Document:

Exhibit 10.11

 

 

LICENSE
AGREEMENT

 

BETWEEN

MOTOROLA, INC.

AND

FORWARD INDUSTRIES,
INC.

 

             

 

 
 
TABLE OF CONTENTS
 

		
			
1.         DEFINITIONS

			
2.         GRANT OF LICENSE

3.         SAMPLES; QUALITY CONTROL

				
			4

			7

			7

	

4.         APPROVED MANUFACTURERS

				
			9

	

5.         APPEARANCE OF TRADEMARKS
TRADEMARK NOTICES
	
			10

	

6.         PROTECTION OF TRADEMARKS

			
			7.         PRODUCT WARRANTY
			AND SUPPORT

			
			8.         ROYALTIES AND
			REPORTS

			
			9.         SALES AND
			MARKETING

			
			10.       TERM AND TERMINATION

				
			11

			12

			13

			15

			16

	

11.       POST TERMINATION RIGHTS AND OBLIGATIONS

			
			12.       CONFIDENTIALITY AND
			INTELLECTUAL PROPERTY 

			
			13.       EXPORT 

			
			14.       REPRESENTATIONS AND
			WARRANTIES

			
			15.       INDEMNITY AND INSURANCE

				
			18

			20

			22

			22

			23

	

16.       DISPUTE RESOLUTION
	
			24

	

17.       FORCE MAJEURE

			
			18.       LIMITATION OF LIABILITY

				
			25

			26

	

19.       COMPLIANCE WITH LAWS
	
			 26

	

20.       INTELLECTUAL PROPERTY
	
			26

	

21.       PRESS RELEASES
	
			27

	

22.       ETHICS AND CONFLICTS OF INTEREST

			
			23.       NOTICES
	
			27

			27

	
24.      
ASSIGNMENT OF RIGHTS AND SUBLICENSE
	
			 28

	

25.       FREEDOM OF ACTION
	
			29

 

 

 

		
26.       APPROVALS

				29
	

27.       WAIVER OF DEFAULT OR OTHER RIGHTS

				29
	

28.       SEVERABILITY
	29
	

29.       SECTION HEADINGS
	29
	

30.       EXHIBITS 
	29
	

31.       SURVIVAL
	30
	

32.       TIME IS OF THE ESSENCE
	30
	

33.       RIGHTS CUMULATIVE
	30
	

34.       ENTIRE AGREEMENT 
	30
	
35.       GOVERNING LAW 

				30 

EXHIBITS

A,         Products, Territory,
Rates and Term

B.         Trademarks

C.        Trademark Use
Guidelines

D.        Specifications

E.         Sample Manufacturer’s
Agreement

F.         Product Warranty

G.        Licensor Exclusive
Accounts

H.         Compliance with Laws
and Ethical Standards
  

 

 

LICENSE AGREEMENT

 

 

THIS AGREEMENT is made between:

 

(1)        MOTOROLA,
INC., a Delaware corporation, having its principal office at 1303 East Algonquin Road, Schaumburg, Illinois 60196, USA (including its subsidiaries and
affiliates, “Motorola” or “Licensor”); and

 

(2)        FORWARD INDUSTRIES, INC.,
a New York corporation, having its principal office at 1801 Green Road, Pompano Beach, Florida 33064, (“Licensee”).                                                                                                                                                                                                                        
                                                                                  

 

with reference to the
following recitals:

 

,A.        Motorola is the owner of
certain Trademarks, including MOTOROLA and the Stylized M logo. The Trademarks
constitute valuable rights owned and used by  Motorola in conducting its
business and designating the origin or sponsorship of distinctive branded
products by Motorola;

 

B.         Motorola wishes to
license certain Trademarks for use in connection with accessories for cellular
telephones;

 

C.         Licensee wishes to use
the Trademarks upon and in connection with the manufacture, sale, marketing,
and distribution of certain accessories for cellular telephones;  

 

D.         Motorola desires to
protect the integrity of its Trademarks and to preserve its right to label its
products with its Trademarks so as to avoid consumer confusion and to
distinguish its products from those of its competitors; 

 

E.         Motorola and Licensee are parties to a
license agreement entered into as of October 1, 2004, that expired by its terms December 31, 2007 (the “Prior Agreement”); and

 

F.         Licensee and Motorola
agree that certain restrictions on Licensee’s use of the Trademarks are
necessary to ensure that the Trademarks are not diluted or subjected to
disrepute in the course of Licensee’s use of the Trademarks, that Motorola’s
reputation is not subjected to disrepute, and that Motorola’s rights in the
Trademarks and ownership of the Trademarks are preserved.

 

 

NOW, THEREFORE, in
consideration of the mutual promises of this Agreement, the parties agree as
follows:

 

 

1.         DEFINITIONS

 

1.1             
In
this Agreement:

 

 

 

“Affiliates” means affiliated,
associated or subsidiary companies of Motorola or Licensee (as applicable) or
persons or other entities with a common ownership, common management, or
interest in or interlocking directorate with, Licensee or Motorola.

 

 

“Approved Sample”
means
Product or Product Materials which have been delivered to and approved in
writing by Motorola’s Representative as provided in Section 3 of this
Agreement.

 

“Approved Manufacturer” means
a contract manufacturer or supplier to Licensee of the Product or Product
Materials that has been approved by Motorola and that has executed a
Manufacturer’s Agreement incorporating all of the terms of the Manufacturer’s
Agreement set forth in Exhibit E.

 

“Business Day” means a day that is not a Saturday or
Sunday or a legal holiday and on which banks are not required or permitted by
law or other governmental action to close in Illinois or Florida.

 

“Days” means calendar days.

 

“Derivative Works” means any computer
program, work, industrial design, ornamental design, product, service,
improvement, supplement, modification, alteration, addition, revision,
enhancement, new version, new edition, remake, sequel, translation, adaptation,
design, plot, theme, character, story line, concept, scene, audio-visual
display, interface element or aspect, in any medium, format, use or form
whatsoever, whether interactive or linear and whether now known or unknown
(including but not limited to sound recordings, phonorecords, computer-assisted
media, games, books, magazines, periodicals, merchandise, animation, home
videos, radio, motion pictures, cable and television), that is derived directly
or indirectly, from any Motorola Intellectual Property, or any part or aspect
of any thereof, or that uses or incorporates any of the Motorola Intellectual
Property, or any part or aspect of any thereof.

 

“Effective Date” means January 1, 2008.

 

“Gross Sales” means the total amount
billed by Licensee for Products sold to its customers, other than Motorola, its
subsidiaries and its affiliates.

 

 

“Intellectual Property Rights” means any and all (by whatever name or term known or designated)
tangible and intangible and now known or hereafter existing: (i) rights
associated with works of authorship throughout the universe, including but not
limited to copyrights (including without limitation the sole and exclusive
right to prepare Derivative Works of copyrighted works and to copy,
manufacture, reproduce, lend, distribute copies of, modify, publicly perform
and publicly display the copyrighted work and all derivative works thereof),
moral rights (including without limitation any right to identification of
authorship and any limitation on subsequent modification) and mask-works; (ii) rights
in and relating to the protection of trademarks, service marks, trade names,
goodwill, rights in packaging, rights of publicity, merchandising rights,
advertising rights and similar rights; (iii) rights in and relating to the
protection of trade secrets and confidential information; (iv) patents,
designs, algorithms and other industrial property rights and rights associated
therewith; (v) other intellectual and industrial property and proprietary
rights (of every kind and nature throughout the universe and however
designated) relating to intangible property that are analogous to any of the
foregoing rights (including without limitation logos, character rights,
“rental” rights and rights to remuneration), whether arising by operation of
law, contract, license or otherwise; (vi) registrations, applications,
renewals, extensions, continuations, divisions or reissues thereof now or
hereafter in force throughout the universe (including without limitation rights
in any of the foregoing); and (vii) rights in and relating to the sole and
exclusive possession, ownership and use of any of the foregoing throughout the
universe, including without limitation the right to license and sublicense,
franchise, assign, pledge, mortgage, sell, transfer, convey, grant, gift over,
divide, partition and use (or not use) in any way any of the foregoing now or
hereafter (including without limitation any claims and causes of action of any
kind with respect to, and any other rights relating to the enforcement of, any
of the foregoing).

