<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
ARDEN GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
PRELIMINARY COPY
ARDEN GROUP, INC.
2020 SOUTH CENTRAL AVENUE
COMPTON, CALIFORNIA 90220
(310) 638-2842
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 17, 1998
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of Arden
Group, Inc. (the "Company") will be held at The Beverly Hilton Hotel, Rodeo Room
in the Executive Center, 9876 Wilshire Boulevard, Beverly Hills, California, on
June 17, 1998, at 10:00 a.m. local time in Los Angeles, for the following
purposes:
1. To elect three directors for a term of three years each;
2. To approve the Bernard Briskin Bonus Plan;
3. To amend the Restated Certificate of Incorporation to increase the
number of authorized shares of Class A Common Stock from 5,000,000 to
10,000,000 and the Class B Common Stock from 500,000 to 1,500,000 shares;
4. To ratify the selection of independent certified public accountants for
the 1998 fiscal year; and
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The close of business on May 13, 1998, has been fixed as the record date for
the determination of stockholders entitled to notice of and to vote at the
meeting. A list of such stockholders will be available for examination by any
stockholder at the meeting and, for 10 days prior to the meeting, during
ordinary business hours at Arden Group, Inc., 9595 Wilshire Boulevard, Suite
411, Beverly Hills, California 90212.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED, POSTAGE
PREPAID ENVELOPE. THE RETURN OF YOUR PROXY WILL NOT PRECLUDE YOU FROM VOTING IN
PERSON IF YOU CHOOSE TO ATTEND THE MEETING.
By Order of the Board of Directors
Assistant Secretary
May 18, 1998
PROMPT RETURN OF PROXIES WILL SAVE THE EXPENSE INVOLVED
IN FURTHER COMMUNICATION
<PAGE>
PRELIMINARY COPY
ARDEN GROUP, INC.
2020 SOUTH CENTRAL AVENUE
COMPTON, CALIFORNIA 90220
------------------------
ANNUAL MEETING OF STOCKHOLDERS
ON JUNE 17, 1998
---------------------
PROXY STATEMENT
---------------------
GENERAL
This Proxy Statement is furnished by the Board of Directors of Arden Group,
Inc. (the "Company") in connection with its solicitation for use at the Annual
Meeting of Stockholders (the "Meeting") to be held at The Beverly Hilton Hotel,
Rodeo Room in the Executive Center, 9876 Wilshire Boulevard, Beverly Hills,
California, on June 17, 1998, at 10:00 a.m. local time in Los Angeles, and at
any adjournment thereof. The approximate date on which this Proxy Statement and
the accompanying forms of proxy will first be sent to stockholders is May 18,
1998.
All shares represented by each properly executed and unrevoked proxy
received in time for the Meeting will be voted as specified, or, if no
specification is made, for (i) the election as director of management's
nominees; (ii) approval of the Bernard Briskin Bonus Plan; (iii) the amendment
to the Restated Certificate of Incorporation to increase the number of
authorized shares of the Class A Common Stock and the Class B Common Stock; and
(iv) the ratification of the selection of independent certified public
accountants. The Company does not know of any other business that will be
presented for action at the Meeting, but if any matter is properly presented,
the persons named in the accompanying proxies will vote thereon in accordance
with their judgment. A proxy may be revoked at any time prior to its exercise by
filing a written notice of revocation with an Assistant Secretary of the
Company, by timely delivery of a later proxy or by voting in person at the
Meeting contrary to the manner in which the proxy is to be voted.
The cost of soliciting proxies will be paid by the Company. Arrangements
will be made with brokerage houses and other custodians, nominees and
fiduciaries to forward proxy material to the beneficial owners of stock of the
Company and such persons will be reimbursed for their reasonable expenses.
Proxies may be solicited by directors, officers or employees of the Company and
its subsidiaries in person or by telephone or telegraph, for which such persons
will receive no special compensation. In addition, Beacon Hill Partners, Inc.
("Beacon Hill") has been retained by the Company to aid in the solicitation of
proxies from banks, brokers and nominees and will solicit such proxies by mail,
telephone, telegraph and personal interview, and request brokerage houses and
nominees to forward soliciting material to beneficial owners of the Company's
stock. For these services, Beacon Hill will be paid a fee of $3,000 plus
expenses.
RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM
The Board has fixed the close of business on May 13, 1998, as the record
date for the determination of holders of Class A Common Stock and Class B Common
Stock entitled to notice of and to vote at the Meeting. Accordingly, only
holders of shares of Class A Common Stock and Class B Common Stock of record at
the close of business on such date will be entitled to vote such shares at the
Meeting. At the close
1
<PAGE>
of business on May 13, 1998, there were outstanding 554,134 shares of Class A
Common Stock and 342,246 shares of Class B Common Stock. Each share of Class A
Common Stock will entitle the holder thereof to one vote on all matters
described in this Proxy Statement and all other matters which could be properly
brought before the Meeting. Each share of Class B Common Stock will entitle the
holder thereof to 10 votes on all matters described in this Proxy Statement and
most other matters which could be properly brought before the Meeting. As of May
13, 1998, there were approximately 1,424 holders of record of Class A Common
Stock and 11 holders of record of Class B Common Stock. The presence, either in
person or by properly executed proxy, of stockholders holding of record a number
of shares entitling them to exercise a majority of the voting power of the
Company is necessary to constitute a quorum at the Meeting with respect to
proposal number 2 and proposal number 4 on the Notice of Annual Meeting
accompanying this Proxy Statement and the presence, either in person or by
properly executed proxy, of both (i) stockholders holding of record a number of
shares of Class A Common Stock entitling them to exercise a majority of the
voting power of such class of stock and (ii) stockholders holding of record a
number of shares of Class B Common Stock entitling them to exercise a majority
of the voting power of such class of stock is necessary to constitute a quorum
at the Meeting with respect to proposal number 1 and proposal number 3 described
on the Notice of Annual Meeting accompanying this Proxy Statement.
PRINCIPAL STOCKHOLDERS
As of May 13, 1998, the only persons known to the Company to own
beneficially more than 5% of the then outstanding shares of Class A Common Stock
or Class B Common Stock were the following:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF PERCENT OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS(1) TOTAL VOTE
- ------------------------------ ------------------------------------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Class A Common Stock.......... City National Bank, as Trustee 64,385 11.6% 1.6%
of the Company's Stock Bonus Plan and
Trust (the "Stock Bonus Plan")
400 North Roxbury Drive, Suite 500
Beverly Hills, CA 90210
Class A Common Stock.......... Bernard Briskin 166,666(2) 30.1% 4.2%
Arden Group, Inc. 9595 Wilshire Blvd.,
Suite 411
Beverly Hills, CA 90212
Class B Common Stock.......... Bernard Briskin 340,624 99.5% 85.7%
</TABLE>
- ------------------------
(1) Unless otherwise indicated to the contrary, all beneficial owners have sole
investment and voting power. For purposes of this table, 339,300 shares of
Company Class A Common Stock which are held by AMG Holdings, Inc., an
indirect wholly owned subsidiary of the Company, are not deemed to be
outstanding.
(2) This amount includes the following shares: (i) 59,944 shares owned by Mr.
Briskin's wife; (ii) 46,524 shares held in trust (of which Mr. Briskin is a
trustee) for the benefit of Mr. Briskin, his children and his mother; and
(iii) 24,503 shares held in an Individual Retirement Account by Mr.
Briskin's wife. Mr. Briskin disclaims any beneficial ownership of the shares
set forth in clauses (i) and (iii) hereof. Mr. Briskin shares voting and
investment power with respect to the shares referred to in clause (ii),
shares voting power but denies that he has or shares investment power with
respect to the shares referred to in clauses (i) and (iii). Nothing herein
should be construed as an admission that Mr. Briskin is in fact the
beneficial owner of any of these shares.
2
<PAGE>
If Mr. Briskin converted all of the Class B Common Stock to Class A Common
Stock (convertible on a share for share basis) of which he is shown as the
beneficial owner, his beneficial ownership of Class A Common Stock would be
increased to 507,290 shares or 56.6% of total shares outstanding.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1 ON PROXY CARD)
As permitted under the General Corporation Law of the State of Delaware, the
state in which the Company is incorporated, the Company's Restated Certificate
of Incorporation provides for a classified Board of Directors, with
approximately one-third of the total authorized number of directors elected each
year for a term of three years by straight (as distinguished from cumulative)
voting.
At the Meeting, it is proposed to elect the three nominees shown below to
hold office as directors until the Company's Annual Meeting in 2001 or until
such directors' successors have been elected and qualified. Each nominee is now
a director of the Company.
Under Article Fourth of the Restated Certificate of Incorporation of the
Company, so long as the total number of outstanding shares of Class B Common
Stock is equal to or greater than 12.5% of the total aggregate number of
outstanding shares of Class A Common Stock and Class B Common Stock, the holders
of Class A Common Stock are entitled to elect at any meeting therefor only such
number of directors as, when added to the number of continuing directors
previously elected by the holders of Class A Common Stock, equals 25% of the
total number of directors of the Company (rounded up to the nearest whole
number); the remaining directors are to be elected by the holders of the Class B
Common Stock. Pursuant to the terms of the Company's Restated Certificate of
Incorporation, the holders of Class A Common Stock are entitled to elect one
director at the Meeting and will have one vote per share for the election of
such director. The holders of Class B Common Stock are entitled to elect two
directors at the Meeting and will have 10 votes per share for each director to
be elected by such stockholders. The election of the directors requires the
affirmative vote of the holders of a plurality of the shares of such class of
stock present, in person or by proxy, and entitled to vote at the Meeting. Any
votes against a nominee or withheld from voting (whether by abstention, broker
non-votes or otherwise) will not be counted and will have no effect on the vote
with respect to the election of directors.
