Document:

Exhibit 10.2

 

 

                                                                                   

SEVERANCE AND RELEASE AGREEMENT

 

            This
Severance and Release Agreement
(this “Agreement”) is entered into as of this 10th day of August 2010
(“Effective Date”),  by and between Douglas W. Sabra, residing at 7441
Brunswick Circle, Boynton Beach, Florida 33472 ("Executive" or
“you”), and Forward Industries, Inc., a New York corporation (“Forward”),
having its principal offices at 1801 Green Road, Suite E, Pompano Beach,
Florida 33064 (Forward, together with its wholly-owned subsidiaries Forward
Innovations, Koszegi Industries, Inc., and Koszegi, Asia, Ltd., are referred to
herein as the "Company").

 

RECITALS:

 

Executive has
been continuously employed by the Company as an executive since May 2000;

 

Executive has
served as director of Forward since 2006;

 

Executive has been party to employment agreements with
Company whereby he has been employed as its Chief Financial Officer commencing
January 2001; as such agreement was amended and restated in September 2003, and
again in December 2005. Executive was then appointed Company’s President and
Chief Executive Officer and entered into a new employment agreement with
Company effective January 2008 which was extended and restated on August 12,
2008 and extended again without further modification effective January 2010
(the agreement dated as of August 12, 2008, is referred to herein as the “Prior
Agreement”); 

 

In such executive capacities Executive has had access to
confidential and valuable non-public information relating to the Company’s
customer lists, supplier lists, sourcing and pricing know-how, other
non-public, proprietary information relating to product pricing, product
proposals, product design proposals, product sourcing information, and other
information relating to the Company Business (as defined herein);

 

The Company and Executive have mutually agreed that
Executive will terminate his employment with the Company in the capacities
under the Prior Agreement and as a Director of the Company as of the Effective
Date, and the Company has agreed to the payment, confirmation of benefits, and
grant of the Executive Release (as defined herein) set forth below in
paragraphs enumerated as 1, 3 and 4, respectively, hereof in consideration of
the Release and covenants in this Agreement; and

 

This Agreement will govern all aspects of the termination
and severance arrangements between Executive and the Company arising out of or
relating to the Prior Agreement and, as hereinafter set forth, shall supersede
any provisions thereof that are inconsistent with this Agreement, the
inconsistent terms of the Prior Agreement being null and void:

 

 

1

 

	

 

 

 

 

 

In
consideration of the foregoing, and in consideration of the obligations
undertaken and benefits received pursuant to the Prior Agreement, the parties
hereto agree as follows:

 

1.  Consideration.  In consideration
of
Executive’s execution and performance of this Agreement,
the Company agrees to (i) pay Executive $500,000.00 (five
hundred thousand US Dollars) less applicable withholding and payroll taxes; of which half ($250,000.00) shall be paid on the Effective
Date  and the remaining half ($250,000.00) shall be paid in 12 equal monthly
installments of approximately $20,833.33 each commencing on September 1, 2010
and continuing on the first business day of each month through August 1, 2011,
(ii) immediately vest and eliminate all restrictions on 26,666 shares of
restricted Common Stock previously granted to Executive under Company’s Equity
Incentive Plan, (iii) immediately vest the option to purchase 10,000 shares of
Common Stock at $2.02 per share, previously granted to Executive under the
Company’s Equity Incentive Plan, with the right to immediately exercise such
option  in accordance with the stock option award agreement and (iv) grant the
Executive Release.  Capitalized terms used in the Prior Agreement that are not
otherwise defined herein shall have the meanings ascribed to such terms when
used in this Agreement.  The parties hereto confirm the survival of Sections 9,
10, 11, and 12 of the Prior Agreement.

 

