**Exhibit 10.10**

 

NON-EMPLOYEE DIRECTOR

 

PHANTOM STOCK UNITAGREEMENT

 

                THIS PHANTOM STOCKUNIT AGREEMENT (the “Agreement”), dated as of the 6th day of December, 2007, byand between Arden Group, Inc., a Delaware corporation (the “Company”), and                              (the “Unit Holder”), is made with reference to the following facts:

 

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

 

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

 

                NOW, THEREFORE, itis agreed as follows:

                1.             Grant

 

                                (a)           Subject to the terms and conditionsset forth herein, the Company hereby grants to the Unit Holder Seven Thousand(7,000) Units exercisable from time to time in accordance with the provisionsof this Agreement during a period commencing on the date hereof and expiring atthe close of business on December 5, 2014 (the “Expiration Date”).  Each Unit hereunder represents the right toreceive an amount equal to the excess of (i) the fair market value(determined in accordance with Paragraph 1(b) below) of one share of the Class ACommon Stock, $.25 par value per share, of the Company (the “Class ACommon Stock”) based on the date upon which the Unit Holder exercises such Unit(the “Exercise Date Price”) over (ii) $146.44 (the “Base Price”),representing the fair market value of one share of the Class A CommonStock on the effective date hereof determined on the basis of the closing salesprice of the Class A Common Stock on the date hereof as reported by theNASDAQ Global Market.

 

                                (b)           The Exercise Date Price shall be determined as follows: (i) ifthe Class A Common Stock is then listed on a national securities exchange,the average of the closing sales prices of the Class A Common Stock forthe twenty Trading Days (as defined below) preceding the date of exercise ofsuch Units (the “Determination Date”) on the principal securities exchange onwhich such stock is then listed, and, if there is no reported sale on anyTrading Day within such twenty day period, such Trading Day shall be countedfor purposes of determining such twenty day period but shall be disregarded forpurposes of determining such average, or (ii) if the Class A CommonStock is then publicly traded in the over-the-counter market, the average ofthe closing sales prices of the Class A Common Stock in theover-the-counter market for the twenty Trading Days preceding the DeterminationDate and, if there is no reported sale on any Trading Day within such twentyday period, such Trading Day shall be counted for purposes of determining suchtwenty day period but shall be disregarded for purposes of determining suchaverage, or (iii) if the Class A Common Stock is not then separatelyquoted or publicly traded, the fair market value on the Determination Date, asdetermined by the Board of Directors of the Company (the “Board”).  For purposes hereof, “Trading Day” shall meanany day upon which the principal national securities exchange orover-the-counter market upon which the Class A Common Stock is then tradedis open for the trading of securities.

 

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                2.             Exercise of Units

 

                                (a)           The Unit Holder may elect to be paidfor any then vested Unit by timely delivering or mailing to the Company (inaccordance with Paragraph 10 below), Attention: Chief Executive Officer andChief Financial Officer (or person acting as Chief Financial Officer), a noticeof exercise, in the form prescribed by the Company, stating therein that theUnit Holder has elected to exercise his Units and specifying therein the dateof this Agreement and the number of vested Units for which he is electing to bepaid.  The exercise of any Units shallnot be deemed effective unless and until the Unit Holder has complied with allof the provisions of this Paragraph 2(a). Upon an effective exercise of any one or more Units, the Company shallthereafter pay the Unit Holder in complete satisfaction of each Unit withrespect to which such right and option has been exercised an amount equalto:  (i) the Exercise Date Priceminus (ii) the Base Price.  Suchpayment shall be made to the Unit Holder within 30 days after the exercise ofsuch right and option.