The Board of Directors recommends a vote FOR the election of each of the
three nominees whose names are shown below.
Management is not aware of any circumstance that would render any nominee
unable to serve. However, if any nominee should unexpectedly become unavailable
for election, votes will be cast, pursuant to the accompanying proxies, for the
election of a substitute nominee or nominees who may be selected by the present
Board of Directors. At present there is one vacancy on the Board of Directors in
the directors to be elected by the holders of Class B Common Stock, which
director's term would expire in 1999. The Board of Directors has not completed
its search for a qualified person to fill such vacancy.
Below is set forth certain information concerning the nominees and the three
continuing directors as of May 13, 1998. Certain of this information has been
supplied by the persons named:
NOMINEE FOR ELECTION BY CLASS A COMMON STOCKHOLDERS
FOR A THREE-YEAR TERM ENDING IN 2001:
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AGE PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS(1) SINCE EXPIRES
- ------------------------ --- -------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C> <C>
Daniel Lembark.......... 73 Financial Consultant and Certified Public Accountant. 1978 1998
</TABLE>
3
<PAGE>
NOMINEES FOR ELECTION BY CLASS B COMMON STOCKHOLDERS
FOR A THREE-YEAR TERM ENDING IN 2001:
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AGE PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS(1) SINCE EXPIRES
- ------------------------ --- -------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C> <C>
Bernard Briskin......... 74 Chairman of the Board of Directors, President and Chief 1970 1998
Executive Officer of the Company and Arden-Mayfair, Inc., a
subsidiary of the Company, and Chairman of the Board of AMG
Holdings, Inc. and Gelson's Markets, both subsidiaries of
Arden-Mayfair.
John G. Danhakl......... 42 Partner of Leonard Green & Partners from March 1995 to 1995 1998
present. Director of Big 5 Sporting Goods, Inc.,
Communications and Power Industries, Inc. and Twin
Laboratories Corporation. Managing Director of Donaldson
Lufkin Jenrette Securities Corporation from March 1990 to
February 1995.
</TABLE>
CONTINUING DIRECTORS: (2)
<TABLE>
<S> <C> <C> <C> <C>
Robert A. Davidow.. 56 Director, Vice Chairman of WHX Corporation since 1993 1999
April 1991; private investor.
Stuart Krieger..... 80 Business Consultant 1978 2000
Director of American Rocket Co.
Ben Winters........ 77 Business Consultant. 1978 2000
</TABLE>
- ------------------------
(1) Unless otherwise indicated, principal occupation or occupations shown have
been such for a period of at least five years in the aggregate.
(2) Date shown for term of service indicates commencement of service as a
director of the Company or Arden-Mayfair.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company has audit, nominating, investment and compensation committees.
Current members of the audit committee are Mr. Lembark, chairman, and Messrs.
Krieger and Winters. This committee, which monitors significant accounting
policies, approves services rendered by the independent auditors, reviews audit
and management reports and makes recommendations regarding the appointment of
independent auditors and the fees payable for their services, met three times in
1997. Current members of the compensation committee are Mr. Danhakl, chairman,
and Messrs. Davidow and Lembark. This committee, which considers and makes
recommendations as to salary and incentive compensation awards to senior
executive officers, met twice in 1997. Current members of the investment
committee are Mr. Davidow, chairman, and Messrs. Briskin, Danhakl and Winters.
This committee defines the short term investment strategy for the Company and
met four times in 1997. Current members of the nominating committee are Mr.
Winters, chairman, and Messrs. Briskin and Krieger. This committee, which was
established to select candidates for nomination and election as directors, met
once in 1997. The nominating committee will consider qualified nominees
recommended by stockholders. Stockholders who wish to recommend qualified
nominees should write to an Assistant Secretary of the Company at 2020 South
Central Avenue, Compton, California 90220, and should state the qualifications
of persons proposed by them.
During the 1997 fiscal year, the Board of Directors held five meetings. Each
of the directors attended over 75% of the aggregate of all of the meetings of
the Board of Directors and meetings held by all committees of the Board on which
he served during such period.
4
<PAGE>
COMPENSATION OF DIRECTORS
During 1997, each non-employee director of the Company was compensated for
all services as a director at an annual rate of $18,000 plus $1,000 for each
Board meeting attended and $1,000 for attendance at each committee meeting.
Non-employee directors who serve as committee chairmen are entitled to an
additional $4,200 per year.
BENEFICIAL OWNERSHIP OF THE COMPANY'S STOCK BY MANAGEMENT
The following table shows, as of May 13, 1998, the beneficial ownership of
the Company's equity securities by each director or nominee, Ernest T. Klinger,
CFO, VP Finance and Administration, and by all directors and executive officers
as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
TITLE OF CLASS BENEFICIAL PERCENT OF PERCENT OF
NAME OF COMPANY'S STOCK OWNERSHIP(1) CLASS(1) TOTAL VOTE
- ---------------------------------------------- --------------------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Class A Common Stock 166,666(2) 30.1% 4.2%
Class B Common Stock 340,624 99.5% 85.7%
Bernard Briskin...............................
Robert A. Davidow............................. Class A Common Stock 0
John G. Danhakl............................... Class A Common Stock 0
Stuart A. Krieger............................. Class A Common Stock 0
Daniel Lembark................................ Class A Common Stock 0
Ben Winters................................... Class A Common Stock 100 (4) (5)
Ernest T. Klinger............................. Class A Common Stock 343(3) (4) (5)
167,109(3) 30.2% 4.2%
Class A Common Stock 340,624 99.5% 85.7%
Class B Common Stock
All directors and executive officers as a
group (7 persons)...........................
</TABLE>
- ------------------------
(1) Unless otherwise indicated to the contrary, all beneficial owners have sole
investment and voting power. The number of outstanding shares of Company
Class A Common Stock on which the percentages shown in this table are based
does not include 339,300 shares of Company Class A Common Stock held by AMG
Holdings, Inc.
(2) See note (2) to the table under "Principal Stockholders" set forth above.
(3) Includes shares held in the Stock Bonus Plan for their accounts.
(4) Did not exceed 1% of the outstanding shares of the class.
(5) Did not exceed 1% of the total vote.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information regarding the persons who presently
serve as executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITIONS AT THE COMPANY(1)
- --------------------------------------------- --- ------------------------------------------------------------
<S> <C> <C>
Bernard Briskin.............................. 74 Chairman of the Board, President and Chief Executive Officer
of the Company.
Ernest T. Klinger............................ 62 Vice President Finance and Administration and Chief
Financial Officer of the Company.
</TABLE>
- ------------------------
(1) Unless otherwise indicated, principal occupation or occupations shown have
been such for a period of least five years in the aggregate.
5
<PAGE>
Executive officers of the Company are elected annually by the Company's
Board of Directors and serve at the discretion of the Board, with the exception
of Mr. Briskin, who has an employment agreement. See "Employment
Agreement--Bernard Briskin."
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that directors
and executive officers of the Company, as well as persons holding more than ten
percent (10%) of a registered class of the Company's equity securities, file
with the Securities and Exchange Commission initial reports of the ownership and
reports of changes of ownership of Class A Common Stock and other equity
securities of the Company. Based solely on review of copies of such reports
furnished to the Company and written representations that no other reports were
required to be filed during the fiscal year ended January 3, 1998, all Section
16(a) filing requirements applicable to the Company's executive officers,
directors and greater than ten percent (10%) beneficial owners were complied
with.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
GENERAL. The following table sets forth the total annual and long-term
compensation paid or accrued by the Company and its subsidiaries in connection
with all businesses of the Company and its subsidiaries to or for the account of
the Chief Executive Officer of the Company and each other executive officer of
the Company whose total annual salary and bonus for the fiscal year ended
January 3, 1998 exceeded in the aggregate $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
AWARDS PAYOUTS
-----------------------------------
ANNUAL COMPENSATION SECURITIES-
----------------------------------- RESTRICTED UNDERLYING
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) SARS(1) PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (4) (1) ($) (1) ($) (2)(3)
- --------------------- --------- --------- --------- ------------- ----------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bernard Briskin,..... 1997 $ 500,000 $ 496,780(5) $ 12,800
Chief Executive 1996 450,177 191,632 9,000
Officer 1995 444,400 407,624 10,500
Ernest T.
Klinger, .......... 1997 190,000 40,000 12,800
CFO, VP Finance 1996 190,000 40,000 9,000
and Administration 1995 190,000 40,000 10,500
</TABLE>
- ------------------------------
(1) The Company did not grant to Mr. Briskin or Mr. Klinger any restricted
stock, stock options or stock appreciation rights ("SARs") and made no
payout to them on any long-term incentive plan in fiscal years 1997, 1996 or
1995.
(2) Includes the Company contribution to the Arden Group, Inc. 401(k) Retirement
Savings Plan and the Arden Group, Inc. Stock Bonus Plan. In 1997, Messrs.
Briskin and Klinger were each allocated $9,600 to their 401(k) account and
$3,200 to their Stock Bonus Plan account.
