**Exhibit 10.7**

 

 

 

 

 

** **

**AMENDED EMPLOYMENT AGREEMENT**

** **

**AMENDED EMPLOYMENT AGREEMENT** (this“Agreement”), dated as of the 1st day of April, 2011, between ForwardIndustries, Inc., a New York corporation having its principal offices at 3110Main St., Suite 400, Santa Monica, CA 90405 (the “Company”), and James O.McKenna, residing at 6771 Wandermere Rd., Malibu, CA 90265 (“Executive”).

**RECITALS**:

Executive is employed as theCompany’s Chief Financial Officer/Treasurer pursuant to an employment agreementwith the Company dated as of August 10, 2010 (the “Prior Agreement”), and theCompany has elected to move its executive offices from Pompano Beach, Floridato Los Angeles, California.

The Company and Executive wish toamend the Prior Agreement and secure Executive’s services upon the terms andconditions set forth in this Agreement, with effect from the date hereof.

In consideration of the mutualcovenants herein contained and other good and valuable consideration, thereceipt of which the parties hereby acknowledge, the parties agree as follows:

1.        EMPLOYMENT TERM; PRIOR AGREEMENT

Upon execution hereof, this Agreement shallbecome effective and the Prior Agreement shall be null and void and of nofurther force or effect whatsoever.  The term of employment hereunder (the **“**Term”)shall commence on the date hereof and, unless earlier terminated in accordancewith the terms of this Agreement, expire December 31, 2012.  Uponexpiration of the Term, this Agreement shall be automatically renewed forsuccessive terms of one year each; provided, however, that if eitherparty provides written notice to the other party of its or his determinationnot to so renew not later than 90 (ninety) days prior to the expiration of theTerm, or any renewal thereof, as the case may be, this Agreement andExecutive’s employment shall terminate at the end of the Term or such renewalterm, as the case may be.  In the event that the Company is the partygiving notice of non-renewal, such termination shall be characterized as withoutCause and governed by the terms of Section 5.

 

 

----

 

 

 

  

2         EMPLOYMENT DUTIES AND SERVICES

 

(a)       On the terms and conditions herein set forth, the Company hereby employsExecutive as its chief financial officer, treasurer, and assistant secretaryfor the term of this Agreement and any renewal(s) thereof, and Executive herebyaccepts such employment.  Executive shall perform such duties andresponsibilities of a chief financial officer and treasurer nature for theCompany as shall be consistent with the provisions of the Company’s By-laws ineffect from time to time and as are customary for a chief financial officer andtreasurer of corporations of similar size and business as the Company, subjectto the direction of the Company’s President (chief executive officer), or in hisabsence, the Board of Directors of the Company (the “Board”).  Executiveshall serve the Company faithfully and to the best of his ability and shalldevote his full business time and attention to the business and affairs of theCompany, subject to reasonable absences for vacation and illness in accordancewith Company policies.  Executive shall not engage, directly orindirectly, in any other business or occupation during the Term and any renewal.

 

 

 

 

----

 

 

 

 

 

(b)       Nothing in this Agreement shall preclude the Executive from (i) engaging inpersonal investment activities for himself and his family, (ii) acceptingdirectorships unrelated to the Company, subject to the prior, written approvalof the Nominating and Governance Committee of the Board (“Nominating andGovernance Committee”), (iii) engaging in charitable and civic activities, and(iv) engaging in such other limited activities on behalf of family interests asmay be approved by the Nominating and Governance Committee, so long as any oneor 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 orresponsibilities hereunder.

(c)       Unless otherwise agreed in writing by the Company and Executive, theperformance of Executive’s services during the term of this Agreement shall berendered at the principal executive offices of the Company, subject to suchtravel in furtherance of Executive’s performance of his duties hereunder as thebusiness of the Company may require.

 3.        COMPENSATION AND EXPENSE REIMBURSEMENT

                              (a)       Salary.  Executive shall be entitled to receive for all servicesrendered by Executive in any and all capacities in connection with hisemployment hereunder a salary (as it may be adjusted, “Salary”) at the rate of$225,000 per annum, payable in equal installments in accordance with theprevailing practices of the Company (but not less frequently than monthly).                                                                                                                                                                                

 

----

 

 

 

 

 

                                                            (b)        Bonus; Calculation and Payment. The Executive shall be eligible to receive a (“Bonus”) with respect to eachfull fiscal year or part thereof (except to the extent expressly provided inSection 3(b), 4, 5, or 6(b) hereof) in respect of his employment hereunder, asset forth in this Section 3.  The amount of Bonus, if any, that Executive iseligible to earn in any fiscal year during the Term hereof pursuant to thisSection 3(b) shall be based on the terms of the bonus plan that the CompensationCommittee (the “Compensation Committee”)  of the Board adopts, from year toyear. The Executive’s participation in such bonus plan shall be at a levelcommensurate with the Executive’s current position or any more seniorposition(s) to which Executive may be appointed.  

 

Bonus compensation, if any,payable in respect of any fiscal year or part thereof shall be payable toExecutive no later than the tenth (10th) business day after the dateon which the Company’s audited financial statements relating to such fiscalyear are first filed with the Securities and Exchange Commission (the“Commission’) pursuant to Section 13 or 15(d) under the Securities Exchange Actof 1934 (“Exchange Act”). If Executive is otherwise entitled to payment of aBonus pursuant to this Section 3(b) and the terms of this Agreement but has notserved as an employee for the full fiscal year in respect of which such Bonusis payable, Executive, or his estate, shall be entitled to payment, at the timespecified in the next preceding sentence, of a ratable portion of such Bonus towhich he or his estate is entitled, based on the ratio that the actual numberof days in such fiscal year during which he served as an employee pursuant tothis Agreement and is so entitled bears to 365; provided, however, thatno Bonus (pro-rated or otherwise) shall be payable in respect of a fiscal yearduring which Executive is employed hereunder solely for the first fiscalquarter thereof because of expiration of the Term, or any renewal thereof as aresult of notice of non-renewal furnished pursuant to Section 1; and provided,further, that if Executive’s employment was terminated as a result ofnotice (not withdrawn) pursuant to Section 4, Termination for Cause, he shallnot be entitled to any Bonus compensation in respect of the fiscal year duringwhich the actions giving rise to Cause took place, or such notice oftermination was given or during which such termination becomeseffective.  

