Document:

Exhibit 4.1 2012 Stock Incentive Plan

Exhibit 4.1

OPHTHALIX INC.

2012 STOCK INCENTIVE PLAN

1.

Purpose

The purpose of this 2012 Stock Incentive Plan (the “Plan”) of Ophthalix Inc., a Nevada corporation (the “Company”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s stockholders. Except where the context otherwise requires, the term “Company” shall include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations thereunder (the “Code”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the “Board”).

2.

Eligibility

All of the Company’s employees, officers and directors, as well as consultants and advisors to the Company (as such terms consultants and advisors are defined and interpreted for purposes of Form S-8 under the Securities Act of 1933, as amended (the “Securities Act”), or any successor form) are eligible to be granted Awards under the Plan. Each person who is granted an Award under the Plan is deemed a “Participant.” “Award” means Options (as defined in Section 5(a)), Restricted Stock (as defined in Section 6(a)), Restricted Stock Units (as defined in Section 6(a)), Other Stock-Based Awards (as defined in Section 7(a)) and Performance Awards (as defined in Section 8(a)). 

3.

Administration and Delegation

(a)

Administration by Board of Directors. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board’s sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award.

(b)

Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”). All references in the Plan to the “Board” shall mean the Board or a Committee of the Board or the officers referred to in Section 3(c) to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee or officers.

(c)

Delegation to Officers. To the extent permitted by applicable law, the Board may delegate to one or more officers of the Company the power to grant Options and other Awards that constitute rights under Nevada law (subject to any limitations under the Plan) to employees or officers of the Company and to exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the terms of such Awards to be granted by such officers (including the exercise price of such Awards, which may include a formula by which the exercise price will be determined) and the maximum number of shares subject to such Awards that the officers may grant; provided further, however, that no officer shall be authorized to grant such Awards to any “executive officer” of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or to any “officer” of the Company (as defined by Rule 16a-1 under the Exchange Act). The Board may not delegate authority under this Section 3(c) to grant Restricted Stock, unless Nevada law then permits such delegation.

4.

Stock Available for Awards

(a)

Number of Shares; Share Counting.

(1) Authorized Number of Shares. Subject to adjustment under Section 9, Awards may be made under the Plan for up to 4,900,000 shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”). Any or all Awards may be in the form of Incentive Stock Options. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

(2)

Share Counting. For purposes of counting the number of shares available for the grant of Awards under the Plan:

(A)

if any Award (i) expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right) or (ii) results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards; provided, however, that in the case of Incentive Stock Options, the foregoing shall be subject to any limitations under the Code;

(B)

shares of Common Stock delivered (either by actual delivery, attestation, or net exercise) to the Company by a Participant to (i) purchase shares of Common Stock upon the exercise of an Award or (ii) satisfy tax withholding obligations (including shares retained from the Award creating the tax obligation) shall not be added back to the number of shares available for the future grant of Awards; and

(C)

shares of Common Stock repurchased by the Company on the open market using the proceeds from the exercise of an Award shall not increase the number of shares available for future grant of Awards.

(b)

Substitute Awards. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan. Substitute Awards shall not count against the overall share limit set forth in Section 4(a)(1) or any sublimits contained in the Plan, except as may be required by reason of Section 422 and related provisions of the Code.

5.

Stock Options

(a)

General. The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. 

(b)

Incentive Stock Options. An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted to employees of Ophthalix Inc., any of Ophthalix Inc.’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. An Option that is not intended to be an Incentive Stock Option shall be designated a “Nonstatutory Stock Option.” The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or if the Company converts an Incentive Stock Option to a Nonstatutory Stock Option.

(c)

Exercise Price. The Board shall establish the exercise price of each Option and specify the exercise price in the applicable Option agreement. The exercise price shall be not less than 100% of the fair market value per share of Common Stock (“Fair Market Value”) on the date the Option is granted; provided that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the exercise price shall be not less than 100% of the Fair Market Value on such future date. Fair Market Value of a share of Common Stock for purposes of the Plan will be determined as follows: 

(1) if the Common Stock trades on a national securities exchange, the closing sale price (for the primary trading session) on the date of grant; or

(2) if the Common Stock does not trade on any such exchange, the average of the closing bid and asked prices as reported by an authorized OTCQX market data vendor as listed on the OTCQX website (www.otcmarkets.com) on the date of grant; or

(3) if the Common Stock does not trade on any such exchange and is not quoted on the OTCQX, the average of the closing bid and asked prices as reported by an authorized OTCBB market data vendor as listed on the OTCBB website (otcbb.com) on the date of grant; or

(4) if the Common Stock is not publicly traded, the Board will determine the Fair Market Value for purposes of the Plan using any measure of value it determines to be appropriate (including, as it considers appropriate, relying on appraisals) in a manner consistent with the valuation principles under Section 409A of the Code, except as the Board may expressly determine otherwise.

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For any date that is not a trading day, the Fair Market Value of a share of Common Stock for such date will be determined by using the closing sale price or average of the bid and asked prices, as appropriate, for the immediately preceding trading day and with the timing in the formulas above adjusted accordingly. The Board can substitute a particular time of day or other measure of “closing sale price” or “bid and asked prices” if appropriate because of exchange or market procedures or can, in its sole discretion, use weighted averages either on a daily basis or such longer period as complies with Section 409A of the Code. The Board has sole discretion to determine the Fair Market Value for purposes of the Plan, and all Awards are conditioned on the participants’ agreement that the Board’s determination is conclusive and binding even though others might make a different determination. 

(d)

Duration of Options. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement; provided, however, that no Option will be granted with a term in excess of 10 years. 

(e)

Exercise of Options. Options may be exercised by delivery to the Company of a notice of exercise in a form (which may be electronic) approved by the Company, together with payment in full (in the manner specified in Section 5(f)) of the exercise price for the number of shares for which the Option is exercised. Shares of Common Stock subject to the Option will be delivered by the Company as soon as practicable following exercise.

(f)

Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:

(1) in cash or by check, payable to the order of the Company;

(2) except as may otherwise be provided in the applicable Option agreement or approved by the Board, in its sole discretion, by (A) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (B) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;

(3) to the extent provided for in the applicable Option agreement or approved by the Board, in its sole discretion, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their Fair Market Value, provided that (A) such method of payment is then permitted under applicable law, (B) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (C) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

(4) to the extent provided for in the applicable Nonstatutory Stock Option agreement or approved by the Board in its sole discretion, by delivery of a notice of “net exercise” to the Company, as a result of which the Participant would receive (A) the number of shares underlying the portion of the Option being exercised, less (B) such number of shares as is equal to (i) the aggregate exercise price for the portion of the Option being exercised divided by (ii) the Fair Market Value on the date of exercise;

(5) to the extent permitted by applicable law and provided for in the applicable Option agreement or approved by the Board, in its sole discretion, by payment of such other lawful consideration as the Board may determine; or

(6) by any combination of the above permitted forms of payment.

