-----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, NfnAeuVPfUHAa2FCgxWfBEYdiNRwVGzf0voUsmyf247gDw7UBybDaOs1bmh3+t4Q Ji8ydfiycy18txCtehehzw== 0000950116-99-001178.txt : 19990616 0000950116-99-001178.hdr.sgml : 19990616 ACCESSION NUMBER: 0000950116-99-001178 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990501 FILED AS OF DATE: 19990615 FILER: 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: 0130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19774 FILM NUMBER: 99646446 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 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 1, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------------------- --------------------- Commission file number 00019774 ---------------------------------------------------- United Retail Group, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 51 0303670 - ------------------------------------ ------------------- State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 365 West Passaic Street, Rochelle Park, NJ 07662 - ------------------------------------------ ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (201) 845-0880 ----------------- - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "1934 Act") during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ------ ------ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the 1934 Act subsequent to the distribution of securities under a plan confirmed by a court. YES NO ------ ------ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. As of May 1, 1999, 13,100,588 shares of the registrant's common stock, $.001 par value per share, were outstanding. Item 1. FINANCIAL STATEMENTS UNITED RETAIL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands)
May 1, January 30, May 2, 1999 1999 1998 ----------- ---------- ---------- ASSETS (Unaudited) (Unaudited) Current assets: Cash and cash equivalents $ 46,818 $ 45,894 $ 31,221 Accounts receivable 2,870 513 1,625 Inventory 50,824 45,564 48,326 Prepaid rents 3,971 3,946 4,007 Other prepaid expenses 2,950 2,429 2,757 -------- -------- -------- Total current assets 107,433 98,346 87,936 Property and equipment, net 52,234 48,017 47,221 Deferred charges and other intangible assets, net of accumulated amortization of $2,218, $2,130 and $1,878 6,925 6,746 6,964 Deferred income taxes 736 1,120 971 Other assets 483 363 375 -------- -------- -------- Total assets $167,811 $154,592 $143,467 ======== ======== ======== LIABILITIES Current liabilities: Current portion of distribution center financing $ 1,159 $ 1,136 $ 1,072 Accounts payable, trade 17,537 14,208 17,182 Accrued expenses 27,598 22,659 20,808 -------- -------- -------- Total current liabilities 46,294 38,003 39,062 Distribution center financing 8,874 9,172 10,033 Other long-term liabilities 6,161 6,270 6,749 -------- -------- -------- Total liabilities 61,329 53,445 55,844 -------- -------- -------- STOCKHOLDERS' EQUITY Preferred stock, $.001 par value; authorized 1,000,000; none issued Common stock, $.001 par value; authorized 30,000,000; issued 13,773,900, 13,762,900, 13,759,100; outstanding 13,100,588, 13,089,588, 13,085,388 14 14 14 Additional paid-in capital 77,534 77,458 77,345 Retained earnings 30,593 25,334 11,924 Treasury stock (673,312, 673,312, 673,712 shares) at cost (1,659) (1,659) (1,660) -------- -------- -------- Total stockholders' equity 106,482 101,147 87,623 -------- -------- -------- Total liabilities and stockholders' equity $167,811 $154,592 $143,467 ======== ======== ========
The accompanying notes are an integral part of the Consolidated Financial Statements. UNITED RETAIL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except per share amounts) (Unaudited) Thirteen Weeks Ended --------------------------- May 1, May 2, 1999 1998 ----------- ----------- Net sales $96,693 $94,943 Cost of goods sold, including buying and occupancy costs 69,719 67,823 ----------- ----------- Gross profit 26,974 27,120 General, administrative and store operating expenses 19,007 19,907 ----------- ----------- Operating income 7,967 7,213 Interest income, net (347) (140) ----------- ----------- Income before income taxes 8,314 7,353 Provision for income taxes 3,055 2,783 ----------- ----------- Net income $5,259 $4,570 =========== =========== Net income per share Basic $0.40 $0.35 =========== =========== Diluted $0.38 $0.34 =========== =========== Weighted average number of shares outstanding Basic 13,093,291 12,957,041 Common stock equivalents (stock options) 690,077 537,045 ----------- ----------- Diluted 13,783,368 13,494,086 =========== =========== The accompanying notes are an integral part of the Consolidated Financial Statements. UNITED RETAIL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (Unaudited)
Thirteen Weeks Ended -------------------------- May 1, May 2, 1999 1998 -------- --------- Cash Flows From Operating Activities: Net income $5,259 $4,570 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation and amortization of property and equipment 1,591 1,907 Amortization of deferred charges and other intangible assets 88 88 Loss on disposal of assets 171 17 Deferred compensation 78 - Benefit from deferred income taxes 384 1,714 Deferred lease assumption revenue amortization (106) (126) Changes in operating assets and liabilities: Accounts receivable (2,357) (1,054) Income taxes 2,617 619 Inventory (5,260) (10,323) Accounts payable and accrued expenses 4,619 5,972 Prepaid expenses (546) (158) Other assets and liabilities (496) 3 ------- ------- Net Cash Provided from Operating Activities 6,042 3,229 ------- ------- Investing Activities: Capital expenditures (5,979) (914) Deferred payment for property and equipment 1,138 30 ------- ------- Net Cash Used for Investing Activities (4,841) (884) ------- ------- Financing Activities: Repayments of long-term debt (275) (255) Issuance of loans to officers (41) (1,993) Exercise of stock options 39 2 ------- ------- Net Cash Used in Financing Activities (277) (2,246) ------- ------- Net increase in cash and cash equivalents 924 99 Cash and cash equivalents, beginning of period 45,894 31,122 ------- ------- Cash and cash equivalents, end of period $46,818 $31,221 ======= =======
The accompanying notes are an integral part of the Consolidated Financial Statements. UNITED RETAIL GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The consolidated financial statements include the accounts of United Retail Group, Inc. and its subsidiaries (the "Company"). All significant intercompany balances and transactions have been eliminated. The consolidated financial statements as of and for the thirteen weeks ended May 1, 1999 and May 2, 1998 are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the consolidated financial statements should be read in conjunction with the financial statement disclosures contained in the Company's 1998 Annual Report and 1998 Form 10-K. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments necessary (which are of a normal recurring nature) to present fairly the financial position and results of operations and cash flows for the interim periods, but are not necessarily indicative of the results of operations for a full fiscal year. 2. Net Income Per Share At the end of fiscal 1997, the Company adopted the provisions of Statement of Financial Accounting Standards No. 128 "Earnings Per Share". Basic per share data has been computed based on the weighted average number of shares of common stock outstanding. Diluted per share data has been computed on the basic plus the dilution of stock options. Options to purchase approximately 60,000 shares of common stock at prices ranging from $10.12 to $26.75 per share were outstanding as of May 1, 1999 but were not included in the computation of diluted net income per share because the exercise prices were greater than the average market price of the common shares. 3. Financing Arrangements In 1994, the Company executed a fifteen-year $8.0 million loan bearing interest at 8.64%. Interest and principal are payable in equal monthly installments beginning May 1, 1994. The loan is collateralized by a mortgage on the national distribution center owned by the Company in Troy, Ohio. In 1993, the Company executed a ten-year $7.0 million note bearing interest at 7.3%. Interest and principal are payable in equal monthly installments beginning November 1993. The note is collateralized by the material handling equipment in the distribution center. The Company and United Retail Incorporated, its subsidiary, (collectively, the "Companies") are parties to a Financing Agreement, dated August 15, 1997, as amended September 15, 1997 (the "Financing Agreement"), with The CIT Group/Business Credit, Inc.("CIT"). The Financing Agreement, which was extended in March 1999 to August 15, 2001, provides a revolving line of credit in the aggregate amount of $40 million for the Companies, subject to availability of credit according to a borrowing base computation. The line of credit may be used on a revolving basis by either of the Companies to support trade letters of credit and standby letters of credit and to finance loans. The Companies are required to maintain unused at all times combined availability of at least $5 million. Except for the maintenance of a minimum availability of $5 million and a limit on capital expenditures, the Financing Agreement does not contain any financial covenants. In the event a loan is made to one of the Companies, interest is payable monthly based on a 360-day year at the prime rate or at two percent plus the LIBOR rate on a per annum basis, at the borrower's option. The line of credit is secured by a security interest in inventory and proceeds and by the balance on deposit from time to time in an account that has been pledged to the lenders. At May 1, 1999, the combined availability of the Companies was $18.8 million, no balance was in the pledged account, the aggregate outstanding amount of letters of credit arranged by CIT was $20.5 million and no loan had been drawn down. The Company's cash on hand was unrestricted. 