 

----

 

 

 

 

 

(c)       Expenses.  Executive will be reimbursed for all reasonable andnecessary expenses incurred by Executive in carrying out the duties contemplatedunder this Agreement, in accordance with Company practices and procedures ineffect from time to time, as such practices may be changed from time to time bythe Board.  Executive shall be reimbursed for the expense of operating anautomobile (maintenance, gas, tolls and insurance only) for Executive’s use inconnection with the discharge of his duties under this Agreement, the maximumamount of which reimbursement shall be determined by the Compensation Committeeand shall be includible in Executive’s W-2 statements and be subject toapplicable income tax withholding regulations. 

(d)        RelocationReimbursement.  The Company shall reimburse Executive’s reasonable,documented out-of-pocket costs incurred in his relocation to the Los Angeles,CA area from his Florida residence, including the following: (i) shipping offurniture and other personal possessions from Florida to Los Angeles; (ii) economyfare transportation from Florida to California for Executive and his family;and (iii) current, monthly net rental expense in respect of Executive’s leaseof his Mill Creek Drive, Palm Beach Gardens, FL residence, commencing withApril rent until the earlier of lease expiration in August 2011 or the date ofearly lease termination.

 

 

 

----

 

 

 

 

 

(e)        Housing Allowance. Executive shall be entitled to a housing allowance of $7,500 per month, or$90,000 per annum, based on documented lease expense provided by Executive inrespect of his California residence, to assist in defraying the increase inhousing costs to be incurred by Executive with his relocation to the LosAngeles, CA area.  The allowance shall be phased out over time if, as, and tothe extent that Executive’s base salary increases, in accordance with Schedule 1[annexed hereto][for purposes of Board review: it will be removed as part ofthe filing] approved by the Compensation Committee.  Such allowance may includeadvance rent required to be paid by Executive under the terms of lease of hisMalibu, CA residence.  

 (f)      Benefits.  Executive shall be entitled to participate in all grouphealth and other insurance programs and all other fringe benefit (includingvacation) and retirement plans (including any 401(k) plan) or othercompensatory plans that the Company may hereafter elect to make available toits executives generally on terms no less favorable than those provided toother executives generally, provided Executive meets the qualificationstherefor.  The Company shall not be required to establish any such programor plan, except to the extent expressly set forth in this Section 4.

 

(g)       Withholding.  All payments required to be made by the Companyhereunder to the Executive shall be subject to the withholding of such amountsrelating to taxes and other governmental assessments as the Company may reasonablydetermine it should withhold pursuant to any applicable law, rule orregulation.

(h)        IRC§409A.      Executive and the Company agreethat the provisions of this Agreement shall be construed and implemented, andany deferrals and elections shall be made, in order to comply with InternalRevenue Code Section 409A, as it may be amended, and the rules and regulationsissued 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 theTerm, or any renewal thereof, terminate the employment of Executive for cause,the cause to be specified in reasonable detail in such notice.  Forpurposes of this Agreement, “cause” shall mean Executive’s: 

 

----

 

 

 

 

 

           (i) willful misconduct in connection with the performance of any of his dutiesor services hereunder, including without limitation (1) misappropriation orimproper diversion of funds, rights or property of the Company or anysubsidiary of the Company ("Subsidiary"), or (2) securing orattempting to secure personally (including for the benefit of any familymember, 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 beneficialinterest) any profit or benefit in connection with any transaction entered intoon behalf of the Company or any Subsidiary unless the transaction benefitingthe entity has been approved by the Board upon the basis of full disclosure ofsuch benefit, or (3) material breach of (x) any covenant contained in thisAgreement or (y) the Company’s Insider Trading Policy or Code of BusinessConduct and Ethics, as in effect from time to time, or (4) any other action inviolation of Executive's fiduciary duty owed to the Company or Executive's acting in a manner adverse to the interests of the Companyand for his own pecuniary benefit or that of a family member (or member of hishousehold) 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 anyinvestigation or inquiry into his or the Company's business practices, whetherinternal or external; 

           (ii) willful failure, neglect or refusal to perform his duties or servicesunder this Agreement, which failure, neglect or refusal shall continue for aperiod of 30 days after written notice thereof shall have been given to theExecutive by or on behalf of the Board ; and/or 

           (iii) conviction of, or nolocontendere or guilty plea inconnection with, a felony.  

 

----

 

 

 

 

 

(b)       Termination for cause under clause (i) or (iii) of paragraph (a) of thisSection 4 shall be effective immediately upon the giving of such notice; ifnotice of termination for cause relates to clause (ii) of paragraph (a) of thisSection 4, termination shall be effective on the thirtieth (30th)day after the notice referred to in the first sentence of this Section 4 isgiven to Executive, unless the Executive shall have, prior to such thirtieth(30th) day, cured the alleged cause to the satisfaction of theBoard, in which case the Board shall so notify Executive and such cause shallbe deemed to no longer exist; provided, however, that if the Boardconcludes that Executive’s willful failure, neglect, or refusal to perform hasresulted in material damage to the Company or its reputation that is notcapable of being remedied, termination shall be effective immediately upongiving of notice.  

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 notinclude any act or failure to act resulting from any incapacity of theExecutive.