2. 
Release. 
This release of claims (the “Release”) set forth in this Agreement is entered
into by you as a condition precedent to receiving the severance and severance
related benefits herein.  In exchange for the receipt of the severance and
severance-related benefits, you for yourself, your heirs and assigns and anyone
else acting on your behalf, hereby voluntarily, knowingly and irrevocably and
forever discharge the Company, including without limitation each of its
subsidiaries, and their respective successors, as well as their respective
present, former, and future officers, directors, shareholders, employees, and
agents, in both their individual and representative capacities, and each of
their heirs and assigns (the “Releasees”) from all actions, claims, demands,
causes of actions, obligations, damages, liabilities, expenses and
controversies of any nature whatsoever, whether known or not now known or
suspected, which you had, have or may have against the Releasees from the
beginning of time up to and including the date you sign this Release (the
“Waived Claims”). The Waived Claims that you forever and irrevocably give up
and release when the Release becomes effective on the Effective Date include,
but are not limited to, all claims related to (i) your employment at the
Company, including without limitation its subsidiaries, or the termination of
your employment, (ii) statements, acts or omissions by the Releasees, (iii) any
express or implied agreement between you and the Releasees, (iv) wrongful
discharge, defamation, slander, breach of express or implied contract,
negligent and/or intentional misrepresentation or infliction of emotional
distress, breach of an implied covenant of good faith and fair dealing, claims
of intentional or negligent interference with economic, employment, or
contractual rights or promissory estoppel, (v) any federal, state, or local law
or regulation prohibiting 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
Equal Pay 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), the
Americans with Disabilities Act of 1990 (ADA), the Worker Adjustment and
Retraining Notification Act, the Fair Labor Standards Act of 1938, as amended,
the Employee Retirement Income Security Act of 1974 (ERISA), as amended, 42
U.S.C. Sections 1981 through 1988, the Consolidated Omnibus Reconciliation Act
of 1986 (COBRA) the New York State Human Rights Law and the New York City Human
Rights Act, (vi) any claim for wages, commissions, bonuses, incentive
compensation, vacation pay, employee benefits (except as set forth in paragraph
3 of this Agreement), expenses or allowances of any kind, or any other payment
or compensation, according to the terms of each of those plans. You are not
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 the date
that you sign this Agreement.

 

 

2

 

	

 

 

 

 

3.  Termination and Severance Benefits. The Release
does not affect your vested rights and eligibility for benefits under the
Company 401(k) Plan, or any other employee benefit plan covered by ERISA (other
than a severance plan). Eligibility for benefits under these plans is
determined by the applicable plan documents.  The Release does not affect your
right to reimbursement of expenses incurred but not reimbursed prior to the
date you sign this Agreement, subject to the Company’s expense reimbursement
policies.  In addition, this Agreement does not affect your right to
post-retirement medical coverage as applicable.  In particular, this Agreement
and the Release shall not affect your right to the
payment provided in paragraph 1 of this Agreement.

 

4. 
Release. 
This release of claims (the “Executive Release”) set forth in this Agreement is
entered into by the Company in consideration of Executive entering into and
performing this Agreement.  In exchange for Executive’s performance of the
terms of this Agreement and grant of the Release, Company, for itself, its
subsidiaries, and their respective successors and assigns, subject to the last
sentence of the first paragraph of paragraph 1 hereof and the accuracy of the
representations set forth in paragraph 6 hereof, hereby voluntarily, knowingly
and irrevocably and forever discharges Executive from all actions, claims,
demands, causes of actions, obligations, damages, liabilities, expenses and
controversies of any nature whatsoever, whether known or not now known or
suspected, which it had, have or may have against the Executive in his capacity
as executive officer from the beginning of time up to and including the
Effective Date of this Agreement (the “Executive Waived Claims”). The Executive
Waived Claims that the Company and its subsidiaries forever and irrevocably
give up and release when the Executive Release becomes effective on the
Effective Date include, but are not limited to, all claims related to (i)
Executive’s employment at the Company, including without limitation its
subsidiaries, or the termination of said employment, (ii) statements, acts or
omissions by Executive, (iii) any express or implied agreement between the
Company, including without limitation, its subsidiaries and you, other than
agreements that by their terms survive the Prior Agreement, and (iv)
defamation, slander, breach of express or implied contract, negligent and/or
intentional misrepresentation or infliction of emotional distress, breach of an
implied covenant of good faith and fair dealing. By entering into this
Agreement or granting this Executive Release neither Company nor any subsidiary
hereby waives any claim with respect to its rights to enforce this Agreement.
Neither the Company nor any subsidiary waives or releases any rights or claims
that may arise after the date that it executes this Agreement.

 

 

 

3

 

	

 

 

 

5. 
No
suit. You represent and warrant that as of the date you enter into this
Agreement, you nor anyone acting on your behalf has made or filed, commenced,
maintained, prosecuted or participated in any action, suit, charge, grievance,
complaint or proceeding of any kind against the Company, any subsidiary
thereof, and/or Releasees in any federal, state or local court, agency or
investigative body.  You acknowledge that based on the foregoing, you hereby
waive all relief available to you, including, without limitation, monetary
damages, attorney’s fees and costs, equitable relief and reinstatement, under
any claims released pursuant to paragraph 2 above.

