Exhibit 10.2





 


 


 


 


 


 


 


EMPLOYMENT
AGREEMENT


 


EMPLOYMENT AGREEMENT (this “Agreement”), dated
as of the 12th day of August, 2008, 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 James O. McKenna, residing at
951 Mill Creek Drive, Palm Beach Gardens, FL 33410 (“Executive”).


W I T N E S S E T H:


WHEREAS, the Company wished to secure the
services of Executive upon the terms and conditions of employment as set forth
herein, with effect from the date of execution of this Agreement (“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.         EMPLOYMENT
TERM


Unless earlier terminated in
accordance with the terms of this Agreement, the term of employment hereunder
(the “Term”) shall commence on the Effective Date and expire on December 31 , 2009.  Upon expiration of the 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 Term, or any renewal thereof, as the case may be, this
Agreement and Executive’s employment shall terminate at the end of the Term or
such renewal term, as the case may be.  In the event that the Company is the
party giving notice of non-renewal, this shall be treated as a termination
without Cause and governed by the terms of Section 5 or Section 7, as the case
may be.

 

 

 









  


 


 


 


 


2          EMPLOYMENT DUTIES AND SERVICES


(a)        On
the terms and conditions herein set forth, the Company hereby employs Executive
as its chief financial officer and treasurer for the term of this Agreement and
any renewal(s) thereof, and Executive hereby accepts such employment.  Executive
shall perform such duties and responsibilities of a chief financial officer nature
for the Company as shall be consistent with the provisions of the Company’s
By-laws in effect from time to time and as are customary for a chief financial officer
of corporations of similar size and business as the Company, subject to the
direction of the Company’s President (chief executive officer), or in his
absence, the 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 in accordance with Company
policies.  Executive will not engage, directly or indirectly, in any other
business or occupation during the Term. 


(b)        Nothing in this
Agreement shall preclude 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 of the Board (“Compensation Committee”), (iii) engaging in charitable
and civic activities, and (iv) engaging in such other limited activities on
behalf of family interests as may be approved by the Nominating and Governance
Committee of the Board, so long as any one or more such outside interests set
forth in clauses (i), (ii), (iii), and (iv) hereof do not interfere with or
affect the performance of his duties or responsibilities hereunder.


(c)        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.


 


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3.         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 $175,000 per annum, payable in equal
installments in accordance with the prevailing practices of the Company (but
not less frequently than monthly). 


(b)        Bonus;
Calculation and Payment.  The Executive shall be eligible to receive a
bonus (“Bonus”) with respect to each full fiscal year or part thereof (except
to the extent expressly provided in Section 3(b), 4, 5, or 6(b) hereof) in
respect of his employment hereunder, as set forth in this Section 3.  The amount
of Bonus, if any, that Executive may earn in any fiscal year during the Term
hereof pursuant to this Section 3(b) 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, or a
formula, 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 or other measure of operating results of the Company 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 Executive’s right to receive Bonus
compensation in respect of such fiscal year.  The Compensation Committee shall
determine the Target, together with the formulas for earning Bonus hereunder, after
the Board has adopted the Annual Budget in respect of each fiscal year during
the Term hereof but not later than the 75th day of each 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.


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Bonus compensation, if any,
payable pursuant to Section 3(b) 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 this Section
4(b) 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 a fiscal year during which Executive
is employed hereunder solely for the first fiscal quarter thereof because of
expiration of the Term, or any renewal thereof as a result of notice of
non-renewal furnished pursuant to Section 1; and provided, further, that
if Executive’s employment was terminated as a result of notice pursuant to
Section 4, Termination for Cause, 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.


(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 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 reimbursed for the expense of operating an automobile (maintenance,
gas, tolls and insurance only) for Executive’s use in connection with the
discharge of his duties under this Agreement, the maximum amount of which reimbursement
shall be determined by the Compensation Committee and shall be includible in
Executive’s W-2 statements and be subject to applicable income tax withholding
regulations.


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 (d)       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 4.


(e)        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.


(f)         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.