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

(i) any earned and unpaidSalary accrued through the date of termination for Cause, payable in a lump sumnot later than 15 days following Executive’s termination of employment; 

(ii) compensation for anyunused personal holidays and unused vacation days accrued in the fiscal year inwhich termination occurs through the date of termination, payable as in clause(i) of this Section 4;

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

 

 

 

----

 

 

 

 

 

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

(d)       Termination of Executive’s employment under this Section 4 shall be in additionto and not exclusive of any other rights and remedies that the Company has ormay have relating to Executive with respect to the facts and circumstances pertainingto such termination.

5.        TERMINATION BY EXECUTIVE FOR GOOD REASON OR TERMINATION WITHOUT CAUSE 

(a)       In the event Executive terminates his employment under this Agreement for GoodReason (as hereinafter defined), or in the event Executive’s employment isterminated without Cause (for the avoidance of doubt, termination without causeshall include Company notice of non-renewal to be effective at the end of theemployment term, or any renewal thereof), which termination shall be effectiveas of the date specified by the Company in written notice delivered toExecutive not fewer than 15 days prior to the date of termination) other thandue to death or Disability (as hereinafter defined), the Executive shall beentitled to receive, and his sole remedies under this Agreement shall be: 

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

 

 

 

----

 

 

 

 

 

(ii) Salary, at the annualizedrate in effect on the date of termination of Executive’s employment (or, in theevent a reduction in Salary is a basis for termination for Good Reason, thenthe Salary in effect immediately prior to such reduction), equal to the amountof salary payable for a period of one year following such termination, payablein a lump sum not later than 15 days following termination of employment;

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

(iv) except in the case of theCompany giving notice of non-renewal at the end of the Term (or any renewalthereof), the ratable amount of Bonus, if any, to which Executive would otherwisehave been entitled in the current fiscal year but for termination under thisSection, payable at the time specified in Section 3(b);

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

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

 

 

----

 

 

 

 

 

(vii)      Executive’s reasonable,documented out-of-pocket costs incurred in connection with a relocation of hisprimary residence back to Florida (of the type set forth in clauses (d)(i) and(ii) of Section 3 of this Agreement, plus leasehold rent in respect of hisCalifornia residence not to exceed 12 months of such rent actually incurred (andnot refunded or netted, directly or indirectly) subsequent to the noticereferred to in the following proviso; provided, however, that theexpenses enumerated in this clause (vii) shall be payable to Executive only ifnotice of termination for Good Reason or without Cause is given (and notsubsequently withdrawn in accordance with the terms of this Agreement) withinthe first 36 months after the date hereof. 

(b)       Termination by the Executive for Good Reason shall be effected by his givingprior written notice to the Company, in which case this Agreement shallterminate on the date specified in such notice; provided, however, thatsuch notice shall specify (i) in reasonable detail the circumstances or eventasserted as the basis for termination for Good Reason and (ii) a date oftermination that shall be at least thirty (30) days after the date of deliveryof such notice; and provided, further, that the Company shall have theright during such thirty (30) day period to remedy the circumstances or eventgiving rise to the notice of termination for Good Reason prior to the datespecified in such notice, in which case no right of termination or other rightshall exist under this Section.  .  

(c)       For purposes of this Agreement, the term “Good Reason” shall mean:

(i) the assignment to Executivewithout his written consent of any duties or title inconsistent in any materialrespect with Executive’s position (including employment status, titles(including without limitation that of Chief Financial Officer) and reportingrequirements), authority, duties or responsibilities as contemplated by Section2 of this Agreement or any other action by the Company that results in amaterial diminishment in such positions, status, titles, authority, duties, orresponsibilities, other than such assignment or other action that is remediedby the Company prior to the date of termination specified in the written noticefrom Executive:  

 

 

 

----

 

 

 

 

 

(ii) a decrease in annualSalary rate or reduction in level of employee benefits that Executive currentlyreceives or entitlement to Bonus (subject always to the discretion of theCompensation Committee to fix Target and define the formula under whichExecutive may be eligible to receive Bonus);

(iii) failure to accordExecutive equal treatment in respect of responsibilities, reporting obligationsand other matters reflected in clause (i) above, in respect of benefitsgenerally, with any other executive officer having the same or similarpositions; 

(iv) direction that performanceof Executive’s responsibilities under this Agreement shall be performed at alocation (at the Company’s principal executive offices or otherwise) more than30 miles distance from the location of the Company’s current executive officesin Santa Monica, California.

(v) any failure by the Companyto perform any material obligation under, or its breach of a material provisionof, this Agreement that is not cured within the 30-day notice period referredto above; or

(vi) failure of a Successor toexpressly assume and agree to perform this Agreement in the same manner and tothe same extent as the Company would have had there been no Successor.  

6.         TERMINATIONFOR  DEATH OR DISABILITY

(a)       Executive’s employment shall terminate immediately upon his death or Disability(as hereinafter defined).  Upon such termination, the Executive, hisestate, 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 6(b),any earned and unpaid Salary accrued through the date of termination, payablein a lump sum not later than 15 days following Executive’s termination ofemployment; 

 

----

 

 

 

 

 

(ii) subject to Section 6(b),compensation for any unused personal holidays and unused vacation days accruedin 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 6(b),the ratable amount of Bonus, if any, to which Executive would otherwise havebeen entitled in the current fiscal year to the date of termination under thisSection, payable at the time specified in Section 3(b);

(iv) any unpaid benefitsaccrued through the date of termination that may be due the Executive under anyemployee benefit plans or programs of the Company, payable in accordance withthe terms of such plans or programs, together with any documented, unreimbursedbusiness expenses, payable in accordance with Company policies; and

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

 

 

 

----

 

 

 

 

 

(b)       For purposes of this Agreement, the term “Disability” shall mean anydisability, illness, or other incapacity that prevents Executive fromperforming services as contemplated by Section 2, for 120 or more consecutivedays 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 toExecutive pursuant to Section 3 shall be reduced to the extent of any amountreceived by Executive pursuant to any disability insurance policy maintainedand paid for by the Company, and (ii) no bonus compensation or other employeebenefits shall accrue or be earned, or count toward proration. Termination under this Section shall not prejudice any rights of Executiveunder disability policies being maintained by the Company for Executive underthe terms of this Agreement, if any.