 

6. 
Representations.
You acknowledge and agree that:

	(a)	
		You have read and fully
understand the legal effect and binding nature of the promises and obligations
contained in this Agreement;

	(b)	
		You are signing this
Agreement freely and voluntarily;

	(c)	
		You have been advised to
consult with legal counsel, at your own expense, before signing this Agreement;

		
	(d)	
		You are receiving benefits
as a condition to signing this Agreement and this Agreement becoming effective
on the Effective Date that you would not otherwise be entitled to receive but
for this Agreement so becoming effective;

	(e)	
		You have not, during the term of your employment
under the Prior Agreement or thereafter performed any act, or directed any
other person or entity to perform any act on your or their behalf, the intended
or proximate result of which would constitute a violation of the terms referred
to or set forth in paragraph 7 of this Agreement, nor are there any agreements,
arrangements, or understandings, written or oral, that would, if performed or
acted upon, constitute such a violation. 

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

	(g)	
		You will have had a period
of five (5) days from the date of receipt of this Agreement to consider it.
Please indicate your acceptance by signing the agreement and sending it via
overnight mail or hand delivery to:

 

James O.
McKenna

c/o Forward
Industries, Inc.

1801 Green
Road, Suite E,

Pompano
Beach, FL 33064

 

With
a copy to:

Chairman of the Compensation
Committee

c/o Forward Industries, Inc.

1801 Green Road, Suite E,

Pompano Beach, FL 33064

 

 

 

4

 

	

 

 

 

7.  Covenants Under Prior
Agreement.  You further acknowledge and agree that the Confidentiality,
Non-Compete, Non-Solicitation, Separability, and Specific Performance
provisions in Sections 9, 10, and 11, of the Prior Agreement are hereby
reaffirmed and shall survive the termination of your employment for whatever
reason, and continue as set forth in the Prior Agreement. 

8. 
Non-Disparagement. 
You agree that you will not make disparaging remarks about Company, any of its
subsidiaries, or their current and future officers, or directors in their
individual and representative capacities, or the Company Business. Company and
its subsidiaries will not, and they shall cause their respective current and
future officers and directors not to, make disparaging remarks about you. 
None of the parties to this Agreement will issue or cooperate with issuance of
any article, memorandum, release, interview, publicity, or statement, whether
oral or written of any kind, to the public, the press or the media, which in
any way concerns in a disparaging, offensive, or prejudicial manner the other
party, including any accusation of impropriety or unlawful conduct made
directly or by authorizing others to make such accusations. “Disparaging
remarks” when used in this Agreement shall mean the publication of matter that
is untrue or adversely affects the subject’s reputation, image or good will, or
is designed to induce others not to do business with you, Company, or any of
its subsidiaries, as the case may be. This paragraph will not be construed to
prevent you from complying with any lawfully served and binding subpoena,
provided however, that you 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.

9. 
Equitable Relief.  You agree that the violation of the obligations in
paragraphs 7 and 8 would be a material breach of this Agreement, and the
Company shall have no adequate remedy at law and will be able to enforce these
obligations by seeking an injunction, including without limitation an ex parte
preliminary and/or temporary restraining order, and such other relief as may be
deemed just and proper, including monetary damages. 

 

10. 
Cooperation.  You agree that you will cooperate with the
Company, including without limitation its subsidiaries, and each of their
respective attorneys or other legal representatives (“Company attorneys”) in
connection with any claim, litigation, or judicial or arbitral proceeding which
is now pending or may hereinafter be brought against the Company, including
without limitation, any of its subsidiaries by any third party. Your duty of
cooperation shall include, but not be limited to (i) meeting with  Company
attorneys by telephone or in person, at mutually convenient times and places,
in order to state truthfully your knowledge of matters at issue and
recollection of events; (ii) appearance by you (that does not conflict with the
reasonable needs or requirements of your then current employer or occupation)
as a witness at depositions or trials, without necessity of a subpoena, in
order to state truthfully your knowledge of matters at issues; and (iii)
signing, upon the request of Company attorneys, declaration or affidavits that
truthfully state matters of which you have knowledge.  The Company shall
promptly reimburse you for your actual and reasonable travel or other expenses
that you may incur in complying with your obligations pursuant to this
paragraph.

