CONFIDENTIAL

 

 

MEMORANDUM OF UNDERSTANDING

This Memorandum of Understanding, made as of the 21st day of June, 2012, by and
between FORWARD INDUSTRIES, INC. a New York corporation (hereafter referred to
as “Forward”), having an address at 3110 Main Street, Suite 400, Santa Monica,
CA 90405 and G-Form, LLC, a Rhode Island limited liability company (hereinafter
referred to as “G-Form”) having an address at 1 Davol Square, Providence, RI
02903.

WHEREAS, Forward has established a global retail distribution infrastructure in
the consumer electronics accessories market; and

WHEREAS, G-Form has developed a line of consumer electronic accessory products
incorporating proprietary technology for retail distribution; and

WHEREAS, Forward desires to (1) exit its retail business entirely within sixty
(60) days from the date of this Memorandum of Understanding, (2) sell off its
inventory on hand and on order in an amount equal to or greater than its book
value, and (3) reduce or eliminate its severance obligations with regard to
certain of its employees; and G-Form desires to expand and enhance its
distribution capability by (1) potentially hiring certain of Forward’s
employees, (2) leveraging Forward’s vendor of record status to immediately
facilitate distribution of its products with Best Buy, and (3) purchasing
certain remaining “G-Form” inventories from Forward and (4) continuing to
service sales channels that have been established; the parties desire to enter
into this Memorandum of Understanding, subject to all of the terms and
conditions set forth herein; and

WHEREAS, the parties desire to terminate their previous Memorandum of
Understanding dated as of August 26, 2011 (the “Prior MOU”).

NOW, THEREFORE, the parties hereto, in consideration of the foregoing and of the
mutual covenants contained herein, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound by this Memorandum of
Understanding, agree as follows:

1.      EMEA Personnel

 a. Subject to the provisos and conditions contained in this Section 1, after
    execution of this Memorandum of Understanding, and during the period between
    such execution and July 15, 2012, G-Form shall use commercially reasonable
    efforts to offer employment, intended to commence on July 31, 2012 to the
    following individuals (the “EMEA Personnel”),

 * Astrid Immerz

 * Patrick Kastelic

 * Andreas Wagner

 * Robert Gebicki

 * Radek Bilski

 * Ripunjay Gajjar

 * Brian Johnson

 

--------------------------------------------------------------------------------

 

 

 

 

 

 * Tara McLoughlin

 * Pete Morley

 * Eshi Jerome

 * A.R. Prasanna

 * Dmitry Brilliantov

 b. The terms of any such offer shall be in G-Form’s sole discretion and neither
    the individuals nor G-Form shall be under any obligation to enter into an
    employment relationship, nor shall there be any obligation or liability to
    Forward on the part of either G-Form or the EMEA Personnel in connection
    with any such offer or any such eventual employment (except for the document
    preparation assistance described in Section 1d. below); provided that the
    base compensation and reasonable automobile allowances offered to the EMEA
    Personnel shall be commensurate with the amounts that Forward has
    represented to G-Form that it is currently paying to such individuals.  The
    parties acknowledge that all other elements of such compensation including,
    without limitation, benefits, potential severance and non-monetary items
    offered will be at the discretion of G-Form and may or may not be
    commensurate with what the EMEA Personnel are currently receiving from
    Forward.

 c. Under no circumstances shall G-Form be responsible for any remuneration,
    benefits, severance or other compensation of any kind related to the EMEA
    Personnel or any other former employee of Forward in connection with their
    employment with Forward and/or the cessation of their employment with
    Forward; provided, however, that G-Form will reimburse Forward for the base
    salary paid and cost of standard benefits and reasonable automobile
    allowances provided to such employee for the period between July 1, 2012 and
    July 31, 2012 in connection with EMEA Personnel who accept employment with
    G-Form and who remain employed by Forward during the entire period between
    July 1, 2012 and July 31, 2012.  Such reimbursement shall not include
    commissions, bonuses, severance or other monetary or non-monetary
    compensation of any kind.

 d. Prior to entering into an employment relationship with any of the EMEA
    Personnel, G-Form will require receipt of a document, in a form reasonably
    acceptable to G-Form, executed by the applicable EMEA Personnel individual
    and Forward evidencing that both of such parties acknowledge that neither of
    them owes any continuing obligation, monetary or otherwise, to the other
    party and that the individual EMEA Personnel is free to enter into an
    employment relationship with G-Form, and G-Form is free to enter into an
    employment relationship with the individual EMEA Personnel without any
    obligation or liability to Forward or to the individual EMEA Personnel
    (other than the employment parameters agreed upon by the individual and
    G-Form in connection with the individual’s subsequent employment with
    G-Form).  For a period of two (2) years after execution of this Memorandum
    of Understanding, G-Form will not offer employment to any individual EMEA
    Personnel who has not provided such documentation to G-Form.