 

7.        OBLIGATIONS UPON TERMINATION, ETC.

(a)       Upon the termination of employment for any reason hereunder, all provisions ofthis Agreement shall terminate except for Sections 7, 8, 9 and 10 of thisAgreement and the provisions contained in Exhibit I hereto, the terms of whichshall survive such termination, and the Company shall have no furtherobligation to Executive hereunder, except as herein and therein expresslyprovided.  The Company shall comply with the terms of settlement of alldeferred compensation arrangements to which Executive is a party in accordancewith his duly executed deferral election forms.  

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

 

 

----

 

 

 

 

 

(c)       In the event of a termination of employment, payment made and performance bythe Company in accordance with the provisions of Section 4, 5, or 6, as thecase may be, and this Section 7 shall operate to fully discharge and releasethe Company and its directors, officers, employees, subsidiaries, affiliates,shareholders, successors, assigns, agents, and representatives (all of theforegoing collectively, the “releasees”) from any further obligation or liabilitywith respect to Executive’s rights under this Agreement.  Other thanpayment and performance as aforesaid, none of the releasees shall have anyfurther obligation or liability to Executive or any other person under thisAgreement arising out of termination of Executive’s employment under thisAgreement except as expressly set forth in Exhibit I hereto.  TheCompany’s payment of any severance or other amounts pursuant to Section 4, 5,6, or 7 shall be subject to delivery by Executive to the Company of a releasein form and substance satisfactory to the Company releasing any and all claimsthe Executive, his estate, representatives, and assigns may have against theCompany and any other releasee arising out of this Agreement, as set forth inExhibit I hereto.

8.        COVENANTS

Executive agrees that duringthe Term, any renewal thereof, and for one full year after expiration ortermination 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 shallnot, without the express prior written consent of the Company, directly orindirectly, 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 othercapacity:

 

 

 

----

 

 

 

 

 

(a)       except as required in the course of performing his duties as an Executivehereunder, disclose, copy, divulge, furnish, distribute or make available inany medium whatsoever to any firm, company, corporation, organization, or otherentity or person (including but not limited to actual or potential customers orcompetitors or government officials), or otherwise misappropriate tradesecrets, intellectual property, or other confidential or non-public informationof or concerning the Company, its Subsidiaries or affiliates or the business ofany of the foregoing, including without limitation, customer lists, productdesigns and product know-how, launch information or plans pertaining to Companyor customer products, arrangements for supplying customers, methods ofoperation 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 lawor compelled upon court or administrative order, provided, further,however, that in the event that Executive is so required or compelled, he shallnotify the Company not fewer than ten (10) business days in advance of suchdisclosure in order to afford it the reasonable opportunity to obtain aprotective order or other remedy to limit the scope of such disclosure (itbeing understood and agreed that, if such disclosure is required by applicablelaw, Executive shall upon the Company’s request furnish the source andprecedents with respect to such requirement).  For purposes of thisSection 8, information shall not be deemed confidential if it is within thepublic domain or becomes publicly known other than through disclosure byExecutive in violation of this provision; (ii) 

(b)       own (or have any financial interest in, actual, contingent or otherwise),control, manage, operate, participate, engage in, invest in or otherwise haveany interest in, or otherwise be connected with, in any manner, any firm,company, corporation, organization, business, enterprise, venture or otherentity, association or person that is engaged in the business actually engagedin by the Company during the Term or any renewal thereof, including withoutlimitation the Company Business (as hereinafter defined) ; or

 

 

 

----

 

 

 

 

 

(c) solicit, employ or retainor 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 theemployment or retention of, any person who is then, or who has been, within thepreceding six (6) months, an employee, consultant, sales representative,technician or engineer of the Company, its subsidiaries, affiliates, or jointventure counterparties.

(d)  own (or have anyfinancial interest in, actual, contingent, future, or otherwise), control,manage, operate, participate, engage in, invest in or otherwise have anyinterest in or through, or otherwise be connected with, in any manner, anyfirm, company, corporation, organization, associate, business, enterprise,venture or other entity, association or person that does or proposes to do anyone or more of the following as it relates to of the Company Business (ashereinafter defined): (a)(i) engage in, do, or solicit business with, or (ii)interfere with or affect the Company’s business opportunities with, any of thecustomers with whom the Company has done business with during the most recenttwo 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 mostrecent two calendar years.  The term “Company Business” shall mean thebusiness of designing, manufacturing, procuring the supply or manufacture of,sourcing, selling, re-selling, and/or distributing (at wholesale, retail, orotherwise) of carrying, protective, or portable cases or cover plates andrelated carry case or other accessories supplied to the cellular telephone,portable medical equipment, laptop computer, tablet, photography, firearms, aeronautic,code reader, video or audio industries. Nothing in this Section 8 shall bedeemed to prohibit Executive from the acquisition or holding of, solely as apassive stockholder, not more than one percent (1%) of the shares or othersecurities of a publicly-owned corporation if such securities are traded on anational securities exchange or the NASDAQ Stock Market.

 

 

 

----

 

 

 

 

 

(e) Upon the expiration ortermination of this Agreement for any reason, Executive shall promptly deliverto the Company all documents, papers and records in his possession relating tothe business or affairs of the Company and that he obtained or received in hiscapacity as an officer of the Company and any other Company property orequipment in his possession or control.