 

 

 

“Laws” mean any and all applicable
published laws, rules, regulations, including, but not limited to, local and
national laws, rules and regulations, treaties, ministerial guidance or
guidelines, generally accepted voluntary industry standards, association laws,
codes, etc. pertaining to any activities of Motorola or any third party engaged
by Motorola in connection with the performance of the obligations arising under
this Agreement.

 

“Manufacturer’s Agreement” means an
agreement among Motorola, Licensee and a manufacturer or supplier of the
Product or Product Materials incorporating all of the terms of the
Manufacturer’s Agreement set forth in Exhibit E.

 

“Net Sales” means Gross Sales, less
refunds, credits and allowances actually allowed to customers for returned
Products.

 

“Product” or “Products” means
specific products or product categories as established in Exhibit A for which
the Licensee is authorized under this Agreement and which have been approved by Motorola
as provided in this Agreement and which bear the Trademarks.

 

“Product Materials” means to the
extent required by this Agreement, warranty statement, user guide,
packaging and marketing materials, including but not limited to point-of-sale
materials, publicity, advertising, signs, catalogs, product brochures and other
in-box materials relating to the Products.

 

“Promptly” means a reasonable effort to perform
within 10-15 business days.

 

“Sales Year” or “Sales Years” means a period of
time that is twelve months or less in time, as defined in Exhibit A, during
which sales of Products are measured.

 

“Specifications” means the Cosmetic
Specifications and Materials and Methods Specifications attached hereto as
Exhibit D.

 

“Territory” means the authorized counties referred to
in Exhibit A subject to the restrictions in Section 13. 

 

“Trademarks” means one or more of the trademarks, trade
names, logos, trade dress,  and service marks referred to in Exhibit B.

 

 

 

“Trademark Use Guidelines” shall be those Motorola guidelines for use of the Trademarks,
as provided in Exhibit C.

 

 

 

2.        
GRANT
OF LICENSE

 

2.1        Motorola grants to
Licensee, subject to the terms and conditions of this Agreement, the
non-exclusive right to use the Trademarks upon the Products and in connection
with the manufacture, sale, marketing and distribution of the Products in the
Territory.

 

2.2             
Licensee may manufacture Products or have Products manufactured for it
anywhere in the world subject to the terms of this Agreement including the
restrictions and obligations of Sections 3, 13 and 19 of this Agreement.

 

2.3             
Licensee is
further authorized to use in the Territory the Trademarks in Product Materials directly
related to Products including in publicity, advertising, signs, catalogs,
product brochures, packaging, point-of-sale materials and other forms of
advertising, subject to the terms and conditions of this Agreement.

 

 

3.          SAMPLES;
QUALITY CONTROL

 

3.1       Motorola shall provide Licensee with artistic
renderings of the Trademarks and with Trademark Use Guidelines identified in
Exhibit C.  Licensee shall use the Trademarks only as provided in the artistic
renderings provided by Motorola and shall comply with the Trademark Use
Guidelines provided by Motorola.

 

3.2       Motorola will attend a quarterly meeting with
Licensee to provide information and strategize regarding the future planned
launch of Motorola mobile phones and accessories for which Licensee might plan
to make compatible Products.  

 

3.3      
Samples.  Licensee shall produce and submit
to Motorola samples of any Product(s) it proposes to market or sell under this
Agreement.    Motorola agrees to Promptly review the sample(s) and notify
Licensee of its decision in writing to designate the sample(s) as approved or
not approved. Motorola may approve or disapprove any sample in its sole
discretion.

  

3.4       
Technical Specifications.    All products
must comply with the Materials and Methods and Cosmetic Specifications
(“Specifications”) attached hereto as Exhibit D. 

 

3.5       
Final Production Samples. Licensee must also
obtain Motorola’s written approval of final production samples of each Product
and all Product Materials, prior to the sale, publication, distribution or use
of such Product and/or Product Materials. Licensee shall furnish, at no cost to
Motorola, three final production samples of each Product and corresponding
Product Materials to Motorola’s Representative who may retain such final
samples at Motorola’s discretion.   Licensee acknowledges that Motorola may
perform SAR tests on the production samples and that no production sample will
be approved unless it passes SAR testing.  Motorola agrees to Promptly after
submission of Product samples notify Licensee in writing if it approves of such
final production samples of each Product and final production samples of Product
Materials.  If such Product and/or Product Materials are not approved, Motorola
will in such notice advise Licensee of the reasons, including corrections
required by Motorola.  Licensee shall make all such corrections at its expense,
or withdraw the proposed Product and/or Product Materials from consideration.  Any
review and/or approval by Motorola shall not relieve Licensee from its
obligations provided in this Agreement.  Sections 3.2 and 3.4 shall not apply
to Products sold in the Territory pursuant to the Prior Agreement and which
have not been modified by Licensee or at Motorola’s direction subsequent to
their final approval for production and sale under that license.  Licensee
shall not manufacture any Product until it has received written approval from
Motorola.

 

 

 

 

3.6    Licensee agrees that, once approved, it will not make
any changes to an approved Product or Product Materials without seeking new
approval from Motorola.  Individual Approved Products may not be bundled
together without separate approval of the bundle and its Product Materials. .  Each
Product and the Product Materials shall at all times: (i) conform to the terms
of this Agreement; (ii) conform to the Trademark Use Guidelines and the
Specifications and (iii) be the same in appearance, form, fit, function,
quality and regulatory compliance to the Approved Sample of the Product or
Product Materials.    If at any time the Product and/or Product Materials fail
to meet these requirements, Licensee shall Promptly, but in no event later than
thirty (30) days of becoming aware of such failure, make all changes necessary
to bring such Product and/or Product Materials into conformance, or cease using
the Trademarks on a nonconforming Product and/or Product Materials, or cease
selling the Product. In addition, Licensee may be required by Motorola within
ten (10) business days after becoming aware of such nonconformance, take steps
to withdraw any nonconforming Products and/or Product Materials from the market
if reasonably determined by Motorola to be a nonconformance creating significant
safety, quality, customer satisfaction or negative brand impact issues. 

 

3.7       If requested by Motorola due to reasonable
concerns over nonconformance with the Approved Samples, Licensee shall, at its
own expense, submit to Motorola’s  Representative the results of inspections
and tests that have been performed by an independent testing laboratory approved
by Motorola on randomly selected samples of each Product to show conformance.
In addition, Motorola may require Licensee, at Licensee’s own expense, to
perform tests at an independent laboratory approved by Motorola to show conformance of the Product with the Approved
Samples. At its sole discretion, Motorola may purchase the Product, at its own
expense, from retail outlets or from distributors and review the Product and
Product Materials to ensure that they conform in appearance, form, fit,
function, quality and regulatory compliance to the Approved Samples, the
Specifications and the Trademark Use Guidelines.

