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                                                                    Exhibit 10.5

                              EMPLOYMENT AGREEMENT

      AGREEMENT effective as of January 1, 2001 between Forward Industries,
Inc., a New York corporation with offices at 1801 Green Road, Suite E, Pompano
Beach, Florida 33064 (the "Company"), and Douglas W. Sabra residing at 7441
Brunswick Circle, Boynton Beach, Florida 33437 ("Executive").

                              W I T N E S S E T H:
                               -------------------

      WHEREAS, Executive has been rendering services to the Company pursuant to
a letter agreement effective as of June 1, 2000 (the "Letter Agreement").
WHEREAS, the Company desires to terminate the Letter Agreement and employ
Executive to perform senior executive and other services for the Company, and
Executive desires to accept such employment, all on the terms and conditions
hereinafter set forth.

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



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      TERMINATION OF LETTER AGREEMENT

         The Letter Agreement is hereby terminated and shall be of no further
force and effect, and the terms and conditions of this Agreement supersede the
terms and conditions of the Letter Agreement. The Company has no remaining
obligations under the Letter Agreement.

      EMPLOYMENT AND DUTIES

         The Company hereby employs Executive for the term of this Agreement
and Executive hereby accepts such employment as the Chief Financial Officer, of
the Company on the terms and conditions set forth in this Agreement.

      1. EMPLOYMENT TERM

         Unless terminated at an earlier date pursuant to the terms of this
Agreement, the term of employment hereunder (the "Employment Term") shall be
three (3) years, commencing on the date hereof (the "Commencement Date"). This
Agreement shall be automatically renewed for successive one-year terms unless
either party provides written notice to the other party of its or his desire not
to renew within 120 days prior to the expiration of the initial term or any
renewal term, as the case maybe.

      2. 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 Board of Directors
of the Company (the "Board"). Executive shall serve the Company faithfully and
to the best of his ability and shall devote his full business


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time and attention to the affairs of the Company, subject to reasonable absences
for vacation and illness as determined by the Board.

         b. The headquarters for the performance of Executive's services during
the term of this Agreement shall be the principal executive offices of the
Company in Pompano Beach, Florida, unless otherwise agreed by the Company and
Executive and subject to such reasonable travel in the performance of
Executive's duties as the business of the Company may require.

      3. COMPENSATION AND EXPENSE REIMBURSEMENT

         a. SALARY. Executive shall be entitled to receive for all services
rendered by Executive in any capacity, an annual salary of $120,000 (payable in
equal installments in accordance with the then prevailing practices of the
Company, but in no event less frequently than monthly), subject to an annual
increase as agreed to among the Executive, the Company's Chief Executive Officer
and the Company's President.

         b. BONUS. The Executive shall be eligible for an annual bonus of up to
50% of his then current annual salary based on performance as determined by the
Company's President and Chief Executive Officer.

         c. EXPENSES. Executive will be reimbursed for all reasonable and
necessary expenses incurred by Executive in carrying out the duties contemplated
under this Agreement, in accordance with then prevailing Company procedure, as
such practices may be changed from time to time by the Board.

         d. STOCK OPTIONS. The Company hereby grants Executive options under the
Plan to purchase 75,000 shares of the Company's Common Stock at an exercise
price of $2.00 per share with a date of grant of January 1, 2001. Such options
shall vest upon the four-year anniversary of


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the date of grant; provided, however, that all such options shall immediately
vest in the event that the Company's Common Stock price averages $3.50 per share
for 180 consecutive days (not less than 90 days of which shall be during the
Employment Term), based upon the average reported closing sale prices for the
Company's Common Stock on the Nasdaq Smallcap Market. Such options shall expire
five (5) years following the date of grant. If this Agreement is terminated
prior to the end of the Employment Term, such options shall expire one year
after the date of such termination. [Nothing contained herein shall affect the
stock options granted to Executive under the Letter Agreement.]