(f)       In the event Executive shall violate or be in violation of any provision ofthis Section 8 (which provisions Executive hereby acknowledges are reasonableand equitable), in addition to the Company’s right to exercise any and allremedies, legal and equitable, which it may have under applicable laws, Executiveshall not be entitled to any, and hereby waives any and all rights to, each andevery, termination payment under this Agreement.

9.       SEPARABILITY

Executive agrees that theprovisions of Section 8 hereof constitute independent and separable covenants,for which Executive is receiving consideration, which shall survive thetermination of employment, and which shall be enforceable by the Companynotwithstanding any rights or remedies the Company may have under any otherprovision hereof.

10.     SPECIFIC PERFORMANCE

Executive acknowledges that:

 (a)       the services to be rendered and covenants to be performed under this Agreementare of a special and unique character and that the Company would be irreparablyharmed if such services were lost to it or if Executive breached itsobligations and covenants hereunder;

(b)       the Company is relying on the Executive’s performance of the covenantscontained herein, including, without limitation, those contained in Section 9above, as a material inducement for its entering into this Agreement;

 

----

 

 

 

 

 

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

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

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

 

                                                   

11.       MISCELLANEOUS

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

(b)        Relocation.       Theterm “relocation” as used in this Agreement shall mean the date on which theperson enters into a definitive and irrevocable agreement pertaining tooccupancy or vacation of premises, as the case may be.              

 

----

 

 

 

 

 

(c)       Assignment; Successors.  This Agreement is not assignable byExecutive without the prior written consent of the Company and any purportedassignment by Executive of Executive’s rights and/or obligations under thisAgreement shall be null and void.  Except as provided below, thisAgreement may be assigned by the Company at any time, upon delivery of writtennotice to Executive, to any successor to the business of the Company, or to anySubsidiary or affiliate of the Company.  In the event that anothercorporation or other business entity becomes a Successor of the Company, thenthis Agreement may not be assigned to such Successor unless the Successorshall, 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 tothe same extent as the Company would be required to perform if there had beenno Successor. The term “Successor” as used herein shall mean any corporation orother business entity that succeeds to substantially all of the assets orconducts the business of the Company, whether directly or indirectly, bypurchase, merger, consolidation or otherwise. This Agreement shall be bindingupon and inure to the benefit of the parties and their respective heirs,executors, administrators, personal representatives, successors and permittedassigns.                                                                                                                                                       

(d)       Waivers, etc.  No waiver of any breach or default hereunder shallbe considered valid unless in writing, and no such waiver shall be deemed awaiver 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 thisAgreement on any occasion shall not operate or be construed as a waiver of theright to insist upon strict adherence to that term or any other term of thisAgreement on that or any other occasion.

 

----

 

 

 

 

 

(e)       Provisions Overly Broad.  In the event that any term or provisionof this Agreement shall be deemed by a court of competent jurisdiction to beoverly broad in scope, duration or area of applicability, the court consideringthe same shall have the power and hereby is authorized and directed to modifysuch 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 thesame as so limited.  Subject to the foregoing sentence, in the event thatany provision of this Agreement shall be held to be invalid or unenforceablefor any reason, such invalidity or unenforceability shall attach only to suchprovision and shall not affect or render invalid or unenforceable any otherprovision of this Agreement.

(f)       Notices.  Any notice permitted or required hereunder shall be inwriting and shall be deemed to have been given on the date of delivery or, ifmailed by certified mail, postage prepaid, return receipt requested, documentedovernight courier, or by facsimile transmission, on the date mailed ortransmitted.

(i)        If to Executive to:

James O. McKenna at his address

set forth in the preamble to this Agreement orsuch more recent address as advised to the Company in writing. 

   

  

(ii)       If to the Company to:

the address set forth in the

preamble to this Agreement

Attention:Chairman of the Compensation Committee

witha copy to:

 

 

 

 

----

 

 

 

 

 

StevenMalsin, Esq.

237Upper Shad Road

Pound Ridge, NY 10576

 

Telecopy: (914) 764-1940

(g)      Law Governing. This Agreement shall be governed by and construed inaccordance with the laws of the State of New York governing contracts made andto be performed in New York without regard to conflict of law principlesthereof.

 

 

(h)       Survival.  All obligations of the Company to Executive andExecutive to the Company shall terminate upon the termination of thisAgreement, except as expressly provided herein.  The provisions ofSections 7, 8, 9, and 10 shall survive termination of this Agreement.

(i)       Counterparts.  This Agreement may be executed in counterparts, eachof which shall be deemed an original, and each party may become a party heretoby executing a counterpart hereof.  This Agreement and any counterpart soexecuted shall be deemed to be one and the same instrument.  It shall notbe necessary in making proof of this Agreement or any counterpart hereof toproduce or account for any of the other counterparts.

(j)        Approval.  This Agreement is subject to prior review and approvalof the Compensation Committee of the Company’s Board of Directors.

(k)        Headings.  The headings in this Agreement are for convenience ofreference only

 

**IN WITNESS WHEREOF**, theparties have executed this Agreement as of the 1st day of April, 2011,intending it to be effective on and as of the date hereof.