4.         TERMINATION BY
THE COMPANY FOR CAUSE


(a)        The Board of
Directors may, by written notice given at any time during the 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: 

 


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            (i) willful
misconduct in connection with the performance of any of his duties or services
hereunder, including without limitation (1) misappropriation or improper
diversion of funds, rights or property of the Company or any subsidiary of the
Company (“Subsidiary”), or (2) securing or attempting to secure personally (including
for the benefit of any family member, or person sharing the same household, or
any entity (corporate, partnership, unincorporated association, proprietorship,
limited liability company, trust, or otherwise) in which Executive has any economic
or beneficial interest) any profit or benefit in connection with any
transaction entered into on behalf of the Company or any Subsidiary unless the
transaction benefiting the entity has been approved by the Board upon the basis
of full disclosure of such benefit, or (3) material breach of any covenant
contained in this Agreement or (4) any other action in violation of Executive’s
fiduciary duty owed to the Company or  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 any entity (as described in
clause (i)(2) of Section 4(a) above) in which he or any such person has an economic
or beneficial interest; or (5) Executive’s failure to cooperate, if requested
by the Board, with any investigation or inquiry into his or the Company’s
business practices, whether internal or external; 


            (ii) 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 ; and/or 


            (iii) conviction
of, or nolo contendere or guilty plea in connection with, a
felony.  


(b)        Termination for
cause under clause (i) or (iii) of paragraph (a) of this Section 4 shall be
effective immediately upon the giving of such notice; if notice of termination
for cause relates to clause (ii) of paragraph (a) of this Section 4,
termination shall be effective on the thirtieth (30th) day after the
notice referred to in the first sentence of this Section 4 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; provided, however, that if the Board concludes that Executive’s
willful failure, neglect, or refusal to perform has resulted in material damage
to the Company or its reputation that is not capable of being remedied,
termination shall be effective immediately upon giving of notice.  


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For purposes of this
Agreement, an act or failure to act on the Executive’s part shall be considered
“willful” if it was done or omitted to be done by him not in good faith, and
shall not include any act or failure to act resulting from any incapacity of
the Executive.


(c)        Upon termination
of employment by the Company for Cause, the Executive shall be entitled to
receive, and his sole remedies under this Agreement shall be:


(i) any earned and unpaid
Salary accrued through the date of termination for Cause, payable in a lump sum
not later than 15 days following Executive’s termination of employment; 


(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, payable as in clause
(i) of this Section 4;


(iii) except for any Bonus
compensation (for which Executive shall not be eligible), any unpaid benefits accrued
through the day immediately prior to the date of termination that may be due
the Executive under any employee benefit plans or programs of the Company, payable
in accordance with the terms of such plans or programs, together with any
documented, unreimbursed business expenses, payable in accordance with Company
policies; and


(iv) any stock options,
grants of Common Stock, restricted share grants or other benefits under any of the
Company’s compensation plans that were vested as of 5:00 PM on the date
immediately prior to the date of termination in accordance with the terms of
such plans and any applicable plan agreements with Executive, provided,
however, that any vested but unexercised stock options may not be exercised on
or after the effective date of termination.    


(d)        Termination of
Executive’s employment under this Section 4 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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5.         TERMINATION BY EXECUTIVE FOR GOOD REASON
OR TERMINATION WITHOUT CAUSE PRIOR TO CHANGE IN CONTROL


(a)        In the event Executive
terminates his employment under this Agreement for Good Reason (as hereinafter
defined), or in the event Executive’s employment is terminated without Cause
(which termination shall be effective as of the date specified by the Company
in written notice delivered to Executive not fewer than 15 days prior to the
date of termination) other than due to death or Disability (as hereinafter
defined), in either case prior to a Change in Control (as hereinafter defined),
the Executive shall be entitled to receive, and his sole remedies under this
Agreement shall be: 


(i) any earned and unpaid
Salary accrued through the date of termination, payable in a lump sum not later
than 15 days following Executive’s termination of employment; 


(ii) Salary, at the
annualized rate in effect on the date of termination of Executive’s employment
(or, in the event a reduction in Salary is a basis for termination for Good
Reason, then the Salary in effect immediately prior to such reduction), for a
period of six months following such termination, payable in a lump sum not
later than 15 days following termination of employment;


(iii) compensation for any
unused personal holidays and unused vacation days accrued in the fiscal year in
which termination occurs through the date of termination, payable as in clause
(i) of this Section 6;