4. Income Taxes The provision for income taxes consists of (dollars in thousands): Thirteen Weeks Ended -------------------- May 1, May 2, 1999 1998 ------ ------ Currently payable: Federal $2,552 $1,012 State 119 56 ------ ------ 2,671 1,068 ------ ------ Deferred: Federal 316 1,411 State 68 304 ------ ------ 384 1,715 ------ ------ $3,055 $2,783 ====== ====== Reconciliation of the provision for income taxes from the U.S. Federal statutory rate to the Company's effective rate is as follows (dollars in thousands): Thirteen Weeks Ended --------------------------------------------- May 1, 1999 May 2, 1998 ----------- ----------- Tax at Federal rate $ 2,910 35.0% $ 2,573 35.0% State income taxes, net of federal benefit 122 1.4% 234 3.2% Goodwill amortization 18 0.2% 18 0.2% Other 5 0.1% (42) (0.6%) -------- ---- -------- ---- $ 3,055 36.7% $ 2,783 37.8% ======== ==== ======== ==== The net deferred tax asset reflects the tax impact of temporary differences. The components of the net deferred tax asset as of May 1, 1999 are as follows (dollars in thousands): Assets: Inventory $ 218 Accruals and reserves 2,705 Compensation 339 ------ 3,262 ------ Liabilities: Depreciation 2,526 ------ 2,526 ------ Net deferred tax asset $ 736 ======= Future realization of the tax benefits attributable to these existing deductible temporary differences ultimately depends on the existence of sufficient taxable income within the carryforward period available under the tax law at the time of the tax deduction. Based on management's assessment, it is more likely than not that the net deferred tax asset will be realized through future taxable earnings or available carrybacks. The Company's federal income tax returns for fiscal 1994, fiscal 1995 and fiscal 1996 are being audited by the Internal Revenue Service. Management believes that the results of the audits will not have a material adverse effect on the Company's financial condition or results of operations. 5. Advances To Officers Raphael Benaroya, the Chairman of the Board, President and Chief Executive Officer of the Company, and George R. Remeta, the Vice Chairman and Chief Financial Officer of the Company, borrowed money from the Company to finance taxes arising from their exercises of employee stock options on February 13, 1998. (The advances had previously been authorized by the Compensation Committee.) In Fiscal 1998, advances were made of approximately $1.6 million to Mr. Benaroya and $0.2 million to Mr. Remeta. In Fiscal 1999, an additional advance of approximately $0.1 million was made to Mr. Benaroya. Interest is payable annually at the prime rate. Accrued interest at February 13, 1999 has been paid in full in the respective amounts of approximately $137,000 for Mr. Benaroya and $21,000 for Mr. Remeta. The largest amounts outstanding were approximately $1.7 million from Mr. Benaroya and $0.2 million from Mr. Remeta, respectively, which remain outstanding. The advances mature on February 13, 2002 subject to acceleration under certain circumstances and to a call by the Company on February 13, 2000 with respect to half of the principal amount. Payment of the advances is secured by a pledge of the shares of the Company's Common Stock issued upon the option exercises in the respective amounts of 777,925 shares issued to Mr. Benaroya and 116,888 shares issued to Mr. Remeta. Each advance is a full recourse obligation of the borrower. 6. Supplemental Cash Flow Information Net cash flow from operating activities includes cash payments for interest and income taxes as follows (dollars in thousands): Thirteen Weeks Ended ----------------------- May 1, May 2, 1999 1998 ---- ---- Cash interest: Interest income, net per statements of operations ($347) ($140) Less: Non-cash interest expense 20 11 ----- ----- Net cash interest income including interest income of $587 and $438 ($367) ($151) ----- ----- Net income tax payments $ 54 $449 ===== ===== Financing activities for the thirteen weeks ended May 2, 1998 include the non-cash exercise of 1,076,955 stock options, with the exercise price paid by exchanging common stock held equal to the cash payment due. 7. Contingency Footnote The Company is involved in legal actions and claims arising in the ordinary course of business. Management believes (based on advice of legal counsel) that such litigation and claims will not have a material adverse effect on the Company's financial position or results of operations. 8. Subsequent Event In May 1999, at the annual meeting of stockholder's of the Company, the stockholders approved the adoption of the 1999 Stock Option Plan, including a stock option reserve of 400,000 shares of common stock. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS First Quarter Fiscal 1999 Versus First Quarter Fiscal 1998 Net sales for the first quarter of Fiscal 1999 increased 1.8% from the first quarter of Fiscal 1998, to $96.7 million from $94.9 million, from an increase in the unit volume. Average stores open decreased 3.8% from 522 to 502 as underperforming stores were closed selectively. Comparable store sales for the quarter increased 4.6%. There is no assurance that sales and comparable store sales will continue to increase. Gross profit was $27.0 million in the first quarter of Fiscal 1999 compared with $27.1 million in the first quarter of Fiscal 1998, decreasing as a percentage of net sales to 27.9% from 28.6%. The decrease in gross profit as a percentage of net sales was primarily attributable to a decrease in the merchandise margin rate partially offset by a decrease in buying and occupancy costs as a percentage of net sales. General, administrative and store operating expenses were $19.0 million in the first quarter of Fiscal 1999 compared to $19.9 million in the first quarter of Fiscal 1998, decreasing principally as a result of reduced insurance expense. As a percentage of net sales, general, administrative and store operating expenses decreased to 19.7% from 21.0%. During the first quarter of Fiscal 1999, the Company had operating income of $8.0 million (8.3% of sales) compared to operating income of $7.2 million in the first quarter of Fiscal 1998. Net interest income was $0.3 million in the first quarter of Fiscal 1999 and $0.1 million in the first quarter of Fiscal 1998, primarily from interest earned on a higher level of cash and cash equivalents. The Company had a provision for income taxes of $3.1 million in the first quarter of Fiscal 1999 and $2.8 million in the first quarter of Fiscal 1998. The effective rate changed to 36.7% in the first quarter of Fiscal 1999 from 37.8% in the first quarter of Fiscal 1998. The Company had net income of $5.3 million for the first quarter of Fiscal 1999 and $4.6 million for the first quarter of Fiscal 1998. Liquidity and Capital Resources Net cash provided from operating activities in the first quarter of Fiscal 1999 was $6.0 million. The Company's cash on hand increased to $46.8 million at May 1, 1999 from $45.9 million at January 30, 1999 and $31.2 million at May 2, 1998. Inventory increased to $50.8 million at May 1, 1999 from $48.3 million at May 2, 1998 and $45.6 million at January 30, 1999. The Company's inventory levels peak in early May and November/December. During Fiscal 1998, the highest inventory level was $54.2 million. Import purchases are made in U.S. dollars, are generally financed by trade letters of credit and generally constitute approximately half of total purchases. Short-term trade credit represents a significant source of financing for domestic merchandise purchases. Trade credit arises from the willingness of the Company's domestic vendors to grant extended payment terms for inventory purchases and is generally financed either by the vendor or a third-party factor. United Retail Group, Inc. and United Retail Incorporated, its subsidiary (collectively, the "Companies"), are parties to a Financing Agreement, dated August 15, 1997, as amended (the "Financing Agreement"), with The CIT Group/Business Credit, Inc. ("CIT"). The Financing Agreement provides a revolving line of credit for a term ending August 15, 2001 in the aggregate amount of $40 million for the Companies, subject to availability of credit as described in the following paragraphs. The line of credit may be used on a revolving basis by either of the Companies to support trade letters of credit and standby letters of credit and to finance loans. As of May 1, 1999, trade letters of credit for the account of the Company and supported by CIT were outstanding in the amount of $18.0 million. (A standby letter of credit supported by CIT was also outstanding for $2.0 million as collateral for obligations in the ordinary course of business under general liability insurance policies.) Subject to the following paragraph, the availability of credit (within the aggregate $40 million line of credit) to either of the Companies at any time is the excess of its borrowing base over the sum of (x) the aggregate outstanding amount of its letters of credit and its revolving loans, if any, and (y) at CIT's option, the sum of (i) unpaid sales taxes, and (ii) up to $500,000 in total liabilities of the Companies under permitted encumbrances (as defined in the Financing Agreement). The borrowing base, as to either of the Companies, is the sum of (x) a percentage of the book value of its eligible inventory (both on hand and unfilled purchase orders financed with letters of credit), ranging from 60% to 65% depending on the season, and (y) the balance in an account in its name that has been pledged to the lenders (a "Pledged Account"). (At May 1, 1999, the combined availability of the Companies was $18.8 million; no balance was in a Pledged Account; no loan had been drawn down; and the Company's cash on hand was unrestricted.) The provisions of the preceding paragraph to the contrary notwithstanding, the Companies are required to maintain unused at all times combined availability of at least $5 million. Except for the maintenance of a minimum availability of $5 million and a limit on capital expenditures, the Financing Agreement does not contain any financial covenants. In the event a revolving loan is made to one of the Companies, interest is payable monthly based on a 360-day year at the prime rate or at two percent plus the LIBOR rate on a per annum basis, at the borrower's option. The line of credit is secured by a security interest in inventory and proceeds and by the balance from time to time in the Pledged Account. The Financing Agreement also includes certain restrictive covenants that impose limitations (subject to certain exceptions) on the Companies with respect to, among other things, making certain investments, declaring or paying dividends, acquiring Common Stock or preferred stock of the Company, making loans, engaging in certain transactions with affiliates, or consolidating, merging or making acquisitions outside the ordinary course of business. The Company believes that its cash on hand, the availability of credit under the Financing Agreement and cash flows from operating activities will be adequate to meet anticipated working capital needs, including seasonal financing needs, for the next 12 months. This paragraph constitutes forward-looking information under the 1995 Private Securities Litigation Reform Act (the "Reform Act") and is subject to the uncertainties and other risk factors referred to under the caption "Future Results." Stores The Company leased 502 retail stores at May 1, 1999, of which 299 stores were located in strip shopping centers, 180 stores were located in malls and 23 stores were located in downtown shopping districts. Total retail square footage was 2.0 million square feet at May 1, 1999 compared to 2.1 million square feet a year earlier. A total