 

 

 

5

 

	

 

 

 

 

 

 

11.  Law Governing.  This Agreement shall be deemed
to have been made within the State of New York, and shall be interpreted and
construed and enforced in accordance with the law of the State of New York and
before the courts of the State of New York.  This Agreement is not an admission
of any liability or wrongdoing by you, the Company and/or any Releasee.

 

12.  Return of Property.  You acknowledge that by
executing this Agreement that you have returned to the Company all property and
all copies of Confidential Information belonging or pertaining to, or arising
out of your employment by, the Company or any of its subsidiaries, as defined
in Section 9(a) of the Prior Agreement, in your custody or possession.

 

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

 

Your signature below acknowledges that you knowingly and
voluntarily agree to all of the terms and conditions contained in this
Agreement.

 

 

 

           
Agreed to and Accepted this 10th day of August, 2010

 

 

/s/ Douglas W.
Sabra                               

Douglas W.
Sabra

 

 

FORWARD
INDUSTRIES, INC.

(on its own
behalf and behalf of each

subsidiary
thereof)

 

 

 

/s/ Fred Hamilton                                      

By: Fred
Hamilton

By direction
of the Board of Directors

 

 

 

 

6Exhibit 10.3

 

 

 

 

 

EMPLOYMENT
AGREEMENT

 

EMPLOYMENT AGREEMENT (this “Agreement”), dated as of
the 10th day of August, 2010, 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, Executive is party to an employment agreement
with the Company dated as of August 12, 2008 (the “Prior Agreement”), and the
Company wishes to secure the services of Executive upon the terms and
conditions of employment as set forth in this Agreement, with effect from the
Effective Date (as such term is hereinafter defined), the Prior Agreement
thereupon becoming of no further force or effect;

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; PRIOR AGREEMENT

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 December 31, 2011.  The
Effective Date shall mean the date on which the Company, or the Special
Committee of the Board of Directors of the Company on behalf of the Company,
and LaGrange Capital Partners L.P. enter into a definitive and binding
settlement agreement relating to management of the Company and certain other
matters.  Upon the Effective Date, this Agreement shall become effective and
the Prior Agreement shall be null and void and of no further force or effect
whatsoever.  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.

 

 

	

 

 

 

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 of the Company (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 shall
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.

 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”) 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 terms of the bonus
plan that the Company adopts, with approval by the Compensation Committee of
the Board of Directors (the “Compensation Committee”), from year to year. The
Executive’s participation in such bonus plan shall be at a level commensurate
with the Executive’s current position or any more senior position(s) to which
Executive may be appointed.

 

Bonus compensation, if any, payable pursuant to Section 3(b)
shall be payable to Executive no later than the tenth (10th) business
day after 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”). If Executive is otherwise entitled to payment of a Bonus
pursuant to this Section 3(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.

 (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: 

           
(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.  

 

 

 

	

 

 

 

 

 

 

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.

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

(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 (for the avoidance of doubt, termination without cause shall
include Company notice of non-renewal to be effective at the end of the
employment term, or any renewal thereof), 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), 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), equal to the amount of salary payable for
a period of one year 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);

(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.  .  

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

(i) the assignment to Executive without his written consent
of any duties or title inconsistent in any material respect with Executive’s
position (including employment status, titles (including without limitation
that of Chief Financial Officer) 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, status, titles, 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 or reduction in level
of employee benefits that Executive currently receives or entitlement to Bonus
(subject always to the discretion of the Compensation Committee to fix Target
and define the formula under which Executive may be eligible to receive Bonus);

(iii) failure to accord Executive equal treatment in respect
of responsibilities, reporting obligations and other matters reflected in
clause (i) above, in respect of benefits generally, with any other executive
officer having the same or similar positions;

 

 

 

	

 

 

 

 

 

(iv) direction that performance of Executive’s
responsibilities under this Agreement shall be performed at a location (at the
Company’s principal executive offices or otherwise) more than 30 miles distance
from the location of the Company’s current executive offices in Pompano Beach,
Florida.

(v) 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

(vi) 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 6(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 6(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 6(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

(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 or other employee benefits 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.         OBLIGATIONS
UPON TERMINATION, ETC.

(a)        Upon the
termination of employment for any reason hereunder, all provisions of this
Agreement shall terminate except for Sections 7, 8, 9 and 10 of this Agreement
and the provisions contained in Exhibit I hereto, the terms of which shall
survive such termination, and the Company shall have no further obligation to
Executive hereunder, except as herein and therein 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, or 6, as the case may be, and
this Section 7 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
except as expressly set forth in Exhibit I hereto.  The Company’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 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, as set forth in
Exhibit I hereto.

