EMPLOYMENT AGREEMENT (this "Agreement"), dated as of the 27th day of December,
2005, and effective as of October 1, 2005 (the "Effective Date"), between
Forward Industries, Inc., a New York corporation having its principal offices at
1801 Green Road, Suite E, Pompano Beach, Florida 33064 (the "Company"), and
Douglas W. Sabra, residing at 7441 Brunswick Circle, Boynton Beach FL 33437
("Executive").

W I T N E S S E T H:

WHEREAS, Executive has been rendering services to the Company pursuant to an
employment agreement between him and the Company effective as of October 1,
2003, and amended as of July 12, 2005 (the "Prior Agreement");

WHEREAS, the Company desires to employ Executive to perform senior executive and
other services for the Company, and Executive desires to accept such employment,
upon the terms and conditions of this Agreement, and the parties agree that the
Prior Agreement shall be terminated on and as of the Effective Date;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which the parties hereby
acknowledge, the parties agree as follows:

1.         TERMINATION OF PRIOR AGREEMENT

The parties hereto hereby agree that, on and as of the Effective Date, (a) the
Prior Agreement shall be, and it hereby is, terminated and of no further force
or effect whatsoever, (b) the terms and conditions of this Agreement supersede
the terms and conditions of the Prior Agreement, and (c) the Company shall have
no remaining obligations under the Prior Agreement except in respect of unused
personal days and vacation time accrued in respect of the fiscal year ended
September 30, 2005, and pension, medical benefits, and other benefits granted to
all employees generally as such benefits have accrued on behalf of Executive
consistent with the terms of the Prior Agreement.

 

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2.         EMPLOYMENT AND DUTIES

On the terms and conditions hereinafter set forth, the Company hereby employs
Executive as its Vice President and Chief Financial Officer for the term of this
Agreement, as set forth in Section 3, and Executive hereby accepts such
employment.

3.         EMPLOYMENT TERM

Unless terminated at an earlier date in accordance with the terms of this
Agreement, the term of employment hereunder (the "Employment Term") shall
commence on the Effective Date and expire on December 31, 2008.  Upon expiration
of the Employment Term, this Agreement shall be automatically renewed for
successive terms of one year each; provided, however, that if either party
provides written notice to the other party of its or his determination not to so
renew not later than 90 (ninety) days prior to the expiration of the Employment
Term, or any renewal thereof, as the case may be, this Agreement shall terminate
at the end of the Employment Term or such renewal term, as the case may be. 
Subject to the terms of Section 6, in the event that the Company gives notice to
Executive of its determination not to renew, Executive shall be entitled to
severance in an amount equal to his Salary (as hereinafter defined) for six
months at the rate in effect at the time that such  notice is given, payable in
a lump sum (less applicable withholding and payroll taxes and other deductions
in accordance with the Company's benefit plans in which Executive is
participating at the time) on the last day of Executive's employment.  Payment
of bonus compensation shall be subject to the terms of Section 5.

4.         SERVICES

(a)        Executive shall perform such duties of a senior executive nature for
the Company, as shall be consistent with the provisions of the Company's By-laws
in effect on the date hereof, subject to the direction of the Company's Chief
Executive Officer and its Board of Directors (the "Board").  Executive shall
serve the Company faithfully and to the best of his ability and shall devote his
full business time and attention to the business and affairs of the Company,
subject to reasonable absences for vacation and illness as determined by the
Compensation Committee of the Board (the "Compensation Committee").  Executive
will not engage, directly or indirectly, in any other business or occupation
during the Employment Term. It is understood, however, that the foregoing will
not prohibit the Executive from (i) engaging in personal investment activities
for himself and his family, (ii) accepting directorships unrelated to the
Company, subject to the prior, written approval of the Compensation Committee,
and (iii) engaging in charitable and civic activities, so long as any one or
more such outside interests set forth in clauses (i), (ii) and (iii) hereof do
not interfere with or affect the performance of his duties hereunder.

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(b)        Unless otherwise agreed in writing by the Company and Executive, the
performance of Executive's services during the term of this Agreement shall be
rendered at the principal executive offices of the Company, subject to such
travel in furtherance of Executive's performance of his duties hereunder as the
business of the Company may require.

5.         COMPENSATION AND EXPENSE REIMBURSEMENT

(a)        Salary.  Executive shall be entitled to receive for all services
rendered by Executive in any and all capacities in connection with his
employment hereunder a salary (as it may be adjusted, "Salary") of $185,000 per
annum (at such rate, retroactive to the Effective Date), payable in equal
installments in accordance with the prevailing practices of the Company (but not
less frequently than monthly).