 

3.8       Upon five (5) business days’ notice to Licensee,
Motorola shall have the right to conduct or have conducted, during regular
business hours, an examination of Products manufactured by or for Licensee
(including those assembled or tested) at Licensee’s facilities to determine
compliance of such Products with the Approved Sample(s) and the Trademark Use
Guidelines and the Specifications.

 

 

 

3.9      
Costs.  Motorola
and Licensee shall each bear their own costs, including, but not limited to,
reasonable and necessary travel and inspection services associated with the
inspection and testing of Products for conformance with the requirements of
this Section 3 , except that Licensee alone shall bear any costs associated
with the inspection and testing of Products that are conducted by an
independent testing laboratory as referenced in Section 3.7 and shall bear the
cost of the samples referenced in this Agreement.

 

 

4.        
APPROVED MANUFACTURERS

 

4.1       Licensee must obtain Motorola’s written consent
prior to using any third party to manufacture or to supply Licensee with any
Product. Licensee shall forward to Motorola a written list of proposed
manufacturers or suppliers and the Products that each is to manufacture or
supply and the location(s) where such Products shall be manufactured. Motorola
may request any additional business or credit information regarding the
proposed manufacturer or supplier it deems necessary to make a determination. 
Motorola agrees to Promptly review the list and to notify Licensee of its decision,
and, if not approved, to advise Licensee, in writing stating the reasons why
such manufacturer or supplier is not acceptable.  A manufacturer or supplier
who is so approved is an Approved Manufacturer for only that Product for which
it is approved and only after executing a Manufacturer’s Agreement. 

 

4.2       Prior to manufacturing any Product or using any manufacturer
to manufacture any Product, Licensee shall have the proposed manufacturer
execute a Manufacturer’s Agreement that has terms that are legally enforceable
in the jurisdiction in which the Products  are manufactured or supplied and
includes at least the same terms and conditions as those set out in the
Manufacturer’s Agreement in Exhibit E.  Licensee may include additional terms
in the Manufacturer’s Agreement provided they do not result, in the opinion of
Motorola, in a reduction in the protections and remedies available to Motorola
under the terms in Exhibit E. A copy of the executed Manufacturer’s Agreement
shall be delivered to Motorola before the Licensee or any Approved Manufacturer
may commence the manufacture or supply of any Product.

 

4.3       Should either party become aware of any applicable
published laws or regulations in any jurisdiction in the Territory that are
inconsistent with the provisions and intent of the Manufacturer’s Agreement, it
shall notify the other party within five (5) days of becoming aware of such
inconsistency.

 

4.4       If Motorola
determines that an Approved Manufacturer has breached any Manufacturer’s Agreement
in any material respect, Motorola shall advise the Licensee of the breach in
reasonable detail and, instruct Licensee to enforce the Manufacturer’s
Agreement against the breaching Approved Manufacturer. If Licensee determines
that an Approved Manufacturer has breached any Manufacturer’s Agreement in any
material respect, Licensee shall immediately give notice to Motorola of such
breach.  In either case Licensee will use commercially reasonable efforts to enforce
the Manufacturer’s Agreement against the breaching Approved Manufacturer by
obtaining a cure of the breach or terminating the Manufacturer’s Agreement
within thirty (30) days. If the Licensee or the Approved Manufacturer fails
within this thirty (30) day period to (i) cure such breach to the satisfaction
of Motorola or (ii) to suspend the manufacture of Products under the
Manufacturer’s Agreement pending cure of such breach to the satisfaction of
Motorola, all rights to manufacture Product under this Agreement are
immediately terminated and that Approved Manufacturer shall immediately be
terminated as an Approved Manufacturer.

 

 

 

4.5       Licensee acknowledges
that any failure by Licensee to enforce or terminate any Manufacturer’s
Agreement against a breaching Approved Manufacturer in accordance with this Article
4 is a material breach of this Agreement, and that such failure will cause
irreparable harm and damages to Motorola.

 

4.6       If Licensee fails or
refuses to immediately comply with or enforce the Manufacturer’s Agreement
against the breaching Approved Manufacturer in accordance with Section 4.4,
Motorola shall have the right commencing three business days after written
notice to Licensee to enforce the provisions of the Manufacturer’s Agreement
against the Licensee or the breaching Approved Manufacturer. In such cases, the
cost of enforcing the Manufacturer’s Agreement, including but not limited to
attorneys fees, shall be paid by Licensee, whether the Manufacturer’s Agreement
is enforced by Motorola or Licensee. Licensee agrees to cooperate fully with
Motorola, at Licensee’s own expense, in all actions to enforce a Manufacturing
Agreement.

 

4.7       Upon seven (7)
business days’ notice to the Approved Manufacturer, Motorola shall have the
right to inspect or have inspected, at Motorola’s expense, the manufacturing
facilities of the Approved Manufacturer during regular business hours to
determine compliance with the terms of the Manufacturer’s Agreement and compliance
of the Products and the Product Materials with the Approved Samples, the
Specifications and the Trademark Use Guidelines. If at any time the Products and/or
Product Materials fail to conform to the Trademark Use Guidelines, or the
Specifications or are not the same in appearance, form, fit, function, quality
and regulatory compliance to the Approved Sample(s), Motorola or its authorized
representative shall so notify Licensee. Upon such notification, Licensee shall
Promptly, but in no event later than thirty (30) business days, work with the
Approved Manufacturer to make all changes necessary to bring such Products
and/or Product Materials into conformance, or cease using the Trademarks on
such nonconforming Products and/or Product Materials, or cease selling such
Products.   In addition, Licensee may be required by Motorola within ten (10)
business days after becoming aware of such nonconformance, take steps to
withdraw any nonconforming Products and/or Product Materials from the market if
reasonably determined by Motorola to be a nonconformance creating significant safety,
quality, customer satisfaction or negative brand impact issues. 

 

5.         APPEARANCE OF TRADEMARKS; TRADEMARK NOTICES

 

5.1       All products and
Product materials shall comply with the Trademark use Guidelines.  Motorola may
change the Trademarks Use Guidelines regarding the style, appearance and manner
of use of the Trademarks as necessary, in its sole discretion.  If Motorola
requires Licensee to implement such changes, it shall give written notice to
Licensee of any such change(s). Licensee shall Promptly implement the revised
Trademarks Use Guidelines on a running change basis, but in no event later than
one hundred twenty (120) business days of Licensee’s receipt of Motorola’s
notification of any change in the Trademarks Use Guidelines. Licensee shall be
permitted in accordance with the terms of this Agreement, to sell, in the
ordinary course of business, Product inventory that exists at the time of
receipt of such notice.

 

 

 

5.2       Motorola
may require, where practicable, that the following notices, all or in part, be
used on the Products and/or Product Materials to identify the licensed use
under the Agreement and the proprietary rights of Motorola:

 

Motorola
TM attribution statement for Licensee packaging:

 

Manufactured,
distributed or sold by "FORWARD INDUSTRIES, INC.", official
licensee for this product.  Motorola, the Stylized M Logo, and other
Motorola trademarks and trade dress are owned by Motorola, Inc. and are used
under license from Motorola, Inc.  MOTOROLA and the Stylized M Logo are
registered in the US Patent & Trademark Office. All other product or
service names are the property of their respective owners.   ©
Motorola, Inc. 200X.  (with X being the date of publication). All rights
reserved.