8.         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 8,
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) 

(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 8 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.

 

 

	

 

 

 

 

 

 

(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 8 (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.

9.         SEPARABILITY

Executive agrees that the provisions of Section 8 hereof
constitute independent and separable covenants, for which Executive is
receiving consideration, which shall survive the termination of employment, and
which shall be enforceable by the Company notwithstanding any rights or
remedies the Company may have under any other provision hereof.

10.      SPECIFIC
PERFORMANCE

Executive acknowledges that:

 

	

 

 

 

 

 

(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.

 

 

 

 

	

 

 

 

 

 

 

11.       MISCELLANEOUS

(a)        Entire Agreement;
Amendment.  This Agreement constitutes the entire employment agreement
between the parties and may not be modified, amended or terminated (other than
pursuant to the terms hereof) except by a written instrument executed by the
parties hereto.  All other agreements, 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.

(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.

(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.

 

 

 

 

 

 

 

 

 

 

 

	

 

 

 

 

 

(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 7, 8, 9, and 10 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

 

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the 10th day of August 2010, intending it to be
effective on and as of the Effective Date.

	
		JAMES O. McKENNA
	
		
		FORWARD INDUSTRIES, INC.

	
		/s/ James O. McKenna	
		
		By:  /s/ Fred Hamilton

	
		 

			
		Fred Hamilton

		Director, duly authorized by the Board

		

 

 

	

 

 

 

 

 

 

EXHIBIT I

 

1. 
Release. 
This Release of Claims (the “Release”) is entered into by you as a condition
precedent to receiving the severance and severance related benefits provided in
the Employment Agreement to which this Exhibit I relates (this “Agreement” or the
“Employment Agreement”).  In exchange for the receipt of the severance and
severance related benefits, you for yourself, your heirs and assigns and anyone
else acting on your behalf, hereby voluntarily, knowingly and irrevocably and
forever discharge the Company, each of its subsidiaries, and their respective
successors, as well as their respective present, former, and future officers,
directors, shareholders, employees, and agents, in both their individual and
representative capacities, and each of their heirs and assigns (the
“Releasees”) from all actions, claims, demands, causes of actions, obligations,
damages, liabilities, expenses and controversies  of any nature whatsoever,
whether known or not now known or suspected, which you had, have or may have
against the Releasees from the beginning of time up to and including the date
you sign this Release (the “Waived Claims”). The Waived Claims that you forever
and irrevocably give up and release when the Release becomes Effective 
include, but are not limited to, all claims related to (i)  your employment at
each of the Company and its subsidiaries or the termination of your employment,
(ii)  statements, acts or omissions by the Releasees, (iii)  any express or
implied agreement between you and the Releasees, (iv)  wrongful discharge,
defamation, slander, breach of express or implied contract, negligent and/or
intentional misrepresentation or infliction of emotional distress, breach of an
implied covenant of good faith and fair dealing, claims of intentional or
negligent interference  with economic, employment, or contractual rights or
promissory estoppel, (v)  any federal, state, or local law or regulation
prohibiting 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 Equal Pay 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), the Americans
with Disabilities Act of 1990 (ADA), the Worker Adjustment and Retraining
Notification Act, the Fair Labor Standards Act of 1938, as amended, the
Employee Retirement Income Security Act of 1974 (ERISA), as amended, 42 U.S.C.
Sections 1981 through 1988, the Consolidated Omnibus Reconciliation Act of 1986
(COBRA) the New York State Human Rights Law and the New York City Human Rights
Act, (vi) any claim for wages, commissions, bonuses, incentive compensation,
vacation pay, employee benefits (except as set forth in paragraph 2 of this
Exhibit1 and paragraphs 5 or 6, as the case may be, and paragraph 7 of the
Employment Agreement), expenses or allowances of any kind, or any other payment
or compensation, according to the terms of each of those plans. You are not
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 the date
that you sign this Release.  The date that you sign this Release shall be the
date on or about you are entitled to receive the severance and other payments
and other consideration as provided in the Employment Agreement and is referred
to herein as the “Effective Date”.

 

 

 

 

	

 

 

 

 

 

2. 
Termination
and Severance Benefits. The Release does not affect your vested rights and
eligibility for benefits under the Company 401(k) Plan, or any other employee
benefit plan covered by ERISA (other than a severance plan). Eligibility for
benefits under these plans is determined by the applicable plan documents.  The
Release does not affect your right to reimbursement of expenses 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 as applicable.  In particular, this
Agreement and the Release shall not affect your right to the
payment provided in Section 4, 5 or 6 of the Agreement, as the case may be, and
Section 7 thereof, or the Executive Release as set
forth below.