(3) Does not include retirement benefits from the Telautograph Pension Plan
(terminated in December 1993).
(4) Perquisites and other personal benefits did not exceed the lesser of $50,000
or 10% of the compensation received by the named officers in any of the
years for which compensation information is reported.
(5) Reflects the bonus payable to Mr. Briskin based upon the formula set forth
in the Second Amendment to Mr. Briskin's Employment Agreement, as described
hereafter under "Approval of Bernard Briskin Bonus Plan", which bonus
arrangement is subject to stockholder approval.
6
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors has a Compensation Committee. At the end of fiscal
1997 the Compensation Committee consisted of the following directors, none of
whom are or have been officers or employees of the Company:
John G. Danhakl, Chairman
Robert A. Davidow
Daniel Lembark
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors (the "Committee") is
composed of three outside directors and is responsible for the development of
Company policies relating to executive compensation. The Committee's principal
objective is to aid the Company in achieving its goals by the establishment of
compensation policies which will attract and retain superior talent and also
reward performance.
The compensation of Mr. Bernard Briskin, the Chief Executive Officer of the
Company, is established under an Employment Agreement dated May 13, 1988, as
amended by Amendment to Employment Agreement dated April 27, 1994 (the
"Employment Agreement") which was further amended in January 1998, effective
January 1, 1997 (the "Second Amendment"). The Second Amendment extended the
expiration date of the term of the Employment Agreement from January 1, 2001 to
January 1, 2004, increased Mr. Briskin's base annual salary to $500,000
effective January 1, 1997, excluded from the definition of Pre-Tax Profits upon
which Mr. Briskin's bonus is determined any arbitration award to Danka and the
associated expense in 1997 as a charge to discontinued operations which had the
effect of increasing the amount of Mr. Briskin's bonus in 1997 from $344,871 to
$496,780, increased the maximum annual reimbursement for medical expenses for
Mr. Briskin and his immediate family from $100,000 to $200,000 and provides for
annual retirement compensation equal to twenty-five percent of Mr. Briskin's
average base salary and bonus earned in the last three fiscal years prior to his
retirement and continuation of health insurance benefits and automobile
allowance. Mr. Briskin's bonus arrangement for 1997 and years following under
the Second Amendment is subject to stockholder approval. If Mr. Briskin's bonus
arrangement is not approved by the stockholders of the Company, the bonus will
be determined under the Employment Agreement and Mr. Briskin will have the right
to terminate the Employment Agreement as amended by the Second Amendment on six
months prior notice to the Company. Pursuant to the terms of the Second
Amendment, Mr. Briskin's base salary will be increased on January 1 of each year
of the term of the Second Amendment commencing January 1, 1998 based upon
increases in the Consumer Price Index subject, however, to a maximum annual
increase of 4%. His annual bonus will equal 2 1/2% of the Company's first
$2,000,000 of Pre-Tax Profits (as defined in the Second Amendment) plus 3 1/2%
of Pre-Tax Profits in excess of $2,000,000. In addition, if he becomes
permanently disabled, dies or his employment is terminated prior to January 1,
2004, the cumulative unpaid portion of two notes from Mr. Briskin to the
Company, in the amount of $255,000 as of March 6, 1998, will be forgiven. The
maturity dates of the two notes was extended to December 31, 2003 with equal
annual principal payments of $40,000 plus interest at 6% per annum.
The Committee felt that Mr. Briskin's continuing services were important to
the continuing success of the Company. Accordingly, the Committee supported an
extension of the term of Mr. Briskin's Employment Agreement. Further, in
considering the terms and conditions of the Second Amendment, the Committee took
into account a number of factors including, without limitation, comparative
salaries of other chief executive officers, Mr. Briskin's length of service as
Chief Executive Officer of the Company, his responsibilities and his
contributions to the Company's expansion and development and the fact that since
1994 Mr. Briskin had received only modest increases in his base compensation.
Since Mr. Briskin's bonus is directly determined on the basis of the Pre-Tax
Profits of the Company, the Committee did not
7
<PAGE>
feel that this portion of his compensation which was intended to be directly
related to performance should be adversely impacted by accumulated arbitration
costs and award which are unrelated to the Company's continuing business. For
this reason the Committee approved a modification of Mr. Briskin's bonus
computation in the Second Amendment by deleting the charge to discontinued
operations from the definition of Pre-Tax Profits.
As to executives other than Mr. Briskin, the Committee recommends
compensation for them to the Board of Directors. Such compensation is designed
to achieve an overall level of compensation which is competitive with other
companies in the supermarket business in Southern California. By taking into
account the individual performance, responsibility and achievement level of the
executives involved and the annual and long term performance of the Company, the
actual compensation level for such executives recommended by the Committee may
be greater or less than the average of competitive levels in such other
companies. Accordingly, the Committee exercises its best judgment in setting
executive compensation based upon a number of internal, external and individual
factors.
The Company's Stock Bonus Plan is included as a component of executive
compensation and this, as well as the other factors, operates to link a portion
of executive compensation to Company profitability.
In general, Section 162(m) of the Internal Revenue Code of 1986, as amended,
disallows deductions by a publicly traded corporation for compensation in excess
of $1,000,000 to its chief executive officer or any of its four other highest
paid officers. The Committee does not expect that any executive officer's
compensation for the 1998 fiscal year will exceed the $1,000,000 IRS deduction
cap since the amount of Mr. Briskin's annual bonus arrangement should be
excluded from the computation to determine whether his compensation exceeds the
$1,000,000 deduction cap.
John G. Danhakl, Chairman
Robert A. Davidow
Daniel Lembark
Members of the Compensation Committee.
8
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on the Class A Common Stock against the cumulative total return of the
Standard & Poor's 500 Stock Index, the Standard & Poor's Food Retailers Index
and the Dow Jones Food Retailers Index for the period of five years commencing
December 31, 1992 and ending December 31, 1997. The graph assumes that $100 was
invested on December 31, 1992 in the Class A Common Stock and in each of the
above-mentioned indices that all dividends were reinvested.
TOTAL SHAREHOLDERS RETURN
ARDEN GROUP, INC.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ARDEN GROUP, INC. S&P 500 INDEX S&P FOOD RETAILERS INDEX
<S> <C> <C> <C>
1992 $100.00 $100.00 $100.00
1993 145.71 110.08 97.00
1994 130.00 111.53 103.82
1995 170.00 153.45 132.99
1996 165.37 188.68 154.40
1997 274.63 251.63 201.60
</TABLE>
STOCK BONUS PLAN
The Stock Bonus Plan is a non-contributory trusteed profit sharing plan
which is qualified under Section 401 of the Internal Revenue Code of 1986, as
amended (the "Code"). All non-union employees over 18 years of age who complete
1,000 hours of service are eligible to become participating employees in the
Stock Bonus Plan. Contributions to the Stock Bonus Plan for any fiscal year, as
determined by the Board of Directors, are discretionary, but in no event to
exceed 15% of the annual aggregate salaries of those employees eligible for
participation in the Stock Bonus Plan. Any assets of the Stock Bonus Plan which
are not invested in the Company's Class A Common Stock may be invested in
certain government backed securities. Contributions to the Stock Bonus Plan are
allocated among eligible participants in the proportions of their salaries to
the salaries of all participants. Contributions accrued for the Stock Bonus Plan
in 1997 were $135,000.
9
<PAGE>
ARDEN GROUP, INC. 401(K) RETIREMENT SAVINGS PLAN
Effective January 1, 1992, the Company's Board adopted the Arden Group, Inc.
401(k) Retirement Savings Plan (the "Company Savings Plan"). All non-union
employees of the Company and its subsidiaries who have attained the age of 18
and have completed at least one year of service with any of such companies are
entitled to participate in the Company Savings Plan. The Company Savings Plan
provides that, with certain limitations, a participating employee may elect to
contribute up to 15% of such employee's annual compensation to the Company
Savings Plan on a tax-deferred basis, subject to a limitation that the annual
elective contribution may not exceed an annual indexed dollar limit determined
pursuant to the Code ($10,000 in 1997). Annual contributions are made by the
Company in a discretionary amount as determined by the Company each year.
Contributions accrued for the Plan in 1997 and contributed in early 1998 were
$406,000.
EMPLOYMENT AGREEMENT--BERNARD BRISKIN
Mr. Briskin is employed as the Chairman of the Board of Directors, President
and Chief Executive Officer of the Company and Arden-Mayfair, Inc. and the
Chairman of the Board and Chief Executive Officer of AMG Holdings, Inc. and
Gelson's Markets pursuant to an employment agreement which was entered into as
of May, 1988, amended in April 1994 retroactive to January 1, 1994 and further
amended in January 1998, effective in January 1997 (the Agreement as amended is
hereinafter referred to as the Second Amendment.) The Second Amendment has a
term ending at January 1, 2004 and provides that the term thereof is subject to
automatic extension thereafter for periods of one fiscal year each unless either
his employers or Mr. Briskin gives notice of termination not less than 15 months
nor more than 18 months prior to the date upon which the term of the Second
Amendment will expire.
