EXHIBIT 10.1


 


NON-EMPLOYEE
DIRECTOR


 


PHANTOM
STOCK UNIT AGREEMENT


 


THIS PHANTOM STOCK UNIT AGREEMENT (the “Agreement”), dated as of this
22nd day of June, 2005, by and between Arden Group, Inc., a Delaware
corporation (the “Company”), and Steven C. Gordon (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 June 22, 2010
(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 Unit Holder exercises such Unit over (ii) $78.43
(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 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 Unit Holder 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 


 


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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 Unit Holder’s
termination is attributable to a disability of the Unit Holder 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 and deemed exercised 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 or if
a non-recurring dividend or distribution of non-cash assets is paid by the
Company to its Class A Shareholders, 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 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 


 


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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 Unit Holder 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 


 


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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 C. GORDON

  	
   

  
	
   

  	
  Steven C. Gordon

  
	
   

  	
   

  
	
   

  	
  Address for Notice:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
						



 


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