(iv) except in the case of the
Company giving notice of non-renewal at the end of the Term (or any renewal
thereof), 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, payable at the time specified in Section 3(b);


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(v) any unpaid benefits
accrued through the day immediately prior to the date of termination that may
be due the Executive under any employee benefit plans or programs of the
Company, payable in accordance with the terms of such plans or programs,
together with any documented, unreimbursed business expenses, payable in
accordance with Company policies; and


(vi) any stock options,
grants of Common Stock, restricted share grants or other benefits under any of
the Company’s compensation plans that were vested as of 5:00 PM on the date
immediately prior to the date of termination, which may be exercised (in the
case of options) or delivered (in the case of restricted stock) in accordance
with the terms of such plans and any applicable plan agreements with Executive.


(b)        Termination by the
Executive for Good Reason shall be effected by his giving 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 for Good Reason 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.  .  


For
purposes of this Agreement, subject to Section 7(D), the term “Good Reason”
shall mean:


(i)
the assignment to Executive without his written consent of any duties
inconsistent in any material respect with Executive’s position (including employment
status, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2 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:  


(ii) a decrease in annual Salary rate;


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(iii) any failure by the Company to perform any material
obligation under, or its breach of a material provision of, this Agreement that
is not cured within the 30-day notice period referred to above; or


(iv) 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.  


6.         TERMINATION FOR  DEATH OR DISABILITY


(a)        Executive’s
employment shall terminate immediately upon his death or Disability (as
hereinafter defined).  Upon such termination, the Executive, his estate, or his
beneficiaries, as the case may be, shall be entitled to receive, and their sole
remedies under this Agreement shall be:


(i) subject to Section 7(b), any
earned and unpaid Salary accrued through the date of termination, payable in a
lump sum not later than 15 days following Executive’s termination of
employment; 


(ii) subject to Section 7(b),
compensation for any unused personal holidays and unused vacation days accrued
in the fiscal year in which termination occurs through the date of termination,
payable as in clause (i) of this Section 6;


(iii) subject to Section 7(b),
the ratable amount of Bonus, if any, to which Executive would otherwise have
been entitled in the current fiscal year to the date of termination under this
Section, payable at the time specified in Section 3(b);


(iv) any unpaid benefits
accrued through the date of termination that may be due the Executive under any
employee benefit plans or programs of the Company, payable in accordance with
the terms of such plans or programs, together with any documented, unreimbursed
business expenses, payable in accordance with Company policies; and


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(v) any stock options, grants
of Common Stock, restricted share grants or other benefits under any of the
Company’s compensation plans that were vested as of 5:00 PM on the date
immediately prior to the date of termination, which may be exercised (in the
case of options) or delivered (in the case of restricted stock) in accordance
with the terms of such plans and any applicable plan agreements with Executive.


(b)        For purposes of
this Agreement, the term “Disability” shall mean any disability, illness, or
other incapacity that prevents Executive from performing services as
contemplated by Section 2, for 120 or more consecutive days or for 180 days in
any consecutive 12-month period.  In such event, the Company shall have the
right to terminate this Agreement upon 10 days’ prior written notice to
Executive. During the period of any such disability, illness, or incapacity,
(i) the obligation of the Company to pay Salary to Executive pursuant to
Section 3 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, and (ii) no bonus compensation shall accrue or be earned, or count
toward proration.  Termination under this Section 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.


7.         TERMINATION
UPON CHANGE OF CONTROL


(a)        In the event
Executive terminates his employment under this Agreement for Good Reason, or in
the event Executive’s employment is terminated without Cause (which termination
shall be effective as of the date specified by the Company in written notice to
Executive) other than due to death or disability, in either case within 12
months after a Change in Control (as hereinafter defined), the Executive shall
be entitled to receive, and his sole remedies under this Agreement shall be: 


(i) any earned and unpaid
Salary accrued through the date of termination, payable in a lump sum not later
than 15 days following Executive’s termination of employment; 


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(ii) Salary, at the
annualized rate in effect on the date of termination of Executive’s employment
(or, in the event a reduction in Salary after a Change in Control is a basis
for termination for Good Reason, then the Salary in effect immediately prior to
such reduction), for a period of 12 months following such termination, payable
in a lump sum not later than 15 days following termination of employment;