of 303 stores are operated by the Company under trade names that predate the AVENUE(R) trade name now used on new stores and remodeled stores. Approximately 300 of these stores are scheduled to be converted to the AVENUE(R) trade name in Fiscal 1999. In Fiscal 1999, the Company intends to pay the costs of opening new stores, remodeling certain existing stores and changing the signage on approximately 300 stores from its cash on hand. The two preceding paragraphs contain forward-looking information under the Reform Act, which is subject to the uncertainties and other risk factors referred to under the caption "Future Results". Tax Matters The Company's federal income tax returns for Fiscal 1994, Fiscal 1995 and Fiscal 1996 are being audited by the Internal Revenue Service. Management believes that the results of the audit will not have a material adverse effect on the Company's financial condition or results of operations. Renovating Computerized Systems and Replacing Embedded Technology The Company operates a nationwide chain of specialty apparel retail stores, imports a significant portion of its inventory, and makes proprietary credit cards available to its customers. The Company's operations are heavily dependent on date sensitive computerized systems and embedded technology, including (i) its management information systems, (ii) the technology, including microcontrollers, embedded in equipment at the Company's national distribution center, (iii) the system for issuing and processing a trade letter of credit for each of the Company's purchase orders used by the bank (the "Letter of Credit Provider") that finances the Company's purchases of inventory abroad and (iv) links to another bank (the "Credit Card Bank") to authorize purchases by customers using the Company's proprietary credit cards. The Company's headquarters uses a date sensitive voicemail system. The Company's headquarters and stores are leased and are generally affected by date sensitive embedded technology used to control heating and ventilation and lighting. Generally, computer programs and embedded technology often will mishandle data that includes a year after 1999 (referred to below as "Year 2000 risks"). The mainframe operating systems used by the Company's vendor have been represented by the vendor to be Year 2000 compliant in all material respects. The Company's management information systems department (the "MIS Department") has renovated substantially all of the Company's applications software, systems software and hardware (collectively referred to below as "Systems") to accommodate dates after 1999. Integrated Year 2000 testing of substantially all the Systems that are essential to the Company's management information systems ("Essential Systems") and the mainframe operating systems was completed successfully. (There is no assurance, however, that the integrated testing revealed all Year 2000 risks.) The few untested Essential Systems are scheduled to be renovated and tested separately during the second quarter of Fiscal 1999. (The renovation, validation and testing of the Essential Systems are referred to below as the "Year 2000 Project.") The Company has obtained representations from the manufacturers of the equipment that performs essential functions at the national distribution center to the effect that the equipment is Year 2000 compliant in all material respects. There is no assurance, however, that all the essential equipment at the national distribution center will function properly after 1999 or that any malfunctions that occur will not have a material adverse effect on the Company's logistics operations. The Letter of Credit Provider has advised the Company that its trade letter of credit system and telecommunications interfaces are Year 2000 complaint in all material respects. There is no assurance, however, that such system and interfaces will function properly after 1999. The Credit Card Bank has advised the Company that its credit card transaction processing system has been renovated, and certified to be Year 2000 compliant in all material respects. The Credit Card Bank also stated that it has assessed its telecommunications interfaces for point of sale credit authorizations and is in the process of renovating them to make them Year 2000 compliant in all material respects by June 30, 1999. There is no assurance, however, that these processing systems and telecommunications interfaces will function properly after 1999 or that any malfunctions that occur will not have a material adverse effect on the Company's sales. The Company will replace its voicemail system in 1999 with one that is guaranteed to be Year 2000 compliant by the manufacturer. The Company believes that in most cases the embedded technology used in energy management systems to control heating and ventilation and lighting at its headquarters and its stores can quickly be bypassed manually in the event of a malfunction because of an inability to accommodate dates after 1999. There is no assurance, however, that any malfunctions that occur will not have a material adverse effect on the Company's operations. The Company does not have a project tracking system for the time that its associates spend on the Year 2000 Project. The Company's internal costs for the Year 2000 Project are principally the related payroll costs for the MIS Department, estimated to have been $0.8 million from February 3, 1996 to May 1, 1999, of which $0.1 million is estimated to have been expensed in the first quarter of Fiscal 1999. The cost of special purchases for the Year 2000 Project was approximately $0.6 million, substantially all of which was incurred in Fiscal 1998. Amounts equal to the internal and external costs of the Year 2000 Project, however, probably would have been spent on other software development projects, if the Year 2000 Project had not been necessary. Other software development projects deferred because of the Year 2000 Project probably would have improved the Company's operational efficiency but management does not believe that any of the deferred operational improvements would have been material to its operations. Budgeted MIS Department payroll costs and special purchases for the Year 2000 Project, including a voicemail system, in Fiscal 1999 are not material in relation to the Company's general, administrative and store operating expenses in Fiscal 1998. However, there is no assurance that unexpected additional costs will not be incurred. The inability of computerized systems and embedded technology in general to accommodate dates after 1999 may cause disruptions in the United States and abroad in the telecommunications, banking, credit card, transportation, utilities and apparel manufacturing industries and in government services. If such disruptions occur, they could have a material adverse effect on the entire specialty apparel retail industry, including the Company. The Company has not assessed industry-wide Year 2000 risks that are not unique to the Company's operations. The Company's contingency plan for Year 2000 risks that might affect the entire industry is to have multiple, geographically diverse vendors of each major category of goods, to the extent feasible. The Company will address industry-wide Year 2000 risks on an ad hoc basis as problems arise, principally by shifting purchase orders to vendors that are less troubled by Year 2000 problems than their competitors. There is no assurance, however, that any vendors will be Year 2000 compliant. There is no commercially viable alternative course of action, so the Company will not develop contingency plans for prolonged failure of its Essential Systems and lengthy constructive eviction from its headquarters. Such Systems failure and constructive eviction would have a material adverse effect on the Company's results of operations, net cash provided from operating activities and financial condition. The Company's contingency plan for Year 2000 risks at its national distribution center is to replace as quickly as possible any essential equipment that malfunctions because of inability to accommodate dates after 1999. There is no assurance, however, that Year 2000 compliant replacement equipment will be available. The Company's contingency plan with respect to the unavailability of a trade letter of credit for each of the Company's purchase orders is to deliver blanket trade letters of credit to the Company's major foreign vendors, by courier, if necessary. (A blanket trade letter of credit would finance all Company purchase orders to be given to the vendor.) The Company's contingency plan with respect to downtime in proprietary credit card operations by the Credit Card Bank is to continue credit sales on the Company's own account with its own systems until the Credit Card Bank resumes operations or is replaced by another bank. While other banks would be available to replace the Credit Card Bank, there is no assurance that any bank will be Year 2000 compliant. The Company has contingency plans with respect to heating and ventilation and lighting controls in its stores that have malfunctioned because of an inability to accommodate dates after 1999. For stores located in strip shopping centers, the Company will arrange as quickly as possible for local maintenance contractors to bypass manually any controls that have malfunctioned. There is no assurance, however, that local maintenance contractors will have time available to bypass controls that have malfunctioned. For stores located in malls and downtown shopping districts, the Company will promptly notify landlords of systems that have malfunctioned and request immediate restoration of service. There is no assurance, however, that landlords will be able to restore service. In the case of any unheated stores that have lights, the Company will also ask store managers to keep the stores open if weather conditions permit. There is no assurance that the Company's contingency plans will diminish the possible adverse consequences of Year 2000 risks. The Company believes that a reasonably likely worst case scenario resulting from Year 2000 risks that are unique to its operations would be a decline in net sales for the fourth quarter of Fiscal 1999 having a material adverse effect on the Company's results of operations and net cash provided from operating activities for that quarter but not on the Company's financial condition (see, "-Liquidity"). While management does not believe that such risks will have a material adverse effect on the Company's operations in Fiscal 2000, there is no assurance that such risks will not have such a material adverse effect, regardless of the Company's remediation efforts and contingency plans. Further, there is no assurance that Year 2000 risks that affect the entire specialty apparel retail industry, and not just the Company, will not have a material adverse effect on the