The Second Amendment provides for an annual base salary of $500,000 and a
bonus based upon the "Pre-Tax Profits" of the Company as described under
"Approval of Bernard Briskin Bonus Plan" below. The annual base salary is
subject to a cost of living adjustment effective as of January 1, 1998 and as of
January 1 of each year thereafter (the Adjustment Date.) The base salary is
adjusted for increases in the Consumer Price Index for All Urban Wage Earners
and Clerical Workers Los Angeles-Anaheim-Riverside Metropolitan Area
(1982-1984=100) published by the Bureau of Labor Statistics of the United States
Department of Labor (the Index). The base salary is adjusted for 100% of any
increase in the Index up to 3% and 50% for any increase in the Index in excess
of 3% up to 5%, with no adjustment for any increase in the Index in excess of
5%. The amount of the increase in the Index is calculated by dividing the Index
for the month of October immediately preceding the applicable Adjustment Date by
the Index for the month of October of the immediately preceding calendar year.
The Second Amendment also provides for certain expense reimbursement and
personal benefits, including payment or reimbursement for uninsured medical
expenses of Mr. Briskin and his immediate family up to a maximum of $200,000
during any calendar year. In addition, if he becomes permanently disabled, dies
or his employment is terminated prior to January 1, 2004, the cumulative unpaid
portion of two notes from Mr. Briskin to the Company, in the amount of $255,000
as of March 6, 1998, will be forgiven. The maturity dates of the two notes was
extended to December 31, 2003 with equal annual principal payments of $40,000
plus interest at 6% per annum.
The Second Amendment provides that its terms will be subject to review
during the 2002 fiscal year by the Compensation Committee of the Board of
Directors. Pursuant to this provision, the terms of the Second Amendment may be
modified. See "Approval of Bernard Briskin Bonus Plan" below.
APPROVAL OF BERNARD BRISKIN BONUS PLAN
(PROPOSAL NO. 2 ON PROXY CARD)
As described under "Employment Agreement--Bernard Briskin", the Board of
Directors of the Company, following approval by the Compensation Committee of
the Board of Directors, approved a
10
<PAGE>
Second Amendment to Employment Agreement between the Company and Bernard
Briskin, President and Chief Executive Officer of the Company. The Second
Amendment, effective as of January 1, 1997, among other things, (a) extends the
expiration date of the initial term of the employment agreement from January 1,
2001 to January 1, 2004 thereby extending for such additional period the bonus
arrangement for Mr. Briskin which has been in effect since fiscal year 1994 and
was previously approved by the stockholders, and (b) amends certain terms of the
bonus arrangement as noted below.
Under the previously-approved bonus arrangement, Mr. Briskin was entitled to
an annual bonus in an amount equal to certain specified percentages of the
"Pre-Tax Profits" for each fiscal year. The percentage of Pre-Tax Profits was,
and under the Second Amendment will continue to be, 2.5% of the first $2,000,000
of Pre-Tax Profits for each fiscal year and 3.5% of all Pre-Tax Profits in
excess of $2,000,000 for each fiscal year. The term "Pre-Tax Profits" meant, for
fiscal years 1994 to 1996, the amount shown on the audited Consolidated
Statement of Operations of the Company for the fiscal year under the caption
"Income Before Income Taxes and Extraordinary Items", adjusted so as to exclude
any charge, accrual or deduction for any bonus paid or payable to Mr. Briskin.
The Second Amendment amends the definition of Pre-Tax Profits to exclude
therefrom any arbitration award to Danka and the associated expense in 1997 as a
charge to discontinued operations. The effect of this amendment to the
definition of Pre-Tax Profits is to increase the amount of Mr. Briskin's bonus
for fiscal 1997 from $344,871 to $496,780. It is not anticipated that such
amendment will have any effect on bonuses which may become payable with respect
to fiscal year 1998 or thereafter. The bonus paid to Mr. Briskin for fiscal year
1996 (which was determined in accordance with the prior definition of Pre-Tax
Profits) was $191,632.
Under the Second Amendment, the payment of Mr. Briskin's annual bonus for
the 1997 fiscal year and thereafter is contingent upon (i) approval by the
stockholders of the Company of the material terms of the annual bonus
arrangement (as extended and amended by the Second Amendment) in accordance with
the regulations promulgated under Section 162(m) of the Code, and (ii) prior to
payment of a bonus with respect to a specific fiscal year, certification in
writing by the Company's Compensation Committee that the Pre-Tax Profits were in
fact achieved, and other material terms of the bonus formula were in fact
satisfied, for such fiscal year.
In general, Section 162(m) of the Code disallows deductions by a publicly
held corporation for compensation in excess of $1,000,000 to its chief executive
officer or any of its four highest paid officers (other than the chief executive
officer). Under Section 162(m), certain performance based compensation is exempt
from the $1,000,000 cap if (i) the performance goals are determined by the
corporation's compensation committee comprised solely of two or more outside
directors; (ii) the material terms of the arrangement under which it is to be
paid (or if the material terms which were previously approved have been amended,
such amended terms) are approved by the stockholders of the Company prior to
payment; and (iii) before payment thereof, such compensation committee confirms
that the performance goals were in fact satisfied. Because of the extension of
the term of the bonus arrangement and an amendment to the terms thereof which
has been made to the previously approved bonus arrangement (which amendment is
described below), the Company is submitting the annual bonus arrangement
contained in the Second Amendment to the stockholders for approval so as to
exclude payment of such annual bonus from the computation made under the Code to
determine whether Mr. Briskin's compensation exceeds $1,000,000 in any one year
and, therefore, is to that extent not deductible by the Company for federal
income tax purposes. If Mr. Briskin's bonus arrangement as so extended and
amended is not approved by the stockholders, or if in any year the Company's
Compensation Committee does not make the above-described written certification,
Mr. Briskin may terminate his Employment Agreement upon six months' prior
notice.
The affirmative vote of a majority in voting interest of stockholders
present, in person or by proxy, and entitled to vote at the Annual Meeting of
Stockholders is required to approve the annual bonus arrangement as so extended
and amended. Abstentions and broker non-votes will not be voted for or against
the proposal to approve the annual bonus arrangement but, because they will be
included as votes
11
<PAGE>
present at the Meeting, will have the effect of a negative vote because the
affirmative vote of a majority voting interest of the shares present at the
Meeting is required to pass the proposal. The number of votes represented by
shares beneficially owned by Mr. Briskin are sufficient to approve the annual
bonus arrangement (as so extended and amended) and it is anticipated that such
votes will be cast at the Annual Meeting in favor thereof.
The Board of Directors recommends a vote FOR approval of the annual bonus
arrangement for Mr. Briskin as set forth in the Second Amendment.
APPROVAL OF AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
(PROPOSAL NO. 3 ON PROXY CARD)
The Board of Directors has unanimously approved and recommends to its
stockholders the adoption of an amendment to Article Fourth of the Restated
Certificate of Incorporation of the Company. The proposed amendment would
increase (a) the authorized number of shares of the Class A Common Stock from
five million shares to ten million shares and (b) the authorized number of
shares of the Class B Common Stock from five hundred thousand shares to one
million five hundred thousand shares. As a result of the foregoing, the
aggregate number of shares which the Company is authorized to issue would be
increased from six million shares to twelve million shares. Each additional
share of Class A Common Stock and Class B Common Stock will have the same rights
and privileges as the currently authorized Class A Common Stock and Class B
Common Stock. If the stockholders approve the proposed increase in the
authorized shares of Class A Common Stock and Class B Common Stock, the Board of
Directors will have authority to issue the additional shares of Class A Common
Stock and Class B Common Stock without further approval of stockholders except
as required by applicable rules and regulations. Holders of Class A Common Stock
and Class B Common Stock do not have preemptive rights, which means they do not
have the right to purchase any new issuance of shares of Class A Common Stock or
Class B Common Stock in order to maintain their proportionate interest. The
Restated Certificate of Incorporation of the Company does provide, however, that
no dividend or distribution payable in capital stock of the Company (other than
Serial Preferred Stock) shall be paid on the Class A Common Stock or the Class B
Common Stock unless a simultaneous dividend or other distribution in an equal
amount per share (with only shares of Class A Common Stock being distributed
with respect to Class A Common Stock and only shares of Class B Common Stock
being distributed with respect to Class B Common Stock) is paid on the other
class of Common Stock. The text of the proposed amendment is attached to this
Proxy Statement as Exhibit A.
The primary purpose of the amendment is to provide the Company with
sufficient shares of Class B Common Stock to effect a four-for-one stock split
of both the Class A Common Stock and the Class B Common Stock in order to bring
the Class A Common Stock in compliance with revised requirements of the Nasdaq
Stock Market for continued listing in the Nasdaq National Market. The stock
splits will be in the form of stock dividends of three shares of Class A Common
Stock to holders of Class A Common Stock for each share of Class A Common Stock
held and three shares of Class B Common Stock to the holders of Class B Common
Stock for each share of Class B Common Stock held. Subject to stockholder
approval of the increase in the authorized shares of Class A Common Stock and
Class B Common Stock, the Company plans to effect the four-for-one stock splits
in the form of stock dividends to the respective holders of Class A Common Stock
and Class B Common Stock.
The Company's Class A Common Stock is traded on the Nasdaq National Market.
The Company believes that it is in the best interests of the Company and its
stockholders for the Class A Common Stock to continue to be traded on the Nasdaq
National Market. Effective February 1998, the quantitative standards that a
security must meet to continue to be designated as a National Market security
were revised to, among other things, increase the minimum number of shares which
must be held by the public (that is, the number of shares that are not held
directly or indirectly by any officer, director or beneficial owner of more than
10% of the security) from 200,000 shares to 750,000 shares (the "public float").