(b)        Bonus.  The Executive shall be eligible to receive a bonus ("Bonus")
with respect to each full fiscal year or (except to the extent expressly
provided in Sections 5(c), 6, or 8 hereof) part thereof in respect of his
employment hereunder, as set forth in this Section 5. 

 

 

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(c)        Calculation and Payment of Bonus.  The amount of Bonus, if any, that
Executive may earn in any fiscal year during the Term hereof pursuant to this
Section 5(c) shall be based on the extent to which, if any, the Company achieves
all or a percentage of, or exceeds, Target (as defined below) in each such
fiscal year, in accordance with guidelines for earning such bonus as fixed by
the Compensation Committee in its sole discretion not later than the date
referred to in the next paragraph.

"Target" means, with respect to any fiscal year, the amount of pre-tax income of
the Company, in combination with other measures as determined by the
Compensation Committee of the Board in its sole discretion, projected for
achievement, in whole or in part, in such fiscal year by the Compensation
Committee for the purpose of establishing Bonus compensation.  Pre-tax income is
defined for purposes hereof as the Company's consolidated net income, after
giving effect to bonuses paid to employees (including executive officers) but
before extraordinary items (whether contributions to or deductions from net
income), plus income taxes, all as determined by reference to the results of
operations set forth in the Company's audited financial statements in respect of
the fiscal year with respect to which the calculation of the Bonus payable
hereunder is being determined.  The Compensation Committee shall determine the
Target in each such fiscal year, together with the formulas for earning Bonus
hereunder, after the Board has adopted the Annual Budget in respect thereof but
not later than the 61st day of such fiscal year.  The Compensation Committee may
determine that the amount of Bonus for such purposes may be pro rated based on
Target being achieved, exceeded, or missed.

"Fiscal year" means the fiscal year of the Company, ending on September 30.

Bonus compensation, if any, payable pursuant to Section 5(c) shall be payable to
Executive not earlier than the date on which the Company's audited financial
statements relating to the fiscal year in respect of which such Bonus
compensation is payable are first filed with the Securities and Exchange
Commission (the "Commission') pursuant to Section 13 or 15(d) under the
Securities Exchange Act of 1934 ("Exchange Act") nor later than the tenth (10th)
business day after such date.  If Executive is otherwise entitled to payment of
a Bonus pursuant to Section 5(c) and the terms of this Agreement but has not
served as an employee for the full fiscal year in respect of which such Bonus is
payable, Executive, or his estate, shall be entitled to payment, at the time
specified in the next preceding sentence, of a ratable portion of such Bonus to
which he or his estate is entitled, based on the ratio that the actual number of
days in such fiscal year during which he served as an Employee pursuant to this
Agreement and is so entitled bears to 365; provided, however, that no Bonus
(pro-rated or otherwise) shall be payable in respect of the part of the fiscal
year during which Executive is employed hereunder solely for the first fiscal
quarter thereof because of expiration of the Employment Term, or any renewal
thereof as a result of notice of non-renewal furnished pursuant to Section 3;
and provided, further, that if Executive's employment was terminated as a result
of notice pursuant to Section 6, he shall not be entitled to any Bonus
compensation in respect of the fiscal year during which such notice of
termination was given or during which such termination becomes effective.

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(d)        Expenses.  Executive will be reimbursed for all reasonable and
necessary expenses reasonably incurred by Executive in carrying out the duties
contemplated under this Agreement, in accordance with Company practices and
procedures in effect from time to time, as such practices may be changed from
time to time by the Board.  Executive shall be entitled to a monthly allowance,
subject to the approval and discretion of the Chief Executive Officer, to defray
the expense of the lease of an automobile (including monthly lease cost,
maintenance, insurance, and operating expense) for Executive's use in connection
with the discharge of his duties under this Agreement, the amount of which
allowance shall be includible in Executive's W-2 statements and be subject to
applicable income tax withholding regulations..

 

 

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 (e)       Benefits.  Executive shall be entitled to participate in all group
health and other insurance programs and all other fringe benefit (including
vacation) and retirement plans (including any 401(k) plan) or other compensatory
plans that the Company may hereafter elect to make available to its executives
generally on terms no less favorable than those provided to other executives
generally, provided Executive meets the qualifications therefor.  The Company
shall not be required to establish any such program or plan, except to the
extent expressly set forth in this Section 5.