(g)

Limitation on Repricing. At the point any securities of the Company are listed on a national exchange (as defined in the Exchange Act), unless such action is approved by the Company’s stockholders, the Company may not (except as provided for under Section 9): (1) amend any outstanding Option granted under the Plan to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Option, (2) cancel any outstanding Option granted under the Plan and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4(c)) covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then- current exercise price per share of the cancelled option, (3) cancel in exchange for a cash payment any outstanding Option granted under the Plan with an exercise price per share above the then-current Fair Market Value, other than pursuant to Section 9, or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of the stock exchange on which the securities of the Company are listed.

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6.

Restricted Stock; Restricted Stock Units

(a)

General. The Board may grant Awards entitling recipients to acquire shares of Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price or to require forfeiture of such shares if issued at no cost from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award. The Board may also grant Awards entitling the recipient to receive shares of Common Stock or cash to be delivered at the time such Award vests (“Restricted Stock Units”) (Restricted Stock and Restricted Stock Units are each referred to herein as a “Restricted Stock Award”).

(b)

Terms and Conditions for All Restricted Stock Awards. The Board shall determine the terms and conditions of a Restricted Stock Award, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.

(c)

Additional Provisions Relating to Restricted Stock.

(1) Dividends. Unless otherwise provided in the applicable Award agreement, any dividends (whether paid in cash, stock or property) declared and paid by the Company with respect to shares of Restricted Stock (“Accrued Dividends”) shall be paid to the Participant only if and when such shares become free from the restrictions on transferability and forfeitability that apply to such shares. Each payment of Accrued Dividends will be made no later than the end of the calendar year in which the dividends are paid to stockholders of that class of stock or, if later, the 15th day of the third month following the lapsing of the restrictions on transferability and the forfeitability provisions applicable to the underlying shares of Restricted Stock.

(2) Stock Certificates. The Company may require that any stock certificates issued in respect of shares of Restricted Stock, as well as dividends or distributions paid on such Restricted Stock, shall be deposited in escrow by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to his or her Designated Beneficiary. “Designated Beneficiary” means (A) the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death or (B) in the absence of an effective designation by a Participant, the Participant’s estate.

(d)

Additional Provisions Relating to Restricted Stock Units.

(1) Settlement. Upon the vesting of and/or lapsing of any other restrictions (i.e., settlement) with respect to each Restricted Stock Unit, the Participant shall be entitled to receive from the Company one share of Common Stock or (if so provided in the applicable Award agreement) an amount of cash equal to the Fair Market Value of one share of Common Stock. The Board may, in its discretion, provide that settlement of Restricted Stock Units shall be deferred, on a mandatory basis or at the election of the Participant in a manner that complies with Section 409A of the Code.

(2) Voting Rights. A Participant shall have no voting rights with respect to any Restricted Stock Units.

(3) Dividend Equivalents. The Award agreement for Restricted Stock Units may provide Participants with the right to receive an amount equal to any dividends or other distributions declared and paid on an equal number of outstanding shares of Common Stock (“Dividend Equivalents”). Dividend Equivalents may be paid currently or credited to an account for the Participant, may be settled in cash and/or shares of Common Stock and may be subject to the same restrictions on transfer and forfeitability as the Restricted Stock Units with respect to which paid, in each case to the extent provided in the Award agreement.

7.

Other Stock-Based Awards

(a)

General. Other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other property, may be granted hereunder to Participants (“Other Stock-Based-Awards”). Such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Board shall determine.

(b)

Terms and Conditions. Subject to the provisions of the Plan, the Board shall determine the terms and conditions of each Other Stock-Based Award, including any purchase price applicable thereto.

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8.

Performance Awards

(a)

Grants. Restricted Stock Awards and Other Stock-Based Awards under the Plan may be made subject to the achievement of performance goals pursuant to this Section 8 (“Performance Awards”).

(b)

Committee. Grants of Performance Awards to any Covered Employee (as defined below) intended to qualify as “performance-based compensation” under Section 162(m) of the Code (“Performance-Based Compensation”) shall be made only by a Committee (or a subcommittee of a Committee) comprised solely of two or more directors eligible to serve on a committee making Awards qualifying as “performance-based compensation” under Section 162(m) of the Code (“Section 162(m)”). In the case of such Awards granted to Covered Employees, references to the Board or to a Committee shall be treated as referring to such Committee (or subcommittee). “Covered Employee” shall mean any person who is, or whom the Committee, in its discretion, determines may be, a “covered employee” under Section 162(m)(3) of the Code.

(c)

Performance Measures. For any Award that is intended to qualify as Performance-Based Compensation, the Committee shall specify that the degree of granting, vesting and/or payout shall be subject to the achievement of one or more objective performance measures established by the Committee, which shall be based on the relative or absolute attainment of specified levels of one or any combination of the following, which may be determined on a segment basis pursuant to generally accepted accounting principles (“GAAP”) or on a non-GAAP basis, as determined by the Committee: net income, operating income (loss), earnings before or after discontinued operations, interest, taxes, depreciation and/or amortization, gross profit, operating profit before or after discontinued operations and/or taxes, sales, revenue growth, sales growth, earnings growth, cash flow or cash position, net operating cash usage, loan volume, loan characteristics, gross margins, cost savings, stock price, market share, return on sales, assets, equity or investment, improvement of financial ratings, achievement of balance sheet or income statement objectives or total stockholder return, completion of capital markets transactions, completion of strategic acquisitions/disposition, receipt of regulatory approvals and cash position. Such goals may reflect absolute entity, segment or business unit performance or a relative comparison to the performance of a peer group of entities or other external measure of the selected performance criteria and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. The Committee may specify that such performance measures shall be adjusted to exclude any one or more of (1) extraordinary items, (2) gains or losses on the dispositions of discontinued operations, (3) the cumulative effects of changes in accounting principles, (4) the writedown of any asset, (5) fluctuation in foreign currency exchange rates, and (6) charges for restructuring and rationalization programs. Such performance measures: (A) may vary by Participant and may be different for different Awards; (B) may be particular to a Participant or the department, branch, line of business, subsidiary or other unit in which the Participant works and may cover such period as may be specified by the Committee; and (C) shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m). Awards that are not intended to qualify as Performance-Based Compensation may be based on these or such other performance measures as the Board may determine.

(d)

Adjustments. Notwithstanding any provision of the Plan, with respect to any Performance Award that is intended to qualify as Performance-Based Compensation, the Committee may adjust downwards, but not upwards, the cash or number of shares payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance measures except in the case of the death or disability of the Participant or a change in control of the Company.