 

Please
contact customer service at 800-872-3935  for questions/comments, warranty, support
or service related to this product.

 

Motorola
TM attribution statement for Licensee Collateral:

 

Motorola,
the Stylized M Logo, and other Motorola trademarks and trade dress are owned by
Motorola, Inc. and are used under license from Motorola, Inc.  MOTOROLA
and the Stylized M Logo are registered in the U.S. Patent & Trademark
Office.  All other products or service names are the property of
their respective owners. © Motorola, Inc. 200X. (with X being the date of
publication) All rights reserved.

 

5.3       Motorola may require
through written notice and a reasonable time for implementation that Licensee
adopt and use different Trademarks and/or Product Materials specifications for
different countries in the Territory, and Licensee agrees to be bound by such
requirements of Motorola.

 

6.          PROTECTION OF
TRADEMARKS 

 

6.1       Licensee acknowledges that Motorola is the exclusive owner of
the Trademarks and any trademark incorporating all or any part of the
Trademarks. Without limiting the foregoing, Licensee hereby assigns to Motorola
all right, title and interest in the Trademarks, together with the goodwill
attaching thereto that may inure to Licensee in connection with this Agreement
or from its use of the Trademarks hereunder.  Licensee agrees to execute and deliver
such documents as necessary for Motorola to register Licensee as registered
user or permitted user in any country, or to withdraw Licensee as a registered
user or permitted user, of the Trademarks.  All use of the Trademarks by
Licensee shall inure to the sole benefit of Motorola.  Licensee shall cooperate
and shall execute all papers reasonably requested by Motorola to affect further
registration, maintenance and renewal of the Trademarks at the sole expense of
Motorola.

 

6.2       Licensee will not encourage or assist a third
party to register, or attempt in any country to register the copyright, or to
register as a trademark, service mark, design patent or industrial design, any
portion of the Motorola Intellectual Property Rights or derivations or adaptations
thereof, or any work, symbol or design that is so similar thereto as to suggest
association with or sponsorship by Motorola.  In the event of any breach of the
foregoing, Licensee agrees to terminate the unauthorized registration activity
and to execute and deliver, or cause to be delivered, to Motorola such
assignments and other documents as Motorola may require to transfer to Motorola
all rights to the registrations, patents or applications involved.  Licensee
will not, nor will it encourage or assist a third party to, challenge the
validity or ownership of any patent, copyright, trademark, or other
Intellectual Property Rights or registrations of Motorola. 

 

 

 

6.3       If Licensee learns
of any infringement of the Trademarks or of the existence, use or promotion of
any mark or design similar to the Trademarks, Licensee shall Promptly notify
Motorola. Motorola shall have the sole right and discretion to decide what
legal proceedings or other action, if any, shall be taken, by whom, how such
proceedings or other action shall be conducted. Any legal proceedings
instituted pursuant to this Section 6.3 shall be for the sole benefit of
Motorola.  Licensee shall, at the request of Motorola, cooperate and assist
Motorola in any such suit or action, provided that Motorola will reimburse
Licensee for all documented reasonable costs, including attorneys’ fees.

 

6.4       In the performance of
this Agreement, Licensee shall comply with applicable laws and regulations, and
those laws and regulations particularly pertaining to the proper use and
designation of trademarks in the countries of the Territory. Should Licensee be
or become aware of any applicable laws or regulations that are inconsistent
with the provisions of this Agreement, Licensee shall Promptly notify Motorola
of such inconsistency. The parties then, shall in good faith, negotiate a
modification to this Agreement such that it complies with applicable law and
regulations or Motorola may terminate the license and rights granted hereunder
in that jurisdiction, and the Territory set forth in Exhibit B shall be
appropriately amended.

 

7.          PRODUCT WARRANTY AND
SUPPORT

 

7.1       Licensee shall
provide a warranty and support service plan for the Products.  Licensee must obtain
Motorola’s written approval of the warranty and support service plan prior to
the manufacture of any Product for each country in the Territory. Such warranty
shall, at a minimum, provide a one-year warranty period and comply with the
requirements set forth in Exhibit F, unless otherwise approved in writing by
Motorola. Motorola agrees to Promptly notify Licensee if it approves the
warranty and support plan or, if not approved, Motorola will advise the
Licensee of corrections required by Motorola for the warranty and support
service to be approved. Once the warranty and support service plan is approved,
Licensee may use it with all Products.  However, if Licensee makes any
modifications to the warranty and support service plan, it must re-submit the
plan to Motorola for a new approval. Any approval by Motorola shall not relieve
Licensee from its obligations set forth in this Agreement, including but not
limited to complying with local laws on warranties in the Territories where the
Products are sold.

 

7.2       Licensee will be
fully responsible for all end user support service and warranty costs,
including but not limited to the following (if applicable): transportation
costs, Product replacements, service labor, field repair, refunds, returns, and
other customer concessions to ensure each customer’s satisfaction for the
duration of the applicable warranty period. Motorola may require Licensee to
halt sales or to recall Product in whole or in part or to take other corrective
actions where Motorola reasonably determines customer satisfaction, quality,
safety, returns or compliance problem(s) exist. 

 

 

 

7.3       All Product packaging
shall include a conspicuous use of the telephone number and address for
Licensee’s customer service department or customer service representative so
that any questions regarding support service for the Products including
warranty can be directed by the consumer or by Motorola to Licensee. At its
sole discretion and when feasible, Motorola may also require the Licensee to
affix a sticker on each Product indicating the telephone number of Licensee’s
customer service department. Licensee shall provide the telephone number and
address for customer service to Motorola for each Product before the initial
sale of such Product. If Motorola determines that the number of questions
regarding any Product that are directed by the consumer to Motorola exceed 1%
of the number of such Products sold, Motorola and the Licensee shall mutually
agree on a corrective action. If a reasonable corrective action cannot be
agreed to, Motorola may require Licensee to withdraw such Product from the
market or require Licensee to pay Motorola for future costs incurred related to
such questions. 

 

7.4       Throughout the period
during which the warranty for any Product is in effect, Licensee shall provide
a well-manned toll-free (where available) telephone service number for receipt
of service calls for the Products. At a minimum, such telephone service number
shall operate manned with live personnel during regular business hours for all
time zones in which the Products are sold. At all other times, such telephone
service number shall have, at a minimum, an automated message specifying the
times during which the service number shall be manned with live personnel.

 

7.5       Licensee will
collect, prepare reports or, maintain and, upon request, deliver to Motorola,
all applicable data and records relating to Product warranty and warranty
service rendered.  In addition, within thirty (30) days after the end of each
quarterly period, Licensee shall furnish to Motorola‘s Representative a
statement summarizing all significant problems and quality issues reported to
Licensee’s customer service department for each Product in the preceding
quarter.

 

8.          ROYALTIES AND REPORTS

 

8.1       Licensee agrees to
pay Motorola a Royalty equal to the percentage shown in Exhibit A for each
Product, of all Net Sales for the Products (”Royalty”).  Licensee shall pay the
Royalties in quarterly periods ending on the last day of March, June, September
and December during the Sales Year.  The Royalty obligation shall accrue upon
the sale of the Products regardless of the time of collection by Licensee.  For
purposes of this agreement, Products shall be considered “sold” on the date
when such Products are billed, invoiced, shipped or paid for, whichever event
occurs first.  No deductions shall be made for uncollectible accounts. 
Royalties will be paid in US dollars.  If the gross sale price is expressed in
any currency other than United States Dollars, the royalty rate shall be
applied to that currency converted to United States Dollars based upon the
exchange rate that appears in the “Currency Trading” section of the United
States Eastern Edition of The Wall Street Journal on the last day of the
quarterly period in which the royalties become due.