         e. BENEFITS. Executive shall be entitled to participate in all group
health and other insurance programs and all other fringe benefit or retirement
plans (including any 401(k) plan) or other compensatory plans which 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 therefore, but the Company shall not be
required to establish any such program or plan, except as provided in this
Paragraph 3.

         f. AUTOMOBILE. The Company will provide to the Executive an automobile
for use during the term of the Agreement and provide the maintenance, insurance
and operating expenses of such vehicle.

         g. VACATION. The Executive is entitled to three (3) weeks paid vacation
per year. Unused vacation may be carried forward to subsequent years or, at the
Executive's sole option, paid to him. The election to carry forward, or to
receive payment, shall be made by the Executive by December 1st of each year.

      4. TERMINATION FOR CAUSE


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         In the event of: (a) fraud against the Company, conviction of a felony,
the intentional disclosure of confidential information (unless required by
applicable law or court or other order), aiding a competitor to the detriment of
the Company, its subsidiaries or affiliates, intentionally engaging in conduct
which brings disrepute or otherwise is damaging to the reputation of the
Company, its subsidiaries or affiliates, performing competitive services or
acting in a competitive capacity for any other person, firm or corporation
without the prior written consent of the Company; or (b) willful misconduct,
gross negligence, prolonged and unexcused absenteeism by Executive in connection
with Executive's employment hereunder, or Executive's willful or intentional
failure to implement the reasonable business requests or directions of the
Board, the Company shall have the right to give Executive a termination notice,
specifying the nature of the breach or failure. If such termination notice is
given pursuant to clause (a) above, the Employment Term shall terminate upon the
giving of such notice. If such termination notice is given pursuant to clause
(b) above, the Employment Term shall terminate thirty (30) days after the giving
of such notice if the circumstances described in such notice have not been
remedied by Executive within such thirty (30)-day period. Upon the termination
of the Employment Term pursuant to this Paragraph 4, all provisions of this
Agreement shall terminate except for the provisions of Paragraphs 8 and 9. Upon
the effective date of termination of the Employment Term, the Company shall have
no further obligation to Executive hereunder, except for accrued and unpaid
salary, and other previously earned, accrued and unpaid benefits from the
Company and its employee benefit plans through the date of termination.

      5. TERMINATION BY EXECUTIVE FOR GOOD REASON.

         a. In the event of a Change in Senior Management (as hereinafter
defined), Executive shall have the right to terminate his employment under this
Agreement for Good Reason


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(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
that in the case of paragraph (i) or (ii) of this Section 5, the date of
termination specified in such notice shall be at least thirty (30) days after
the delivery of such notice, subject to the Company's right as provided below to
remedy the event giving rise to the termination prior to the date of termination
specified in such notice. 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 Section 8 and 9
hereof, and the Company shall have no further obligations under this Agreement,
except to pay to Executive all unreimbursed business-related expenses and lump
sum severance within thirty (30) days following termination under this Section 5
in an amount equal to his base salary under Section 3a. hereof through December
31, 2003 and the last annual bonus paid to Executive under Section 3b. hereof.
For purposes of this Agreement, the term "Good Reason" shall mean:

            (i) the assignment to Executive of any duties inconsistent in any
material respect with Executive's positions (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as
contemplated by Section 2 of this Agreement or any other action by the Company
which results in a material diminishment in such positions, authority, duties or
responsibilities, other than action or inaction which is remedied by the Company
prior to the date of termination specified in the written notice from Executive;
or

            (ii) transfer by the Company of all or substantially all of its
assets to a Successor (as defined in Section 11b. hereof) without such Successor
having expressly assumed this Agreement as provided in Section 11b. hereof.

         b. For purposes of this Agreement, a "Change in Senior Management"
means any circumstances by which the Executive no longer reports to the
Company's current President Mr.

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Michael Schiffman or the Company's current Chief Executive Officer Mr. Jerome
Ball.

