EXHIBIT
10.1


 


NON-EMPLOYEE
DIRECTOR

PHANTOM STOCK UNIT AGREEMENT


 


THIS PHANTOM STOCK UNIT
AGREEMENT (the “Agreement”), dated as of this 1st day of April, 2003, by and
between Arden Group, Inc., a Delaware corporation (the “Company”), and Steven
Romick (the “Unit Holder”), is made with reference to the following facts:


 


A.                                   The Company is desirous of providing
additional incentives to the Unit Holder in rendering services as a
non-employee director of the Company and, in order to accomplish this result,
has determined to grant the Unit Holder phantom stock units representing the
right to receive a cash payment on the terms and conditions set forth herein.


 


B.                                     The Unit Holder is desirous of accepting said
right on the terms and conditions set forth herein.


 


NOW, THEREFORE, it is agreed
as follows:


 


1.                                       Grant.


 


(a)  Subject to the terms and conditions set forth herein, the Company
hereby grants to the Unit Holder Ten Thousand (10,000) Units exercisable from
time to time in accordance with the provisions of this Agreement during a
period commencing on the date hereof and expiring at the close of business on
April 1, 2008 (the “Expiration Date”). 
Each Unit hereunder represents the right to receive an amount equal to
the excess of (i) the Fair Market Value (as defined below) of one share of the
Class A Common Stock, $.25 par value per share, of the Company (the “Class A
Common Stock”) on the date upon which the Grantee exercises such Unit over (ii)
$54.25 (the “Base Price”), representing the Fair Market Value of one share of
the Class A Common Stock on the effective date hereof.


 


(b)  For purposes of this Agreement, “Fair Market Value of one share
of Class A Common Stock” shall mean (i) if the Class A Common Stock is then
listed on a national securities exchange, the closing sales price of the Class
A Common Stock on the day such value is determined on the principal securities
exchange on which such stock is then listed, or if there is no reported sale on
that day, the average of the bid and asked quotations on such exchange on that
day, or (ii) if the Class A Common Stock is then publicly traded in the NASDAQ
National Market System, the closing sales price of the Class A Common Stock as
reported by the NASDAQ National Market System on the day such value is
determined, or if there is no reported sale on that day, the average of the bid
and asked quotations on that day, or (iii) if the Class A Common Stock is then
publicly traded in the over-the-counter market (other than the NASDAQ National
Market System), the mean between the closing bid and asked prices of the Class
A Common Stock in the over-the-counter market on the day such value is
determined or, if no shares were traded that day, on the next preceding day on
which there was such a trade, or (iv) if the Class A Common Stock is not then
separately quoted or publicly traded, the fair market value on the date such
value is to be determined, as determined in good faith by the Board of
Directors of the Company (the “Board”).


 


2.                                       Exercise of Units.


 


(a)                                  The Unit Holder may elect to be paid for any
then vested Unit by timely delivering or mailing to the Company (in accordance
with Paragraph 10 below), Attention: Chief Executive Officer and Chief
Financial Officer, a notice of exercise, in the form prescribed by the Company,
stating therein that the Unit Holder has elected to exercise his Units and
specifying therein the number of vested Units for which he is electing to be
paid.  The exercise of any Units shall
not be deemed effective unless and until the Unit Holder has complied with all
of the provisions of this Paragraph 2(a). 
Upon an effective exercise of any one or more Units, the Company shall
thereafter pay the Unit Holder in complete satisfaction of each Unit with
respect to which such right and option has been exercised an amount equal
to:  (i) the Fair Market Value of one
share of Common Stock on the date of exercise of such right and option minus
(ii) the Base Price.  Such payment shall
be made to the Unit Holder within 30 days after the exercise of such right and
option.


 


(b)                                 No Units shall vest or become exercisable
during the first year from the date of grant hereof; thereafter Units shall
vest and become exercisable in installments as to (i) no more than twenty-five
percent (25%) of the total number of Units subject to this Agreement during the
second year from the date hereof, (ii) no more than fifty percent (50%) of the
total number of Units subject to this Agreement during the third year from the
date hereof, (iii) no more than seventy-five percent (75%) of the total number
of Units subject to this Agreement during the fourth year from the date hereof,
and (iv) all Units subject to this Agreement from and after the fourth
anniversary of the date hereof. 
Notwithstanding the foregoing, if at any time prior to the vesting in
full of all Units the Unit Holder’s service as a member of the Board is
terminated due to the Unit Holder’s death or disability (as disability is
defined Paragraph 4 below), then all unexercised Units covered hereby that have
not vested and become exercisable as of


 


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the effective date of the Unit Holder’s
termination of service due to death or disability shall be deemed to have
vested and become immediately exercisable in full effective on and as of such
date of termination of service.