(e)

Other. The Committee shall have the power to impose such other restrictions on Performance Awards as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for Performance-Based Compensation.

9.

Adjustments for Changes in Common Stock and Certain Other Events

(a)

Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (1) the number and class of securities available under the Plan, (2) the share counting rules and sublimit set forth in Sections 4(a) and 4(b), (3) the number and class of securities and exercise price per share of each outstanding Option, (4) the number of shares subject to and the repurchase price per share subject to each outstanding Restricted Stock Award, (5) the share and per-share-related provisions and the purchase price, if any, of each outstanding Other Stock-Based Award and (6) the share and per share related provisions and the purchase price, if any, of each outstanding Performance Award, shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board. Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

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(b)

Reorganization Events.

(1) Definition. A “Reorganization Event” shall mean: (A) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (B) any transfer or disposition of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange or other transaction or (C) any liquidation or dissolution of the Company.

(2) Consequences of a Reorganization Event on Awards Other than Restricted Stock.

(A)

In connection with a Reorganization Event, the Board may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards other than Restricted Stock on such terms as the Board determines (except to the extent specifically provided otherwise in an applicable Award agreement or another agreement between the Company and the Participant): (i) provide that such Awards shall be assumed, or substantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to a Participant, provide that all of the Participant’s unexercised Awards will terminate immediately prior to the consummation of such Reorganization Event unless exercised by the Participant (to the extent then exercisable) within a specified period following the date of such notice, (iii) provide that outstanding Awards shall become exercisable, realizable, or deliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such Reorganization Event, (iv) in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a cash payment to Participants with respect to each Award held by a Participant equal to (x) the number of shares of Common Stock subject to the vested portion of the Award (after giving effect to any acceleration of vesting that occurs upon or immediately prior to such Reorganization Event) multiplied by (y) the excess, if any, of (I) the Acquisition Price over (II) the exercise, measurement or purchase price of such Award and any applicable tax withholdings, in exchange for the termination of such Award, (v) provide that, in connection with a liquidation or dissolution of the Company, Awards shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise, measurement or purchase price thereof and any applicable tax withholdings) and (vi) any combination of the foregoing. In taking any of the actions permitted under this Section 9(b)(2), the Board shall not be obligated by the Plan to treat all Awards, all Awards held by a Participant, or all Awards of the same type, identically.

(B)

Notwithstanding the terms of Section 9(b)(2)(A), in the case of outstanding Restricted Stock Units that are subject to Section 409A of the Code: (i) if the applicable Restricted Stock Unit agreement provides that the Restricted Stock Units shall be settled upon a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i), and the Reorganization Event constitutes such a “change in control event”, then no assumption or substitution shall be permitted pursuant to Section 9(b)(2)(A)(i) and the Restricted Stock Units shall instead be settled in accordance with the terms of the applicable Restricted Stock Unit agreement; and (ii) the Board may only undertake the actions set forth in clauses (iii), (iv) or (v) of Section 9(b)(2)(A) if the Reorganization Event constitutes a “change in control event” as defined under Treasury Regulation Section 1.409A-3(i)(5)(i) and such action is permitted or required by Section 409A of the Code; if the Reorganization Event is not a “change in control event” as so defined or such action is not permitted or required by Section 409A of the Code, and the acquiring or succeeding corporation does not assume or substitute the Restricted Stock Units pursuant to clause (i) of Section 9(b)(2)(A), then the unvested Restricted Stock Units shall terminate immediately prior to the consummation of the Reorganization Event without any payment in exchange therefor. 

(C)

For purposes of Section 9(b)(2)(A)(i), an Award (other than Restricted Stock) shall be considered assumed if, following consummation of the Reorganization Event, such Award confers the right to purchase or receive pursuant to the terms of such Award, for each share of Common Stock subject to the Award immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise or settlement of the Award to consist solely of such number of shares of common stock of the acquiring or succeeding corporation (or an affiliate thereof) that the Board determined to be equivalent in value (as of the date of such determination or another date specified by the Board) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.

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(3) Consequences of a Reorganization Event on Restricted Stock. Upon the occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the repurchase and other rights of the Company with respect to outstanding Restricted Stock shall inure to the benefit of the Company’s successor and shall, unless the Board determines otherwise, apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to such Restricted Stock; provided, however, that the Board may provide for termination or deemed satisfaction of such repurchase or other rights under the instrument evidencing any Restricted Stock or any other agreement between a Participant and the Company, either initially or by amendment. Upon the occurrence of a Reorganization Event involving the liquidation or dissolution of the Company, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock or any other agreement between a Participant and the Company, all restrictions and conditions on all Restricted Stock then outstanding shall automatically be deemed terminated or satisfied.

10.

General Provisions Applicable to Awards

(a)

Transferability of Awards. Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the life of the Participant, shall be exercisable only by the Participant; provided, however, that, except with respect to Awards that are subject to Section 409A of the Code, the Board may permit or provide in an Award for the gratuitous transfer of the Award by the Participant to or for the benefit of any immediate family member, family trust or other entity established for the benefit of the Participant and/or an immediate family member thereof if the Company would be eligible to use a Form S-8 under the Securities Act for the registration of the sale of the Common Stock subject to such Award to such proposed transferee; provided further, that the Company shall not be required to recognize any such permitted transfer until such time as such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees. For the avoidance of doubt, nothing contained in this Section 10(a) shall be deemed to restrict a transfer to the Company.

(b)

Documentation. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan.

(c)

Board Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly.

(d)

Termination of Status. The Board shall determine the effect on an Award of the disability, death, termination or other cessation of employment, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award.

(e)

Withholding. The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company may decide to satisfy the withholding obligations through additional withholding on salary or wages. If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations. Payment of withholding obligations is due before the Company will issue any shares on exercise, vesting or release from forfeiture of an Award or at the same time as payment of the exercise or purchase price, unless the Company determines otherwise. If provided for in an Award or approved by the Board in its sole discretion, a Participant may satisfy such tax obligations in whole or in part by delivery (either by actual delivery or attestation) of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however, except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). Shares used to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

(f)

Amendment of Award. Except as otherwise provided in Section 5(g) with respect to repricings, Section 8 with respect to Performance Awards or Section 11(d) with respect to actions requiring stockholder approval, the Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option. The Participant’s consent to such action shall be required unless (1) the Board determines that the action, taking into account any related action, does not materially and adversely affect the Participant’s rights under the Plan or (2) the change is permitted under Section 9.

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(g)

Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously issued or delivered under the Plan until (1) all conditions of the Award have been met or removed to the satisfaction of the Company, (2) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and regulations and any applicable stock exchange or stock market rules and regulations, and (3) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.