 

 

 

----

 

 

 

 

 

 
| **JAMES  O. McKENNA**                                            | **FORWARD  INDUSTRIES, INC.**                                   |
|------------------------------------------------------------------|-----------------------------------------------------------------|
| /s/___________________________________                           | By:   /s/________________________                          |
| James  O. McKenna III

Vice  President (Chief Financial Officer) | Brett M.  Johnson

President  (Chief Executive Officer)

  |
|                                                             |                                                            |

 

 

 

 

 

 

 

 

 

 

 

 

 

----

 

 

 

 

 

 

 

 

  

EXHIBIT I

 

1. Release.  This Release of Claims (the “Release”) is entered into byyou as a condition precedent to receiving the severance and severance relatedbenefits provided in the Amended Employment Agreement to which this Exhibit Irelates (this “Agreement” or the “Employment Agreement”).  In exchange forthe receipt of the severance and severance related benefits, you for yourself,your heirs and assigns and anyone else acting on your behalf, herebyvoluntarily, knowingly and irrevocably and forever discharge the Company, eachof its subsidiaries, and their respective successors, as well as theirrespective present, former, and future officers, directors, shareholders, employees,and agents, in both their individual and representative capacities, and each oftheir heirs and assigns (the “Releasees”) from all actions, claims, demands,causes of actions, obligations, damages, liabilities, expenses andcontroversies  of any nature whatsoever, whether known or not now known orsuspected, which you had, have or may have against the Releasees from thebeginning of time up to and including the date you sign this Release (the“Waived Claims”). The Waived Claims that you forever and irrevocably give upand release when the Release becomes Effective  include, but are notlimited to, all claims related to (i)  your employment at each of theCompany and its subsidiaries or the termination of your employment, (ii) statements, acts or omissions by the Releasees, (iii)  any express orimplied agreement between you and the Releasees, (iv)  wrongful discharge,defamation, slander, breach of express or implied contract, negligent and/orintentional misrepresentation or infliction of emotional distress, breach of animplied covenant of good faith and fair dealing, claims of intentional ornegligent interference  with economic, employment, or contractual rightsor promissory estoppel, (v)  any federal, state, or local law or regulationprohibiting discrimination in employment or otherwise regulating employment,including but not limited to, the Age Discrimination in Employment Act of 1967,as amended (ADEA), the Older Worker Benefit Protections Act,  the EqualPay Act of 1963, Title VII of the Civil Rights Acts of 1964, as amended, the Civil Rights Act of 1991, the Family Medical Leave Act of 1993 (FMLA), theAmericans with Disabilities Act of 1990 (ADA), the Worker Adjustment andRetraining Notification Act, the Fair Labor Standards Act of 1938, as amended,the Employee Retirement Income Security Act of 1974 (ERISA), as amended, 42U.S.C. Sections 1981 through 1988, the Consolidated Omnibus Reconciliation Actof 1986 (COBRA) the New York State Human Rights Law and the New York City HumanRights Act, (vi) any claim for wages, commissions, bonuses, incentivecompensation, vacation pay, employee benefits (except as set forth in paragraph2 of this Exhibit1 and paragraphs 5 or 6, as the case may be, and paragraph 7of the Employment Agreement), expenses or allowances of any kind, or any otherpayment or compensation, according to the terms of each of those plans. You arenot waiving any claims with respect to your rights to enforce this Agreement.You are not waiving or releasing any rights or claims that may arise after thedate that you sign this Release.  The date that you sign this Releaseshall be the date on or about you are entitled to receive the severance andother payments and other consideration as provided in the Employment Agreementand is referred to herein as the “Effective Date”.

 

 

 

 

 

----

 

 

 

 

 

  

2. Termination and Severance Benefits. The Release does not affect yourvested rights and eligibility for benefits under the Company 401(k) Plan, orany other employee benefit plan covered by ERISA (other than a severance plan).Eligibility for benefits under these plans is determined by the applicable plandocuments.  The Release does not affect your right to reimbursement ofexpenses incurred but not reimbursed prior to the date you sign the Release,subject to the Company’s expense reimbursement policies.  In addition,this Release does not affect your right to post-retirement medical coverage asapplicable.  In particular, this Agreement and the Release shall notaffect your right to the payment provided in Section 4, 5 or6 of the Agreement, as the case may be, and Section 7 thereof, or the ExecutiveRelease as set forth below.

 

3.  Release.  This ExecutiveRelease of Claims (the “Executive Release”) is entered into by the Company inconsideration of Executive entering into and performing the Agreement includingthe terms of this Exhibit I.  In exchange for Executive’s performance ofthe terms of the Agreement, including without limitation the terms of thisExhibit I to be performed by him, and grant of the Release, Forward, foritself, its subsidiaries, and their respective successors and assigns, theaccuracy of the representations set forth in paragraph 5 of this Exhibit I,hereby voluntarily, knowingly and irrevocably and forever discharges Executive fromall actions, claims, demands, causes of actions, obligations, damages,liabilities, expenses and controversies of any nature whatsoever, whether knownor not now known or suspected, which it had, have or may have against theExecutive in his capacity as executive officer from the beginning of time up toand including the Effective Date of this Agreement (the “Executive WaivedClaims”). The Executive Waived Claims that the Company and its subsidiariesforever and irrevocably give up and release when the Executive Release becomesEffective  include, but are not limited to, all claims related to(i)  Executive’s employment at each of the Company and its subsidiaries orthe termination of said employment, (ii)  statements, acts or omissions byExecutive, (iii)  any express or implied agreement between the Company andits subsidiaries and you, other than agreements that by their terms survive theEmployment Agreement, and (iv) defamation, slander, breach of express orimplied contract, negligent and/or intentional misrepresentation or inflictionof emotional distress, breach of an implied covenant of good faith and fairdealing. By entering into this Agreement or granting this Executive Releaseneither Forward nor any subsidiary hereby waives any claim with respect to itsrights to enforce this Agreement. Neither the Company nor any subsidiary waivesor releases any rights or claims that may arise after the date that it executesthis Release.

