**AMENDMENT TO EMPLOYMENT AGREEMENT**

**AMENDMENTTO EMPLOYMENT AGREEMENT** (this "Amendment"), dated as of the 1stday of January, 2008, between Forward Industries, Inc., a New York corporationhaving its principal offices at 1801 Green Road, Suite E, Pompano Beach,Florida 33064 (the "Company"), and Douglas W. Sabra, residing at 7441Brunswick Circle, Boynton Beach FL 33437 ("Executive").

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

**WHEREAS**,Executive has been rendering services to the Company pursuant to an employmentagreement between the Company and Executive dated as of December 27, 2005, effectiveas of October 1, 2005, (the "Prior Agreement", which as modified bythis Amendment, is referred to herein as the “Amended Agreement”);

**WHEREAS**,Executive has been appointed Chief Executive Officer of the Company and it desiresto employ Executive to perform such senior executive and other services for theCompany consistent with this position and to amend the Executive’s terms ofemployment in connection therewith upon terms of compensation recommended bythe Compensation Committee (as hereinafter defined) and approved by the Board;

**WHEREAS**,Executive agrees to accept such employment upon the amended terms andconditions, and the parties agree that the Prior Agreement shall be amended inaccordance with the terms of this Amendment;

 

----

 

 

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

 1.        EMPLOYMENT AND DUTIES

On the termsand conditions set forth herein and in the Prior Agreement, the Company herebyemploys Executive as its Chief Executive Officer for the term of the Amended Agreement,and Executive hereby accepts such employment.

2.        SERVICES

(a)       Executive shall perform such duties of a senior executive nature for theCompany, as shall be consistent with the provisions of the Company's By-laws ineffect on the date hereof, subject to the direction of its Board of Directors(the "Board").  Executive shall serve the Company faithfully andto the best of his ability and shall devote his full business time andattention to the business and affairs of the Company, subject to reasonableabsences for vacation and illness as determined by the Compensation Committeeof the Board (the "Compensation Committee").  Executive will notengage, directly or indirectly, in any other business or occupation during theEmployment Term. It is understood, however, that the foregoing will notprohibit the Executive from (i) engaging in personal investment activities forhimself and his family as have been or may hereafter be approved by the Board,(ii) accepting directorships unrelated to the Company, subject to the prior,written approval of the Compensation Committee, and (iii) engaging incharitable and civic activities, so long as any one or more such outsideinterests set forth in clauses (i), (ii) and (iii) hereof do not interfere withor affect the performance of his duties hereunder in any material respect.

 

----

 

 

3.        COMPENSATION 

(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") of $250,000per annum effective from the date of this Agreement, payable in equalinstallments in accordance with the prevailing practices of the Company (butnot less frequently than monthly). 

(b)       Bonus.  The Executive shall be eligible to receive a bonus ("Bonus")with respect to each full fiscal year or (except to the extent expresslyprovided in Sections 5(c) (solely with respect to the last paragraph thereof),6, or 8 of the Prior Agreement) part thereof in respect of his employmenthereunder, as set forth in this Section 3.  

(c)       Calculation and Payment of Bonus.  The amount of Bonus, if any,that Executive may earn with respect to the fiscal year ending September 30,2008 (“Fiscal 2008”), shall be equal to the product of (i) three percent (0.03)and (ii) the amount, if any, of pre-tax income of the Company for Fiscal 2008,exclusive of “other income”, .

Pre-taxincome is defined for purposes hereof as the Company's consolidated net income,after giving effect to bonuses paid to employees (including executive officers)but before extraordinary items (whether contributions to or deductions from netincome), less other income, plus income taxes, all as determined by referenceto the results of operations set forth in the Company's audited financial statementsin respect of Fiscal 2008.  

 

----

 

 

4.        EFFECT ON PRIOR AGREEMENT

The partieshereto hereby agree that, on and as of the date hereof, (a) the Prior Agreementshall be, and it hereby is, amended in accordance with the terms of thisAmendment, (b) the terms and conditions of this Amendment supersede anyinconsistent terms and conditions of the Prior Agreement, and (c) all otherterms and conditions of the Prior Agreement shall remain in full force andeffect.

**INWITNESS WHEREOF**, the parties have executed this Amendment as of the 1st dayof January 2008. 

| **DOUGLAS W. SABRA**     |    | **FORWARD INDUSTRIES, INC.**                                                                                                                     |
|--------------------------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |    |                                                                                                                                             |
| /s/ **DOUGLAS W. SABRA** | **By:** | **/s/ James O. McKenna**                                                                                                                         |
|  Executive          |    | **     Name:   James O. McKenna       Title:    Chief Financial  Officer** |