(h)

Acceleration. Except as otherwise provided in Section 8 with respect to Performance Awards, the Board may at any time provide that any Award shall become immediately exercisable in whole or in part, free of some or all restrictions or conditions, or otherwise realizable in whole or in part, as the case may be.

11.

Miscellaneous

(a)

No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award by virtue of the adoption of the Plan, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.

(b)

No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares.

(c)

Effective Date and Term of Plan. The Plan shall become effective on January 2, 2012 (the “Effective Date”). No Awards shall be granted under the Plan after the expiration of 10 years from the Effective Date, but Awards previously granted may extend beyond that date.

(d)

Amendment of Plan. The Board may amend the Plan at any time, and from time to time, subject to the limitation that no amendment shall be effective unless approved by the stockholders of the Company in accordance with applicable law and regulations at adoption of such amendment, in any instance in which such amendment would: (1) increase the number of shares of Common Stock as to which options may be granted under the Plan; or (2) change in substance the provisions of Section 2 hereof relating to eligibility to participate in the Plan and obligations under any option granted before any amendment of the Plan shall not be altered or impaired by such amendment, except with the consent of the Optionee.

(e)

Authorization of Sub-Plans (including for Grants to non-U.S. Employees). The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable securities, tax or other laws of various jurisdictions. The Board shall establish such sub-plans by adopting supplements to the Plan containing (1) such limitations on the Board’s discretion under the Plan as the Board deems necessary or desirable or (2) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary or desirable. All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement shall apply only to Participants within the affected jurisdiction and the Company shall not be required to provide copies of any supplement to Participants in any jurisdiction which is not the subject of such supplement.

(f)

Compliance with Section 409A of the Code. Except as provided in individual Award agreements initially or by amendment, if and to the extent (1) any portion of any payment, compensation or other benefit provided to a Participant pursuant to the Plan in connection with his or her employment termination constitutes “nonqualified deferred compensation” within the meaning of Section 409A of the Code and (2) the Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, in each case as determined by the Company in accordance with its procedures, by which determinations the Participant (through accepting the Award) agrees that he or she is bound, such portion of the payment, compensation or other benefit shall not be paid before the day that is six months plus one day after the date of “separation from service” (as determined under Section 409A of the Code) (the “New Payment Date”), except as Section 409A of the Code may then permit. The aggregate of any payments that otherwise would have been paid to the Participant during the period between the date of separation from service and the New Payment Date shall be paid to the Participant in a lump sum on such New Payment Date, and any remaining payments will be paid on their original schedule.

The Company makes no representations or warranty and shall have no liability to the Participant or any other person if any provisions of or payments, compensation or other benefits under the Plan are determined to constitute nonqualified deferred compensation subject to Section 409A of the Code but do not to satisfy the conditions of that section.

8

(g)

Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, employee or agent of the Company will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan, nor will such individual be personally liable with respect to the Plan because of any contract or other instrument he or she executes in his or her capacity as a director, officer, employee or agent of the Company. The Company will indemnify and hold harmless each director, officer, employee or agent of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been or will be delegated, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Board’s approval) arising out of any act or omission to act concerning the Plan unless arising out of such person’s own fraud or bad faith.

(h)

Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Nevada, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than the State of Nevada.

DATE APPROVED BY BOARD OF DIRECTORS: January 2, 2012

DATE APPROVED BY STOCKHOLDERS: February 6, 2012

9ex10_1.htm

Exhibit 10.1

 

EMPLOYMENT AGREEMENT OF JAMES RUDIS

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is dated as of February 1, 2012 between Overhill Farms, Inc., having its principal place of business at 2727 East Vernon Avenue, Vernon, California 90058 (the “Company”), and James Rudis, an individual residing in New York (the “Executive”).

 

The Company and the Executive (collectively referred to herein as the “Parties”) enter this Agreement on the basis of the following facts, understandings and intentions:

 

 

A.           The Company is engaged in the manufacture of custom prepared frozen food products for branded retail, private label, foodservice and airline customers;

 

B.           The Company is willing to continue Executive’s employment and Executive desires to continue his employment with the Company, based upon the terms and conditions set forth in this Agreement;

 

C.           In the course of the employment contemplated under this Agreement, it will be necessary for Executive to acquire knowledge of certain trade secrets and other confidential and proprietary information regarding the Company; and

 

D.           The Company and Executive acknowledge and agree that the execution of this Agreement is necessary to memorialize the terms and conditions of their employment relationship as well as safeguard against the unauthorized disclosure or use of the Company’s confidential information and to otherwise preserve the goodwill and ongoing business value of the Company.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Company and the Executive agree as follows:

 

1. Incorporation of Recitals. The recitals stated above are hereby incorporated by reference as though fully set forth at length herein.

 

2. Employment. The Company hereby agrees to employ Executive, and Executive hereby agrees to be employed by the Company, subject to the terms and conditions set forth herein. This Agreement shall govern the employment relationship between the Company and Executive from January 1, 2012 (the “Effective Date”) until terminated in accordance with the provisions of this Agreement. The total period of the Executive’s employment under this Agreement is referred to herein as the “Employment Period.”

 

3. Term. The initial term of this Agreement shall be from the Effective Date through December 31, 2014. Thereafter, subject to the notice provisions contained in Section 6, Executive’s employment shall continue until terminated by either Party. The Company is an at-will employer, and, after the initial term, the employment relationship between the Company and Executive pursuant to this Agreement shall not be for any specific term, but may be terminated with or without cause, by the Company or by Executive, at any time and for any reason, subject to the rights and obligations of the Parties as set forth in this Agreement. Any modification to the nature of the at-will employment relationship between the Company and Executive after the initial term must be made in writing, and must be signed by Executive and an authorized representative of the Board of Directors of the Company (the “Board”).

 

4. Position.

 

(a) Title, Position and Duties. Executive shall be employed by the Company in the position of Chief Executive Officer and President, and Executive shall have the normal and reasonable duties, responsibilities and authority commensurate with such positions as determined by the Board. In addition to, and coterminous with, Executive’s service as Chief Executive Officer of the Company, Executive shall serve as Chairman of the Board. In the performance of Executive’s duties, Executive shall be subject to the direction of the Board, and will report directly to the Board.

 

(b) Place of Employment. During the Employment Period, Executive generally shall perform the services required by this Agreement at a Company office in the New York area and, as needed by the Company, at the Company’s principal place of business in Vernon, California, or other such locations as are necessary for the Executive to perform his duties hereunder. The Company may also require Executive to travel to other locations on the Company’s business from time to time.