Company's operations in Fiscal 1999 and Fiscal 2000. Certain of the 18 preceding paragraphs contain forward-looking information under the Reform Act, which is subject to the uncertainties and other risk factors referred to under the caption "Future Results." Future Results Future results could differ materially from those currently anticipated by the Company due to unforeseeable problems that might arise and possible (i) miscalculation of fashion trends, (ii) shifting shopping patterns, both within the specialty store sector and in other channels of distribution, (iii) extreme or unseasonable weather conditions, (iv) disruptions in the telecommunications, banking, credit card, transportation, utilities and apparel manufacturing industries in the United States and abroad caused by the inability of their computerized systems and embedded technology to accommodate dates after 1999, (v) economic downturns, weakness in overall consumer demand, and variations in the demand for women's fashion apparel, (vi) imposition by vendors, or their third-party factors, of more onerous payment terms for domestic merchandise purchases, (vii) acceleration in the rate of business failures and inventory liquidations in the specialty store sector of the women's apparel industry, and (viii) disruptions in the sourcing of merchandise abroad, including (a) political instability and economic distress in South Asia, (b) China's claims to sovereignty over Taiwan, (c) North Korea's claims to sovereignty over South Korea, (d) exchange rate fluctuations, (e) trade sanctions or restrictions, (f) changes in quota and duty regulations, (g) delays in shipping, (h) increased costs of transportation or (i) disruptions in government services in the United States and abroad caused by the inability of computerized systems and embedded technology to accommodate dates after 1999, including delays in the issuance by the United States Customs Service of clearances on imported merchandise. PART II - OTHER INFORMATION Item 2. Changes in Securities. (c) Seven stock options to purchase 3,000 shares each of the Company's common stock were issued on May 26, 1999 without registration under the Securities Act of 1933 (the "Securities Act"). The options were formula options granted pursuant to the 1999 Stock Option Plan exercisable at $15.125 per share. The grantees were non-employee directors of the Company. The options become exercisable in five equal annual installments commencing one year after the date of grant. The above grants were exempt from the registration provisions of the Securities Act under Section 4(2) thereof because all the grantees are directors of the issuer. Nevertheless, the Company intends to file a registration statement with respect to the options before they become exercisable. Item 4. Submission of Matters to a Vote of Security Holders. (a) The seventh Annual Meeting of Stockholders (the "Meeting") was held on May 26, 1999. (c) The Meeting elected directors for terms ending at the eight Annual Meeting of Stockholders, by the following vote: Name For Withhold Authority to Vote ---- --- -------------------------- Joseph A. Alutto 11,039,347 17,017 Raphael Benaroya 11,040,947 15,417 Russell Berrie 10,571,904 484,460 Joseph Ciechanover 10,569,064 487,300 Michael Goldstein 11,042,347 14,017 Ilan Kaufthal 11,042,347 14,017 Vincent P. Langone 11,040,147 16,217 George R. Remeta 11,041,447 14,917 Richard W. Rubenstein 11,042,347 14,017 (d) The adoption of the 1999 Stock Option Plan (the "1999 Plan") was approved at the Meeting by a vote of 10,273,621 for, 776,822 against and 5,921 abstain. The 1999 Plan is incorporated herein by reference to the appendix to the Company's proxy statement on Schedule 14A for its 1999 Annual Meeting of Stockholders. Item 6. Exhibits The following exhibits are filed herewith: Number Description ------ ----------- 4.1 Amended By-Laws of the Corporation 27 Financial Data schedule The following exhibits to the Corporation's Annual Report on Form 10-K for the year ended January 30, 1999 are incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1 Amendment, dated March 29, 1999, to Financing Agreement among the Corporation, United Retail Incorporated and The CIT Group/Business Credit, Inc. ("CIT") 10.2 Financial Statements of Retirement Savings Plan for year ended December 31, 1998 13 Sections of 1998 Annual Report to Stockholders (including opinion of Independent Public Accountants) that are incorporated by reference in response to the items of the Annual Report on Form 10-K 21 Subsidiaries of the Corporation The 1999 Stock Option Plan set forth as the Appendix to the Corporation's proxy statement on Schedule 14A for its 1999 annual meeting of stockholders is incorporated herein by reference.* The following exhibits to the Corporation's Quarterly Report on Form 10-Q for the period ended October 31, 1998 are incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1* Employment Agreement, dated November 20, 1998, between the Corporation and Raphael Benaroya 10.2* Employment Agreement, dated November 20, 1998, between the Corporation and George R. Remeta 10.3* Employment Agreement, dated November 20, 1998, between the Corporation and Kenneth P. Carroll 10.4* Employment Agreement, dated March 26, 1998, between the Corporation and Carrie Cline-Tunick and amendment thereto. The following exhibits to the Corporation's Quarterly Report on Form 10-Q for the period ended May 2, 1998 are incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1* 1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and Raphael Benaroya 10.2* 1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and George R. Remeta The following exhibits to the Corporation's Annual Report on Form 10-K for the year ended January 31, 1998 are incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1 Restated Stockholders' Agreement, dated December 23, 1992, between the Corporation and certain of its stockholders and Amendment No. 1, Amendment No. 2 and Amendment No. 3 thereto 10.2 Private Label Credit Program Agreement, dated January 27, 1998, between the Corporation, United Retail Incorporated and World Financial Network National Bank (Confidential portions have been deleted and filed separately with the Secretary of the Commission) 10.4* Restated 1990 Stock Option Plan as of March 6, 1998 10.5* Restated 1990 Stock Option Plan as of May 28, 1996 10.6* Restated 1996 Stock Option Plan as of March 6, 1998 10.7* Restated 1989 Performance Option Plan as of May 6, 1998 The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ended November 1, 1997 is incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1 Amendment, dated September 15, 1997, to Financing Agreement among the Corporation, United Retail Incorporated and CIT The following exhibits to the Corporation's Quarterly Report on Form 10-Q for the period ended August 2, 1997 are incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1 Financing Agreement, dated August 15, 1997, among the Corporation, United Retail Incorporated and CIT 10.2* Amendment No. 1 to Restated Supplemental Retirement Savings Plan The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ended November 2, 1996 is incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1* Restated Supplemental Retirement Savings Plan The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ended May 4, 1996 is incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.3 Amended and Restated Term Sheet Agreement for Hosiery, dated as of December 29, 1995, between The Avenue, Inc. and American Licensing Group, Inc. (Confidential portions have been deleted and filed separately with the Secretary of the Commission) The following exhibits to the Corporation's Amended Current Report on Form 8-KA, dated May 22, 1995, are incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1 Amended and Restated Gloria Vanderbilt Intimate Apparel Sublicense Agreement, dated May 22, 1995, between United Retail Incorporated and American Licensing Group Limited Partnership ("ALGLP") 10.2 Gloria Vanderbilt Sleepwear Sublicense Agreement, dated May 22, 1995, between United Retail Incorporated and ALGLP The following exhibit to the Corporation's Annual Report on Form 10-K for the year ended January 28, 1995 is incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1* Incentive Compensation Program Summary The following exhibits to the Corporation's Registration Statement on Form S-1 (Registration No. 33-44499), as amended, are incorporated herein by reference: Number in Filing Description ---------------- ----------- 3.1 Amended and Restated Certificate of Incorporation of Registrant 4.1 Specimen Certificate for Common Stock of Registrant 10.2.1 Software License Agreement, dated as of April 30, 1989, between The Limited Stores, Inc. and Sizes Unlimited, Inc. (now known as United Retail Incorporated) 10.2.2 Amendment to Software License Agreement, dated December 10, 1991 10.7 Amended and Restated Gloria Vanderbilt Hosiery Sublicense Agreement, dated as of April 30, 1989, between American Licensing Group, Inc. (Licensee) and Sizes Unlimited, Inc. (Sublicensee) 10.12 Amended and Restated Master Affiliate Sublease Agreement, dated as of July 17, 1989, among Lane Bryant, Inc., Lerner Stores, Inc. (Landlord) and Sizes Unlimited, Inc. (Tenant) and Amendment thereto, dated July 17, 1989 10.33* 1991 Stock Option Agreement, dated November 1, 1991, between the Corporation and Raphael Benaroya 10.34* 1991 Stock Option Agreement, dated November 1, 1991, between the Corporation and George R. Remeta 10.38 Management Services Agreement, dated August 26, 1989, between American Licensing Group, Inc. and ALGLP 10.39 First Refusal Agreement, dated as of August 31, 1989, between the Corporation and ALGLP - -------------------- *A compensatory plan for the benefit of the Corporation's management or a management contract. (b) No Current Reports on Form 8-K were filed by the Corporation during the fiscal quarter ended May 1, 1999. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. (Registrant) UNITED RETAIL GROUP, INC. -------------------------------------------------------------------- By: /s/ GEORGE R. REMETA ------------------------------------------------------ George R. Remeta, Vice Chairman of the Board and Chief Financial Officer - Authorized Signatory By: /s/ JON GROSSMAN ------------------------------------------------------- Jon Grossman, Vice President - Finance and Chief Accounting Officer Date: June 9, 1999 EXHIBIT INDEX The following exhibits are filed herewith: Number Description ------ ----------- 4.1 Amended By-Laws of the Corporation 27 Financial Data schedule The following exhibits to the Corporation's Annual Report on Form 10-K for the year ended January 30, 1999 are incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1 Amendment, dated March 29, 1999, to Financing Agreement among the Corporation, United Retail Incorporated and The CIT Group/Business Credit, Inc. ("CIT") 10.2 Financial Statements of Retirement Savings Plan for year ended December 31, 1998 13 Sections of 1998 Annual Report to Stockholders (including opinion of Independent Public Accountants) that are incorporated by reference in response to the items of the Annual Report on Form 10-K 21 Subsidiaries of the Corporation The 1999 Stock Option Plan set forth as the Appendix to the Corporation's proxy statement on Schedule 14A for its 1999 annual meeting of stockholders is incorporated herein by reference.