 


(c)                                  In connection with the exercise of any one or
more Units and as a condition to delivery of any payment to which the Unit
Holder is entitled upon such exercise, the Company may withhold from such
payment an amount sufficient to satisfy all current or estimated future
federal, state and local withholding tax requirements (if any) and federal
social security or other taxes or other tax requirements relating thereto (if
any).


 


3.                                       Termination.  All unexercised Units shall
automatically and without notice terminate and become null and void at the time
of the earliest to occur of the following:


 


(a)                                  the Expiration Date;


 


(b)                                 The expiration of 30 days from the date of
termination (other than a termination described in subparagraph (c) below or on
account of death or disability, as defined in Paragraph 4 below, of the Unit
Holder while a member of the Board) of the Unit Holder’s service as a member of
the Board, or, if the Unit Holder shall die during such 30-day period, the
expiration of one year following the date of the Unit Holder’s death; provided
that no additional Units shall vest or become exercisable during such 30-day or
one year period, as the case may be;


 


(c)                                  The date of termination of the Unit Holder’s
service as a member of the Board, if such termination of service is due to the
removal of the Grantee from the Board for cause (the Board shall have the right
to determine whether the Unit Holder has been removed for cause and the date of
such removal, such determination of the Board to be final and conclusive); and


 


(d)                                 Any of the events as described in Paragraph 7
below.


 


Nothing contained in this
Agreement shall obligate the Company or any of its subsidiary corporations to
continue to employ or engage the services of the Unit Holder in any capacity,
nor confer upon the Unit Holder any right to continue on the Board or in any
other capacity with the Company or its subsidiary corporations, nor limit in
any way the right of the Company or its subsidiary corporations to amend,
modify or terminate at any time the Unit Holder’s arrangements, if any, with
the Company.


 


4.                                       Payment Upon Death or Disability.  Upon
the termination of the service of the Unit Holder as a member of the Board due
to the death of the Unit Holder or disability of the Unit Holder within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended
(the Board shall have the right to determine whether the Grantee’s termination
is attributable to a disability of the Grantee within the meaning of Section
22(e)(3) of the Internal Revenue Code of 1986, as amended, such determination
of the Board to be final and conclusive), while serving in such capacity, all
unexercised Units covered hereby that have not vested and become exercisable as
of the effective date of the Unit Holder’s termination of service for death or
disability shall vest and become immediately exercisable in full effective as
of such date of termination of service and the Company shall pay such Unit
Holder (or the legal representative of the estate of the deceased Unit Holder
or the person or persons who acquire the right to receive payment for a Unit by
bequest or inheritance or reason of the death of the Unit Holder; hereinafter
“Successor”), in complete satisfaction of all unexercised Units held by such
Unit Holder on the date of such termination of such service of the Unit Holder,
an amount determined in the manner set forth in Paragraph 2 above as if the
Unit Holder had exercised the right and option to be paid for all then
unexercised Units held by the Unit Holder on the date of such service
termination.  Such payment shall be made
by the Company to the Unit Holder or the Unit Holder’s Successor, as the case
may be, within 30 days after the date of such termination.


 


5.                                       Non-Assignability.  The
Unit Holder shall not transfer, assign, pledge or hypothecate in any manner
this Agreement or any of the rights and privileges granted hereby other than by
will or by the laws of descent and distribution.  Units are exercisable during the Unit Holder’s lifetime only by
the Unit Holder.  Upon any attempt by
the Unit Holder to transfer this Agreement or any right or privilege granted
hereby (including without limitation any Units) other than by will or by the
laws of descent and distribution and contrary to the provisions hereof, this
Agreement and said rights and privileges shall immediately become null and
void.


 


6.                                       Anti-Dilution.  In
the event that the shares of Class A Common Stock subject to this Agreement
shall be changed into or exchanged for a different number or kind of shares of
stock or other securities of the Company or of another corporation (whether by
reason of merger, consolidation, recapitalization, reclassification, split-up,
combination of shares, or otherwise) or if the number of such shares of Class A
Common Stock shall be increased solely through the payment of a stock dividend,
then there shall be made an appropriate adjustment (a) in the number of Units
then covered hereby, (b) to the Base Price and (c) to the other terms as may be
necessary to reflect the foregoing events. 
In the event there shall be any other change in the number or kind of
the outstanding shares of stock of the Company subject to this Agreement, then
if the Board, in its sole discretion, determines that such change equitably
requires an adjustment in this Agreement, such adjustments shall be made in
accordance with such determination.  The
foregoing adjustments shall be made in a manner that will cause the
relationship between


 


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the aggregate appreciation in a share of Class
A Common Stock and the increase in value of each Unit granted hereunder to
remain unchanged as a result of the applicable transaction.