 

(c) Best Efforts. Executive shall devote his best efforts and substantially full working time and attention to the promotion and advancement of the Company and its objectives. Executive shall serve the Company faithfully and to the best of Executive’s ability, and shall perform such services and duties in connection with the business, affairs and operations of the Company as may be assigned or delegated to Executive from time to time by the Board.

 

 

  

  

  

 

	
5.  

	
Compensation and Related Matters.

 

(a) Base Salary. During the Employment Period, conditioned upon Executive’s continued employment by the Company, and contingent upon Executive’s compliance with all the terms and provisions of this Agreement, the Company shall pay the Executive a base salary at the annual rate of Four Hundred Seventy Five Thousand Dollars ($475,000.00) (the “Base Salary”). Executive’s Base Salary shall be paid according to the standard payroll practices of the Company, including those Company practices related to withholding for taxes, insurance and similar items. Compensation shall be reviewed on an annual basis and shall be subject to a minimum increase in a percentage not less than that of the annual increase in the cost of living as determined by reference to the U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index, U.S. City Average All Items, Base Period 1982-84 = 100.

 

(b) Bonuses. Executive shall be eligible to receive annual bonuses during the Employment Period, if and as determined in the sole and absolute discretion of the Compensation Committee, subject to Section 9.

 

(c) Reimbursement for Business Expenses. The Company will promptly reimburse Executive for all reasonable expenses incurred by Executive for a legitimate business purpose, provided that: (i) each such expenditure is of a nature qualifying it as a proper deduction on the Company’s federal and state income tax returns; and (ii) Executive timely furnishes to the Company adequate records and other documentary evidence for each such expenditure (such as a receipt of paid bills) required by federal and state statutes, regulations, rulings, and procedures for the substantiation of each such expenditure as an income tax deduction. Notwithstanding the foregoing, the Company acknowledges that Executive maintains his principal residence and office in the state of New York, and the Company agrees to pay or reimburse all past and/or present travel and related expenses to and from New York, and any related costs (including a “gross-up” for income taxes if the Internal Revenue Service determines that such reimbursements constitute taxable income to the Executive), and without regard to tax deductibility by the Company. The Company further acknowledges that all of Executive’s air travel may be business or first class.

 

(d) Benefit Plan Eligibility. During the Employment Period, the Executive shall be entitled to participate in such benefit plans that are made generally available by the Company to senior management executives of the Company from time to time, including, but not limited to group medical, dental, life insurance, long-term disability benefits and the Company’s 401(k) defined contribution plan, in each case subject to the terms and conditions of the applicable plan documents. Nothing in this Section 5(d) is intended or shall be construed to require the Company to institute or to continue any, or any particular, plan or benefit. If Executive chooses not to participate in the Company’s existing group medical insurance plan, and provided that Executive is and remains covered by a separate medical insurance plan, the Company will reimburse Executive for his and his immediate family’s actual premiums for such separate medical plan, provided that the reimbursement amount shall not exceed amounts paid by the Executive for such coverage immediately prior to the Effective Date.

 

(e) Life Insurance. The Company shall make available, at its costs, a life insurance policy in the amount of $1 million for the sole and exclusive benefit of Executive (the “Policy”). Executive shall be entitled to name the beneficiary under the Policy, and the Company shall, upon demand from Executive at any and all times, execute and deliver any forms, notices or other documentation requested by Executive in connection with the Policy. Upon request of Executive, the Company agrees to transfer ownership of the Policy to Executive.

 

(f) Automobile. The Company shall provide an automobile allowance in the amount of $800 per month. The Company also agrees to pay all automobile operating expenses, including, without limitation, maintenance and repair, gas, oil, car washes, insurance and deductible amounts arising from any claim against such insurance.

 

(g) Vacation and Holidays. During the Employment Period, Executive shall be entitled to four weeks of paid vacation each calendar year, and Executive shall be entitled to all paid Company holidays, subject to the Company’s vacation and holiday policies, as in effect from time to time; provided, however, that the Company agrees to cash out and pay Executive for the portion of any vacation time not used by the end of the calendar year in which it was earned (or at such later date as may be specified by Executive). In addition, Executive shall be entitled to ten (10) paid sick or personal business days per year.

 

(h) Change In Control Bonus. If a Change in Control occurs, then the Company shall pay Executive a minimum of $300,000, in addition to any other amounts that the Compensation Committee may award in its sole and absolute discretion. “Change in Control” means the occurrence of any of the following events occurring after the Effective Date of this Agreement:

 

 

  

  

  

(i) a Person (as defined below) or two or more Persons acting as a group directly or indirectly becomes the “beneficial owner” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Securities Exchange Act of 1934) of more than fifty percent (50%) of the total voting power of the total outstanding voting securities of the Company on a fully diluted basis;

 

(ii) a Person directly or indirectly acquires all or substantially all of the assets and business of the Company; or

 

(iii) the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) the acquisition of assets or stock of another entity, in each case, other than a transaction which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the entity or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least fifty percent (50%) of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction.

 

Notwithstanding the foregoing, for purposes of this Section 5(h) a financing transaction approved by the Board and involving the offering and sale of shares of the Company’s capital stock shall not be a “Change in Control.” “Person” means any natural person, corporation, or any other entity.

 

(i) Withholding. The Company shall withhold from the compensation and benefits payable under this Agreement any amounts required to be withheld under applicable law.

 

 

6. Termination. Executive’s employment hereunder shall be, or may be, as applicable, terminated under the following circumstances:

 

(a) Death. Executive’s employment under this Agreement shall terminate immediately upon his death.

 

 

(b) Incapacity. Executive’s employment under this Agreement shall terminate upon Executive’s physical or mental incapacity to perform the essential functions of his position under this Agreement for more than ninety (90) consecutive days during any twelve (12) month period. Any question or disagreement between the Parties as to the existence of a physical or mental condition which would give rise to such an incapacity will be resolved by the results of an examination by a qualified physician, to be mutually agreed upon by the Parties. If the Parties fail to agree on the selection of a physician, each shall select a physician who will then together select an independent physician to conduct the examination and render a decision as to whether Executive is incapacitated as defined in this Agreement. The Parties agree to be bound by the decision of the independent physician. Any examining physician shall be furnished with information concerning the essential functions of Executive’s position prior to conducting such an examination. Notwithstanding anything expressed or implied above to the contrary, the Company will fully comply with its obligations under the Americans with Disabilities Act, and with any other applicable federal, state or local law, regulation or ordinance, governing the protection of individuals with disabilities.

 

(c) Discharge by the Company. After expiration of the initial term, Executive’s at-will employment hereunder may be terminated by the Company at any time with or without “Cause” (as defined in Section 8(b)(iii)), upon written Notice of Termination to Executive. For purposes of this Agreement, a “Notice of Termination” means a written notice which indicates the specific termination provision in this Agreement relied upon as a basis for termination of the Executive’s employment (which may be a reference to this Section 6(c) if the termination is without Cause).