8.3       On or before the fifteenth
(15th) day following each calendar quarter during the Sales Year, as
set forth in Exhibit A, Licensee shall make a quarterly payment to Motorola
which shall be calculated as follows:  The greater of the year-to-date Minimum
Royalty due or the year-to-date Royalties due, minus the actual Royalty
payments made for the Sales Year.  The Minimum Royalty due in each quarter
shall be the Minimum set forth in Exhibit A.  Neither the expiration nor the
termination of this Agreement shall relieve Licensee from its Royalty and
Minimum Royalty payment obligations.

 

8.2        Fifteen (15) days
after the close of each month, Licensee will also furnish to Motorola, on forms
provided or approved by Motorola, a statement of Net Sales and number of units
of all Products sold (whether or not subject to a royalty) during the
immediately preceding month and statements of other information as the forms
may require.  Such statements will be certified true and correct by a duly
authorized officer of Licensee if Licensee is a corporation or by a principal
of Licensee if Licensee is a partnership or sole proprietor.  Licensee shall
send all payments required by this Section to Motorola at the address in
Section 8.4 and statements required by this Section to the Category Manager at
the address in Section 23.  

 

 

 

8.3       Credits for Products
for which royalties were previously paid shall be made against royalties in the
quarter the Product returns are received and credited to Licensee’s customers.

 

8.4      All payments shall be electronically transferred to
Motorola with all electronic transfer fees to be paid by Licensee at:

WIRE TRANSFERS:

Bank of America

100 West 33rd Street

New York, NY 10001

ABA#026009593

SWIFT Code: BOFAUS3N

Account Name: MOTOROLA INC

Account Number: 4426499628

 

 

                                               

 

 

8.5       During the term of this
Agreement and for at least three (3) years following the termination or
expiration of this Agreement, Licensee and its Affiliates shall maintain at
Licensee’s or its Affiliate’s principal office such books and records including
but not limited to production, inventory and sales records (collectively “Books
and Records”) as are necessary to substantiate that (i) all statements
submitted to Motorola hereunder were true, complete and accurate, (ii) all
royalties and other payments due Motorola hereunder shall have been paid to
Motorola in accordance with the provisions of this Agreement, and (iii) no
payments have been made, directly or indirectly, by or on behalf of Licensee to
or for the benefit of any Motorola employee or agent who may reasonably be
expected to influence Motorola’s decision to enter this Agreement or the amount
to be paid by Licensee under this Agreement.  (As used in this Section,
“payment” shall include money, property, services, and all other forms of
consideration.)  All Books and Records shall be maintained in accordance with
generally accepted accounting principles consistently applied.  During the term
of, and for three (3) years after the termination or expiration of this
Agreement, the Books and Records shall be open to inspection, audit, and copy
by or on behalf of Motorola during business hours.

 

8.6       If any examination
reveals that Licensee has underpaid the royalty, Licensee shall pay the
shortfall to Motorola within ten (10) days of being notified of the shortfall.
Motorola shall bear the costs and expenses of conducting each examination.
However, if the examination reveals that Licensee has underpaid the royalty by
more than five percent (5%) of the actual amount due, Licensee shall reimburse
Motorola for all costs and expenses incurred in conducting the examination. 

 

 

 

8.7       Licensee shall pay
any tax (and any related interest and penalties), however designated, imposed
solely as a result of the existence or operation of this Agreement including
any tax that Licensee is required to withhold or deduct from payments to
Motorola, except (i) any such tax constituting an income tax imposed upon
Motorola (including its subsidiaries and Affiliates) by any governmental entity
within the United States proper (the fifty (50) states and the District of
Columbia); and (ii), if the aforesaid office of Licensee is located in or
relocated to a jurisdiction outside of the United States proper, any foreign
tax imposed on Motorola or any of its subsidiaries if such tax is allowable as a
credit against U.S. income taxes of any of such companies. In the case of taxes
imposed pursuant to sub-section ii of this Section, Licensee shall furnish
Motorola with any evidence required by United States taxing authorities to
establish that such tax has been paid.

 

8.8      
Interest.  Any
payment or underpayment under this Agreement that is delayed beyond the due
date shall be subject to an interest charge, calculated on the due date and
monthly thereafter, of four percent (4%) over the United States prime rate (as
reported by the Wall Street Journal on the due date and monthly
thereafter) per annum, compounded monthly until paid, on the unpaid balance,
payable in United States dollars.  If the amount of such interest exceeds the
maximum interest rate permitted by law, such fee shall be reduced to such
maximum. 

 

9.          SALES AND MARKETING

 

9.1       Licensee shall provide Motorola with written descriptions in
such detail as may be requested from time to time by Motorola of Licensee’s
marketing and distribution program before
the program’s implementation or modification.  Licensee shall not proceed with
the implementation of the initial program or any modification of its marketing
and distribution program without obtaining Motorola’s prior approval. 

 

9.2       Licensee agrees to
attend an Annual Review and Planning Meeting with Motorola to review the
current year’s performance in comparison with previously projected goals and
objectives and to adopt goals and objectives for the coming year.  Licensee
agrees to develop and present a detailed sales marketing plan with projected
goals and objectives for the coming year.  The sales marketing plans shall be
structured with Motorola.   At least sixty (60) days prior to the annual
meeting, each party agrees to provide the other party with a list of relevant
issues and questions to be addressed, and the other party agrees to address the
issues and questions at the Annual Review and Planning Meeting.  At the
discretion of Motorola, Licensee agrees to attend semi-annual or other required
performance review meetings with Motorola at a mutually agreed upon location.

 

 

 

9.3       Throughout the term of this Agreement, Licensee
agrees to promote the sales of Products in retail outlets and distributors in
the Territory.  In
order to preserve the value and integrity of the Trademarks, the parties agree
that the Products will be sold only in channels where the suitability of the
trading premises, the customer service and the competence of the resellers are
of sufficient quality and reliability and are appropriate for the resale of the
Products consistent with Motorola’s brand image.  For the avoidance of doubt,
the following channels would satisfy such requirements:  department stores,
chain consumer electronics stores, boutique consumer electronics stores, and mass
merchants. Motorola reserves the right to disapprove or withdraw approval of
any specific retailer if, in Motorola’s reasonable belief, that retailer does
not provide suitable service or competence or maintain a suitable trading
premises, or may otherwise subject the Trademarks to devaluation or disrepute
in any way.

 

 

9.4        Licensee agrees not
to offer, without prior written approval from Motorola, branded products that
are identical in function and in appearance to Products, except for the Trademarks,
in the same retail outlets or distributors with the Products. Motorola
acknowledges that the foregoing restriction is intended only to prohibit
Licensee from offering items that are identical to the Products under a
different brand name, and is not intended to prohibit Licensee from offering
non-Trademarks branded products generally. In the event the parties mutually
agree to customizations that differentiate the Products by including in
appearance elements that create an identity associated with the Products,
Licensee agrees to use and limit such customizations to the Products unless
Motorola agrees in writing to their use for other products. Neither party
assigns to the other party any rights in its industrial designs, Product
designs, technology, and/or intellectual property in and associated with the
Products unless specifically agreed to in writing by the owner.