 

4. No suit. You represent and warrant that as of the Effective Date, younor anyone acting on your behalf has made or filed, commenced, maintained,prosecuted or participated in any action, suit, charge, grievance, complaint orproceeding of any kind against the Company, any subsidiary thereof, and/orReleasees in any federal, state or local court, agency or investigativebody.  You acknowledge that based on the foregoing, you hereby waive allrelief available to you, including, without limitation, monetary damages,attorney’s fees and costs, equitable relief and reinstatement, under any claimsreleased pursuant to paragraph 1 above.

 

 

 

 

 

 

----

 

 

 

 

 

5.  Representations.You acknowledge and agree that:

(a) Youhave read and fully understand the legal effect and binding nature of thepromises and obligations contained in this Exhibit to the Agreement;

(b) Youare executing this Exhibit to Agreement freely and voluntarily;

(c) Youhave been advised to consult with legal counsel, at your own expense, beforesigning this Exhibit to the Agreement;

(d) Youare receiving benefits as a condition to signing this Exhibit to Agreement andit becoming Effective that you would not otherwise be entitled to receive butfor this Exhibit to Agreement becoming Effective;

(e) Youhave not, during the term of your employment under the Employment Agreement orthereafter performed any act, or directed any other person or entity to performany act on your or their behalf, the intended or proximate result of whichwould constitute a violation of the covenants to be performed by you referredto or set forth in Section 8 of this Agreement, nor are there any agreements,arrangements, or understandings, written or oral, that would, if performed oracted upon, constitute such a violation. 

(f) Thereare no promises or representations that have been made to you to sign thisAgreement except those that are included in this Agreement;

(g) Youwill have had a period of five (5) days from the date of receipt of the termsof this Exhibit I to consider them. After you sign this Exhibit by sending awritten notice of revocation via overnight mail or hand delivery to:

 

President

c/oForward Industries, Inc.

3110 Main St.

SantaMonica, CA 90405

 

 

6.  CovenantsUnder Employment Agreement.  You further acknowledge and agree thatthe Confidentiality, Non-Compete, Non-Solicitation, Separability, and SpecificPerformance provisions in Section 8, 9, and 10, of the Employment Agreement arehereby reaffirmed and shall survive the termination of your employment forwhatever reason, and continue as set forth in the EmploymentAgreement.  

   

 

----

 

 

 

 

 

7. Non-Disparagement.  You agree that you will not make disparagingremarks about Forward, any of its subsidiaries, or their officers, or directorsin their individual and representative capacities, or the Company Business.Forward and its subsidiaries will not, and they shall cause their respectiveofficers and directors not to, make disparaging remarks about you.  Noneof the parties to this Agreement will issue or cooperate with issuance of anyarticle, memorandum, release, interview, publicity, or statement, whether oralor written of any kind, to the public, the press or the media, which in any wayconcerns in a disaparaging, offensive, or prejudicial manner the other party,including any accusation of impropriety or unlawful conduct made directly or byauthorizing others to make such accusations. “Disparaging remarks” when used inthis Agreement shall mean the publication of matter that is untrue or adverselyaffects the subject’s reputation, image or good will, or is designed to induceothers not to do business with you, Forward, or any of its subsidiaries, as thecase may be. This subparagraph will not be construed to prevent you fromcomplying with any lawfully served and binding subpoena, provided however, thatyou forward a copy of said subpoena(s) to the Company within seventy-two (72)hours of receipt of the same, unless expressly prohibited by law from doing so.

8. Equitable Relief.  You agree that the violation of the obligationsin paragraphs 6 and 7 of this Exhibit I would be a material breach of thisAgreement, and the Company shall have no adequate remedy at law and will beable to enforce these obligations by seeking an injunction, including withoutlimitation an ex parte preliminary and/or temporary restraining order, and suchother relief as may be deemed just and proper, including monetary damages. 

 

9. Cooperation.  You agree that you will cooperate with Forward,its subsidiaries, and each of their respective attorneys or other legalrepresentatives (“Company attorneys”) in connection with any claim, litigation,or judicial or arbitral proceeding which is now pending or may hereinafter bebrought against Forward or any of its subsidiaries by any third party. Yourduty of cooperation shall include, but not be limited to (i) meeting with Company attorneys by telephone or in person, at mutually convenient times andplaces,  in order to state truthfully your knowledge of matters at issueand recollection of events; (ii) appearance by you (that does not conflict withthe needs or requirements of your then current employer or occupation) as awitness at depositions or trials, without necessity of a subpoena, in order tostate truthfully your knowledge of matters at issues; and (iii) signing, uponthe request of Company attorneys, declaration or affidavits that truthfullystate matters of which you have knowledge.  The Company shall promptlyreimburse you for your actual and reasonable travel or other expenses that youmay incur in complying with your obligations pursuant to this paragraph.

 

10.  Law Governing.  The termsof this Exhibit I shall be deemed to have been made within the State of NewYork, and shall be interpreted and construed and enforced in accordance withthe law of the State of New York and before the courts of the State of NewYork.  This Agreement is not an admission of any liability or wrongdoingby you, the Company and/or any Releasee.

 

11.  Return of Property.  Youacknowledge that by executing this Agreement that you have returned to theCompany all property and all copies of Confidential Information belonging orpertaining to, or arising out of your employment by, the Company or any of itssubsidiaries in your custody or possession.

 

12.  No Reinstatement. By  entering into this Agreement, you acknowledge that you (i)  waiveany claim to reinstatement and/or future employment with the Company and(ii)  are not and shall not be entitled to any payments, benefits or otherobligations from the Company or any subsidiary thereof whatsoever (except asexpressly set forth herein).

 

Your signature belowacknowledges that you knowingly and voluntarily agree to all of the terms andconditions contained in this Exhibit I and the Agreement.