(f)         Withholding.  All payments required to be made by the Company
hereunder to the Executive shall be subject to the withholding of such amounts
relating to taxes and other governmental assessments as the Company may
reasonably determine it should withhold pursuant to any applicable law, rule or
regulation.

(g)        IRC§409A.      Executive and the Company agree that the provisions of
this Agreement shall be construed and implemented, and any deferrals and
elections shall be made, in order to comply with Internal Revenue Code Section
409A, as it may be amended, and the rules and regulations issued thereunder from
time to time.

 

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6.         TERMINATION FOR CAUSE

The Board of Directors may, by written notice given at any time during the
Employment Term, or any renewal thereof, terminate the employment of Executive
for cause, the cause to be specified in reasonable detail in such notice.  For
purposes of this Agreement, "cause" shall mean Executive's: (a) willful
misconduct in connection with the performance of any of his duties or services
hereunder, including without limitation (i) misappropriation or improper
diversion of funds, rights or property of the Company or any subsidiary of the
Company ("Subsidiary"), or (ii) securing or attempting to secure personally
(including for the benefit of any family member, person sharing the same
household, or any entity (as used herein: corporate, partnership, unincorporated
association, trust, or otherwise) in which Executive has any beneficial interest
unless the transaction benefiting the entity has been approved by the Board upon
the basis of full disclosure of such benefit) any profit or benefit in
connection with any transaction entered into on behalf of the Company or any
Subsidiary, or (iii) intentional disclosure or misappropriation of confidential
information belonging to the Company or any Subsidiary (unless disclosure is
required by applicable law or court or administrative order), or (iv) material
breach of any material covenant contained in this Agreement or (v)(x) any other
action in violation of Executive's fiduciary duty owed to the Company or (y)
Executive's acting in a manner adverse to the interests of the Company and for
his own pecuniary benefit or that of a family member (or member of his
household) or an entity in which he or any such person has an interest; (b)
willful failure, neglect or refusal to perform his duties or services under this
Agreement, which failure, neglect or refusal shall continue for a period of 30
days after written notice thereof shall have been given to the Executive by or
on behalf of the Board of Directors of the Company; and/or (c) conviction of, or
nolo contendere plea in connection, with a felony.  Termination for cause under
clause (a) or (c) of this Section 6 shall be effective immediately upon the
giving of such notice; if notice of termination for cause relates to clause (b)
of this Section 6, termination shall be effective on the thirtieth (30th) day
after the notice referred to in the first sentence of this Section 6 is given to
Executive, unless the Executive shall have, prior to such thirtieth (30th) day,
cured the alleged cause to the satisfaction of the Board, in which case the
Board shall so notify Executive and such cause shall be deemed to no longer
exist.  Upon termination of employment pursuant to this Section 6, the Executive
shall be entitled to receive (i) any earned and unpaid Salary accrued through
the date of termination, (ii) compensation for any unused personal holidays and
unused vacation days accrued in the fiscal year in which termination occurs
through the date of termination and (iii) except for any Bonus compensation (for
which Executive shall not be eligible), any accrued and unpaid benefits that may
be due the Executive on the date of termination under, and subject to the
provisions of, any employee benefit plan or program, including any options,
grants of Common Stock or other benefits under any of the Company's compensation
plans that are vested.  Upon the termination for cause of the Employment Term
(or any renewal thereof) pursuant to this Paragraph 6, all provisions of this
Agreement shall terminate except for the provisions hereof and of Paragraphs 10,
11 and 12, the terms of which shall survive such termination, and the Company
shall have no further obligation to Executive hereunder, except as herein
expressly provided.  Termination of Executive's employment under this Section 6
shall be in addition to and not exclusive of any other rights and remedies that
the Company has or may have relating to Executive with respect to the facts and
circumstances pertaining to such termination.