 

9.5       
Advertising
Reserve.  Licensee agrees to reserve a minimum of 2% of wholesale price and
use it for advertising, merchandising and promotion of the Product.  Licensee
will provide a report at the Annual Review and Planning meeting detailing how
the advertising reserve was used.  If Licensee fails to provide a detailed
report demonstrating that the advertising reserve was used for advertising,
merchandising and promotion activities related directly to the Product(s),
Licensee shall pay the amount of the reserve to Licensor as a penalty.  

 

 

10.       TERM AND TERMINATION

 

10.1     Unless
sooner terminated in accordance with this Agreement, the license and rights
granted under this Agreement shall commence on the Effective Date of the
Agreement, and shall continue in effect until March 31st, 2009.  The
parties may renew or extend the Term of this Agreement by mutual consent.

 

 

 

10.2     Without prejudice to any
other rights that Motorola may have, Motorola may at any time give notice of
termination of this Agreement effective immediately:

 

10.2.1  If Licensee
shall be unable to pay its obligations when due, shall make any assignment for
the benefit of creditors, shall file a voluntary petition in bankruptcy, shall
be adjudicated bankrupt or insolvent, shall have any receiver or trustee in
bankruptcy or insolvency appointed for its business or property, or shall make
an assignment for the benefit of creditors;

 

10.2.2               
If Licensee
manufactures, sells, markets, or distributes any Products without obtaining Motorola’s
approval as provided for by this Agreement or continues to manufacture, sell,
market, or distribute any Products after receipt of notice from Motorola disapproving
such items in accordance with the terms of this Agreement;

 

10.2.3        If
Licensee breaches any provision of this Agreement relating to the unauthorized
assertion of rights in the Trademarks;

 

10.2.4        If
Licensee breaches any provision of this Agreement prohibiting Licensee from
directly or indirectly arranging for manufacture by third parties, assigning,
transferring, sublicensing, delegating or otherwise encumbering this Agreement
or any of its rights or obligations; or

 

 10.2.5       If
reasonable grounds for insecurity arise with respect to Licensee’s performance
of this Agreement and Motorola demands adequate assurance of due performance in
writing, and Licensee fails to provide such adequate assurance within five (5)
days after the date of Motorola’s request therefore or within such other
shorter period of time as Motorola may reasonably designate under the then
existing circumstances.  The parties further agree that if Motorola has
requested adequate assurances, Motorola may suspend its performance of this
Agreement until Motorola receives such assurances in writing.

 

10.2.6        If
Licensee shall fail for one hundred and twenty (120) consecutive days to
continue the bona fide distribution and sale of the Products in
commercially reasonable quantities throughout the Territory;

 

 

10.2.7              If
the quality in any Products has reached unacceptable levels pursuant to Section
3 referenced herein and a mutually agreeable action plan to remedy the defects
has not been established within seven (7) days from notice by Motorola, or if
subsequent quality reports reveal that the defect rates have not been reduced
to the acceptable standard.

 

 

 

10.2.8        If by May
31st, 2008 Licensee has not begun the bona fide distribution
and sale of the Products in commercially reasonable quantities in the locations
in the Territory agreed in the current marketing and distribution program
adopted pursuant to Section 9 of this Agreement;

 

10.2.9        If
Licensee fails to comply with applicable laws or ethical standards as provided
in section 19.2, 22 and Exhibit G or refuses to allow an inspection to
determine compliance with laws and ethical standards, as provided in section
19.3.

 

10.3     Without prejudice to
any other rights that Motorola may have, Motorola shall have the right to
terminate this agreement for any material breach thirty (30) days after mailing
a written notice to Licensee describing the alleged breach in reasonable detail
unless the breaches are cured in the reasonable discretion of Motorola within
the thirty (30) day period.  Material breaches include but are not limited to
the following:

 

10.3.1        If
Licensee distributes or uses any Product Materials without obtaining Motorola’s
approval as provided in this agreement;

 

10.3.2        If
Licensee shall fail to make any payment due hereunder or provide any statement
required hereunder;

 

                        10.3.3       
If Licensee fails to obtain or maintain insurance as required by the Section 15
of this Agreement;

 

10.3.4        If
Licensee breaches any material provision of this Agreement relating to the
Territory including, but not limited to section 13; 

 

10.3.5        If in Motorola’s
reasonable determination significant customer satisfaction issues have arisen
with any Product; or 

 

10.3.6        Licensee
fails to enforce or terminate a Manufacturer’s Agreement against a breaching
Approved Manufacturer as required in Section 4.

 

     10.4 Licensee may terminate
this Agreement for convenience at any time, with or without cause, by giving
Motorola one-hundred eighty (180)  days prior written notice and upon payment
of the Minimum Royalty for the 180-day period plus the remainder of the Minimum
Royalty for the quarter in which the end of the 180-day period falls.   License
shall also provide royalty reports for the 180 day period as provided in
Section 8.

 

10.5  Without prejudice to any other
rights that Licensee may have, including, without limitation, those under
Section 22, Licensee shall have the right to terminate this Agreement: 

 

10.5.1 for any material
breach of this Agreement by Motorola ninety (90) days after mailing written
notice to Motorola that specifies the alleged breach in reasonable detail,
unless the breach or breaches are cured in the reasonable determination of
Licensee within such ninety-day period;

 

10.5.2 immediately upon written
notice to Motorola if any of the Trademarks is determined by a court of
competent jurisdiction to infringe the rights of a third party; or

 

 

10.5.3  immediately upon
written notice to Motorola if Motorola shall be unable to pay its obligations
when due, shall make any assignment for the benefit of creditors, shall file a
voluntary petition in bankruptcy, shall be adjudicated bankrupt or insolvent,
shall have any receiver or trustee in bankruptcy or insolvency appointed for
its business or property, or shall make an assignment for the benefit of
creditors.

 

 

11.       POST-TERMINATION
AND EXPIRATION RIGHTS AND OBLIGATIONS

 

11.1       If this Agreement is terminated for
any cause under Section 10.2, Licensee and Licensee’s receivers,
representatives, trustees, agents, administrators, successors or permitted assigns
shall have no right after the effective date of termination to manufacture, sell,
ship, market or distribute Products or to use any promotional and packaging
material relating to the Products. Any Products not sold, shipped, and
distributed by Licensee prior to termination must be destroyed or reprocessed
so that the Trademarks are no longer present in whole or in part on the
Products or on their Product Materials.  Upon Motorola’s request, Licensee
shall provide evidence satisfactory to Motorola of such destruction or
reprocessing of remaining Products or Product Materials. Licensee’s final
statement and payment of royalties, which shall include the difference, if any,
between all royalties based upon Net Sales for the termination Sales Year and
the remaining Minimum Royalty for the termination Sales Year shall be received
by Motorola within thirty (30) days after the effective date of termination. 
Licensee shall send all payments and statements required by this Section 11.1 in
accordance with Section 8.5.