 

 

----

 

 

 

 

 

 
| **EXECUTIVE   **                                                                                                                                                                 | **FORWARD  INDUSTRIES, INC. **                                                                                                                                                                                                                                                                                                 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                |
|  By:                                 | By:                                                        |
| James O.  McKenna                                                                                                                                                                               | Brett M.  Johnson                                                                                                                                                                                                                                                                                                                   |
|  Vice  President (Chief Financial Officer)                                                                                                                                                 | President  (Chief Executive Officer)                                                                                                                                                                                                                                                                                                |

 

 

 

 

 

 

----

 

**SCHEDULE 1**

 

 

 

 

 
| Phase out of Housing  Allowance.                            |                                    |                                    |                                                           |                                       |                    |                                                                                                             |
|-------------------------------------------------------------|-----------------------------------------|-----------------------------------------|----------------------------------------------------------------|--------------------------------------------|-------------------------|------------------------------------------------------------------------------------------------------------------|
| Jim McKenna                                                 |                                    |                                    |                                                           |                                       |                    |                                                                                                             |   |
| As approved by the  Board of Directors March 7, 2011        |                                    |                                    |                                                           |                                       |                    |
|                                                        |                                    |                                    |                                                           |                                       |                    |                                                                                                             |   |   |   |
| Current base - post  relocation                             |  $     225,000 |                                    |                                                           |                                       |                    |                                                                                                             |
|                                                        |                                    |                                    |                                                           |                                       |                    |                                                                                                             |   |   |   |
| Phase out Base                                              |                                    |  $     400,000 |                                                           |                                       |                    |                                                                                                             |   |
|                                                        |                                    |                                    |                                                           |                                       |                    |                                                                                                             |   |   |   |
| Difference                                                  |                                    |                                    | ** $     175,000**                    |                                       |                    |                                                                                                             |   |   |
|                                                        |                                    |                                    |                                                           |                                       |                    |                                                                                                             |   |   |   |
| Housing Allowance  (annual) - Note (1)                      |                                    |                                    |                                                           | ** $     90,000** |                    |                                                                                                             |
|                                                        |                                    |                                    |                                                           |                                       |                    |                                                                                                             |   |   |   |
| Phase out the  allowance based on %                         |                                    |                                    |                                                           |                                       |                    |                                                                                                             |
|    increases in base  pay-over the first $175,000 |                                    |                                    |                                                           |                                       |                    |
|    of raises Note  (2)                            |                                    |                                    |                                                           |                                       |                    |                                                                                                             |   |
|                                                        |                                    |                                    |                                                           |                                       |                    |                                                                                                             |   |   |   |
| For Example Only:                                           |                                    |                                    |                                                           |                                       |                    |                                                                                                             |   |
|                                                        |                                    | %                             |  $                                    |  New                                  |  % reduction  |  $ Reduction                                                                                           |  Next Year's |  Net  $  | Net % |
| Year                                                        |                                    | Raise                                   |  Raise                                                    |  Base                                 |  in Allowance      |  in Allowance                                                                                               |  Allowance | Increase | Increase |
| 2012                                                        |                                    | 11%                                     |  $         24,975 |  $     249,975    | 14%                     |  $         12,844                                                   |  $     77,156 |  $ 12,131 | 4.9% |
| 2013                                                        |                                    | 5%                                      |  $         12,499 |  $     262,474    | 7%                      |  $           6,428                                        |  $     70,728 |  $   6,071 | 2.4% |
| 2014                                                        |                                    | 6%                                      |  $         15,748 |  $     278,222    | 9%                      |  $           8,099                                        |  $     62,629 |  $   7,649 | 2.9% |
| 2015                                                        |                                    | 5%                                      |  $         13,911 |  $     292,133    | 8%                      |  $           7,154                                        |  $     55,474 |  $   6,757 | 2.4% |
| 2016                                                        |                                    | 8%                                      |  $         23,371 |  $     315,504    | 13%                     |  $         12,019                                                   |  $     43,455 |  $ 11,351 | 3.9% |
| 2017                                                        |                                    | 5%                                      |  $         15,775 |  $     331,279    | 9%                      |  $           8,113                                        |  $     35,342 |  $   7,662 | 2.4% |
| 2018                                                        |                                    | 5%                                      |  $         16,564 |  $     347,843    | 9%                      |  $           8,519                                        |  $     26,824 |  $   8,045 | 2.4% |
| 2019                                                        |                                    | 5%                                      |  $         17,392 |  $     365,235    | 10%                     |  $           8,945                                        |  $     17,879 |  $   8,448 | 2.4% |
| 2020                                                        |                                    | 5%                                      |  $         18,262 |  $     383,497    | 10%                     |  $           9,392                                        |  $      8,487 |  $   8,870 | 2.4% |
| 2021                                                        |                                    | 5%                                      |  $         19,175 |  $     402,672    | 11%                     |  $           8,487                                        |  $           -   |  $ 10,688 | 2.8% |
| 2022                                                        |                                    | 5%                                      |  $         20,134 |  $     422,805    | 0%                      |  $                 -   |  $           -   |  $ 20,134 | 5.0% |
|                                                        |                                    |                                    |                                                           |                                       |                    |                                                                                                             |   |   |   |

** **

 

----

 

 

 

 
| Note (1) |   | This amount reflects the agreed upon cost differential, including the	tax impact                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
|----------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| Note (2) |   | Based upon the view that the housing allowance should not be paid once	Executive's compensation equals or exceeds $400/000 and should be phased out	over the differential between the starting base pay and the $400,000	($400,000 - $225,000=$175,000).  The above example reflects how the	$90,000 annual allowance would be reduced each time the Executive receives	an adjustment to base compensation. While such amounts are reflected above	on an annual basis for illustrative purposes the actual adjustments will be	made on a per pay period basis.

 

 

  |
|     |   |
|     |   |
|     |   |
|     |   |
|     |   |
|     |   |

 

 

 

 

 

 

 

 

----