 

(d) Voluntary Resignation by Executive. After expiration of the initial term, Executive may voluntarily resign Executive’s position and terminate Executive’s at-will employment hereunder at any time by delivery of a written notice of resignation to the Company (the “Notice of Resignation”). The Notice of Resignation shall set forth the date such resignation shall become effective (the “Date of Resignation”), which date shall be not less than sixty (60) days after the date the Notice of Resignation is delivered to the Company. Notwithstanding the foregoing notice requirement, the Company may, in its sole discretion, elect to accept Executive’s resignation effective immediately upon delivery, or effective on such other date during the sixty (60) day notice period, in which case, such date shall be the Date of Resignation.

 

(e) Date of Termination. “Date of Termination” means: (i) if Executive’s employment is terminated by his death, the date of his death; (ii) if Executive’s employment is terminated by reason of his incapacity, the date of the opinion of the physician referred to in Section 6(b); (iii) if Executive’s employment is terminated by the Company for Cause or without Cause pursuant to Section 6(c), the date specified in the Notice of Termination; or (iv) if Executive voluntarily resigns pursuant to Section 6(d), the Date of Resignation as determined by reference to Section 6(d).

 

 

  

  

  

 

7. Obligations upon Termination.

 

(a) Return of Property. Executive hereby acknowledges and agrees that all property (including, without limitation, any documents, files and electronic information) and equipment furnished to or prepared by Executive in the course of or incident to Executive’s employment belongs to the Company and shall be promptly returned to the Company on or before the Date of Termination.

 

(b) Complete Resignation. Upon Executive’s separation from employment for any reason under Section 6, Executive shall resign, effective upon the Date of Termination, from all offices then held with the Company or any of its subsidiaries and affiliates.

 

(c) Survival of Representations, Warranties, Covenants and Other Provisions. The representations and warranties contained in this Agreement and the parties’ obligations under this Section 7 and Sections 10 through 14, inclusive, shall survive the termination Executive’s employment and of this Agreement.

 

 

8. Compensation upon Termination. Subject to Section 9, Executive shall be entitled to the following payments in the event of the termination of Executive’s employment with the Company:

(a) Death or Incapacity. If Executive’s employment is terminated by reason of death or incapacity pursuant to Section 6(b), the Company shall pay to Executive (or his estate if by death): (i) any accrued, unpaid Base Salary payable under Section 5(a) as in effect on the Date of Termination; (ii) any unreimbursed business expenses under Section 5(d) outstanding as of the Date of Termination; and (iii) any accrued but unused vacation pay as of the Date of Termination (collectively, the “Accrued Compensation”).

 

(b) Termination by the Company.

 

(i) For Cause. If Executive’s employment is terminated by the Company pursuant to Section 6(c) for Cause (as defined in Section 8(b)(iii)), the Company shall pay to Executive the Accrued Compensation.

 

(ii) Without Cause. If Executive’s employment is terminated by the Company pursuant to Section 6(c) without Cause, the Company shall pay to the Executive the Accrued Compensation and a “Severance Benefit,” as follows. The Severance Benefit shall be a continuation of Executive’s Base Salary in effect as of the Date of Termination for the longer of (A) twelve (12) months following the Date of Termination or (B) the remaining unexpired portion of the initial term, payable as provided in Section 5(a), together with the Continued Health Insurance Benefit as set forth and defined in Section 8(d), commencing on the Date of Termination; provided however, that no such Severance Benefit shall be paid unless and until Executive executes and delivers to the Company, and any applicable revocation period required by law has lapsed and the Executive has not revoked, a general release of claims in a form acceptable to the Company in its sole and absolute discretion, and the Executive is not in material breach of any of the provisions of this Agreement. In addition, the Company shall pay Executive the pro-rata portion of any bonuses earned through the Date of Termination, paid in accordance with the terms of the bonus plan pursuant to which any bonus may have been earned; provided, however, that the Company is not required to calculate or pay any bonus prior to the regularly scheduled time for making such calculation or payment.

 

(iii) Definition of “Cause.” For the purpose of this Agreement, “Cause” means a finding by the Board that: (a) Executive breached any of the material terms of this Agreement or any confidentiality or proprietary information and inventions agreement with the Company, including without limitation, by Executive’s theft or other misappropriation of the Company’s proprietary information; (b) Executive failed to perform assigned duties, or acted with gross negligence, willful misconduct or fraudulently in the performance of Executive’s duties; or (c) Executive has been convicted of, or has entered a plea of guilty or nolo contendere to, a criminal offense that is injurious to the Company or the business reputation of the Company. The Company will provide Executive with written notice of any of these events and a ten (10) day opportunity to cure such matter to the satisfaction of the Company.

 

(c) Voluntary Resignation. If Executive terminates Executive’s employment with the Company pursuant to Section 6(d), the Company shall pay to the Executive the Accrued Compensation.

 

(d) Continued Health Insurance Benefit. After the Date of Termination, and until Executive becomes eligible for coverage under Medicare Parts A and B, the Company will continue to provide Executive with medical and dental coverage on the same terms as provided in Section 5(d).

 

(e) Compliance with Obligations. The continuing obligation of the Company to pay to Executive any Severance Benefit under Section 8(b)(ii) or portion thereof is expressly conditioned upon Executive’s continued compliance with Executive’s obligations and covenants under Sections 10, 11 and 13 following the termination of Executive’s employment with the Company.

 

 

  

  

  

9. Compliance with Section 409A of the Internal Revenue Code.

 

(a) Short-Term Deferral Exemption. This Agreement is not intended to provide for any deferral of compensation subject to Section 409A of the Internal Revenue Code (the “Code”) and, accordingly, the benefits provided pursuant to this Agreement are intended to be paid not later than the later of: (i) the fifteenth (15th) day of the third (3rd) month following the Executive’s first taxable year in which such benefit is no longer subject to a substantial risk of forfeiture, and (ii) the fifteenth day of the third month following the first taxable year of the Company in which such benefit is no longer subject to a substantial risk of forfeiture, as determined in accordance with Section 409A of the Code and any Treasury Regulations and other guidance issued thereunder. The date determined under this Section 9(a) is referred to as the “Short-Term Deferral Date.”

