on the completion of the first full year after the
Date of Grant and as to an additional 20% of such Shares on the completion of
each full year thereafter prior to Termination.

                  2.2.4. Notwithstanding Section 2.2.3 but subject to Section
4.5, each 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 the
Termination of an Optionee for a reason other than death or Disability may make
his Option(s)) immediately exercisable as to 100% of the Shares subject to the
Option.

                  2.2.5. Each Option will lapse on the earliest of (a) the date
10 years and one day after the Date of Grant, or (b) the date one year after the
Termination of the Optionee if the Termination is due to death or Disability or
if the Optionee dies within 90 days of Termination, or (c) the date 90 days
after Termination if the Termination is for any reason other than death or
Disability, provided, however, that the Committee within 90 days after the
Termination of an Optionee may defer the lapse of his Option (s) to the date 10
years and one day after the Date of the Grant.


                                       4
<PAGE>   5
SECTION 3.        DISCRETIONARY GRANTS TO ASSOCIATES.

         3.1. ELIGIBILITY AND DISCRETIONARY AWARDS. Subject to the limitations
contained in the Plan, the Committee may, at any time prior to the Termination
Date, grant Options to Associates whom the Committee determines to be executive
and key management Associates of the Employer. In determining the Associates to
whom Options may be granted and the terms and conditions of such grants, the
Committee may take into account the nature of the services rendered by such
Associates, their past, present and potential contributions to the success of
the Employer, and such other factors as the Committee deems relevant. In no
event, however, shall the Committee grant Options to any Associate who is also a
Director on the Date of the Grant.

         3.2.     TERMS OF ASSOCIATE OPTIONS.

                  3.2.1. Subject to the provisions of the Plan and applicable
law, the Committee will, in its sole discretion, determine the terms and
conditions of any Options granted to an Associate at the time of grant.

                  3.2.2. In the absence of any provision in the grant of an
Option to the contrary, the Option will have the following terms:

                           (a) The Options will be Incentive Options with
respect to the maximum number of Shares that may be Incentive Options and
Nonincentive Options with respect to all other Shares.

                           (b) Each Option will have an Option Price equal to
the Value of a Share as of the Date of Grant.

                           (c) Each Option will become exercisable as to 20% of
the Shares subject to the Option on completion of the first full year of
employment of the Optionee after the Date of Grant and as to an additional 20%
of such Shares on the completion of each full year of such employment thereafter
until Termination.

                           (d) Each Option will lapse on the earliest of (i) for
an Incentive Option, the date 10 years after the Date of Grant, and for a
Nonincentive Option, the date 10 years and one day after the Date of Grant, (ii)
the date one year after the Termination of the Optionee if the Termination is
due to death or Disability or if the Optionee dies within 90 days of the date of
Termination, or (iii) the date 90 days after Termination for any other reason.

                  3.2.3. Subject to Section 4.5, each Option granted under
Section 3 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,
Disability, or Retirement.


                                       5
<PAGE>   6
                  3.2.4. Nonincentive Options granted after March 5, 1998 shall
provide, and Nonincentive Options granted prior to March 6, 1998 may be amended
to provide, that 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 4.        RESTRICTIONS ON ALL OPTIONS.

         4.1. OPTION AGREEMENTS. Each grant of an Option must be reduced to
writing in an Option Agreement, in such form as the Committee determines, within
a reasonable period after the Date of Grant. Any action taken after the Date of
Grant may be reflected in an amendment to or restatement of such Option
Agreement.

         4.2. CORPORATE MERGERS; ACQUISITIONS. The Committee may grant Options
having terms and provisions which vary from those specified in the Plan if such
Options are granted in substitution for, or in connection with the assumption
of, existing options granted by another corporation and assumed or otherwise
agreed to be provided for by the Company in connection with a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to which any Employer is a party.

         4.3. RESTRICTIONS ON TERMS OF OPTIONS. Each Option shall be subject to
the following restrictions:

                  4.3.1. No Shares will be issued under the Plan unless and
until all applicable requirements imposed by federal and state securities laws
and by any stock exchanges or NASDAQ upon which the Shares may be listed have
been fully met.

                  4.3.2. No Option will have an Option Price less than 100% of
the Value of a Share as of the Date of Grant.

                  4.3.3. Each Option will lapse no later than the date 10 years
and one day after the Date of Grant.

                  4.3.4. Subject to Sections 2.2.4, 3.2.3 and 8, no more than
25% of the Shares subject to each Option may become exercisable before
completion of the first full year of employment of the Optionee after the Date
of Grant and no more than an additional 25% of such


                                       6
<PAGE>   7
Shares may become exercisable before the completion of each full year of such
employment thereafter until Termination.

         4.4. MAXIMUM NUMBER. In no event shall the Committee grant Options to
an Associate to purchase a total of more than 60,000 Shares under the Plan,
including any Options that lapse or are surrendered for cancellation.