 


7.                                       Termination upon Merger.  In the
event that (a) the Company merges with or into any other corporation,
consolidates with any other corporation, or sells substantially all of its
assets and business to another corporation and, in any such case, stockholders
of the Company immediately prior to the consummation of the transaction own
less than fifty percent (50%) of the outstanding voting securities of the
surviving or acquiring corporation immediately after consummation of the
transaction, or (b) the inclusion of the Company’s Class A Common Stock (or any
other capital stock into which the Class A Common Stock is changed) in the
Nasdaq Stock Market is terminated, the Unit Holder shall be paid the amount
provided in Paragraph 2 above for all then fully vested unexercised Units then
held by him in the manner provided in said Paragraph 2 as if such Grantee had
exercised his right and option to be paid for all of such then fully vested
Units immediately prior to the effectiveness of such merger or consolidation,
consummation of such sale or such termination of inclusion in the Nasdaq Stock
Market and all of the Units shall terminate upon such effectiveness,
consummation or termination.


 


8.                                       Rights Unfunded.  The
Unit Holder understands that the rights provided for hereunder are unfunded and
the Company has not made, and has no obligation to make, any provision with
respect to segregating assets of the Company for payment of any benefits
hereunder.  The Unit Holder further
understands that he has no interest in any particular asset of the Company by
reason of this Agreement but only the rights of a general unsecured creditor
with respect to his rights under this Agreement.


 


9.                                       No Rights as a Stockholder. 
Neither the Unit Holder nor any other person legally entitled to
exercise any Units hereunder shall have any rights of a stockholder by virtue
of the grant, vesting or exercise of a Unit.


 


10.                                 Notices.  Whenever under this Agreement
notice is required to be given in writing, it shall be deemed to have been duly
given upon personal delivery, one business day following deposit with a
nationally recognized air courier guaranteeing overnight delivery, or three
business days after deposit in the United States mail if mailed by registered
or certified mail, postage prepaid, to the Company at the address set forth
below or to the Unit Holder at the address set forth on the last page hereof
(or to such other address as either party shall have indicated to the other
party by notice in accordance with this Paragraph):


 


	
  Company:

  	
  Arden Group, Inc.

  
	
   

  	
  2020 South Central Avenue

  
	
   

  	
  Compton, California 90220

  
	
   

  	
  Attention:
  Chief Executive Officer and

  Chief Financial Officer

  



 


For purposes hereof, a “business day” is any
day other than a Saturday, Sunday or a holiday in the State of California.


 


11.                                 Benefit.  Except as otherwise
specifically provided herein, this Agreement shall be binding upon and shall
operate for the benefit of the Company and the Unit Holder and his successors.


 


12.                                 Governing Law.  This
Agreement and any rights and obligations arising hereunder shall be governed
and construed in accordance with the laws of the State of California.


 


13.                                 Entire Agreement.  This
Agreement represents the entire agreement between the parties hereto regarding
Units based on the Company’s Class A Common Stock and supersedes any and all
prior or contemporaneous written or oral agreements or discussions between the
parties and any other person or legal entity concerning the transactions
contemplated herein.  Except as
otherwise expressly provided herein, this Agreement cannot be amended or
modified except by a written instrument executed by the parties hereto.


 


14.                                 Construction.  The headings of the Paragraphs
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.  If
any of the provisions of this Agreement shall be unlawful, void or for any
reason unenforceable, they shall be deemed separable from, and shall in no way
affect the validity or enforceability of, the remaining provisions of this
Agreement.


 


15.                                 Further Acts.  The parties hereto agree to
execute and deliver such further instruments as may be reasonably necessary to
carry out the intent of this Agreement.


 


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IN WITNESS WHEREOF, the
parties have executed this Agreement as of the day and year first above
written.


 


	
  ARDEN GROUP, INC.

  	
  UNIT HOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  BERNARD BRISKIN

  	
   

  	
  /s/ 

  	
  STEVEN ROMICK

  	
   

  
	
   

  	
   

  	
  Steven Romick

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Address for Notice:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
							



 


Dated: 
April 1, 2003


 


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