As of the date of this Proxy Statement, the Company only has approximately
323,000 shares of Class A Common
12
<PAGE>
Stock in the public float, and thus the Class A Common Stock does not meet the
revised public float requirement for continued designation as a Nasdaq National
Market security. The Company has requested and obtained from the Nasdaq Stock
Market an extension of time within which to comply with the revised public float
requirement before the Class A Common Stock is delisted from the Nasdaq National
Market.
To meet the revised public float requirement, the Company is proposing to
effect a four-for-one stock split of the Class A Common Stock in the form of a
stock dividend of Class A Common Stock in the amount of three shares of Class A
Common Stock for each share of the Class A Common Stock held. The payment of the
Class A Common Stock dividend will have the effect of increasing the total
number of outstanding shares of the Class A Common Stock, including shares held
by the Company as treasury shares, from 893,434 shares to 3,573,736 shares and
of increasing the number of shares of the Class A Common Stock in the public
float from approximately 323,000 shares to approximately 1,292,000 shares, thus
satisfying the revised public float requirement and enabling the Class A Common
Stock to continue to be listed on the Nasdaq National Market.
The Restated Certificate of Incorporation of the Company provides that if a
stock dividend is paid on either class of the Company's Common Stock, a
simultaneous stock dividend in like amount must also be paid on the other class
of Common Stock. Thus, in order to distribute the Class A Common Stock dividend,
the Company is required to simultaneously effect a four-for-one stock split of
the Class B Common Stock by distributing as a stock dividend to Class B Common
Stock holders three shares of Class B Common Stock for each share of Class B
Common Stock held. The distribution of the stock dividend on the Class B Common
Stock will have the effect of increasing the outstanding number of shares of the
Class B Common Stock of the Company from 342,246 shares to 1,368,984 shares.
Since that number of shares exceeds the presently authorized 500,000 shares of
the Class B Common Stock, the Restated Certificate of Incorporation must be
amended to increase the authorized number of shares of Class B Common Stock in
order to effect a four-for-one stock split of the Class B Common Stock and the
four-for-one stock split of the Class A Common Stock. Accordingly, the Board of
Directors is proposing the above-described amendment to its Restated Certificate
of Incorporation increasing the authorized number of shares of Class B Common
Stock so that the four-for-one stock split can be effectuated and the Class A
Common Stock will be in compliance with the requirements for continued Nasdaq
National Market listings.
In addition to the necessary increase in the authorized number of shares of
Class B Common Stock in order to effectuate the four-for-one stock splits, upon
consummation of the four-for-one stock split the number of outstanding shares of
Class A Common Stock, including shares held by the Company as treasury stock,
will be increased to 3,573,736 shares and the number of shares of Class A Common
Stock reserved for issuance upon conversion of the outstanding Class B Common
Stock will be increased to 1,368,984 shares bringing the total of issued and
outstanding and reserved shares of Class A Common Stock to 4,942,720 shares.
This would leave the Company with only 57,280 authorized shares of Class A
Common Stock for other corporate purposes. Although, other than the proposed
four-for-one stock split, the Company has no present plans for the issuance of
additional shares of Class A Common Stock, the Board of Directors is proposing
to increase the authorized number of shares of Class A Common Stock to ten
million shares, thereby providing the Company, following completion of the
four-for-one stock split, with 5,057,280 authorized shares of Class A Common
Stock which are not issued and outstanding or reserved for future issuance and
which may be used for other corporate purposes.
The affirmative vote of each of (a) a majority of the outstanding shares of
the Class A Common Stock and Class B Common Stock of the Company, voting
together as a single class, with the holders of Class B Common Stock entitled to
ten votes per share and the holders of Class A Common Stock entitled to one vote
per share, (b) a majority of the outstanding shares of the Class A Common Stock,
voting as a separate class, and (c) a majority of the outstanding shares of the
Class B Common Stock, voting as a separate class, is required for approval of
the proposed amendment. Any abstentions or broker non-votes on the proposed
amendment will have the same effect as a negative vote.
13
<PAGE>
The Board of Directors recommends a vote FOR the proposed amendment.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL NO. 4 ON PROXY CARD)
The Company's Board of Directors, upon recommendation of its Audit
Committee, has selected Coopers & Lybrand, independent certified public
accountants, to audit the books, records and accounts of the Company and its
consolidated subsidiaries for the 1998 fiscal year. Coopers & Lybrand has
audited the books, records and accounts of the Company and its subsidiaries for
a number of years. If the stockholders do not ratify the appointment of Coopers
& Lybrand, other certified public accountants will be appointed by the Board on
recommendation of the audit committee.
It is anticipated that representatives of Coopers & Lybrand will attend the
Meeting with the opportunity to make any statement they may desire to make, and
will be available to respond to appropriate questions from stockholders.
Ratification of the selection of independent public accountants for the
Company requires the affirmative vote of a majority in voting interest of the
stockholders present, in person or by proxy, and entitled to vote at the
Meeting. Abstentions and broker non-votes will not be voted for or against this
proposal, but will have the effect of negative votes since an affirmative vote
of a majority in voting interest of stockholders present and eligible to vote is
required to ratify the selection.
The Board of Directors recommends a vote FOR ratification of the selection
of Coopers & Lybrand.
CERTAIN OTHER TRANSACTIONS
In connection with the purchase by Mr. Briskin of shares of the Company's
Class A Common Stock in 1979 and 1980, the Company loaned Mr. Briskin $212,500
and $303,750, respectively. Under the Second Amendment of his Employment
Agreement, the interest rates payable under the notes reflecting such loans and
the maturity dates of such notes were modified. Interest on the unpaid principal
of such loans is payable at the rate of 6% per annum payable annually on or
before December 31 of each year. Principal on the $212,500 note is payable in
annual installments of $16,464.89 commencing December 31, 1994 and continuing
each December 31 thereafter until December 31, 2003 at which time the entire
unpaid principal balance of that note with all accrued and unpaid interest is
due and payable. Principal on the $303,750 note is payable in annual
installments of $23,535.11 commencing on December 31, 1994 and continuing each
December 31 thereafter until December 31, 2003 at which time the entire unpaid
principal balance of that note with all accrued and unpaid interest is due and
payable. The foregoing notes are collateralized by 180,000 shares of the
Company's Class B Common Stock. The outstanding principal balance of the two
notes as of December 31, 1997 was $255,000.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
In the event that a stockholder wishes to submit a proposal for
consideration by the stockholders of the Company at the next Annual Meeting of
Stockholders in conformity with current Securities and Exchange Commission proxy
regulations and any such proposal must be received by any Assistant Secretary of
the Company no later than January 18, 1999 in order for it to be includable in
the proxy statement for such Annual Meeting.
By Order of the Board of Directors
Assistant Secretary
May 18, 1998
14
<PAGE>
EXHIBIT A
PROPOSED AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
RESOLVED, that the second sentence of Article Fourth of the Restated
Certificate of Incorporation of this Corporation be amended to read in its
entirety as follows:
"The aggregate number of shares the corporation is authorized to issue is
twelve million (12,000,000), divided into ten million (10,000,000) shares
of Class A Common Stock at a par value of Twenty-Five Cents ($0.25) each,
one million five hundred thousand (1,500,000) shares of Class B Common
Stock at a par value of Twenty-Five Cents ($0.25) each, and five hundred
thousand (500,000) shares of Serial Preferred Stock at a par value of
Fifteen Dollars ($15.00) each."
15
<PAGE>
PRELIMINARY COPY
PROXY CLASS A COMMON
ARDEN GROUP, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF ARDEN GROUP, INC.
Bernard Briskin, Daniel Lembark and Ben Winters are hereby appointed proxies
(each with power to act alone and with power of substitution) to vote all shares
which the undersigned would be entitled to vote at the Annual Meeting of
Stockholders of Arden Group, Inc., at The Beverly Hilton Hotel, Beverly Hills,
California at 10:00 a.m. on June 17, 1998 and all adjournments thereof, on the
matters set forth below, and in their discretion upon any other matters brought
before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS NO. 1, 2, 3 AND 4.
1. ELECTION OF DIRECTORS
FOR / / The nominee listed below
WITHHOLD AUTHORITY / / to vote for the nominee listed below
Daniel Lembark
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, STRIKE A LINE
THROUGH THAT NOMINEE'S NAME.)
2. FOR / / AGAINST / / ABSTAIN / / the proposal to approve the Bernard
Briskin Bonus Plan.
3. FOR / / AGAINST / / ABSTAIN / / the proposal to amend the Restated
Certificate of Incorporation to increase the number of authorized shares
of Class A and Class B Common Stock.
4. FOR / / AGAINST / / ABSTAIN / / the proposal to ratify the selection of
Coopers & Lybrand as independent public accountants of the Company.
(Continued and to be signed on other side)
<PAGE>
(continued from other side)
THIS PROXY WILL BE VOTED AS SPECIFIED, BUT IF NO SPECIFICATION IS MADE, IT WILL
BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS.
The undersigned hereby revokes all prior proxies.
PLEASE SIGN, DATE, AND MAIL
THIS PROXY TODAY
Dated ______________________
Signature __________________
Signature __________________
/ / I/WE PLAN TO ATTEND THE
MEETING.
Please be sure to date this
Proxy and to sign exactly as
your name appears hereon; joint
owners should each sign; if by
a corporation, in the manner
usually employed by it; if by a
fiduciary, the fiduciary's
title should be shown.