 

(b) Compliance with Section 409A of the Code. Notwithstanding anything to the contrary herein, in the event that any benefits provided pursuant to this Agreement are not actually or constructively received by the Executive on or before the Short-Term Deferral Date, to the extent such benefit constitutes a deferral of compensation subject to Section 409A of the Code, then: (i) subject to clause (ii), such benefit shall be paid upon Executive’s separation from service, with respect to the Company and its affiliates within the meaning of Section 409A of the Code, and (ii) if Executive is a “specified Executive,” as defined in Section 409A(a)(2)(B)(i) of the Code, with respect to the Company and its affiliates, such benefit shall be paid upon the date which is six months after the date of Executive’s “separation from service” (or, if earlier, the date of Executive’s death). If any benefit provided for in this Agreement is subject to this Section 9(b), such benefit shall be paid on the sixtieth (60th) day following the payment date determined under this subsection.

 

 

10. Covenant of Confidentiality. Executive will not at any time during the Employment Period or at any time following the Employment Period disclose or use for his own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other organization, entity or enterprise other than the Company (or any of its subsidiaries or affiliated companies), any Confidential Information, without the Company’s written consent, unless and to the extent that the Confidential Information is or becomes generally known to and available for use by the public other than as a result of Executive’s fault is independently developed by Executive without use of or reference to any Confidential Information, as can be demonstrated in Executive’s written records, is furnished by the Company to a third party without restrictions similar to the terms hereof on such third party’s right to use or disclose such information, or is required by law to be disclosed by Executive. As used herein, the term “Confidential Information” means any and all information about inventions, improvements, modifications, discoveries, costs, profits, markets, sales, products, employees, pricing policies, operational methods, concepts, technical processes and applications, and other business affairs and methods of the Company and of its affiliates, collaborators, consultants, suppliers, and customers, as well as any other similar information not readily available to the public, including without limitation any information supplied by third parties to the Company under an obligation of confidence. Confidential Information may be contained in various media, including without limitation patent applications, computer programs in object and/or source code, flow charts and other program documentation, manuals, plans, drawings, designs, technical specifications, supplier and customer lists, internal financial data, and other documents and whether or not in written form and whether or not labeled or identified as confidential or proprietary. Notwithstanding any contrary provision of this Section 10, however, the term “Confidential Information” shall not include information which: (i) is or becomes generally available to the public other than as a result of the disclosure of such information directly or indirectly by Executive; or (ii) comes into Executive’s possession through a source other than the Company; provided, however, that such source is not known to Executive to be bound by a confidentiality agreement with the Company or is not otherwise known to Executive to be bound not to disclose such information. Moreover, nothing in this Agreement shall be construed so as to prohibit Executive’s compliance with a valid order of a court of competent jurisdiction concerning the disclosure of Confidential Information, provided that Executive shall give the Company prior written notice of such disclosure and Executive shall take all reasonable and lawful actions to obtain confidential treatment for such disclosure and, if possible, to minimize the extent of such disclosure. Unless, however, such Confidential Information is made public by such court, all such information shall remain Confidential Information under this Agreement.

 

11. No Competition During Employment; Non-Solicitation. Executive agrees that during the Employment Period Executive has a duty of loyalty to the Company and will not directly or indirectly engage in any other employment, engagement, or other business activity directly related to the business in which the Company (or any of its subsidiaries or affiliated companies) is now involved or becomes involved during the Employment Period. Executive agrees during the Employment Period not to plan or otherwise take any preliminary steps, either alone or in concert with others, to set up or engage in any business enterprise that would be in competition with the Company (or any of its subsidiaries or affiliated companies). However, Executive may make passive investments in any business, provided that such investments shall not exceed a two percent (2%) interest if the business is competitive with the business of the Company (or any of its subsidiaries or affiliated companies). Without limiting the foregoing, Executive further covenants that:

 

 

  

  

  

(a) During the Employment Period and for a period of one (1) year following the termination of Executive’s employment with the Company for any reason, Executive shall not directly or indirectly, either alone or in concert with others, on Executive’s own behalf or on behalf of any other person or entity, solicit, or attempt to persuade or solicit any employee of the Company to terminate his employment with the Company, or to work for anyone in competition with the Company.

 

(b) Executive further understands and agrees that any solicitation by Executive of the Company’s customers and/or suppliers which involves the use or disclosure of the Company’s Confidential Information could be a breach of Executive’s obligations under this Agreement and a violation of applicable laws protecting trade secret information and prohibiting unfair competition. Accordingly, in order to protect the Company’s Confidential Information, Executive agrees during the Employment Period and for a period of one (1) year following the termination of Executive’s employment with the Company for any reason, not to directly or indirectly, either alone or in concert with others, on Executive’s own behalf or on behalf of any other person or entity, use the Company’s Confidential Information: (i) in connection with any solicitation, or any attempt to persuade or solicit, any existing customer or supplier of the Company to cease to do business, or to reduce the amount of business which any customer or supplier of the Company has customarily done or contemplates doing, with the Company; or (ii) in connection with any solicitation, or any attempt to persuade or solicit, any existing customer or supplier of the Company to do or expand business with a competitor of the Company.

 

 

12. Other Obligations of Executive and Employer.

 

(a) Executive agrees to conduct himself at all times with due regard to public conventions and morals.

 

(b) Executive and Employer mutually agree not to do or commit any act that will reasonably tend to degrade the other party or to bring the other party into public hatred, contempt, or ridicule, or that will reasonably tend to shock or offend the community, or to prejudice the other party.

 

(c) Executive covenants that, in performing his duties for Employer, Executive will abide by all applicable federal, state, and local statutes, ordinances, rules, and regulations.

 

 

13. Assignment of Rights.

 

(a) Copyrights. Executive agrees that all works of authorship fixed in any tangible medium of expression by him during the term of this Agreement relating to the Company’s business (“Works”), either solely or jointly with others, shall be and remain exclusively the property of the Company. Each such Work created by Executive is a “work made for hire” under the copyright law and the Company may file applications to register copyright in such Works as author and copyright owner thereof. If, for any reason, a Work created by Executive is excluded from the definition of a “work made for hire” under the copyright law, then Executive does hereby assign, sell, and convey to the Company the entire rights, title, and interests in and to such Work, including the copyright therein, to the Company. Executive will execute any documents that the Company deems necessary in connection with the assignment of such Work and copyright therein. Executive will take whatever steps and do whatever acts the Company requests, including, but not limited to, placement of the Company’s proper copyright notice on Works created by Executive to secure or aid in securing copyright protection in such Works and will assist the Company or its nominees in filing applications to register claims of copyright in such Works. The Company shall have free and unlimited access at all times to all Works and all copies thereof and shall have the right to claim and take possession on demand of such Works and copies.