 

                                (b)           No Units shall vest or becomeexercisable during the first, second or third year from the date of granthereof; thereafter Units shall vest and become exercisable in installments asto (i) twenty-five percent (25%) of the total number of Units subject tothis Agreement on December 6, 2010, (ii) an additional twenty-fivepercent (25%) of the total number of Units subject to this Agreement on December 6,2011, (iii) an additional twenty-five percent (25%) of the total number ofUnits subject to this Agreement on December 6, 2012, and (iv) theremaining twenty-five percent (25%) of the total number of Units subject to thisAgreement on December 6, 2013. Notwithstanding the foregoing, if at any time prior to the vesting infull of all Units the Unit Holder’s service as a member of the Board isterminated due to the Unit Holder’s death or disability (as disability is definedin Paragraph 4 below), then all unexercised Units covered hereby that have notvested and become exercisable as of the effective date of the Unit Holder’stermination of service due to death or disability shall be deemed to havevested and become immediately exercisable in full effective on and as of suchdate of termination of service.

 

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

 

                3.             Termination.  All unexercised Units shall automatically andwithout notice terminate and become null and void at the time of the earliestto occur of the following:

 

                                (a)           the Expiration Date;

 

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

 

                                (c)           The date of termination of the UnitHolder’s service as a member of the Board, if such termination of service isdue to the removal of the Unit Holder from the Board for cause (the Board shallhave the right to determine whether the Unit Holder has been removed for causeand the date of such removal, such determination of the Board to be final andconclusive); and

 

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

 

                Nothing containedin this Agreement shall obligate the Company or any of its subsidiarycorporations to continue to employ or engage the services of the Unit Holder inany capacity, nor confer upon the Unit Holder any right to continue on theBoard 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 toamend, modify or terminate at any time the Unit Holder’s arrangements, if any,with the Company.

 

                4.             Payment Upon Death orDisability.  Upon the termination ofthe service of the Unit Holder as a member of the Board due to the death of theUnit Holder or disability of the Unit Holder within the meaning of Section 22(e)(3) ofthe Internal Revenue Code of 1986, as amended (the Board shall have the rightto determine whether the Unit Holder’s termination is attributable to adisability of the Unit Holder within the meaning of Section 22(e)(3) ofthe Internal Revenue Code of 1986, as amended, such determination of the Boardto be final and conclusive), while serving in such capacity, all unexercisedUnits covered hereby that have not vested and become exercisable as of theeffective date of the Unit Holder’s termination of service for death ordisability shall vest and become immediately exercisable in full effective asof such date of termination of service, and the Company shall pay such UnitHolder (or the legal representative of the estate of the deceased Unit Holderor the person or persons who acquire the right to receive payment for a Unit bybequest 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 onthe date of such termination of such service of the Unit Holder, an amountdetermined in the manner set forth in Paragraph 2 above as if the Unit Holderhad exercised the right and option to be paid for all then unexercised Unitsheld by the Unit Holder on the date of such service termination.  Such payment shall be made by the Company tothe Unit Holder or the Unit Holder’s Successor, as the case may be, within 30days 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 privilegesgranted hereby other than by will or by the laws of descent anddistribution.  Units are exercisableduring the Unit Holder’s lifetime only by the Unit Holder.  Upon any attempt by the Unit Holder totransfer this Agreement or any right or privilege granted hereby (includingwithout limitation any Units) other than by will or by the laws of descent anddistribution and contrary to the provisions hereof, this Agreement and saidrights and privileges shall immediately become null and void.

 

                6.             Anti-Dilution.  In the event that the shares of Class ACommon Stock subject to this Agreement shall be changed into or exchanged for adifferent number or kind of shares of stock or other securities of the Companyor of another corporation (whether by reason of merger, consolidation,recapitalization, reclassification, split-up, combination of shares, orotherwise) or if the number of such shares of Class A Common Stock shallbe increased solely through the payment of a stock dividend, then there shallbe made an appropriate adjustment (a) in the number of Units then coveredhereby, (b) to the Base Price and/or (c) to the other terms as may benecessary to reflect the foregoing events. There may also be made similar adjustments as described in (a)-(c) ofthe previous sentence in the event of any distribution of assets to the Company’sstockholders other than a regular quarterly cash dividend.  Any determinations or interpretations underthis Section, including whether a distribution is other than a regular quarterlycash dividend, shall be made by the Board, which determination shall be final,binding and conclusive. In the event there shall be any other change in thenumber or kind of the outstanding shares of stock of the Company subject tothis Agreement, then if the Board, in its sole discretion, determines that suchchange equitably requires an adjustment in this Agreement, such adjustmentsshall be made in accordance with such determination, and the Board’sdetermination of the nature and amount of such adjustment, if any, shall befinal, binding and conclusive.  Theforegoing adjustments shall be made in a manner that will cause therelationship 