 

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

 

4. 
No
suit. You represent and warrant that as of the Effective Date, you nor
anyone acting on your behalf has made or filed, commenced, maintained,
prosecuted or participated in any action, suit, charge, grievance, complaint or
proceeding of any kind against the Company, any subsidiary thereof, and/or
Releasees in any federal, state or local court, agency or investigative body. 
You acknowledge that based on the foregoing, you hereby waive all relief
available to you, including, without limitation, monetary damages, attorney’s
fees and costs, equitable relief and reinstatement, under any claims released
pursuant to paragraph 1 above.

 

 

 

 

	

 

 

 

 

 

5. 
Representations. You
acknowledge and agree that:

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

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

(c) You have been advised to consult with legal counsel, at your own expense,
before signing this Exhibit to the Agreement;

(d) You are receiving benefits as a condition to signing this Exhibit to Agreement
and it becoming Effective that you would not otherwise be entitled to receive
but for this Exhibit to Agreement becoming Effective;

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

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

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

 

President

c/o Forward
Industries, Inc.

1801 Green
Road, Suite E,

Pompano
Beach, FL 33064

 

 

6.  Covenants Under Employment
Agreement.  You further acknowledge and agree that the Confidentiality,
Non-Compete, Non-Solicitation, Separability, and Specific Performance
provisions in Section 8, 9, and 10, of the Employment Agreement are hereby
reaffirmed and shall survive the termination of your employment for whatever
reason, and continue as set forth in the Employment Agreement. 

 

	

 

 

 

 

 

7. 
Non-Disparagement. 
You agree that you will not make disparaging remarks about Forward, any of its
subsidiaries, or their officers, or directors in their individual and
representative capacities, or the Company Business. Forward and its subsidiaries
will not, and they shall cause their respective officers and directors not to,
make disparaging remarks about you.  None of the parties to this Agreement
will issue or cooperate with issuance of any article, memorandum, release,
interview, publicity, or statement, whether oral or written of any kind, to the
public, the press or the media, which in any way concerns in a disaparaging,
offensive, or prejudicial manner the other party, including any accusation of
impropriety or unlawful conduct made directly or by authorizing others to make
such accusations. “Disparaging remarks” when used in this Agreement shall mean
the publication of matter that is untrue or adversely affects the subject’s
reputation, image or good will, or is designed to induce others not to do
business with you, Forward, or any of its subsidiaries, as the case may be.
This subparagraph will not be construed to prevent you from complying with any
lawfully served and binding subpoena, provided however, that you 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 obligations in
paragraphs 6 and 7 of this Exhibit I would be a material breach of this Agreement,
and the Company shall have no adequate remedy at law and will be able to
enforce these obligations by seeking an injunction, including without
limitation an ex parte preliminary and/or temporary restraining order, and such
other 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 legal
representatives (“Company attorneys”) in connection with any claim, litigation,
or judicial or arbitral proceeding which is now pending or may hereinafter be
brought against Forward or any of its subsidiaries by any third party. Your
duty of cooperation shall include, but not be limited to (i) meeting with 
Company attorneys by telephone or in person, at mutually convenient times and
places,  in order to state truthfully your knowledge of matters at issue
and recollection of events; (ii) appearance by you (that does not conflict with
the needs or requirements of your then current employer or occupation) as a
witness at depositions or trials, without necessity of a subpoena, in order to
state truthfully your knowledge of matters at issues; and (iii) signing, upon
the request of Company attorneys, declaration or affidavits that truthfully
state matters of which you have knowledge.  The Company shall promptly
reimburse you for your actual and reasonable travel or other expenses that you
may incur in complying with your obligations pursuant to this paragraph.

 

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

 

11.  Return of Property.  You acknowledge that by
executing this Agreement that you have returned to the Company all property and
all copies of Confidential Information belonging or pertaining to, or arising
out of your employment by, the Company or any of its subsidiaries in your
custody or possession.

 

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

 

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

 

 

	

 

 

 

 

 

 

	
		
		EXECUTIVE   
	FORWARD INDUSTRIES, INC.  
	
		 

			 
	
		 

			 
	
		
		                                
		

			By:                                                      
	
		James O. McKenna 
	Fred Hamilton
	
		 

			By direction of the Board of Directors

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