* The following exhibits to the Corporation's Quarterly Report on Form 10-Q for the period ended October 31, 1998 are incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1* Employment Agreement, dated November 20, 1998, between the Corporation and Raphael Benaroya 10.2* Employment Agreement, dated November 20, 1998, between the Corporation and George R. Remeta 10.3* Employment Agreement, dated November 20, 1998, between the Corporation and Kenneth P. Carroll 10.4* Employment Agreement, dated March 26, 1998, between the Corporation and Carrie Cline-Tunick and amendment thereto. The following exhibits to the Corporation's Quarterly Report on Form 10-Q for the period ended May 2, 1998 are incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1* 1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and Raphael Benaroya 10.2* 1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and George R. Remeta The following exhibits to the Corporation's Annual Report on Form 10-K for the year ended January 31, 1998 are incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1 Restated Stockholders' Agreement, dated December 23, 1992, between the Corporation and certain of its stockholders and Amendment No. 1, Amendment No. 2 and Amendment No. 3 thereto 10.2 Private Label Credit Program Agreement, dated January 27, 1998, between the Corporation, United Retail Incorporated and World Financial Network National Bank (Confidential portions have been deleted and filed separately with the Secretary of the Commission) 10.4* Restated 1990 Stock Option Plan as of March 6, 1998 10.5* Restated 1990 Stock Option Plan as of May 28, 1996 10.6* Restated 1996 Stock Option Plan as of March 6, 1998 10.7* Restated 1989 Performance Option Plan as of May 6, 1998 The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ended November 1, 1997 is incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1 Amendment, dated September 15, 1997, to Financing Agreement among the Corporation, United Retail Incorporated and CIT The following exhibits to the Corporation's Quarterly Report on Form 10-Q for the period ended August 2, 1997 are incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1 Financing Agreement, dated August 15, 1997, among the Corporation, United Retail Incorporated and CIT 10.2* Amendment No. 1 to Restated Supplemental Retirement Savings Plan The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ended November 2, 1996 is incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1* Restated Supplemental Retirement Savings Plan The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ended May 4, 1996 is incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.3 Amended and Restated Term Sheet Agreement for Hosiery, dated as of December 29, 1995, between The Avenue, Inc. and American Licensing Group, Inc. (Confidential portions have been deleted and filed separately with the Secretary of the Commission) The following exhibits to the Corporation's Amended Current Report on Form 8-KA, dated May 22, 1995, are incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1 Amended and Restated Gloria Vanderbilt Intimate Apparel Sublicense Agreement, dated May 22, 1995, between United Retail Incorporated and American Licensing Group Limited Partnership ("ALGLP") 10.2 Gloria Vanderbilt Sleepwear Sublicense Agreement, dated May 22, 1995, between United Retail Incorporated and ALGLP The following exhibit to the Corporation's Annual Report on Form 10-K for the year ended January 28, 1995 is incorporated herein by reference: Number in Filing Description ---------------- ----------- 10.1* Incentive Compensation Program Summary The following exhibits to the Corporation's Registration Statement on Form S-1 (Registration No. 33-44499), as amended, are incorporated herein by reference: Number in Filing Description ---------------- ----------- 3.1 Amended and Restated Certificate of Incorporation of Registrant 4.1 Specimen Certificate for Common Stock of Registrant 10.2.1 Software License Agreement, dated as of April 30, 1989, between The Limited Stores, Inc. and Sizes Unlimited, Inc. (now known as United Retail Incorporated) 10.2.2 Amendment to Software License Agreement, dated December 10, 1991 10.7 Amended and Restated Gloria Vanderbilt Hosiery Sublicense Agreement, dated as of April 30, 1989, between American Licensing Group, Inc. (Licensee) and Sizes Unlimited, Inc. (Sublicensee) 10.12 Amended and Restated Master Affiliate Sublease Agreement, dated as of July 17, 1989, among Lane Bryant, Inc., Lerner Stores, Inc. (Landlord) and Sizes Unlimited, Inc. (Tenant) and Amendment thereto, dated July 17, 1989 10.33* 1991 Stock Option Agreement, dated November 1, 1991, between the Corporation and Raphael Benaroya 10.34* 1991 Stock Option Agreement, dated November 1, 1991, between the Corporation and George R. Remeta 10.38 Management Services Agreement, dated August 26, 1989, between American Licensing Group, Inc. and ALGLP 10.39 First Refusal Agreement, dated as of August 31, 1989, between the Corporation and ALGLP - -------------------- *A compensatory plan for the benefit of the Corporation's management or a management contract. EX-4.1 2 EXHIBIT 4.1 RESTATED BY-LAWS OF UNITED RETAIL GROUP, INC. ------------------------- (a Delaware Corporation) (as amended July 18, 1999) --------- ARTICLE I --------- STOCKHOLDERS ------------ 1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the corporation shall be entitled to have a certificate signed by, or in the name of, the corporation by the Chairman or Vice-Chairman of the board of directors, if any, or by the President or a Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the corporation certifying the number of shares owned by him in the corporation. Any and all signatures on any such certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. The corporation may issue a new certificate of stock in place of any certificate theretofore issued by it, alleged to have been lost, stolen, or destroyed, and the board of directors may require the owner of any lost, stolen, or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify the corporation against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate or the issuance of any such new certificate. 2. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be required to, issue fractions of a share. If the corporation does not issue fractions of a share, it shall (1) arrange for the disposition of fractional interests by those entitled thereto, (2) pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or (3) issue scrip or warrants in registered or bearer form which shall entitle the holder to receive a certificate for a full share upon the surrender of such scrip or warrants aggregating a full share. A certificate for a fractional share shall, but script or warrants shall not unless otherwise provided therein, entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the corporation in the event of liquidation, in each case to the extent of such fraction. The board of directors may cause scrip or warrants to be issued subject to the conditions that they shall become void if not exchanged for certificates representing full shares before a specified date, or subject to the conditions that the shares for which scrip or warrants are exchangeable may be sold by the corporation and the proceeds thereof distributed to the holders of scrip or warrants, or subject to any other conditions which the board of directors may impose. 3. STOCK TRANSFER. Upon compliance with provisions restricting the transfer or registration of transfer of shares of stock, if any, transfers of shares of stock of the corporation shall be made only by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation or with a transfer agent or a registrar, if any, and on surrender of the certificate or certificates for such shares of stock properly endorsed and the payment of all taxes due thereon. 4. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting (if authorized by the provisions of the certificate of incorporation or a certificate filed under Section 151(g) of the General Corporation Law), or entitled to receive payment of any dividend or other distribution or the allotment of any rights, or entitled to exercise any rights in respect of any change, conversion, or exchange of stock or for the purpose of any other lawful action, the directors may fix, in advance a record date which shall not be more than 60 days nor less then 10 days before the date of such meeting, nor more than 60 days prior to any other action. If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the 2 close of business on the day next preceding the day on which the meeting is held; the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting (if authorized by the provisions of the certificate of incorporation or a certificate filed under Section 151(g) of the General Corporation Law), when no prior action by the board of directors is necessary, shall be the day on which the first written consent is expressed; and the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at any meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date of the adjourned meeting. 