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7.         TERMINATION BY EXECUTIVE FOR GOOD REASON

Executive shall have the right to terminate his employment under this Agreement
for Good Reason (as hereinafter defined) upon prior written notice to the
Company, in which case this Agreement shall terminate on the date specified in
such notice; provided, however, that such notice shall specify (i) in reasonable
detail the circumstances or event asserted as the basis for termination and (ii)
a date of termination that shall be at least thirty (30) days after the date of
delivery of such notice; and provided, further, that the Company shall have the
right during such thirty (30) day period to remedy the circumstances or event
giving rise to the notice of termination for Good Reason prior to the date
specified in such notice, in which case no right of termination or other right
shall exist under this Section.  In the event of any termination of employment
by the Executive for Good Reason, the Executive shall have no further
obligations under this Agreement other than the obligations provided for in
Sections 10, 11 and 12 hereof, the terms of which shall survive termination of
this Agreement, and the Company shall have no further obligations under this
Agreement, except to pay to Executive within thirty (30) days following such
termination under this Section 7 (except in the case of Bonus, if any, under
clause (b)(ii) of this Section 7, which shall be calculated and paid in the
manner and at the time set forth in Section 5(c), and subject to pro ration as
set forth in Section 5(c)): (a) all unreimbursed business-related expenses, (b)
a lump sum severance payment in an amount equal to (i) six months of his Salary
under Section 5(a) hereof at the rate in effect at the date such notice was
given, and (ii) the ratable amount of Bonus, if any, to which Executive would
otherwise have been entitled in the current fiscal year but for termination
under this Section, and (c)(i) compensation for any unused personal holidays and
unused vacation days accrued in the fiscal year in which termination occurs
through the date of termination and (ii) any accrued and unpaid benefits that
may be due the Executive on the date of termination under, and subject to the
provisions of, any employee benefit plan or program, including any options,
grants of Common Stock or other benefits under any of the Company's compensation
plans that are vested. 

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For purposes of this Agreement, the term "Good Reason" shall mean (a) the
assignment to Executive without his written consent of any duties inconsistent
in any material respect with Executive's positions (including status, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4 of this Agreement or any other action by the Company that results
in a material diminishment in such positions, authority, duties or
responsibilities, other than such assignment or other action that is remedied by
the Company prior to the date of termination specified in the written notice
from Executive, or (b) failure of a Successor to expressly assume and agree to
perform this Agreement in the same manner and to the same extent as the Company
would have had there been no Successor. 

8.         TERMINATION FOR ILLNESS OR INCAPACITY

In the event of any disability, illness or other incapacity (any one or more of
the foregoing, a "Disability") that prevents Executive from performing services
as contemplated by Sections 2 and 4, the obligation of the Company to pay
compensation to Executive pursuant to Section 5 shall be reduced to the extent
of any amount received by Executive pursuant to any disability insurance policy
maintained and paid for by the Company.  If as a result of a Disability
Executive can not perform the services contemplated by Sections 2 and 4 of this
Agreement for 120 or more consecutive days or for 180 days in any consecutive
12-month period, the Company shall have the right to terminate this Agreement
upon 10 days' prior written notice to Executive with no further liability under
this Agreement, except under Sections 10, 11 and 12 hereof, the terms of which
shall survive such termination, and except for accrued and unpaid Salary and
other previously earned, accrued and unpaid benefits from the Company and under
its employee benefit plans, including any stock options,  grants of Common Stock
or other benefits under any of the Company's compensation plans that are vested
and Bonus to which Executive may be entitled, in each case through the date of
such termination; provided, however, that such termination shall not prejudice
any rights of Executive under disability policies being maintained by the
Company for Executive under the terms of this Agreement, if any; and provided,
further, that during the period of Disability, no Bonus may be earned or
accrued.  Upon termination under this Section 8, any Bonus to which Executive
would be entitled (subject to the exclusion contained in the second proviso of
the next preceding sentence) shall be determined and paid in accordance with
Section 5(c).

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9.         DEATH

This Agreement shall terminate automatically upon the death of Executive.  In
such event, the Company shall pay the estate of Executive, in addition to any
amounts to which Executive's estate would otherwise be entitled under the
Company's retirement plans and group life insurance policy, within 30 days after
the date of death, all compensation earned under Section 5 through the date of
death; provided, however, that, with respect to any partial fiscal year, any
Bonus compensation to which Executive may have been entitled under Section 5(b)
shall be payable in accordance with Section 5(c), and the amount of such Bonus,
if any, shall be prorated as provided therein.