 

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between the aggregate appreciation in a share of Class A CommonStock and the increase in value of each Unit granted hereunder to remainunchanged as a result of the applicable transaction.

 

                7.             Termination upon Merger.  In the event that (a) the Company mergeswith or into any other corporation, consolidates with any other corporation, orsells substantially all of its assets and business to another corporation and,in any such case, stockholders of the Company immediately prior to theconsummation of the transaction own less than fifty percent (50%) of theoutstanding voting securities of the surviving or acquiring corporationimmediately after consummation of the transaction, or (b) the Class ACommon Stock (or any other capital stock into which the Class A CommonStock is changed) is no longer listed on a national securities exchange orpublicly traded in the over-the-counter market, then (i) the Unit Holdershall be paid the amount provided in Paragraph 2 above for all then fullyvested unexercised Units then held by him in the manner provided in saidParagraph 2 as if such Unit Holder had exercised his right and option to bepaid for all of such then fully vested Units immediately prior to theeffectiveness of such merger or consolidation, consummation of such sale or theoccurrence of the Class A Common Stock no longer being listed on anational securities exchange or publicly traded in the over-the-counter marketand (ii) all of the Units shall automatically and without notice terminateand become null and void upon such effectiveness, consummation or occurrence.

 

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

 

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

 

                10.           Notices.  Whenever under this Agreement notice isrequired to be given in writing, it shall be deemed to have been duly givenupon personal delivery or upon receipt by the Company by fax (telecopy), onebusiness day following deposit with a nationally recognized air courierguaranteeing overnight delivery, or three business days after deposit in theUnited 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 theaddress set forth on the last page hereof (or to such other address aseither party shall have indicated to the other party by notice in accordancewith this Paragraph):

 
|   | Company: |   | Arden Group, Inc.                                                 |
|--------|----------|--------|------------------------------------------------------------------------|
|   |     |   | 2020 South Central Avenue                                              |
|   |     |   | Compton, California 90220                                              |
|   |     |   | Attention: Chief Executive Officer and                                 |
|   |     |   | Chief Financial Officer (or person acting as Chief  Financial Officer) |

 

 

                For purposeshereof, a “business day” is any day other than a Saturday, Sunday or a holidayin the State of California.

 

                11.           Benefit.  Except as otherwise specifically providedherein, this Agreement shall be binding upon and shall operate for the benefitof the Company and the Unit Holder and his successors.

 

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

 

                13.           Entire Agreement.  This Agreement represents the entireagreement between the parties hereto regarding Units based on the Class ACommon Stock and supersedes any and all prior or contemporaneous written ororal agreements or discussions between the parties and any other person orlegal entity concerning the transactions contemplated herein.  Except as otherwise expressly providedherein, this Agreement cannot be amended or modified except by a written instrumentexecuted by the parties hereto.

 

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

 

                15.           Further Acts.  The parties hereto agree to execute anddeliver such further instruments as may be reasonably necessary to carry outthe intent of this Agreement.

 

                IN WITNESSWHEREOF, the parties have executed this Agreement as of the day and year firstabove written.

 
| ARDEN  GROUP, INC. | UNIT  HOLDER:        |
|--------------------|----------------------|
|               |                 |
| By:                |                 |   |   |
|               |                 |
|               | Address  for Notice: |
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