YOUR VOTE IS IMPORTANT.
<PAGE>
PRELIMINARY COPY
PROXY CLASS B COMMON
ARDEN GROUP, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF ARDEN GROUP, INC.
Bernard Briskin, Daniel Lembark and Ben Winters are hereby appointed proxies
(each with power to act alone and with power of substitution) to vote all shares
which the undersigned would be entitled to vote at the Annual Meeting of
Stockholders of Arden Group, Inc., at The Beverly Hilton Hotel, Beverly Hills,
California at 10:00 a.m. on June 17, 1998 and all adjournments thereof, on the
matters set forth below, and in their discretion upon any other matters brought
before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS NO. 1, 2, 3 AND 4.
1. ELECTION OF DIRECTORS
FOR / / The nominees listed below
WITHHOLD AUTHORITY / / to vote for the nominees listed below
(a) Bernard Briskin (b) John G. Danhakl
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, STRIKE A LINE
THROUGH THAT NOMINEE'S NAME.)
2. FOR / / AGAINST / / ABSTAIN / / the proposal to approve the Bernard
Briskin Bonus Plan.
3. FOR / / AGAINST / / ABSTAIN / / the proposal to amend the Restated
Certificate of Incorporation to increase the number of authorized shares
of Class A and Class B Common Stock.
4. FOR / / AGAINST / / ABSTAIN / / the proposal to ratify the selection of
Coopers & Lybrand as independent public accountants of the Company.
(Continued and to be signed on other side)
<PAGE>
(continued from other side)
THIS PROXY WILL BE VOTED AS SPECIFIED, BUT IF NO SPECIFICATION IS MADE, IT WILL
BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS.
The undersigned hereby revokes all prior proxies.
PLEASE SIGN, DATE, AND MAIL
THIS PROXY TODAY
Dated ______________________
Signature __________________
Signature __________________
/ / I/WE PLAN TO ATTEND THE
MEETING.
Please be sure to date this
Proxy and to sign exactly as
your name appears hereon; joint
owners should each sign; if by
a corporation, in the manner
usually employed by it; if by a
fiduciary, the fiduciary's
title should be shown.
YOUR VOTE IS IMPORTANT.
<PAGE>
SECOND
AMENDMENT TO EMPLOYMENT AGREEMENT
This Second Amendment to Employment Agreement (the "Second Amendment")
is made and entered into effective as of January 1, 1997 by and between Arden
Group, Inc., a Delaware corporation ("Arden Group"), Arden-Mayfair, Inc., a
Delaware corporation and a wholly-owned subsidiary of Arden Group
("Arden-Mayfair"), AMG Holdings, Inc., formerly known as Telautograph
Corporation, a Virginia corporation and a wholly-owned subsidiary of
Arden-Mayfair ("AMG"), Gelson's Markets, a California corporation and a
wholly-owned subsidiary of Arden-Mayfair ("Gelson's")(Arden Group,
Arden-Mayfair, AMG and Gelson's are herein sometimes referred to collectively
as the "Companies" and individually as a "Company"), and Bernard Briskin
("Employee"), with reference to the following facts:
A. The parties hereto are parties to that certain Employment Agreement
dated as of May 13, 1988, as amended by that certain Amendment to Employment
Agreement dated April 27, 1994 (collectively, the "Agreement").
B. Pursuant to Section 13 of the Agreement, the Boards of Directors of
the Companies have examined the terms of the Agreement, the duties and
performance of Employee and the future needs of the Companies and have made a
good faith determination that the terms of Employee's employment thereunder
should be revised. Accordingly, the parties desire to amend the Agreement,
effective January 1, 1997, to make certain changes to the Agreement,
including, but not limited to, an increase in the base salary payable to
Employee and an extension of the term thereof.
NOW, THEREFORE, for and in consideration of the promises, covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. The first sentence of Section 2 of the Agreement is deleted and
replaced with the following:
"The Companies agree to and hereby do continue to employ Employee, and
Employee agrees to and hereby does continue in the employ of the
Companies, as president and chief executive officer of Arden Group and
Arden-Mayfair, and as chief executive officer of AMG and Gelson's; in
addition, Employee shall continue to serve as Chairman of the Board of
Directors of Arden Group. In the event that, during the term of this
Agreement, Arden Group fails to elect or appoint Employee as Chairman of
Arden Group's Board of Directors, as President of Arden Group and as Chief
Executive Officer of Arden Group, Employee shall have the right thereafter
upon ninety (90) days' written notice to terminate his employment by the
Companies and such termination shall be deemed to be a termination by the
Companies without cause."
1
<PAGE>
2. The first sentence of Section 3 of the Agreement is hereby amended
in its entirety to read as follows:
"The initial term of this Agreement, which commenced at 12:00 A.M. on
January 3, 1988 and was scheduled to expire at 12:00 A.M. on January 1,
2001, is hereby extended to 12:00 A.M. on January 1, 2004, subject to
termination or extension as hereinafter provided."
The remainder of Section 3 shall remain in full force and effect, in
accordance with its terms, and all references therein and in the rest of the
Agreement to the expiration of the term shall mean 12:00 A.M. on January 1,
2004.
3. Section 5 of the Agreement is hereby amended in its entirety to read
as follows:
"5. COMPENSATION.
"(a) IN GENERAL. All compensation payable to Employee hereunder
shall be paid to Employee by Arden Group, with such inter-company
adjustments in respect of such payments as the Companies deem appropriate.
Arden Group shall be primarily liable for the payment of all compensation
payable to Employee hereunder, and Arden-Mayfair, AMG and Gelson's shall
be liable to Employee for the payment of any such compensation only in the
event of non-payment thereof by Arden Group. All compensation shall be
subject to required withholding.
"(b) 1994-1996. During the period from January 1, 1994 through
December 31, 1996, but as to the Bonus for 1995 and thereafter contingent
upon the satisfaction of the requirements in Section 5(d) below, for all
services to be rendered by Employee hereunder, Employee shall be paid an
annual base salary (the "Base Salary"), payable in equal installments no
less frequently than twice monthly, as provided in subsection (1) below,
and incentive compensation consisting of a cash bonus (the "Bonus") for
each complete or partial fiscal year of Arden Group during 1994 through
and including 1996, as provided in subsection (2) below.
"(1) Employee's Base Salary for the period beginning on January
1, 1994 and ending on December 31, 1994 shall be $440,000. Employee's
Base Salary shall be adjusted effective as of January 1, 1995 and
effective as of January 1, 1996 (each such January 1 being the "Adjustment
Date") by the amount of the increase, if any, in the Consumer Price Index
for All Urban Wage Earners and Clerical Workers, Los Angeles-Anaheim-
Riverside Metropolitan Area (1982-84 = 100) published by the Bureau of
Labor Statistics of the United States Department of Labor (the "Index"),
calculated in accordance with this subsection (1); provided, however, that
on each Adjustment Date the Base Salary shall be adjusted for one hundred
percent (100%) of any increase in the Index up to three percent (3%) and
for fifty percent
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(50%) of any increase in the Index in excess of three percent (3%) up to
five percent (5%), but there shall be no adjustment for any increase in
the Index in excess of five percent (5%) (such adjustments for the
increase in the Index are hereinafter referred to as the "Allowable
Adjustments"). The amount of the increase in the Index shall be
calculated by dividing the Index for the month of October immediately
preceding the applicable Adjustment Date (the "Comparison Index") by the
Index for the October of the immediately preceding calendar year (the
"Base Index"). No carryover of any increase in the Index of more than
five percent (5%) shall be permitted.
"For example, the adjustment to the Base Salary on January 1,
1995 shall be determined as follows. First, calculate the increase in the
Index by dividing the Index for October 1994 by the Index for October
1993. By way of illustration only, if the Index in effect for October
1994 is 115.5 and the Index in effect for October 1993 was 110, the
increase in the Index would be 115.5/110 = 5%. Next, multiply the Base
Salary for 1994 by the Allowable Adjustments for the increase in the
Index, and add this amount to the Base Salary for 1994 to arrive at the
Base Salary on January 1, 1995. Continuing the foregoing illustration,
the Base Salary beginning on January 1, 1995 would be $440,000 + (3% x
$440,000) + (50% x 2% x $440,000), or $457,600. If the increase in the
Index had been 6% instead of 5%, the Base Salary beginning on January 1,
1995 would also be $457,600, since there is no adjustment for any increase
in the Index in excess of 5%. The adjustment to the Base Salary on
January 1, 1996 would be determined in a similar manner, with the
adjustment being made to the Base Salary for 1995.
"In no event shall the Base Salary on any January 1 be less than
the amount of the Base Salary during the preceding twelve-month period.
"In the event that publication of the Index is changed or
discontinued, the parties shall select a replacement index published by a
governmental agency. In the event that the references or techniques
employed in the calculation of the Index shall be modified and such
modification would have resulted in a different figure for the Base Index
to be used to calculate the increase in the Index, the parties agree that
the Base Index shall be appropriately adjusted and that the Index, as
modified, shall be used as provided hereunder.