2

 

--------------------------------------------------------------------------------

 

 

 

 

 

 

 e. To the extent that there is any gross profit remaining on the sale of
    Forward’s inventory after Forward has awarded discretionary bonuses to the
    EMEA Personnel, such remaining gross profit shall be credited to G-Form as
    an offset to the July, 2012 EMEA Personnel reimbursement describe in Section
    1.d. above.

 f. Forward hereby indemnifies and holds harmless G-Form, its directors,
    officers, employees, members, representatives and agents from any and all
    claims, liabilities and expenses (including reasonable attorneys’ fees) in
    connection with Forward’s employment of the EMEA Personnel or any other
    former employee of Forward and/or with the cessation of such individuals’
    employment with Forward and/or from any claim Forward may allege in
    connection with the hiring of such individuals by G-Form.  G-Form shall be
    responsible for any other of its own legal and other costs necessary to
    extend offers of employment to the EMEA Personnel.

 g. In the event that G-Form enters into an employment relationship with any of
    the EMEA Personnel, the parties agree to work together to ensure a
    successful transition of such employees from Forward to G-Form; provided
    that any such transition shall not include the assumption by G-Form of any
    liabilities, obligations or expenses owed by Forward to the EMEA Personnel
    other than that described in Section 1.d. above. 

 h. Forward shall issue a “letter of no objection” and/or other documents
    required for G-Form to make its own application for a license in UAE and
    shall assist with any other documents with respect to G-Form offering
    employment to Eshi Jerome and Prasanna A.R.  To the extent that it is
    legally and commercially practical to transfer Forward’s currently licensed
    leased premises in JAFZA to G-Form together with any necessary and
    appropriate documentation in connection therewith, G-Form will assume the
    costs associated with such transfer and resulting occupancy up to a maximum
    of twelve (12) months and a maximum expense of two thousand five hundred
    United States dollars ($2,700) per month during such 12-month period. 
    G-Form will have no other responsibility with respect to payment of
    Forward’s occupancy obligations or any obligations with respect to Forward’s
    JAFZA office.

 

2.      EMEA Inventory

 a. Within five (5) business days of signing this MOU, G-Form and Forward shall
    use commercially reasonable efforts to agree on quantities of G-Form
    products of which Forward has in inventory (“Forward G-Form Inventory”). 
    Upon such agreement, G-Form will issue a purchase order to Forward to
    purchase all of Forward’s inventory of G-Form branded products at a price
    equal to Forward’s acquisition cost from G-Form of such inventory.  To the
    extent that such inventory is not in G-Form original packaging, Forward
    shall be responsible for all costs to repackage the inventory into G-Form
    packaging.  It is estimated that the value of Forward G-Form Inventory on
    hand as of May 31st was approximately three hundred sixty thousand United
    States dollars (U.S. $360,000)) minus any of the above repackaging costs.
    The payment for this Forward G-Form Inventory will be made by G-Form to
    Forward within sixty (60) days after delivery of the inventory to G-Form.

3

 

--------------------------------------------------------------------------------

 

 

 

 

 

 

 b. From the period from the signing of this Memorandum of Understanding through
    July 31, 2012 the parties anticipate that Forward, utilizing the EMEA
    Personnel who are still employed by Forward, and with reasonable
    consultation assistance from G-Form if requested by Forward, shall exercise
    its commercially reasonable efforts to selling Forward’s inventory on hand
    and on order with its suppliers.  Forward may at its discretion offer any
    sales commissions and bonus to the EMEA Personnel still under its employ
    during this time to incentivize these sales.  G-Form shall have no
    obligation or liability in connection with any such incentives.

 c. Forward represents that within sixty (60) days after execution of this
    Memorandum of Understanding, Forward shall execute a hard shut down of its
    EMEA retail business and any remaining Forward Inventory, with the exception
    of any Forward inventory of G-Form products described in Section 2a above,
    will remain the property of Forward to be disposed of in any manner Forward
    chooses.  G-Form will have no obligation to purchase any Forward inventory
    unless by separate mutual agreement.

3.      US Inventory and Best Buy Arrangement

 a. Upon execution of this Memorandum of Understanding, G-Form and Forward shall
    exercise commercially reasonable efforts to enable G-Form to achieve vendor
    of record status with Best Buy with a goal of achieving such status within
    forty-five (45) days.