 

 

11.2     After expiration of
the initial term and any renewal term(s) of this Agreement or the termination
of this Agreement under any provision other than Section 10.2, Licensee 

may sell, ship, market and
distribute Products in the Territory that are on hand or in the process of
manufacture at the date of expiration or at the time notice of termination is
received for a period of ninety (90) days after the date of expiration or the
date of notice of termination, as the case may be, provided that the royalties
with respect to that period are paid and the appropriate statements for that
period are furnished. Motorola shall have the right, but not the obligation, to
purchase all or part of Licensee’s inventory of Products at cost upon
expiration of the ninety (90) day sell-off period permitted by this Section
11.2. Unless purchased by Motorola, any Products not sold, shipped, and
distributed by Licensee within this ninety (90) day period must be destroyed or
reprocessed so that the Trademarks are no longer present in whole or in part on
the Products or on their Product Materials. Upon Motorola’s request, Licensee
shall provide evidence satisfactory to Motorola of such destruction or
reprocessing of remaining Products or Product Materials.  After termination of
this Agreement under Section 10.3, Licensee shall make the next quarterly
statement and payment as required by Section 8 and Licensee shall make a final
statement and payment of royalties including the difference, if any, between
all royalties based upon Net Sales and the remaining Minimum Royalty for the
termination Sales Year to Motorola no later than one hundred (100) days after
the effective date of termination. After termination of this Agreement under
section 10.4 and 10.5 Licensee shall make the next quarterly statement and
payment as required by Section 8 and Section 10.4 and Licensee shall make a
final statement and payment of royalties for all Products sold during the
sell-off period to Motorola no later than one-hundred (100) days after the effective
date of termination.  Licensee shall send all payments and statements required
by this Section 11.2 in accordance with Section 8.5.

 

 

 

11.3     After the expiration
or termination of this Agreement and except as provided in Section 11.2, all
rights granted to Licensee under this Agreement shall forthwith revert to
Motorola, and Licensee shall refrain from further use of the Trademarks or any
further reference to the Trademarks, either directly or indirectly, or from use
of any marks or designs similar to the Trademarks in connection with the
manufacture, sale, marketing or distribution of Licensee’s products.  Licensee
also shall turn over to Motorola all molds, silk-screens, and other materials
that reproduce the Trademarks or shall give evidence satisfactory to Motorola
of their destruction.  Licensee shall be responsible to Motorola for any
damages caused by the unauthorized use by Licensee or by others of such molds,
silk-screens or reproduction materials that are not turned over to Motorola. 

 

11.4         
Licensee acknowledges that its failure to cease the manufacture, sale,
marketing or distribution of the Products and the Product Materials at the
termination or expiration of this Agreement, except as provided in Section
11.2, will result in immediate and irreparable damage to Motorola and to the
rights of any subsequent licensee of Motorola.  Licensee acknowledges and
admits that there is no adequate remedy at law for failure to cease such
activities, and Licensee agrees that in the event of such failure, Motorola
shall be entitled to injunctive relief and such other relief as any court with
jurisdiction may deem just and proper.

 

11.5         
Within twenty (20) days after expiration or within ten (10) days after
notice of termination of this Agreement, as the case may be, Licensee shall
deliver to Motorola a written report indicating the number and description of
the Products and Product Materials that it had on hand or in the process of
manufacture as of the date of expiration or at the time termination notice is
received.  Motorola may conduct a physical inventory in order to verify such
report.  If Licensee fails to submit the required written report or refuses to
permit Motorola to conduct such physical inventory, Licensee shall forfeit its
rights under this Agreement to dispose of such inventory.  In addition to such
forfeiture, Motorola shall have recourse to all other available remedies.

 

 

12.       CONFIDENTIALITY AND
INTELLECTUAL PROPERTY

 

12.1     Motorola’s
“Confidential Information” shall mean specifications, property, data, drawings,
schematics, diagrams, dimensions, prints, reprints, information, business and
financial information, customer and vendor lists, pricing and sales
information.  Products created by Motorola for Licensee under this Agreement,
submitted or presented by Motorola to Licensee under this Agreement, or jointly
developed by the parties are deemed Motorola’s Confidential Information.

 

12.2     Licensee’s
“Confidential Information” shall mean Licensee’s business and financial
information, information concerning Licensee’s products and related
specifications, property, data, drawings, schematics, diagrams, dimensions,
prints and reprints, Licensee’s decoration process, including, without
limitation, specifications, data, drawings, technical information, diagrams,
schematics, Licensee’s customer and vendor lists, pricing and sales
information, and Licensee’s customer information provided to Motorola by
Licensee or to which Motorola otherwise gains access.  Products created by
Licensee under this Agreement and submitted and presented to Motorola under
this Agreement for approval, are deemed Licensee’s Confidential Information.

 

 

 

12.3     Each
of the parties and its contractors agrees to maintain the confidentiality of
the other party’s Confidential Information furnished in oral, visual, written
and/or other tangible form including electronic form, and not disclose such
Confidential Information to any third party, except as authorized by the other
party in writing.  Each party further agrees to keep confidential the terms of
this Agreement; except as required by applicable reporting requirements
pursuant to the Federal securities laws; provided, however, that the parties
shall issue a joint press release regarding this Agreement in a form, and at
such time, as is mutually agreed upon by the parties in writing.

 

12.4     Each
of the parties agrees to restrict disclosure of the other party’s Confidential
Information to its employees and contractors who have a “need to know.” Each of
the parties agrees that the other party’s Confidential Information shall be
handled with the same degree of care that it applies to its own confidential
information (but in no event less than reasonable care) and shall not be
exported directly or indirectly to any restricted or prohibited country set
forth in Section 13 or such other restricted or prohibited countries as may be
designated by the United States Department of Commerce except in compliance
with the regulations of the Office of Export Control for the United States
Department of Commerce.

 

12.5     Licensee
is the “Receiving Party” with respect to Motorola’s Confidential Information
and Motorola is the “Receiving Party” with respect to Licensee’s Confidential
Information. The parties agree to exclude from these obligations of
confidentiality any Confidential Information that the Receiving Party can
demonstrate: (i) is wholly independently developed by the Receiving Party
without the use of the other party’s Confidential Information; or (ii) is known
or becomes known to the general public without breach of this Agreement; or
(iii) was known to the Receiving Party without confidential limitation at the
time of disclosure by the other party as evidenced by documentation in the
Receiving Party’s possession; or (iv) is approved for release by written authorization
of the other party, but only to the extent of and subject to such conditions as
may be imposed in such written authorization; or (v) is disclosed in response
to a valid order to a court, regulatory agency, or other governmental body in
the United States or any political subdivision thereof, but only to the extent
and for the purposes stated in such order; provided, however, that the
Receiving Party shall first notify the other party in writing of the order and
cooperate with the other party if the other party desires to seek an
appropriate protective order; or (vi) is received rightfully and without
confidential limitation by the Receiving Party from a third party. 

 

12.6     In
the course of its relationship with Motorola, Motorola may give Licensee access
to Motorola’s facility including its manufacturing, distribution or accelerated
life testing area.  Licensee agrees that the manufacturing, handling or testing
techniques, processes, methodologies and know how embodied in equipment and
equipment arrangements; equipment supplier names; and products under
manufacture, handling or testing in Motorola’s facility are deemed to be
Motorola Confidential Information, even if not identified as confidential at
the time of disclosure and confirmed in correspondence.  In the course of its
relationship with Licensee, Licensee may give Motorola access to Licensee’s
facility including its manufacturing, distribution or accelerated life testing
area.  Motorola agrees that the manufacturing, handling or testing techniques,
processes, methodologies and know how embodied in equipment and equipment
arrangements; equipment supplier names; and products under manufacture,
handling or testing in Licensee’s facility are deemed to be Licensee
Confidential Information, even if not identified as confidential at the time of
disclosure and confirmed in correspondence.  