"(2) Commencing January 1, 1994, the Bonus in respect of each
of Arden Group's fiscal years ending approximately December 31, 1994, 1995
and 1996 shall be an amount equal to the Applicable Percentage (as
hereinafter defined) of the Pre-Tax Profits (as hereinafter defined) for
such fiscal year. "Pre-Tax Profits" for each such fiscal year shall be
the amount shown on the audited Consolidated
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Statement of Operations of Arden Group for such fiscal year as "Income
Before Income Taxes and Extraordinary Items," adjusted so as to exclude
any charge, accrual or deduction for any Bonus paid or payable to
Employee. With respect to each such fiscal year, the Applicable
Percentage shall be as follows: with respect to the first $2,000,000 of
Pre-Tax Profits for the applicable fiscal year, the Applicable Percentage
shall be two and five-tenths percent (2.5%); with respect to all Pre-Tax
Profits in excess of $2,000,000 for the applicable fiscal year, the
Applicable Percentage shall be three and five-tenths percent (3.5%).
"No later than fifteen (15) days after the close of each such
fiscal year of Arden Group, a good faith estimate of the Bonus which will
be payable for said fiscal year shall be made and there shall be advanced
to Employee an amount equal to seventy five percent (75%) of said
estimate. All such sums so advanced for any such fiscal year shall be
credited against the Bonus for such fiscal year, and the amount of the
Bonus in excess of such amount so advanced shall be paid to Employee at
the conclusion of the audit for such fiscal year. If the amount so
advanced to Employee exceeds the amount of the Bonus to which he is
entitled for such fiscal year, such excess shall be returned within thirty
(30) days after Employee receives a written demand therefor.
"(c) 1997-2004. Commencing January 1, 1997, but as to the Bonus for
1997 and thereafter contingent upon the satisfaction of the requirements
in Section 5(d) below, for all services to be rendered by Employee
hereunder, Employee shall be paid an annual base salary (the "Base
Salary"), payable in equal installments no less frequently than twice
monthly, as provided in subsection (1) below, and incentive compensation
consisting of a cash bonus (the "Bonus") for each complete or partial
fiscal year of Arden Group from and after January 1, 1997 during
Employee's employment hereunder, as provided in subsection (2) below.
"(1) Employee's Base Salary for the period beginning on January
1, 1997 and ending on December 31, 1997 shall be $500,000. (Within ten
(10) days after execution of this Second Amendment, the Companies shall
pay to Employee any salary for calendar year 1997 which is owed and unpaid
to Employee based upon the Base Salary set forth in the preceding
sentence.) Employee's Base Salary shall be adjusted effective as of
January 1, 1998 and effective as of each January 1 thereafter (each such
January 1 also being an "Adjustment Date") during the term of this
Agreement by the amount of the increase, if any, in the Consumer Price
Index for All Urban Wage Earners and Clerical Workers, Los Angeles-Anaheim-
Riverside Metropolitan Area (1982-84 = 100) published by the Bureau of
Labor Statistics of the United States Department of Labor (the "Index"),
calculated in accordance with this subsection (1); provided, however, that
on each Adjustment Date the Base Salary shall be adjusted
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for one hundred percent (100%) of any increase in the Index up to three
percent (3%) and for fifty percent (50%) of any increase in the Index in
excess of three percent (3%) up to five percent (5%), but there shall be
no adjustment for any increase in the Index in excess of five percent
(5%) (such adjustments for the increase in the Index are hereinafter
referred to as the "Allowable Adjustments"). The amount of the increase
in the Index shall be calculated by dividing the Index for the month of
October immediately preceding the applicable Adjustment Date (the
"Comparison Index") by the Index for the October of the immediately
preceding calendar year (the "Base Index"). No carryover of any increase
in the Index of more than five percent (5%) shall be permitted.
"In no event shall the Base Salary on any January 1 be less than
the amount of the Base Salary during the preceding twelve-month period.
"In the event that publication of the Index is changed or
discontinued, the parties shall select a replacement index published by a
governmental agency. In the event that the references or techniques
employed in the calculation of the Index shall be modified and such
modification would have resulted in a different figure for the Base Index
to be used to calculate the increase in the Index, the parties agree that
the Base Index shall be appropriately adjusted and that the Index, as
modified, shall be used as provided hereunder.
"(2) Commencing January 1, 1997, the Bonus in respect of each
of Arden Group's fiscal years ending on or after January 3, 1998 shall be
an amount equal to the Applicable Percentage (as hereinafter defined) of
the Pre-Tax Profits (as hereinafter defined) for such fiscal year. "Pre-
Tax Profits" for each such fiscal year shall be the amount shown on the
audited Consolidated Statement of Operations of Arden Group for such
fiscal year as "Income Before Income Taxes and Extraordinary Items,"
adjusted so as to exclude any charge, accrual or deduction for (i) any
Bonus paid or payable to Employee and (ii) any arbitration award to Danka
and the associated expenses expensed in 1997 as a charge to discontinued
operations. With respect to each such fiscal year, the Applicable
Percentage shall be as follows: with respect to the first $2,000,000 of
Pre-Tax Profits for the applicable fiscal year, the Applicable Percentage
shall be two and five-tenths percent (2.5%); with respect to all Pre-Tax
Profits in excess of $2,000,000 for the applicable fiscal year, the
Applicable Percentage shall be three and five-tenths percent (3.5%).
"No later than fifteen (15) days after the close of each such
fiscal year of Arden Group, a good faith estimate of the Bonus which will
be payable for said fiscal year shall be made and there shall be advanced
to Employee an amount equal to seventy five percent (75%) of said
estimate. All such sums so advanced for any such fiscal
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<PAGE>
year shall be credited against the Bonus for such fiscal year, and the
amount of the Bonus in excess of such amount so advanced shall be paid to
Employee at the conclusion of the audit for such fiscal year. If the
amount so advanced to Employee exceeds the amount of the Bonus to which
he is entitled for such fiscal year, such excess shall be returned within
thirty (30) days after Employee receives a written demand therefor.
"(d) It is the parties' intention that the provisions of subsection
5(b)(2) and subsection 5(c)(2) of this Agreement, which set forth the
formula for the annual Bonus payable to Employee, shall constitute "other
performance-based compensation" within the meaning of Section 162(m)(4)(C)
of the Internal Revenue Code of 1986, as amended (the "Code") and
"qualified performance-based compensation" within the meaning of Proposed
Treasury Regulation Section 1.162-27(e). Payment of the Bonus to Employee
for 1995 and thereafter is contingent upon (i) approval by the
shareholders of Arden Group of the material terms of the Bonus formula in
accordance with the requirements of Proposed Treasury Regulation
Section 1.162-27(e)(4), and (ii) prior to payment of the Bonus with respect
to each fiscal year, the Compensation Committee of Arden Group shall
certify in writing in accordance with the requirement of Proposed Treasury
Regulation Section 1.162-27(e)(5) that the performance goals were in fact
satisfied, i.e., the Pre-Tax Profits with respect to such fiscal year were
in fact achieved and that the other material terms of the Bonus formula
were in fact satisfied. Arden Group agrees to timely place before the
shareholders clause (i) (by asking the shareholders of Arden Group to
approve the payment of all bonuses) and to timely seek the certifications
required pursuant to clause (ii). In the event that Proposed Treasury
Regulation Section 1.162-27(e) is amended, superseded or replaced, the
payment of the Bonus with respect to each fiscal year shall, if required
by then applicable law or regulation (taking into account any grandfather
provisions) be subject to compliance with the applicable requirements of
any future Treasury Regulations, whether proposed, temporary or final,
with respect to "other performance-based compensation" within the meaning
of Code Section 162(m)(4)(C), in lieu of the foregoing provisions of this
subsection 5(d), and Arden Group agrees to use its best efforts to comply
with all such requirements. If in any year after 1994 the conditions for
paying a Bonus to Employee as set forth in this subsection (d) are not
satisfied, Employee may terminate the Agreement upon six (6) months' prior
written notice to the Companies."
4. Section 6 is hereby amended in its entirety to read as follows:
6. EXPENSES. In addition to the Base Salary and Bonus provided
for in Section 5 hereof and the retirement payment provided for in
Section 9 hereof, the Companies shall, in accordance with their past
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practices and upon submission of appropriate bills or vouchers, pay
or reimburse Employee for all ordinary and usual expenses incurred by
Employee in furtherance of or in connection with the business of the
Companies. In addition, the Company shall reimburse Employee (as a
working condition fringe benefit) for attorneys fees incurred by him
in connection with the negotiation and drafting of the Second
Amendment, up to a maximum reimbursement of twenty thousand dollars
($20,000)."
5. The first two (2) lines of Section 7 are amended to read as follows:
"In addition to the Base Salary and Bonus provided for in
Section 5 hereof and the retirement payment provided for in
Section 9."
Clause (b) of Section 7 is hereby amended in its entirety to read as follows:
"(b) pay or reimburse Employee for the uninsured medical
expenses of Employee and his immediate family (`immediate family'
being defined to include Employee, his spouse, and any children of
Employee who reside in his home or are full time students at an
accredited institution), up to a maximum reimbursement during any
calendar year of $200,000 and such reimbursement shall continue until
Employee's death; and."
The second to last sentence of Section 7 is deleted in its entirety and
replaced by the following: "All benefits referred to in this Section 7 shall
be in addition to any other compensation payable to Employee pursuant to the
terms of this Agreement."
6. Sections 8(a) and (b) of the Agreement are hereby deleted.
Employee shall continue to be entitled to participate in any group life
insurance program which the Companies may elect to maintain from time to time.
7. Section 9 (relating to Severance Pay) is hereby deleted in its
entirety and the following is substituted in its place:
"9. RETIREMENT COMPENSATION.