4

10-1.htm

--------------------------------------------------------------------------------

 

 

 

 

 

 b. Following execution of this Memorandum of Understanding, Forward agrees that
    it will cooperate with G-Form to invoice Best Buy for shipments of G-Form
    products sold to Best Buy with Forward as the Vendor Of Record.  Forward
    will use commercially reasonable efforts to assign payment for such
    shipments directly to G-Form and will instruct Best Buy to remit payment
    directly to G-Form.  In the event that despite such efforts and such
    instructions, Forward receives any payments from Best Buy in connection with
    G-Form products, Forward shall remit to G-Form the full gross amount of all
    receipts it receives from Best Buy (less a five percent (5%) processing fee)
    within ten (10) days of the date Forward receives such funds from Best Buy.

 c. During the transition period from the signing of this MOU and until G-Form
    achieves its vendor of record status with Best Buy, G-Form shall be
    responsible for conducting all the necessary operational and logistics
    activities to process orders from Best Buy, as well as the coordination and
    delivery of such products. All products sold under this arrangement with
    Forward relating to Best Buy shall be accepted only with the agreement of
    G-Form and shall drop-ship directly from G-Form to Best Buy.  Any payments
    for any program costs to Best Buy or any other payments required to Best Buy
    relating to the shipments made under this arrangement will be the sole
    responsibility of G-Form.

 d. Provided that Forward has obtained written approval from G-Form for orders
    shipped to Best Buy, has obtained written approval from G-Form for any
    returns sought by Best Buy, and has not had any involvement in the physical
    transfer of G-Form products from G-Form to Best Buy, G-Form agrees to
    indemnify and hold harmless Forward and its agents from any claims,
    liabilities or expenses arising from the sale of G-Form products to Best Buy
    or the return of such defective or unsaleable G-Form products.

 e. G-Form will use commercially reasonable efforts to provide Best Buy directly
    with payment for marketing funds or programs that are required to be made in
    connection with the sale of the G-Form Products to Best Buy under Forward’s
    vendor of record number in an amount not to exceed that previously
    represented by Forward to G-Form.  In the event that, despite such efforts,
    Forward is required to make such payments directly to Best Buy, G-Form shall
    promptly reimburse Forward for such payments in the amount not to exceed
    that previously represented by Forward to G-Form. 

 f. Forward shall continue to allow shipments under its Best Buy Vendor number
    as agreed above until such time as G-Form is able to transition this
    business or sixty (60) days after the signing of this Memorandum of
    Understanding, whichever is earlier.

4.      Advanced Royalties

 a. Subject to agreement by the parties on the final amount owed, within five
    (5) business days of the signing of this Memorandum of Understanding, G-Form
    shall return to Forward the net amount of Forward’s previous payment to
    G-Form of advances against royalties in the amount of five hundred United
    States dollars (U.S.$500,000), pursuant to the Prior MOU, less amounts
    applied toward the previously executed Sam’s Club shipment of approximately
    three hundred thousand United States dollars (U.S.$300,000), and less
    royalties owed to G-Form for unpaid royalties to date of approximately fifty
    thousand United States dollars (U.S. $50,000); for an expected net payment
    to Forward of approximately one hundred thousand United States dollars
    (U.S.$150,000).  The parties shall use good faith efforts to agree on the
    final amount of such net payment before any amount becomes payable from
    G-Form.

5

 

--------------------------------------------------------------------------------

 

 

 

 

 

 

5.      Product Development Charges

 a. Forward acknowledges that it may, by nature of the development discussions
    it has had with G-Form, have been exposed to or participated in discussions
    involving inventions or ideas relating to G-Forms background technology –
    specifically relating to constructing products using molded rate dependent
    foam or G-Form RPT or RPT composites.  Forward agrees that all potentially
    joint inventions (whether or not patents are applied for) involving molded
    rate dependent foam structures or G-Form’s products, that are or were
    invented through interactions with G-Form at any time prior to the date of
    termination of this Memorandum or any extensions thereto are the property of
    G-Form, and Forward agrees to execute, and/or have executed by necessary or
    appropriate parties, invention assignment documents for such joint
    inventions confirming G-Form’s ownership in such intellectual property. 
    Subject to Forward executing any and all documents deemed appropriate by
    G-Form to confirm G-Form’s ownership of all intellectual property resulting
    from any joint development activities with which Forward or its employees or
    representatives may have participated, G-Form shall waive payment for any
    past product development charges and other fees for which it may believe
    Forward was responsible,