         4.5. SIX MONTH RULE. Nothing in the Plan will permit an Option to be
exercisable within six months of the Date of Grant except in the case of the
Optionee's death.

SECTION 5. TAX PAYMENT LOAN GUARANTY. The Committee will have authority, at the
time of grant of a Nonincentive Option or on the exercise by the Optionee of an
Option which is not taxed as an Incentive 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 who exercised the Option 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 Employer to
assist in the payment of income and excise taxes incurred on exercise of such
Option.

SECTION 6. EXERCISE OF OPTIONS.

         6.1. NOTICE OF EXERCISE. Options may be exercised only by delivery to
the Vice President- Human Resources or such other person designated by the
Committee of a Notice of Exercise and payment under Section 6.2 for the Shares.
Except as specifically provided, an Option shall be exercisable during the
Optionee's lifetime only by the Optionee or his or her Assignee.

         6.2. DELIVERIES ON EXERCISE.

                  6.2.1. Any Notice of Exercise will be effective only if the
Holder pays to the Company the Option Price for the portion of any Option being
exercised and pays the Company an amount equal to any tax withholding required
to be made.

                  6.2.2. The Holder may, in his or her 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.

                  6.2.3. 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


                                       7
<PAGE>   8
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 or as of 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.

         6.3. 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.

        6.4. 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 will be delivered to the Holder or, at the direction
of the Holder in accordance with Section 3.2.4, will be registered in the name
of the trustee under the Company's Supplemental Retirement Savings Plan and
will be delivered to the trustee.

SECTION 7. THE COMMITTEE.

         7.1. POWERS OF COMMITTEE. The Committee will have the power to do the
following:

                  7.1.1 To grant Options on such terms not inconsistent with the
Plan as the Committee determines;

                  7.1.2. To maintain records relating to Optionees, Assignees
and Holders;

                  7.1.3. To prepare and furnish to Optionees, Assignees and
Holders all information required by applicable law or the Plan;

                  7.1.4. To construe and apply the provisions of the Plan and to
correct defects and omissions therein;

                  7.1.5. To engage assistants and professional advisers;

                  7.1.6. To provide procedures for determination of claims under
the Plan;

                  7.1.7. To make any factual determinations necessary or useful
under the Plan; and

                  7.1.8. To adopt and revise rules, regulations and policies
under the Plan.

         7.2. 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.


                                       8
<PAGE>   9
         7.3. BINDING EFFECT OF ACTIONS. All actions taken by the Committee
under the Plan will be final and binding on all persons.

         7.4. 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 with respect to the Plan or awards
made thereunder, 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 8.        ACTIONS BY COMMITTEE AFTER GRANT.

         8.1. GENERAL. The Committee may, subject to the consent of the Holder
under Section 9.2, where the action impairs or adversely alters the rights of
the Holder, at any time and from time to time after the Date of Grant of any
Option, modify the terms of any grant to terms which would have been permitted
for such grant on the Date of Grant.

         8.2. 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:

                  8.2.1. 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 and for each Share available for additional grants.

                  8.2.2. 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.

                  8.2.3. The Committee shall make such other adjustments to
Options and the provisions of the Plan and Option Agreements 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.

         8.3. 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


                                       9
<PAGE>   10
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 Options would otherwise lapse and the date of the closing of such proposed
transaction, notwithstanding the provisions of any Option Agreement, all Options
granted under the Plan may be exercised by the Holders in whole or in part
during such period, and that upon the closing of such proposed transaction, all
Options under the Plan 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
Options 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 Options without regard to that application of this Section.

         8.4. AUTHORITY TO ACCELERATE. Notwithstanding anything else in the Plan
to the contrary other than Section 4.5, the Committee may, at the time of grant
or at any time or from time to time thereafter, accelerate the time at which
Options become exercisable or waive any provisions of the Plan relating to the
manner of payment or procedures for the exercise of any Options. Any such
acceleration or waiver may be made effective (a) with respect to one or more or
all Optionees under the Plan, (b) with respect to some or all of the Shares
subject to an Option of any Optionee or (c) for a period of time ending at or
before the expiration date of any 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 4.5. If the waiver of any
provisions constitutes a new grant of an Option for purposes of Code Section
424, the Committee must determine if the Option retains its status as an
Incentive Option.

         8.5. SURRENDERS. The Committee may permit the voluntary surrender of
all or a portion of any Option granted under the Plan. Upon surrender, the
Options surrendered will be canceled and the Shares or units previously subject
to them will be available for the grant of other Options.

SECTION 9.        AMENDMENT OF THE PLAN.

         9.1. RIGHT TO AMEND, ETC. The Company may amend, suspend or terminate
the Plan at any time, provided that, unless first approved by the stockholders
of the Company, no amendment may be made in the Plan which:

                  9.1.1. Materially increases the benefits accruing to
participants under the Plan;

                  9.1.2. Materially increases the number of securities which may
be issued under the Plan; or


                                       10
<PAGE>   11
                  9.1.3. Materially modifies the requirements as to eligibility
for participation in the Plan.