(a) Commencing on the date of Employee's Retirement (as said term is
hereinafter defined), the Company shall pay to Employee on a monthly basis
in arrears for so long as Employee shall be living an amount per annum
equal to twenty-five percent (25%) of Employee's average Base Salary and
Bonus (not including benefits, stock option rights or other employee
compensation) which Employee had earned and accrued with respect to the
last three (3) full fiscal years of the Company prior to Employee's
Retirement. By way of example only, assume that Employee retires on
June 1, 2001 and assume, for purposes of this example only, that the
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<PAGE>
Company's fiscal years ending in 1998, 1999 and 2000 all ended on
December 31. The relevant years to determine Employee's retirement
payment would be the Company's fiscal years ending December 31, 1998,
December 31, 1999, and December 31, 2000. Assume that for the fiscal year
ending on December 31, 1998 Employee received a Base Salary of Five
Hundred Ten Thousand Dollars ($510,000) and a Bonus was accrued for that
fiscal year (regardless of whether the Bonus accrued for that fiscal year
was paid during the fiscal year or thereafter) in the amount of One
Hundred Thousand Dollars ($100,000). Assume that the Base Salary for the
next two fiscal years was Five Hundred Twenty Thousand Dollars ($520,000)
and Five Hundred Thirty Thousand Dollars ($530,000), respectively, and
that Employee's Bonus accrued with respect to those two fiscal years was
One Hundred Twenty Thousand Dollars ($120,000) and One Hundred Fifty
Thousand Dollars ($150,000), respectively. Employee's average annual
compensation for purposes of this paragraph 9 would thus be Six Hundred
Forty Three Thousand Three Hundred Thirty-Three Dollars ($643,333); and
pursuant to this paragraph 9, Employee's annual retirement payment due
under this paragraph 9 would be One Hundred Sixty Thousand Eight Hundred
Thirty-Three Dollars ($160,833) per annum which would commence to accrue
on June 1, 2001 and would be payable commencing July 1, 2001 in the
monthly amount of $13,402.75.
(b) In addition to the annual retirement payment payable to Employee
pursuant to subparagraph (a), the Company shall continue to provide
Employee with health insurance benefits and with an automobile allowance
equivalent to that which the Company grants to its senior executives from
time to time during Employee's Retirement; provided that he shall continue
to receive the uninsured medical expenses as provided in Section 7(b).
The Company may discharge its health insurance obligation hereunder by
paying or reimbursing Employee for a medical supplement policy. If for
any reason (whether it be pursuant to applicable law or by reason of the
Company's then health insurance contract), the Company cannot provide
Employee with health insurance coverage, then it shall pay to Employee,
annually, the annual premium which it would pay for health insurance
coverage for its average senior executive.
(c) For purposes of subparagraph (a) above, the Employee shall be
deemed to be "Retired" when Employee's Base Salary and Bonus no longer
accrue under this Agreement other than by reason of Employee's breach of
this Agreement or the Company's termination of this Agreement for cause."
8. Section 10 is amended as follows: (i) In the first sentence of
Section 10(a), the words "this Agreement" are replaced by the words "Employee's
employment hereunder"; (ii) Clauses (4), (5) and (8) of Section 10(a) are
deleted; (iii) Clause (3) of Section 10(a) is amended in its entirety to
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<PAGE>
read as follows: "payment to Employee of the retirement payment, health
benefits and automobile allowance as provided in Section 9;" and (iv) Section
10(b) is deleted in its entirety.
9. Section 11(c) is hereby deleted.
10. Section 12 of the Agreement is deleted in its entirety and replaced
with the following:
"12. PRORATION OF BONUS. If Employee's employment is terminated
during the term hereof and thereafter Employee is entitled to no further
payment of Bonus, then the remainder of any Bonus payable to Employee for
the year in which such termination occurs, if any, shall be paid no later
than 45 days after the close of the then current fiscal quarter of Arden
Group (unless such termination occurs during the fourth quarter of Arden
Group's fiscal year, in which event it shall be paid no later than 90 days
after the close of such fiscal year), and shall be adjusted as follows:
For purposes of calculating the Bonus, Employee's employment shall be
deemed to terminate at the end of the calendar month in which his
employment is actually terminated. For purposes of Section 5(b)(2) and
5(c)(2), the $2,000,000 amount shall be prorated for the number of months
of Arden Group's fiscal year that have elapsed through the date of
termination (including the entire calendar month in which employment
actually terminated); and the Applicable Percentage of 2-1/2% shall be
applied to Pre-Tax Profits up to such prorated amount and the Applicable
Percentage of 3-1/2% shall be applied to Pre-Tax Profits in excess of such
prorated amount. By way of example only, if the termination of employment
occurred at any time during the month of May and if Arden Group's fiscal
year were the calendar year, then Employee's Bonus for said fiscal year
through the date of employment would equal 2-1/2% of $833,333 (that is,
5/12ths of $2,000,000) plus 3-1/2% of Pre-Tax Profits through the end of
May to the extent in excess of $833,333. Pre-Tax Profits shall be as
defined in Sections 5(b)(2) and 5(c)(2) hereof but shall be prorated to
the end of the calendar month in which such termination occurs and
calculated based upon the quarterly unaudited consolidated financial
statements filed with the Securities and Exchange Commission on Form 10-Q,
if the termination occurs during the first three quarters of any fiscal
year, and in all other cases, upon the audited Consolidated Statement of
Operations of Arden Group."
11. Section 13 is hereby amended in its entirety to read as follows:
"13. GOOD FAITH REEVALUATION OF COMPENSATION. The parties
agree that, during calendar year 2002, the Compensation Committee of
Arden Group and Employee shall meet to discuss in good faith whether,
based on the services being performed by Employee hereunder and the
needs of the Companies, there should be an
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adjustment to the Base Salary and/or Bonus structure payable to him
pursuant to Section 5 hereunder; provided, however, that the parties
acknowledge and agree that the Companies shall not have any legal
obligation to make such an adjustment."
12. A new Section 26 is added to read as follows:
"26. TERMINATION.
(a) TERMINATION BY COMPANIES FOR CAUSE. The
Companies may terminate the employment of Employee for "cause" by
written notice to Employee. For purposes of this Agreement, "cause"
shall mean only (i) conviction of a crime directly related to his
employment hereunder, (ii) conviction of a felony involving moral
turpitude, (iii) willful and gross mismanagement of the business and
affairs of Companies, or (iv) breach of any material provision of
this Agreement. In the event the employment of Employee is
terminated pursuant to this subsection 26(a), Companies shall have no
further liability to Employee other than for compensation accrued
through the date of termination but not yet paid.
In the event Companies contend that they have cause to
terminate Employee pursuant to clause (iii) or (iv) of the second
sentence of this subsection 26(a), Companies shall provide Employee
with written notice specifying in reasonable detail the services or
matters which they contend Employee has not been adequately
performing or the material provisions of this Agreement of which
Employee is in violation and the acts constituting such violation.
If the events can be cured and corrected and if, within ten (10) days
of receipt of the notice, Employee performs the required services or
modifies his performance to correct the matters complained of,
Employee's breach will be deemed cured, and Employee's employment
shall not be terminated. However, if the nature of the service not
performed by Employee or the matters complained of are curable but
more than ten (10) days are reasonably required to perform the
required service or to correct the matters complained of, then his
breach will be deemed cured if he commences to perform such service
or to correct such matters within the ten (10) day period and
thereafter diligently prosecutes such performance or correction to
completion within sixty (60) days after the Companies' original
notice (the "extension"). If Employee does not perform the required
services or modify his performance to correct the matter complained
of within the ten (10) day period or the extension thereof, Companies
shall have the right to terminate this Agreement at the end of the
ten (10) day period or extension thereof. It is understood that
Employee's performance hereunder shall not be deemed
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unsatisfactory solely on the basis of any economic performance of
Companies because this performance will depend in part on a variety
of factors.
(b) TERMINATION BY COMPANIES WITHOUT CAUSE. The
Companies may terminate the employment of Employee without "cause"
(as defined in subsection 26(a) above) at any time during the term
hereof by giving written notice to Employee specifying therein the
effective date of termination. In the event the employment of
Employee is terminated pursuant to this subsection 26(b) without
cause, Companies shall be obligated to pay to Employee his Base
Salary and his Bonus pursuant to Section 5 of this Agreement and all
other benefits payable to Employee under this Agreement for the
balance of the remaining term under Section 3 (without extension).
Employee shall have no duty to mitigate and Companies shall have no
right to offset any other compensation paid to Employee during the
applicable time period."
13. The effective date of this Amendment shall be January 1, 1997.
14. Except as expressly modified and amended by this Second Amendment,
the Agreement shall remain in full force and effect in accordance with its
terms.
IN WITNESS WHEREOF, the parties have executed this Amendment effective the
date first written above.
ARDEN GROUP, INC.
By: ERNEST T. KLINGER
----------------------
Title: VICE PRESIDENT
-------------------
ARDEN-MAYFAIR, INC.
By: ERNEST T. KLINGER
----------------------
Title: VICE PRESIDENT
-------------------
AMG HOLDINGS, INC.
By: ERNEST T. KLINGER
----------------------
Title: SECRETARY
-------------------
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GELSON'S MARKETS
By: ERNEST T. KLINGER
----------------------
Title: SECRETARY
-------------------
BERNARD BRISKIN
-------------------
Bernard Briskin
12