 

(b) Inventions. Executive agrees that all discoveries, concepts, and ideas, whether patentable or not, including, but not limited to, apparatus, processes, methods, compositions of matter, techniques, and formulae, as well as improvements thereof or know-how related thereto, relating to any present or prospective product, process, or service of the Company (“Inventions”) that Executive conceives or makes during the term of this Agreement relating to the Company’s business, shall become and remain the exclusive property of the Company, whether patentable or not, provided, however; that the provisions of this Agreement requiring assignment of Inventions to the Company do not apply to any Invention which qualifies fully under the provisions of California Labor Code Section 2870, including any idea or invention which is developed entirely on Executive’s own time without using the Company’s equipment, supplies, facilities or trade secret information, and which is not related to the Company’s business, whether actual or demonstrably anticipated, and which does not result from work performed for the Company. Subject to the foregoing, Executive will, without royalty or any other consideration:

 

(i) Inform the Company promptly and fully of such Inventions by written reports, setting forth in detail the procedures employed and the results achieved;

 

(ii) Assign to the Company all of his rights, title, and interests in and to such Inventions, any applications for United States and foreign Letters Patent, any United States and foreign Letters Patent, and any renewals thereof granted upon such Inventions;

 

 

  

  

  

(iii) Assist the Company or its nominees, at the expense of the Company, to obtain such United States and foreign Letters Patent for such Inventions as the Company may elect; and

 

(iv) Execute, acknowledge, and deliver to the Company at the Company’s expense such written documents and instruments, and do such other acts, such as giving testimony in support of his inventorship, as may be necessary in the opinion of the Company, to obtain and maintain United States and foreign Letters Patent upon such Inventions and to vest the entire rights and title thereto in the Company and to confirm the complete ownership by the Company of such Inventions, patent applications, and patents.

 

 

14. Injunctive Relief and Enforcement. Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Sections 10 ,11, or 13 would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining orders, temporary or permanent injunctions or any other equitable remedy which may then be available, and to exercise such remedies cumulatively or in conjunction with all other rights and remedies provided by law and not otherwise limited by this Agreement.

 

15. Notice. For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered, when transmitted by telecopy with receipt confirmed, or one day after delivery to an overnight air courier guaranteeing next day delivery, addressed as follows:

 

	
  

	
If to the Executive:

	
James Rudis

 

	
  

	
At the address, telephone and telecopy numbers in the Company’s records

 

 

If to the Company:                                      Overhill Farms, Inc.

 

2727 East Vernon Avenue

 

Vernon, California 90058

 

Attention: Chief Financial Officer

 

Attention: Board of Directors

 

Telephone: (323) 582-9977

 

Telecopy: (323) 582-6418

 

or to such other address as any such party may furnish to the others from time to time in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

16. Interpretation of Agreement. The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning. This Agreement has been negotiated by the Parties and is to be interpreted as if the Parties had prepared it together and not strictly for or against any Party. References in this Agreement to “Section” refer to numbered sections, paragraphs and subparagraphs of this Agreement, unless the context expressly indicates otherwise. References to “provisions” of this Agreement refer to the terms, conditions, restrictions and promises contained in this Agreement. References in this Agreement to applicable laws and regulations refer to such laws and regulations as in effect on the Effective Date of this Agreement, and to the corresponding provisions, if any, of any successor law or regulation. Forms of the verb “including” mean “including without limitation” unless the context expressly indicates otherwise. “Or” is inclusive and includes “and” unless the context expressly indicates otherwise.

 

17. Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect; provided, however, that if any one or more of the terms contained in Section 10, 11 or 13 shall for any reason be held to be excessively broad with regard to time, duration, geographic scope or activity, that term shall not be deleted but shall be reformed and constructed in a manner to extend over the maximum period of time for which it may be enforceable and to the maximum extent in all other respects as to which it may be enforceable, and enforced as so interpreted.

 

18. Expenses. If any action at law or equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reimbursement of reasonable attorney’s fees and other costs incurred by such party in connection with such action, in addition to any other relief to which such party is entitled.

 

19. Assignment. Executive acknowledges that Executive’s abilities and capabilities are unique and distinct and that the Company is relying upon him to personally provide the services contemplated by this Agreement. Executive’s rights, duties and obligations under this Agreement shall not be assignable by Executive in any manner whatsoever without the prior written consent of the Company’s Board of Directors. This Agreement will inure to the benefit and be binding upon the Company and its successors and assigns.

  

  

  

20. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

21. Headings and Captions. The headings and captions herein are provided for reference and convenience only, shall not be construed as part of this Agreement, and shall not be employed in the construction of this Agreement.

 

22. Gender and Number. Except where otherwise clearly indicated by context, the masculine and the neuter shall include the feminine and the neuter, and the singular shall include the plural, and vice-versa.

 

23. Choice of Law. This Agreement shall be governed by and construed under and according to the internal substantive laws, and not the laws of conflicts, of the State of California, except with respect to matters of law concerning the internal corporate affairs of any corporate entity which is a party to or the subject of this Agreement, and as to those matters the law of the jurisdiction under which the respective entity derives its powers shall govern. The Company and Executive irrevocably submit to the exclusive jurisdiction of any State or Federal court sitting in Los Angeles County, California, over any suit, action, or proceeding arising out of or related to this Agreement.

 

24. Entire Agreement. This Agreement contains the entire agreement and understanding between the Company and Executive with respect to the employment of Executive by the Company as contemplated hereby and no representations promises agreements or understandings written or oral, not herein contained shall be of any force or effect. This Agreement supercedes and replaces the Employment Agreement dated February 18, 2010, which shall be deemed terminated and of no further force and effect upon effectiveness of this Agreement. This Agreement shall not be modified or amended unless in writing and signed by both Executive and an authorized representative of the Company or the Board.

 

25. Executive’s Acknowledgement. Executive acknowledges, represents and agrees that:

 

(a) Executive has read and understands the terms of this Agreement and Executive’s obligations hereunder, and Executive agrees to abide by the terms of this Agreement.

 

(b) Executive has had the opportunity to be represented by legal counsel of his choosing in preparing, negotiating, executing and delivering this Agreement.

 

(c) In connection with this Agreement and Executive’s employment under this Agreement, other than as expressly stated in this Agreement, the Company makes and has made no promises or representations concerning future promotions, compensation, or other terms and conditions of employment, and by accepting employment under this Agreement, Executive has not relied upon or been induced to accept employment with the Company on the basis of any such promises or representations.

 

(d) The execution of this Agreement by Executive and his employment by the Company and the performance of his duties herewith will not violate or breach any agreement with a former employer, client or any other person or entity. Executive has not entered into, and Executive agrees that he will not enter into, any agreement, either written or oral, which is in conflict with this Agreement.

 

 

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

 

“Company”

 

	 	Overhill Farms, Inc. 	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ Tracy E. Quin	 
	 	 	Tracy Quinn, Chief Financial Officer	 
	 	 	 	 
	 	 	 	 
	 	"Executive"	 
	 	 	 
	 	 	 
	 	 	 /s/ Jim Rudis	 
	 	 	 James Rudis

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