AMENDMENT I TO
EMPLOYMENT AGREEMENT
AMENDMENT I TO EMPLOYMENT AGREEMENT (the "Amendment") effective as of this 26th
day of October, 2012, by and between Forward Industries, Inc. (the "Company")
and James O. McKenna ("Executive").
WHEREAS, the Company and Executive entered into a certain Employment Agreement,
effective August 10, 2010 (the "Agreement"); and
WHEREAS, the Company and Executive wish to amend the terms of the Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, and in consideration of Executive's continued employment,
the parties hereto agree as follows:
1.
DEFINED TERMS.
ALL CAPITALIZED TERMS CONTAINED IN THIS AMENDMENT
SHALL, FOR THE PURPOSES HEREOF, HAVE THE SAME MEANING ASCRIBED TO THEM IN THE
AGREEMENT UNLESS THE CONTEXT HEREOF CLEARLY PROVIDES OTHERWISE OR UNLESS
OTHERWISE DEFINED HEREIN.
2.
BASE SALARY REDUCTION. EFFECTIVE NOVEMBER 1, 2012, EXECUTIVE'S SALARY
SHALL BE REDUCED TO $210,000 PER ANNUM.
EXECUTIVE AGREES THAT SUCH REDUCTION
SHALL NOT CONSTITUTE A GOOD REASON TERMINATION PURSUANT TO SECTION 5(C)(II) OF
THE AGREEMENT AND EXECUTIVE WAIVES ANY CLAIMS THAT SUCH REDUCTION CONSTITUTES A
GOOD REASON TERMINATION.
3.
HOUSING ALLOWANCE.
SECTION 3(E), HOUSING ALLOWANCE, OF THE AGREEMENT
SHALL BE DELETED FROM THE AGREEMENT.
THE HOUSING ALLOWANCE SHALL CEASE ON
OCTOBER 31, 2012.
4.
IRC§409A.
SECTION 3(H) IS HEREBY DELETED AND RESTATED AS FOLLOWS:
(A)
"THE INTENT OF THE PARTIES IS THAT PAYMENTS AND BENEFITS UNDER
THIS AGREEMENT COMPLY WITH, OR BE EXEMPT FROM, INTERNAL REVENUE CODE SECTION
409A AND THE REGULATIONS AND GUIDANCE PROMULGATED THEREUNDER (COLLECTIVELY "CODE
SECTION 409A") AND, ACCORDINGLY, TO THE MAXIMUM EXTENT PERMITTED, THIS AGREEMENT
SHALL BE INTERPRETED TO BE IN COMPLIANCE THEREWITH.
(B)
A TERMINATION OF EMPLOYMENT SHALL NOT BE DEEMED TO HAVE OCCURRED
FOR PURPOSES OF ANY PROVISION OF THIS AGREEMENT PROVIDING FOR THE PAYMENT OF ANY
AMOUNTS OR BENEFITS UPON OR FOLLOWING A TERMINATION OF EMPLOYMENT THAT ARE
CONSIDERED "NONQUALIFIED DEFERRED COMPENSATION" UNDER CODE SECTION 409A UNLESS
SUCH TERMINATION IS ALSO A "SEPARATION FROM SERVICE" WITHIN THE MEANING OF CODE
SECTION 409A AND, FOR PURPOSES OF ANY SUCH PROVISION OF THIS AGREEMENT,
REFERENCES TO A "TERMINATION," "TERMINATION OF EMPLOYMENT" OR LIKE TERMS SHALL
MEAN "SEPARATION FROM SERVICE."
IF THE EXECUTIVE IS DEEMED ON THE DATE OF
TERMINATION TO BE A "SPECIFIED EMPLOYEE" WITHIN THE MEANING OF THAT TERM UNDER
CODE SECTION 409A(A)(2)(B), THEN WITH REGARD TO ANY PAYMENT THAT IS CONSIDERED
NON-QUALIFIED DEFERRED COMPENSATION UNDER CODE SECTION 409A PAYABLE ON ACCOUNT
OF A "SEPARATION FROM SERVICE," SUCH PAYMENT OR BENEFIT SHALL BE MADE OR
PROVIDED AT THE DATE WHICH IS THE EARLIER OF (A) THE EXPIRATION OF THE SIX
(6)-MONTH PERIOD MEASURED FROM THE DATE OF SUCH "SEPARATION FROM SERVICE" OF THE
EXECUTIVE, AND (B) THIRTY (30) DAYS FROM THE DATE OF THE EXECUTIVE'S DEATH (THE
"DELAY PERIOD").
(C)
WITH REGARD TO ANY PROVISION HEREIN THAT PROVIDES FOR REIMBURSEMENT
OF COSTS AND EXPENSES OR IN-KIND BENEFITS, EXCEPT AS PERMITTED BY CODE SECTION
409A, (I) THE RIGHT TO REIMBURSEMENT OR IN-KIND BENEFITS SHALL NOT BE SUBJECT TO
LIQUIDATION OR EXCHANGE FOR ANOTHER BENEFIT, (II) THE