6.      Confidential Information

 a. Forward recognizes and acknowledges that Forward may receive certain
    confidential information and trade secrets concerning the business and
    affairs of G-Form and/or its officers, executives, and affiliates which may
    be of great value to G-Form. Forward agrees not to disclose, for the term of
    this Memorandum of Understanding and a period of four (4) years thereafter,
    unless required by law or legal order, any such information relating to
    G-Form, G-Form’ personnel or operations, or any idea, project or other
    property being considered for use by G-Form or being used by G-Form and/or
    produced by G-Form, or any of the terms or conditions of this Memorandum
    (including this Memorandum in its entirety or any documents delivered in
    accordance herewith), to any third party other than Forward’s legal and
    financial advisors who need to know such information in order to render
    services on behalf of Forward, or in any way use such information in any
    manner which could adversely affect G-Form’ business.

6

 

--------------------------------------------------------------------------------

 

 

 

 

 

 b. G-Form recognizes and acknowledges that G-Form may receive certain
    confidential information and trade secrets concerning the business and
    affairs of Forward and/or its officers, executives, and affiliates which may
    be of great value to Forward. Therefore, G-Form agrees not to disclose, for
    the term of this Memorandum and a period of four (4) years thereafter,
    unless required by law or legal order, any such information relating to
    Forward, Forward’s personnel or operations, or any idea, project or other
    property being considered for use by Forward or being used by Forward and/or
    produced by Forward, or any of the terms or conditions of this Memorandum
    (including this Memorandum in its entirety or any documents delivered in
    accordance herewith), to any third party other than G-Form’s legal and
    financial advisors who need to know such information in order to render
    services on behalf of G-Form, or in any way use such information in any
    manner which could adversely affect Forward’s business.

 c. Confidential information does not include information or material that: (i)
    is or becomes generally known or available to the public through no fault of
    the party receiving the information (“Receiving Party”); (ii) was already
    known to Receiving Party without restriction, prior to receipt from or on
    behalf of the party disclosing the information (“Disclosing Party”); (iii)
    is lawfully disclosed to Receiving Party by a third party who is not known
    to the Receiving Party to be under any obligation, whether contractual,
    fiduciary, statutory, or otherwise, of confidentiality to Disclosing Party
    with respect to such  confidential information; (iv) is at any time
    developed by Receiving Party independently without use of, or reference to,
    the confidential information of the other Party; or (v) is required to be
    disclosed pursuant to the order or requirement of a court, administrative
    agency or other governmental body with proper jurisdiction; provided,
    however, that Receiving Party uses diligent efforts to limit such disclosure
    and notifies Disclosing Party within three (3) days of receipt of such court
    order or requirement to enable Disclosing Party to seek a protective order
    or otherwise prevent or restrict such disclosure.

7.      Other

 a. After execution of this Memorandum of Understanding, the parties shall use
    commercially reasonable efforts to issue a press release announcing the
    transaction outlined in this MOU to the marketplace.  No press release or
    announcement of any kind concerning the existence or terms of this
    Memorandum of Understanding will be made, released or issued in any medium
    without the agreement of both parties.

7

 

--------------------------------------------------------------------------------

 

 

 

 

 

 b. This Memorandum of Understanding shall be governed by the internal
    substantive laws of the State of Rhode Island.  G-Form and Forward each
    hereby consent to the personal jurisdiction of, and confer non-exclusive
    jurisdiction upon, any state or federal court for or within the State of
    Rhode Island, over any action, suit, or proceeding arising out of or related
    to this Agreement, and G-Form and Forward each hereby irrevocably waive any
    objection which they may now or hereafter have to the laying of venue of any
    such action, suit, or proceeding arising out of or related to this Agreement
    brought in any such court, and hereby each further irrevocably waive any
    claim that any such action, suit or proceeding in such a court has been
    brought in an inconvenient forum.

 c. Parties agree to use commercially reasonable efforts to expeditiously
    replace this Memorandum of Understanding with a full length purchase and
    settlement agreement that will include the above points and such other terms
    and provisions as are generally necessary and appropriate for such an
    agreement.

 d. The parties agree that upon execution of this Memorandum of Understanding,
    the Prior MOU shall be terminated and have no further force and effect.

 

 

 

 

 

Accepted by:

 

FORWARD INDUSTRIES, INC.

 

By:

 

 

Name:

 

 

Title:

 

 

Date:

 

 

 

 

G-FORM, LLC

 

By:

 

 

Name:

 

 

Title:

 

 

Date:

 

 

 

 

 

 

 

 

8

 

--------------------------------------------------------------------------------