(iii) compensation for any
unused personal holidays and unused vacation days accrued in the fiscal year in
which termination occurs through the date of termination, payable as in clause
(i) of this Section 7;


(iv) except in the case of
the Company giving notice of non-renewal at the end of the Term (or any renewal
thereof), 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, payable at the time specified in Section 3(b);


(v) any unpaid benefits
accrued through the day immediately prior to the date of termination that may
be due the Executive under any employee benefit plans or programs of the
Company, payable in accordance with the terms of such plans or programs,
together with any documented, unreimbursed business expenses, payable in
accordance with Company policies; and


(vi) immediate vesting and elimination
of all restrictions on any restricted share grants or deferred stock awards
outstanding on the date of termination of employment; and


(vii) immediate vesting of
all outstanding stock options on the date of termination of employment and the
right to exercise such stock options as provided in any stock option award agreement
to which Executive is a party.


(b)        A “Change of
Control” shall be deemed to have occurred if:


 


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(i)  Any Person (as
hereinafter defined, other than the Company, any employee benefit plan of the
Company, or any company owned directly or indirectly by the shareholders of the
Company immediately prior to such occurrence) becomes the Beneficial Owner (as
hereinafter defined), directly or indirectly, of securities of the Company or
any Subsidiary (as hereinafter defined) representing 50% or more of the combined
voting power of the Company’s or such subsidiary’s then outstanding securities;


(ii)        during any period
of two consecutive years or shorter period, individuals who at the beginning of
such period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (i), (iii) or (iv) of this paragraph
(b)) whose election by the Board or nomination for election by the Company’s
shareholders was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of the two-year
period or whose election or nomination for election was previously so approved
but excluding for this purpose any such new director whose initial assumption
of office occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange
Act) or other actual or threatened solicitation of proxies or consents by or on
behalf of an individual, corporation, partnership, group, associate, or other
entity or Person other than the Board, cease for any reason to constitute at
least a majority of the Board;


(iii)       the Company
enters into any consolidation, merger, or other business combination with or
into any other corporation or other entity or person, or any other corporate
reorganization, whereby the shareholders of the Company immediately prior to
such consolidation, merger, business combination, or reorganization own less
than 50% of the voting power of the surviving entity immediately after such
consolidation, merger, business combination, or reorganization; 



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(iv)       the consummation
of a plan or agreement for the sale or disposition of all or substantially all
of the consolidated assets of the Company (other than such sale or disposition
immediately after which such assets will be owned directly or indirectly by the
shareholders of the Company in substantially the same proportions as their
ownership of common stock of the Company immediately prior to such sale or
disposition), in which case the Board shall determine the effective date of the
Change in Control resulting from such transaction; or


(v)        the occurrence of
any other event that the Board determines, in its discretion, would materially
alter the structure of the Company or its ownership.


For purposes of this
definition, the term:


(A)  “Beneficial Owner” shall
have the meaning ascribed thereto in Rule 13d-3 under the Exchange Act (as such
term or rule may be amended from time to time), except that a Person shall be
deemed to be the Beneficial Owner of all shares that such Person has the right
to acquire pursuant to any agreement or arrangement or upon exercise or
conversion of rights, warrants, or options, or otherwise, without regard to the
sixty day period referred to in Rule 13d-3);


(B)       “Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to time, or any
successor act thereto; 


(C)       “Person” has the
meaning ascribed thereto in Section 3(a)(9) of the Exchange Act and used in
Sections 13(d) and 14(d) thereof, including “group” as defined in Section 14(d)
thereof; and


(D)       “Good Reason” as
used in this Section 7 shall not exist as a reason for Executive to terminate
his employment after a Change of Control notwithstanding anything to the
contrary in Section 5 where the Change of Control arises in connection with the
circumstances described in clause (b)(iii) of this Section 7 and Executive’s
employment by the entity surviving such consolidation, merger, combination, or
reorganization qualifies him as an executive in such entity’s financial
function or department. 


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8.         OBLIGATIONS
UPON TERMINATION, ETC.



(a)        Upon the
termination of employment, all provisions of this Agreement shall terminate
except for this Section 8, Sections 9, 10 and 11, the terms of which shall
survive such termination, and the Company shall have no further obligation to
Executive hereunder, except as herein expressly provided.  The Company shall
comply with the terms of settlement of all deferred compensation arrangements
to which Executive is a party in accordance with his duly executed deferral
election forms.  