      6. ILLNESS OR INCAPACITY

         In the event of any disability, illness or other incapacity which
prevents Executive from performing services as contemplated herein, the
obligation of the Company to pay compensation to Executive 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 Executive shall be
incapacitated for more than 120 consecutive days or 180 days in any consecutive
12-month period, the Company shall have the right to terminate this Agreement
upon 10 days' prior written notice 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 through the date of such termination,
provided that such termination shall not prejudice any rights of Executive under
any disability policies being maintained by the Company for Executive under the
terms of this Agreement. Notwithstanding any such termination, the provisions of
Paragraphs 8 and 9 will continue to apply.

      7. 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
(thirty) days after the date of death, all compensation earned under Paragraph 3
through the date of death.

      8. NON-COMPETITION AND TRADE SECRETS


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         a. CONFIDENTIALITY AND WORK PRODUCT. During the term of this Agreement
and thereafter without limitation of time, Executive shall not knowingly
divulge, furnish, or make available to any third person, company, corporation or
other organization (including but not limited to customers, competitors or
government officials), except in the course of performing his duties as an
Executive hereunder or with the Company's prior written consent, trade secrets
or other confidential information concerning the Company, its subsidiaries or
affiliates or the business of any of the foregoing, including without
limitation, confidential methods of operation and organization and confidential
sources of supply and customer lists, but Executive may make disclosures as
required by applicable law or orders without prior written notice to the
Company. For purposes of this Paragraph 8, 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.

         b. NON-COMPETITION. During the Employment Term and for a period of one
(1) year thereafter, Executive agrees not to directly or indirectly, own,
control, manage, operate, participate or invest in, including, but not limited
to, as an officer, director, shareholder, employee, consultant, agent, or
otherwise be connected with, in any manner, any business, enterprise or venture
which is engaged in the business of manufacturing and/or distributing of
carrying cases supplied to the cellular telephone, home medical equipment,
laptop computer, photography, video or audio industries and any other business
engaged in by the Company during the Employment Term, except that nothing in
this subparagraph 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 over the counter.

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          c. SOLICITATION. During the Employment Term and for a period of one
(1) year thereafter, Executive agrees not to directly or indirectly solicit,
employ or retain or arrange to have any other person, firm or other entity
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, technician or engineer of the Company, its subsidiaries or
affiliates.

         d. In the event Executive shall violate any provisions of this
Paragraph 8 (which provisions Executive hereby acknowledges are reasonable and
equitable), Executive shall no longer be entitled to and hereby waives any and
all rights to any termination payment under this Agreement.

      9. SEPARABILITY

         Executive agrees that the provisions of Paragraph 8 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.

      10. SPECIFIC PERFORMANCE

          Executive acknowledges that:

          (i) the services to be rendered under the provisions of this
Agreement are of a special character and it would be difficult to replace such
services;

          (ii) the Company is relying on the covenants contained herein,
including, without limitation, those contained in Paragraph 8 above, as a
material inducement for entering into this Agreement;

          (iii) the Company may be damaged if the provisions hereof are not
specifically

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enforced; and

          (iv) 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 otherwise, 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 which the Company may have.


      11. 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 between the
parties pertaining to the employment or remuneration of Executive not
specifically contemplated hereby or incorporated or merged herein are 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

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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
subsidiaries or affiliates 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. 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" shall mean any corporation or other business
entity which succeeds to substantially all of the assets or conducts the
business of the Company, whether directly or indirectly, by purchase, merger,
consolidation or otherwise.

         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,


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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.

   (i)   If to Executive to:
         Douglas 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:

         Squadron, Ellenoff, Plesent & Sheinfeld, LLP
         551 Fifth Avenue
         New York, New York 10176
         Attention:  Jeffrey W. Rubin, Esq.
         Telecopy:  (212) 697-6686

         f. 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. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, executors, administrators, personal
representatives, successors and


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permitted assigns.

         h. 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.


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

EXECUTIVE                             FORWARD INDUSTRIES, INC.

/s/                                   By:/s/
------------------------                    -----------------------------------
Douglas W. Sabra                            Name:  Jerome E. Ball
                                            Title: Chief Executive Officer




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