10.       NON-COMPETITION AND TRADE SECRETS

Executive agrees that during the Employment Term, any renewal thereof and for
one full year after expiration or termination of the Employment Term or any
renewal thereof (except in the case of clause (a), as to which Executive's
covenant shall not be limited in time), he shall not, without the prior written
consent of the Company, directly or indirectly, either individually or as an
employee, officer, director, agent, partner, shareholder, consultant, option
holder, joint venturer, contractor, nominee, lender of money, guarantor or in
any other capacity:

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(a)        disclose, copy, divulge, furnish, distribute or make available in any
medium whatsoever to any firm, company, corporation, organization, or other
entity or person (including but not limited to actual or potential customers or
competitors or government officials), except as required in the course of
performing his duties as an Executive hereunder, trade secrets, intellectual
property or other confidential information of or concerning the Company, its
Subsidiaries or affiliates or the business of any of the foregoing, including
without limitation, customer lists, product designs and product know-how,
arrangements for supplying customers, methods of operation and organization,
sources of supply and arrangements with vendors; provided, however, Executive
may make disclosures as and to the extent required by applicable law or
compelled upon court or administrative order, provided, further, however, that
in the event that Executive is so required or compelled, he shall notify the
Company not fewer than ten (10) business days in advance of such disclosure in
order to afford it the reasonable opportunity to obtain a protective order or
other remedy to limit the scope of such disclosure (it being understood and
agreed that, if such disclosure is required by applicable law, Executive shall
upon the Company's request furnish the source and precedents with respect to
such requirement).  For purposes of this Section 10, information shall not be
deemed confidential if it (i) is within the public domain, or (ii) becomes
publicly known other than through disclosure by Executive in violation of this
provision;

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(b)        own (or have any financial interest in, actual, contingent or
otherwise), control, manage, operate, participate, engage in, invest in or
otherwise have any interest in, or otherwise be connected with, in any manner,
any firm, company, corporation, organization, business, enterprise, venture or
other entity, association or person that is engaged in the business actually
engaged in by the Company during the Employment Term or any renewal thereof,
including without limitation the business of designing, manufacturing, procuring
and/or distributing carrying or portable cases or cover plates supplied to the
cellular telephone, home medical equipment, laptop computer, photography, video
or audio industries, except that nothing in this Section 10(b) shall be deemed
to prohibit Executive from the acquisition or holding of, solely as a passive
stockholder, not more than one percent (1%) of the shares or other securities of
a publicly-owned corporation if such securities are traded on a national
securities exchange or the NASDAQ Stock Market; or

(c) solicit, employ or retain or arrange, encourage, facilitate or assist to
have any other firm, company, corporation, organization, business, enterprise,
venture or other entity, association or person solicit, employ, retain, or
otherwise participate in the employment or retention of, any person who is then,
or who has been, within the preceding six (6) months, an employee, consultant,
sales representative, technician or engineer of the Company, its subsidiaries or
affiliates.

(d) Upon the expiration or termination of this Agreement for any reason,
Executive shall promptly deliver to the Company all documents, papers and
records in his possession relating to the business or affairs of the Company and
that he obtained or received in his capacity as an officer of the Company and
any other Company property or equipment in his possession or control.

(e)        In the event Executive shall violate or be in violation of any
provision of this Paragraph 10 (which provisions Executive hereby acknowledges
are reasonable and equitable), in addition to the Company's right to exercise
any and all remedies, legal and equitable, which it may have under applicable
laws, Executive shall not be entitled to any, and hereby waives any and all
rights to, each and every, termination payment under this Agreement.

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11.       SEPARABILITY

Executive agrees that the provisions of Section 10 hereof constitute independent
and separable covenants, for which Executive is receiving consideration, which
shall survive the termination of employment, and which shall be enforceable by
the Company notwithstanding any rights or remedies the Company may have under
any other provision hereof.

12.       SPECIFIC PERFORMANCE

Executive acknowledges that:

(a)        the services to be rendered and covenants to be performed under this
Agreement are of a special and unique character and that the Company would be
irreparably harmed if such services were lost to it or if Executive breached its
obligations and covenants hereunder;

(b)        the Company is relying on the Executive's performance of the
covenants contained herein, including, without limitation, those contained in
Paragraph 10 above, as a material inducement for its entering into this
Agreement;

(c)        the Company may be damaged if the provisions hereof are not
specifically enforced; and

(d)        the award of monetary damages may not adequately protect the Company
in the event of a breach hereof by Executive.

By virtue thereof, Executive agrees and consents that if Executive breaches any
of the provisions of this Agreement, the Company, in addition to any other
rights and remedies available under this Agreement or under applicable laws,
shall (without any bond or other security being required and without the
necessity of proving monetary damages) be entitled to a temporary and/or
permanent injunction to be issued by a court of competent jurisdiction
restraining Executive from committing or continuing any violation of this
Agreement, or any other appropriate decree of specific performance.  Such
remedies shall not be exclusive and shall be in addition to any other remedy
that the Company may have.