         9.2. IMPAIRMENT OF RIGHTS OF HOLDERS. No amendment to the Plan or the
terms of any grant hereunder 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 8.2 or 8.3 do not constitute an amendment of the Plan or of any
grant.

SECTION 10. SHARES RESERVED; PREVIOUS PLANS. The maximum number of Shares which
may be issued under the Plan will be 440,000 Shares, subject to adjustment under
Section 8.2, and such number of Shares will be reserved for issuance under the
Plan. Each previous stock option plan of the Company is hereby amended so that
no additional options may be granted thereunder on or after the Effective Date
except in exchange for the surrender and cancellation of an equal number of
outstanding options issued thereunder, provided, however, all Options granted
under any previous stock option plan will remain in full effect. The Shares
issued on exercise of Options may be authorized and unissued Shares or Shares
held by the Company as treasury stock. If any Option under this Plan terminates,
expires, lapses or is canceled as to any Shares, new Options may thereafter be
granted for the purchase of such Shares.

SECTION 11.       MISCELLANEOUS.

         11.1 REGISTRATION. The Company shall (i) prepare and file with the SEC
amendments to the Registration Statement with respect to the Plan as may be
necessary or advisable to permit the continued and uninterrupted exercise of
Options and the resale of Shares purchased pursuant to the exercise of Options
or as may be required by the SEC, (ii) 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
(the "Securities Act") and the Rules and Regulations thereunder, and (iii)
register and qualify all Shares purchased pursuant to the exercise of Options
for resale by the Holder in the State of New Jersey and in each state adjacent
to the State of New Jersey. An amendment to the Registration Statement necessary
for the resale of Shares purchased pursuant to the exercise of Options 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 all the
Options shall have lapsed, or until all Shares purchased upon the exercise of
Options shall have been resold, as the case may be.

         11.2. NO RIGHT TO EMPLOYMENT. Nothing in the Plan or in any Option or
Option Agreement will confer upon any Associate or Director any right to
continue in the employment or other relationship of any Employer or to be
entitled to any remuneration or benefits not set forth in the Plan or such
Option Agreement or interfere with or limit the right of any Employer to
terminate such Associate's employment or Director's relationship at any time.

         11.3. SUCCESSORS AND ASSIGNS. The obligations of the Company under the
Plan will be binding upon any successor corporation or organization resulting
from the merger, consolidation


                                       11
<PAGE>   12
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.

         11.4. RIGHTS AS STOCKHOLDER. No Holder will have any of the rights of a
stockholder of the Company with respect to the Shares issuable under the Plan
until certificates for such Shares have been issued.

         11.5. EXPENSES. All expenses and costs in connection with
administration of the Plan will be borne by the Company.

         11.6. SECTION 16. Any provision of this Plan will be deemed amended and
void to the extent it causes a violation under Section 16 of the Exchange Act
and the rules thereunder.

         11.7. LIMITATION OF LIABILITY. The liability of the Company under this
Plan or in connection with any exercise of an Option is limited to the
obligations expressly set forth in the Plan and in any of the Option Agreements
and no term or provision of this Plan or any Option Agreement will be construed
to impose any further or additional duties, obligations or costs on the Employer
not expressly set forth in the Plan and the Option Agreement.

         11.8. BENEFICIARIES AND ASSIGNMENT OF RIGHTS. No Option or other right
under the Plan may be assigned, pledged, hypothecated, given, or otherwise
transferred by the Holder, except that (a) an 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) an Option
shall be transferred in accordance with a qualified domestic relations order (as
defined in the Code), and (d) an Optionee will be entitled to assign an Option
to a member of his immediate family, who, after such assignment, shall have all
the rights and obligations of the Optionee with respect to the Option, provided,
however, that the provisions of the Plan relating to death, Disability,
Retirement, Termination and employment, including vesting provisions, shall
remain unchanged and shall continue to refer to the Optionee. If an Optionee
suffers a Disability and does not have the capacity to exercise an Option, such
Option will be exercisable by the Optionee's guardian or attorney-in-fact during
the Optionee's lifetime.

         11.9. NOTICES. Notices required or permitted to be made under the Plan
will be sufficiently made if personally delivered or sent by first-class,
registered, or certified mail addressed (a) to the Holder at the Holder's
address as set forth in the books and records of the Employer, or (b) to the
Company or the Committee at the principal office of the Company to the attention
of the Vice President-Human Resources. Any party may change its address through
the method described above.

         11.10. CAPTIONS. The captions and section numbers appearing in this
Plan are inserted only as a matter of convenience. They do not define, limit,
construe or describe the scope or intent of the provisions of the Plan.


                                       12
<PAGE>   13
         11.11. APPLICABLE LAW. The Plan 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.

         11.12. SEVERABILITY. If any provisions of the Plan are held illegal or
invalid for any reason, such illegality or invalidity will not affect the
remaining parts of the Plan, and the Plan will be construed and enforced as if
the illegal or invalid provision had not been included.


                                       13