5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to participate or vote thereat or to consent or dissent in writing in lieu of a meeting (if authorized by the provisions of the certificate of incorporation or a certificate filed under Section 151(g) of the General Corporation Law), as the case may be, the term "share" or "shares" or "share of stock" or "shares of stock" or "stockholder" or "stockholders" refers to an outstanding share or shares of stock and to a holder or holders of record of outstanding shares of stock when the corporation has only one class of shares of stock outstanding; and said reference is also intended to include any outstanding share or shares of stock and any holder or holders of record of outstanding shares of stock of any class upon which or upon whom the certificate of incorporation or a certificate filed under Section 151(g) of the General Corporation Law confers the right to vote on matters presented to the stockholders where there are two or more classes or series of shares of stock or upon which or upon whom the General Corporation Law confers such rights notwithstanding that the certificate of incorporation or a certificate filed under Section 151(g) of the General Corporation Law may provide for more than one class or series of shares of stock, one or more of which are limited or denied such rights thereunder. As used herein in respect of the right to notice of a meeting of stockholders or a waiver thereof the terms "share" or "shares' or "share of stock" or "shares of stock" or "stockholder" or "stockholders" refers to any outstanding share or shares of stock or holder or holders of record of outstanding shares of stock, regardless of whether such stock or holder of stock possesses the right to vote. 3 6. STOCKHOLDER MEETINGS. - TIME OF ANNUAL MEETINGS. The annual meeting shall be held on the date and at the time fixed, from time to time, by vote of the directors, provided, that each successive annual meeting shall be held on a date within 13 months after the date of the preceding annual meeting. - CALL OF SPECIAL MEETINGS. Special meetings may be called by the Chairman of the board of directors, by at least five directors or by any officer instructed by at least five directors to call the meeting. - PLACE. Annual meetings and special meetings shall be held at such place, within or without the State of Delaware, as the board of directors may, from time to time, fix. Whenever the board of directors shall fail to fix such place, the meeting shall be held at the headquarters office of the corporation. - NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be given, stating the place, date, and hour of the meeting and stating the place within the city or other municipality or community at which the list of stockholders (whether or not entitled to vote at the meeting) and warrant holders of the corporation may be examined. The notice of an annual meeting shall state that the meeting is called for the election of directors and for the transaction of other business which may properly come before the meeting, and shall (if any other action which could be taken at a special meeting is to be taken at such annual meeting) state the purpose or purposes. The notice of a special meeting shall in all instances state clearly the purpose or purposes for which the meeting is to be called. The notice of any meeting shall also include, or be accompanied by, any additional statements, information, or documents prescribed by the General Corporation Law. Except as otherwise provided by the General Corporation Law, a copy of the notice of any meeting shall be given, personally or by mail, not less than 10 days nor more than 60 days before the date of the meeting, unless the lapse of the prescribed period of time shall have been waived, and directed to each stockholder and warrant holder, whether or not such stockholder is entitled to vote at a meeting of stockholders, at his record address or at such other address which he may have furnished by request in writing to the Secretary of the corporation. Notice by mail shall be deemed to be given when deposited, with postage thereon prepaid, in the United States 4 mail. If a meeting is adjourned to another time, not more than 30 days hence, and/or to another place, and if an announcement of the adjourned time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the board of directors, after adjournment, fixes a new record date for the adjourned meeting. Notice need not be given to any stockholder or warrant holder who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of a stockholder or warrant holder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of the stockholders need be specified in any written waiver of notice. - STOCKHOLDER LIST. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for period of at least 10 days prior to the meeting, either at a place within the city or other municipality or community where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section or the books of the corporation, or to vote at any meeting of stockholders. - CONDUCT OF MEETING. Meetings of the stockholders shall be presided over by one of the following officers in the order of seniority and if present and acting: the Chairman of the board, if any, the Vice-Chairman of the board, if any, the President, or the Executive Vice-Presidents in order of seniority, or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the stockholders. The Secretary of the corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present the Chairman of the meeting shall appoint a secretary of the meeting. 5 - NOMINATIONS. Nominations for the election of directors may be made by the board of directors or by any stockholder entitled to vote for the election of directors. Such nominations, if not made by the board of directors, shall be made by notice in writing, delivered or mailed by United States mail, postage prepaid, to the Secretary of the corporation not less than 14 days nor more than 50 days prior to any meeting of the stockholders called for the election of directors; provided, however, that if less than 21 days' notice of the meeting is given to stockholders, such written notice shall be delivered or mailed to the Secretary of the corporation not later than the close of the seventh day following the day on which notice of the meeting was mailed to stockholders. Each such notice shall set forth (i) the name, age, business address and, if known, residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of each such nominee, and (iii) the number of shares of stock of the corporation beneficially owned by each such nominee. Notice of nominations which are proposed by the board of directors shall be given on behalf of the Board by the Chairman of the meeting. - PROXY REPRESENTATION. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provided for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. - INSPECTORS. The directors, in advance of any meeting, may, but need not, appoint one or more inspectors of election to act at the meeting or any adjournment thereof. If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to 6 appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspector or inspectors, if any, shall make a report in writing of any challenge, question or matter determined by him or them and execute a certificate of any fact found by him or them. - QUORUM. The holders of shares representing a majority of votes of the outstanding shares shall constitute a quorum at a meeting of stockholders for the transaction of any business. The stockholders present may adjourn to a later time despite the absence of quorum. - VOTING. Each share of stock shall entitle the holder thereof to such number of votes as set forth in the certificate of incorporation or a certificate filed under Section 151(g) of the General Corporation Law. In the election of directors, a plurality of the votes cast shall elect. Any other action shall be authorized by a majority of the votes cast except where the General Corporation Law prescribes a different percentage of votes and/or a different exercise of voting power, and except as may be otherwise prescribed by the provisions of the certificate of incorporation or a certificate filed under Section 151(g) of the General Corporation Law or these By-laws. In the election of directors, and for any other action, voting need not be by ballot. 7. STOCKHOLDER ACTION WITHOUT MEETINGS. If, and only if, authorized by the provisions of the certificate of incorporation or a certificate filed under Section 151(g) of the General Corporation Law, any action required by the General Corporation Law to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of stockholders, including any action with respect to the 7 election or removal of directors, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing (whether or not such stockholder is entitled to vote at a meeting of stockholders). ARTICLE II ---------- DIRECTORS --------- 1. FUNCTIONS AND DEFINITION. The business and affairs of the corporation shall be managed by or under the direction of the board of directors of the corporation. The board of directors shall have the authority to fix the compensation of the members thereof. The use of the phrase "whole board" herein refers to the total number of directors which the corporation would have if there were no vacancies. 2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, or a citizen or resident of the United States or the State of Delaware. The number of directors constituting the whole board shall be nine. 3. ELECTION AND TERM. (a) RESIGNATION. Any director may resign at any time upon written notice to the corporation. (b) TERM. Directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of stockholders or until their successors are elected and qualified or until their earlier resignation or removal. (c) VACANCIES. In the interim between annual meetings of stockholders or of special meetings of stockholders called for the election of directors and/or for the filling of any vacancies in that connection, newly created directorships and any vacancies in the board of directors may be filled by the vote of a majority of all the remaining directors then in office although less than a quorum, or by the sole remaining director. 8 4. MEETINGS. (a) TIME. Meetings shall be held at such time as the board of directors or person calling the meeting shall fix, except that the first meeting of a newly elected board of directors shall be held as soon after its election as the directors may conveniently assemble. Regular meetings for the following year shall be scheduled at the first meeting of a newly elected board of directors. (b) PLACE. Meetings shall be held at such place within or without the State of Delaware as shall be fixed by the board or person calling the meeting. (c) CALL. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by or at the direction of the Chairman of the board, if any, the Vice-Chairman of the board, if any, or the President, or by at least one-third of the directors in office or by any officer instructed by at least one-third of the directors in office to call the meeting. (d) NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for regular meetings for which the time and place have been fixed. Written notice of the time, place and purpose shall be given for special meetings at least 72 hours in advance. Written notice shall be sent to each director by United States mail postage prepaid, overnight delivery service, telecopier transmission or e-mail and shall be effective upon receipt. Notice shall be sent to the respective addresses designated in writing by the respective directors or, in the absence of such designation, to the last known addresses. Notice need not be given to any director or to any member of a committee of directors who submits a written waiver of notice signed by him before or after the time for the meeting stated therein. Attendance of any such person at a meeting shall constitute a waiver of notice of such meeting, except when he attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors need be specified in any written waiver of notice, provided, however, that a waiver of notice shall be effective only with respect to the purpose stated in the notice of the meeting. 