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13.       MISCELLANEOUS

(a)        Entire Agreement; Amendment.  This Agreement constitutes the entire
employment agreement between the parties and may not be modified, amended or
terminated (other than pursuant to the terms hereof) except by a written
instrument executed by the parties hereto.  All other agreements, written or
oral, between the parties pertaining to the employment or remuneration of
Executive not specifically contemplated hereby or incorporated or merged herein
are hereby terminated and shall be of no further force or effect.

(b)        Assignment; Successors.  This Agreement is not assignable by
Executive without the prior written consent of the Company and any purported
assignment by Executive of Executive's rights and/or obligations under this
Agreement shall be null and void.  Except as provided below, this Agreement may
be assigned by the Company at any time, upon delivery of written notice to
Executive (with Executive's consent, not to be unreasonably withheld), to any
successor to the business of the Company, or to any Subsidiary or affiliate of
the Company.  In the event that Executive does not consent to the assignment of
this Agreement, the Company shall have the right, provided it is otherwise in
compliance with this Agreement, to terminate this Agreement automatically with
no further liability, except for accrued and unpaid Salary, and other previously
earned, accrued and unpaid benefits from the Company and its employee benefit
plans, including any options, grants of Common Stock and other benefits under
compensation plans that have vested prior to the date of termination.  In the
event that another corporation or other business entity becomes a Successor of
the Company, then this Agreement may not be assigned to such Successor unless
the Successor shall, by an agreement in form and substance reasonably
satisfactory to the Executive, expressly assume and agree to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform if there had been no Successor. The term "Successor" as used
herein shall mean any corporation or other business entity that succeeds to
substantially all of the assets or conducts the business of the Company, whether
directly or indirectly, by purchase, merger, consolidation or otherwise. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective heirs, executors, administrators, personal representatives,
successors and permitted assigns.

 

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(c)        Waivers, etc.  No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature.  The failure
of any party to insist upon strict adherence to any term of this Agreement on
any occasion shall not operate or be construed as a waiver of the right to
insist upon strict adherence to that term or any other term of this Agreement on
that or any other occasion.

(d)        Provisions Overly Broad.  In the event that any term or provision of
this Agreement shall be deemed by a court of competent jurisdiction to be overly
broad in scope, duration or area of applicability, the court considering the
same shall have the power and hereby is authorized and directed to modify such
term or provision to limit such scope, duration or area, or all of them, so that
such term or provision is no longer overly broad and to enforce the same as so
limited.  Subject to the foregoing sentence, in the event that any provision of
this Agreement shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall attach only to such provision and shall not
affect or render invalid or unenforceable any other provision of this Agreement.

(e)        Notices.  Any notice permitted or required hereunder shall be in
writing and shall be deemed to have been given on the date of delivery or, if
mailed by certified mail, postage prepaid, return receipt requested, documented
overnight courier, or by facsimile transmission, on the date mailed or
transmitted.

 

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(i)         If to Executive to:

Douglas W. Sabra at his address

set forth in the preamble to this Agreement

(ii)        If to the Company to:

the address set forth in the
preamble to this Agreement
Attention: Chairman of the Board

with a copy to:

Steven Malsin, Esq.

237 Upper Shad Road

Pound Ridge, NY 10576

Telecopy:  (914) 764-1940

(f)         Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York governing contracts made and
to be performed in New York without regard to conflict of law principles
thereof.

(g)        Survival.  All obligations of the Company to Executive and Executive
to the Company shall terminate upon the termination of this Agreement, except as
expressly provided herein.  The provisions of Sections 10, 11 and 12 shall
survive termination of this Agreement.

(h)        Counterparts.  This Agreement may be executed in counterparts, each
of which shall be deemed an original, and each party may become a party hereto
by executing a counterpart hereof.  This Agreement and any counterpart so
executed shall be deemed to be one and the same instrument.  It shall not be
necessary in making proof of this Agreement or any counterpart hereof to produce
or account for any of the other counterparts.

(i)         Approval.  This Agreement is subject to prior review and approval of
the Compensation Committee of the Company's Board of Directors.

 

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(j)         Headings.  The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the 27th day
of December 2005, intending it to be effective on and as of the Effective Date.

 

DOUGLAS W. SABRA   FORWARD INDUSTRIES, INC.       /s/ DOUGLAS W. SABRA

By:

/s/ Jerome E. Ball    

     Name:  Jerome E. Ball
     Title:    Chief Executive Officer