(b)        In the event of a
termination of employment by Executive on his own initiative during the Term or
any renewal thereof by delivery of written notice of such resignation ten
business days in advance, other than due to Disability or termination for Good
Reason, Executive shall have the same entitlements as provided in Section 4,
Termination by the Company for Cause.  Notwithstanding the foregoing, Executive
shall have no right to terminate during the Term except in the event of
termination for Good Reason, and any voluntary termination of employment shall
be considered a material breach.


(c)        In the event of a
termination of employment, payment made and performance by the Company in
accordance with the provisions of Section 4, 5, 6, 7, or 8, as the case may be,
shall operate to fully discharge and release the Company and its directors,
officers, employees, subsidiaries, affiliates, shareholders, successors,
assigns, agents, and representatives (all of the foregoing collectively, the
“releasees”) from any further obligation or liability with respect to
Executive’s rights under this Agreement.  Other than payment and performance as
aforesaid, none of the releasees shall have any further obligation or liability
to Executive or any other person under this Agreement arising out of
termination of Executive’s employment under this Agreement.  The Company shall have
the right to condition the payment of any severance or other amounts pursuant
to Section 4, 5, 6, 7, or 8 upon delivery by Executive to the Company of a
release in form and substance satisfactory to the Company releasing any and all
claims the Executive, his estate, representatives, and assigns may have against
the Company and any other releasee arising out of this Agreement.


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9.         COVENANTS



Executive agrees that during the Term, any renewal
thereof, and for one full year after expiration or termination of the 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 express 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,
investor, owner,  or in any other capacity:



(a)        except
as required in the course of performing his duties as an Executive hereunder, 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), or otherwise misappropriate trade secrets, intellectual
property, or other confidential or non-public 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, launch information or plans pertaining to Company or customer
products, arrangements for supplying customers, methods of operation and
organization, sources of supply and arrangements with vendors, product
development, business plans and strategies; 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 is within the public domain
or becomes publicly known other than through disclosure by Executive in
violation of this provision; (ii) 


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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 Term or any renewal thereof, including without
limitation the Company Business (as hereinafter defined) ; 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)  own (or have any
financial interest in, actual, contingent, future, or otherwise), control,
manage, operate, participate, engage in, invest in or otherwise have any
interest in or through, or otherwise be connected with, in any manner, any
firm, company, corporation, organization, associate, business, enterprise,
venture or other entity, association or person that does or proposes to do any
one or more of the following as it relates to of the Company Business (as
hereinafter defined): (a)(i) engage in, do, or solicit business with, or (ii)
interfere with or affect the Company’s business opportunities with, any of the
customers with whom the Company has done business with during the most recent
two calendar years or (b)(i)  engage in, do, or solicit business with, or (ii)
interfere with or affect the Company’s business opportunities with,  any of the
vendors with whom the Company has done business with during the most recent two
calendar years.  The term “Company Business” shall mean the business of
designing, manufacturing, procuring the supply or manufacture of, sourcing,
selling, re-selling, and/or distributing of carrying or portable cases or cover
plates and related carry case accessories supplied to the cellular telephone,
portable medical equipment, laptop computer, photography, video or audio
industries. Nothing in this Section 9 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.


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(e) 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.


(f)         In
the event Executive shall violate or be in violation of any provision of this Section
9 (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.


10.       SEPARABILITY


Executive agrees that the
provisions of Section 9 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.


11.       SPECIFIC PERFORMANCE


Executive acknowledges that:


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(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 Section 9 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.


12.       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.


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(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, to any successor to
the business of the Company, or to any Subsidiary or affiliate of the Company. 
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.


(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.


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 (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.


(i)         If to Executive to:


James O. McKenna 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 Compensation Committee


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.


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(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 9, 10 and 11 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.


(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 12th day of August 2008, intending it to be
effective on and as of the Effective Date.


	

JAMES O. McKENNA

			FORWARD INDUSTRIES, INC.
	

/s/ James O. McKenna

			By: 
/s/ Douglas W. Sabra
	

 


			Title:   Chief Executive Officer






 

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