9 (e) QUORUM AND ACTION. A majority of the whole board shall constitute a quorum. A majority of the directors present, whether or not a quorum is present, may adjourn to another time and place. Except as herein otherwise provided, and except as otherwise provided by the General Corporation Law, the vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. The quorum and voting provisions herein stated shall not be construed as conflicting with any provisions of the General Corporation Law, the certificate of incorporation and these By-laws which govern a meeting of directors held to fill vacancies and newly created directorships in the board of directors or action of disinterested directors. (f) INTEREST. A director of the corporation, in the exercise of his fiduciary duty to the corporation, shall disqualify himself from a vote of the board of directors with respect to a transaction in which a potential conflict of interest exists between the director and the corporation. A director shall disqualify himself from any vote of the board of directors with respect to transactions including, but not limited to, the following: (i) hiring the director as an employee of the corporation; (ii) approving an employment agreement of a director as an employee of the corporation; (iii) increasing the compensation of a director in his capacity as an employee of the corporation; (iv) terminating the employment of a director as an employee of the corporation, whether or not such employment is pursuant to an employment agreement; (v) making a loan to a director by the corporation; (vi) prepaying or extending or modifying the terms of any promissory note or other indebtedness of the Corporation to a director; (vii) entering into, amending, modifying, waiving or terminating any contract between the corporation and a director (a "Related Party Agreement"); (viii) establishing the terms and provisions of a Related Party Agreement; or (ix) entering into, or establishing the terms and provisions of, any contract replacing or superseding a Related Party Agreement. 10 (g) HIGHER VOTE FOR CERTAIN ACTIONS BY THE BOARD OF DIRECTORS. The affirmative vote of a majority of the directors in office who have not disqualified themselves because of a potential conflict of interest shall be required to approve the adoption of a resolution (i) removing either the Chairman of the board or the President of the corporation from office, (ii) proposing an amendment to or a repeal of any provision of, or the adoption of any new provision of, the certificate of incorporation of the corporation, of any certificate filed under Section 151(g) of the General Corporation Law, or of these By-laws or (iii) proposing the filing of any certificate under Section 151(g) of the General Corporation Law. (h) CHAIRMAN OF THE MEETING. The Chairman of the board of directors, if any and if present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the board of directors, if any and if present and acting, or the President, if present and acting, or any other director chosen by the board of directors, shall preside. 5. COMMITTEES. (a) MEMBERSHIP. The board of directors by majority vote of the whole board shall designate the following standing committees: a nominating committee, a compensation committee, a benefits committee, a finance committee and an audit committee, and may designate additional standing committees. The director presiding at any meeting of the board of directors may name two or more directors as an ad hoc committee to render advice on matters not within the powers and authority of any standing committee. (b) QUORUM. The majority of the authorized number of directors that comprises a standing committee shall constitute a quorum of that committee. No alternate members of committees shall be designated. (c) AUTHORITY. To the extent provided in the resolution of the board of directors establishing such committee, a standing committee shall have and may exercise the powers and authority of the board of directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers which may require it; provided, however, no committee may (i) exercise the powers and authority of the board of directors in contravention of Section 141 of the General Corporation Law, (ii) take any action which requires higher than usual vote (as provided in Article II, Section 4(g) of these By-laws) of the board of directors or (iii) repeal or amend any resolution adopted by the board of directors. Ad hoc committees shall be advisory and shall not exercise the powers and authority of the board of directors. 11 (d) VOTE. Each committee shall act by vote of a majority of a quorum of the Directors that comprise that committee. (e) MEETINGS. (i) Meetings of standing committees shall be held at such time as the committee or person calling the meeting shall fix. (ii) Meetings of standing committees shall be held at such place within or without the State of Delaware as shall be fixed by the committee or person calling the meeting. (iii) Committee meetings may be called by or at the direction of any committee member or by any officer instructed by any committee member. (iv) Written notice of the time, place and purpose shall be given for committee meetings at least 72 hours in advance to each committee member with a copy to the Secretary. Written notice shall be sent to each committee member by United States mail postage prepaid, overnight delivery service, telecopier transmission or e-mail and shall be effective upon receipt. Notice shall be sent to the respective addresses designated in writing by the respective committee members or, in the absence of such designation, to the last known addresses. Notice need not be given to any committee member who submits a written waiver of notice signed by him before or after the time for the meeting stated therein. Attendance of any such person at a meeting shall constitute a waiver of notice of such meeting, except when he attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of a committee need be specified in any written waiver of notice, provided, however, that a waiver of notice shall be effective only with respect to the purpose stated in the notice of the meeting. (v) One committee member may adjourn a meeting to another time and place. The quorum and voting provisions herein stated shall not be construed as conflicting with any provisions of the General Corporation Law, the certificate of incorporation and these By-Laws which govern action of disinterested directors. 12 (vi) A committee member, in the exercise of his fiduciary duty to the corporation, shall disqualify himself from a vote of a committee with respect to a transaction in which a potential conflict of interest exists between the committee member and the corporation. (f) REPORTS. The chairman of each committee shall make a report on its activities at each meeting of the board of directors. 6. WRITTEN ACTION. Any action required or permitted to be taken at any meeting of the board of directors or any committee thereof may be taken without a meeting if all members of the board of directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board of directors or committee. 7. ELECTRONIC COMMUNICATION. Any member or members of the board of directors or of any committee may participate in a meeting of the board of directors, or any such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. 8. REMOVAL. Subject to the rights of the holders of shares of any class or series of preferred stock, any director or the entire board of directors may be removed as provided in the certificate of incorporation and any certificate filed under Section 151(g) of the General Corporation Law. ARTICLE III ----------- OFFICERS -------- The officers of the corporation shall consist of a Chairman of the Board, a President, a Secretary, and, if deemed necessary, expedient or desirable by the board of directors, a Vice-Chairman of the Board, Executive Vice-Presidents, Senior Vice-Presidents, one or more other Vice-Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers with such titles as the resolution of the board of directors choosing them shall designate. Except as may otherwise be provided in the resolution of the board of directors choosing him, no officer other than the Chairman or Vice-Chairman of the Board, if any, need be a director. Any number of offices may be held by the same person. 13 Unless otherwise provided in the resolution choosing him, each officer shall be chosen for a term which shall continue until the meeting of the board of directors following the next annual meeting of stockholders and until his successor shall have been chosen and qualified. Any officer may be removed, with or without cause, by such vote of the directors as may be prescribed in the by-laws. Any vacancy in any office may be filled by the board of directors. The Chairman of the Board shall be the Chief Executive Officer of the corporation and shall have general supervision over the property, business and affairs of the corporation and over its several officers, subject, however, to the control of the board of directors. He shall, if present, preside at all meetings of the stockholders and of the board of directors and of all committees of which he is a member. He may sign, with the Secretary, Treasurer or any other proper officer of the corporation thereunto authorized by the board of directors, certificates for shares in the corporation. He may sign, execute and deliver in the name of the corporation, or authorize other employees to sign, execute and deliver, all deeds, mortgages, bonds, leases, contracts, or other instruments either when specially authorized by the board of directors or when required or deemed necessary or advisable by him in the ordinary conduct of the corporation's normal business, except in cases where the signing and execution thereof shall be required by law or otherwise to be signed or executed by some other officer or agent, and he may cause the seal of the corporation, if any, to be affixed to any instrument requiring the same. The Secretary or Assistant Secretary of the corporation shall record all of the proceedings of all meetings and the actions in writing of stockholders, directors and committees of directors, and shall exercise such additional authority and perform such additional duties as the board of directors shall assign to him. All other officers of the corporation shall perform such duties in the management and operation of the corporation as are assigned to them by the Chairman of the board of directors or by the board of directors. 14 ARTICLE IV ---------- INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS ------------------------------------------------------------ 1. INDEMNIFICATION RESPECTING THIRD PARTY CLAIMS. The corporation, to the full extent permitted and in the manner required by the laws of the State of Delaware as in effect at the time of the adoption of this Article or as such laws may be amended from time to time, shall indemnify any person who was or is made a party to or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (including any appeal thereof), whether civil, criminal, administrative or investigative in nature (other than an action by or in the right of the corporation), by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or, if at a time when he was a director, officer employee or agent of the corporation, is or was serving at the request of, or to represent the interests of, the corporation as a director, officer, partner, fiduciary, employee or agent (a "Subsidiary Officer") of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (an "Affiliated Entity"), against expenses (including attorneys' fees and disbursements), costs, judgments, fines, penalties and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding had no reasonable cause to believe his or her conduct was unlawful; provided, however, that the corporation shall not be obligated to indemnify against any amount paid in settlement unless the corporation has consented to such settlement, which consent shall not be unreasonably withheld. The termination of any action, suit or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, that such person had reasonable cause to believe that his or her conduct was unlawful. Notwithstanding anything to the contrary in the foregoing provisions of this paragraph, a person shall not be entitled, as a matter of right, to indemnification pursuant to this paragraph against costs or expenses incurred in 15 connection with any action, suit or proceeding commenced by such person against any person who is or was a director, officer, fiduciary, employee or agent of the corporation or a Subsidiary Officer of any Affiliated Entity, but such indemnification may be provided by the corporation in a specific case as permitted by Section 6 of this Article. 2. INDEMNIFICATION RESPECTING DERIVATIVE CLAIMS. The corporation, to the full extent permitted, and in the manner required, by the laws of the State of Delaware as in effect at the time of the adoption of this Article or as such laws may be amended from time to time, shall indemnify any person who was or is made a party to or is threatened to be made a party to any threatened, pending or completed action or suit (including any appeal thereof) brought in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or, if at a time when he was a director, officer, employee or agent of the corporation, is or was serving at the request of, or to represent the interests of, the corporation as a Subsidiary Officer of an Affiliated Entity against expenses (including attorneys' fees and disbursements) and costs actually and reasonably incurred by such person in connection with such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless, and except to the extent that, the Court of Chancery of the State of Delaware or the court in which such judgment was rendered shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses and costs as the Court of Chancery of the State of Delaware or such other court shall deem proper. Notwithstanding anything to the contrary in the foregoing provisions of this paragraph, a person shall not be entitled, as a matter of right, to indemnification pursuant to this paragraph against costs and expenses incurred in connection with any action or suit in the right of the corporation commenced by such person, but such indemnification may be provided by the corporation in any specific case as permitted by Section 6 of this Article. 16 3. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Any indemnification under Section 1 or 2 of this Article (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification is proper under the circumstances because such person has met the applicable standard of conduct set forth in Section 1 or 2 of this Article. Such determination shall be made (i) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding in respect of which indemnification is sought or by majority vote of the members of a committee of the board of directors composed of at least three members each of whom is not a party to such action, suit or proceeding, or (ii) if such a quorum is not obtainable and/or such a committee is not established or obtainable, or, even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. In the event a request for indemnification is made by any person referred to in Section 1 or Section 2, the corporation shall cause such determination to be made not later than 60 days after such request is made. 4. RIGHT TO INDEMNIFICATION UPON SUCCESSFUL DEFENSE AND FOR SERVICE AS A WITNESS. (a) Notwithstanding the other provisions of this Article, to the extent that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 1 or 2 of this Article, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees and disbursements) and costs actually and reasonably incurred by such person in connection therewith. (b) To the extent any person who is or was a director or officer of the corporation has served or prepared to serve as a witness in any action, suit or proceeding (whether civil, criminal, administrative or investigative in nature) or in any investigation by the corporation or the board of directors thereof or a committee thereof or by any securities exchange on which securities of the corporation are or were listed by reason of his services as a director or officer of the corporation or as a Subsidiary Officer of any Affiliated Entity (other than in a suit commenced by such person), the corporation shall indemnify such person against expenses (including attorneys' fees and disbursements) and costs actually and reasonably incurred by such 17 person in connection therewith within 30 days after receipt by the corporation from such person of a statement requesting such indemnification, averring such service and reasonably evidencing such expenses and costs. The corporation may indemnify any employee or agent of the corporation to the same extent it may indemnify any director or officer of the corporation pursuant to the foregoing sentence of this paragraph. 5. ADVANCE OF EXPENSES. Expenses and costs incurred by any person referred to in Section 1 or Section 2 of this Article in defending a civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized by this Article. 6. INDEMNIFICATION NOT EXCLUSIVE. The provision of indemnification to or the advancement of expenses and costs to any person under this Article, or the entitlement of any person to indemnification or advancement of expenses and costs under this Article, shall not limit or restrict in any way the power of the corporation to indemnify or advance expenses and costs to such person in any other way permitted by law or be deemed exclusive of, or invalidate, any right to which any person seeking indemnification or advancement of expenses and costs may be entitled under any law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's capacity as an officer, director, employee or agent of the corporation and as to action in any other capacity while holding any such position. 7. ACCRUAL OF CLAIMS; SUCCESSOR. The indemnification provided or permitted under this Article shall apply in respect of any expense, cost, judgment, fine, penalty or amount paid in settlement, whether or not the claim or cause of action in respect thereof accrued or arose before or after the effective date of this Article. The right of any person who is or was a director, officer, employee or agent of the corporation to indemnification under this Article shall continue after he shall have ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, distributees, executors, administrators and other legal representatives of such person. 18 8. CORPORATE OBLIGATIONS; SUCCESSORS. This Article shall be deemed to create a binding obligation on the part of the corporation to its current and former officers and directors and their heirs, distributees, executors, administrators and other legal representatives, and such persons in acting in such capacities shall be entitled to rely on the provisions of this Article, without giving notice thereof to the corporation. 9. INSURANCE. The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of, or to represent the interests of, the corporation as a Subsidiary Officer of any Affiliated Entity, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under the provisions of this Article or applicable law. 10. DEFINITIONS OF CERTAIN TERMS. (a) For purposes of this Article, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its corporate existence had continued, would have been permitted under applicable law to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request, or to represent the interests of, such constituent corporation as a director, officer, employee or agent of any Affiliated Enterprise shall stand in the same position under the provisions of this Article with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if this separate existence had continued. (b) For purposes of this Article, references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; references to "serving at the request of the corporation" shall include any service as a director, officer, fiduciary, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, fiduciary, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this Article. 19 ARTICLE V --------- CORPORATE SEAL -------------- The corporate seal shall be in such form as the board of directors shall prescribe. ARTICLE VI ---------- FISCAL YEAR ----------- The fiscal year of the corporation shall begin on the Sunday which follows the Saturday which is closest to January 31st in any calendar year and shall end on the Saturday closest to January 31st in the following calendar year, or shall be for such other period as the board of directors from time to time may designate. ARTICLE VII ----------- CONTROL OVER BY-LAWS -------------------- Subject to the provisions of the certificate of incorporation, any certificate filed under Section 151(g) of the General Corporation Law and Article II, Section 4 of these By-laws, and the provisions of the General Corporation Law, the power to amend, alter or repeal these By-laws and to adopt new By-laws may be exercised by the board of directors. By Laws July 1999 20 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JAN-29-2000 JAN-31-1999 MAY-01-1999 46,818 0 2,870 0 50,824 107,433 114,432 62,198 167,811 46,294 8,874 0 0 14 106,468 167,811 96,693 96,693 69,719 69,719 19,007 0 (347) 8,314 3,055 5,259 0 0 0 5,259 0.40 0.38
-----END PRIVACY-ENHANCED MESSAGE-----