 

 

 

12.7     Upon
termination of this Agreement, all Confidential Information transmitted to the
Receiving Party by the other party in record bearing media or other tangible
form including electronic form, and any copies thereof made by the Receiving
Party shall be either destroyed and its destruction certified in writing or, at
the other party’s written request, returned to the other party, except that the
Receiving Party shall be entitled to retain a secure copy of the other party’s
Confidential Information for archival purposes only. Additionally, Motorola
agrees to return Licensee’s Confidential Information upon Licensee’s written
request, and Licensee agrees to return Motorola’s Confidential Information upon
Motorola’s written request.

 

12.8         
Licensee agrees that it will not in any manner use its knowledge of
Motorola business for the benefit of itself (except in accordance with the
terms of this Agreement) or any other party or divulge to others information or
data concerning Motorola’s business affairs, including the names of customers,
names of employees, number or character of contracts, marketing strategies and
prices, terms or particulars of Motorola’s business.  Licensee will, in all
things and in good faith, protect the good will of Motorola’s business and keep
confidential its knowledge of such business affairs acquired prior to and
during the terms of this Agreement. Motorola agrees that it will not in any
manner use its knowledge of Licensee business for the benefit of itself (except
in accordance with the terms of this Agreement) or any other party or divulge
to others information or data concerning Licensee’s business affairs, including
the names of customers, names of employees, number or character of contracts,
marketing strategies and prices, terms or particulars of Licensee’s business. 
Motorola will, in all things and in good faith, protect the good will of
Licensee’s business and the Licensee Designs and keep confidential its
knowledge of such business affairs acquired prior to and during the terms of
this Agreement.

 

 

13.       EXPORT

 

13.1     Licensee agrees and represents that it is aware of
all pertinent export laws and regulations and will not violate them in any material
respect. To the extent that Licensee exports, transports or manufactures or has
manufactured any products or technologies in any way connected to the
Trademarks, Licensee hereby assures Motorola that it does not intend to and
will not, without the prior written consent of the Office of Export Licensing
of the U.S. Department of Commerce, P.O. Box 273, Washington, D.C. 20230,
exports, transports, manufactures or have manufactured directly or indirectly
(i) Products or other items in any way associated therewith or (ii) any
technical information provided hereunder in, to or by (a) any individuals or
entities listed in the Table of Denial Orders as published from time to time in
Supplement No.2 to Part 764 of the above referenced regulations, (b) embargoed
countries or foreign nationals of such countries, as may be changed from time
to time, under U.S. export laws and regulations or (c) controlled countries and
foreign nationals of such countries to the extent such products and
technologies are defined as controlled technologies in the U.S. Export
Administration Regulations Part 774. Embargoed and controlled countries are
defined in the U.S. Export Administration Regulations Parts 740 Supplement
No.1, 746 and 772 and currently include Cuba, Iran, Libya, North Korea, Sudan, and Syria.  

 

 

 

 

14.       REPRESENTATIONS AND
WARRANTIES

 

14.1     Motorola represents
and warrants that it has the power to grant a license of the Trademarks in the
Territory and that such grant is in compliance with applicable law and does not
infringe the rights of any third party.  Motorola, at its expense, shall be
responsible for obtaining and maintaining all licenses, permits and approvals
necessary for Motorola to maintain its rights in the Trademarks No other
warranties, express or implied, are given by Motorola, and all other
warranties, express or implied, are expressly disclaimed by Motorola.

 

14.2     Licensee represents
and warrants that at all times:

 

14.2.1       Except as provided  in
Section 14.1,   Licensee has and shall maintain all rights and licenses needed
to sell the Products and the Products do not infringe any patent, copyright,
mask work right, moral right, trademark, service mark, trade secret and/or all
other intellectual property rights and/or similar rights of any third party.
Licensee is solely responsible for all royalties, fees or other payments to
secure such rights and licenses for end user customers.

 

14.2.2       Licensee shall secure
and maintain all certifications and requirements to sell the Products and
Licensee shall affix all labels on the appropriate area of each Product
regarding such certifications and requirements. Licensee shall provide written
evidence of such certifications and approvals to Motorola upon Motorola’s
request.

 

14.2.3       All Products are new,
and do not contain anything used, except for warranty replacement Products
and/or parts provided by Licensee all of which shall be conspicuously labeled
as “Used” on the warranty replacement Product and/or part, on the carton, and
on the shipping paperwork and Licensee shall have processes, procedures and
documentation in place to comply with and substantiate this representation and
warranty. 

 

14.2.4       Product Materials shall
not claim or suggest that any Products improve the health of users, have
therapeutic capabilities, or can help the users to avoid injuries that
otherwise might occur through the use of alternative products.

 

14.2.5       All claims made in
connection with the Products and Product Materials are in all material respects
accurate, complete and have been substantiated prior to use in advertising,
promotion or on the Products or Product Materials.

 

14.2.6       Licensee, at its
expense, shall be responsible for obtaining and maintaining all licenses,
permits and approvals that are required by all appropriate governmental
authorities, with respect to Licensee’s compliance with it obligations under this
Agreement, excluding any licenses, permits or approvals necessary for Motorola
to maintain its rights in the Trademarks, and to comply with any requirements
of such governmental authorities for the registration or recording of this
Agreement and for making payments hereunder. Licensee shall furnish to Motorola
within thirty (30) days of receipt of same, written evidence from such
governmental authorities of any such licenses, permits, clearances,
authorizations, approvals, registration or recording.

 

 

 

14.2.7       All Products are safe
for any use consistent with the warranties, specifications and requirements of
this Agreement.

 

14.2.8       All Products are of
merchantable quality, and conform to the specifications and requirements of
quality in materials, design, and workmanship in this Agreement.

 

14.2.9       Licensee warrants that its
performance hereunder will be in compliance with all applicable federal, state
and local laws, orders, rules and regulations.

 

14.3    
Compliance with
Laws and Procedures; Authority.  Each party hereto warrants that such
party's performance hereunder will be in compliance with all applicable
federal, state and local laws, orders, rules and regulations, whether domestic
or foreign.  Each party hereto warrants that its execution, delivery and
performance of this Agreement has been authorized by all necessary corporation
action and that this Agreement has been duly authorized, executed and
delivered.

 

15.       INDEMNITIES AND INSURANCE

 

15.1     Licensee acknowledges that, except as
set forth in Section 15.2 of this Agreement, it will have no claims against
Motorola for any damage to property or injury to persons arising out of the
operation of Licensee’s business.  Licensee agrees to indemnify, hold harmless
and defend Motorola , its subsidiaries and customers, with legal counsel
acceptable to Motorola, from and against all third-party suits, actions,
claims, damages, liabilities, costs and expenses, including attorneys fees,
court costs and other legal expenses, arising out of or connected with the
Products, Licensee’s methods of manufacturing, marketing, selling, distributing
or use of the Products, the promotional or packaging material relating to the
Products, or any breach by Licensee of any provision of this Agreement or of
any warranty made by Licensee in this Agreement.   Motorola agrees to give
Licensee written notice of any claim within ten (ten) days of receipt by
Motorola.  Motorola’s failure to provide written notice of the claim within ten
days shall not affect its right to indemnification unless and to the extent the
delay materially prejudices Licensee’s ability to respond to the claim.  Licensee
shall bear full responsibility for the defense (including any settlements) of
any such claim; provided, however, that: (i) Licensee shall keep Motorola
informed of, and consult with Motorola in connection with the progress of such
litigation or settlement; and (ii) Licensee shall not have any right, without Motorola’s
prior written consent, to settle any such claim if such settlement arises from
or is part of any criminal action, suit or proceeding or contains a stipulation
to or admission or acknowledgement of any liability or wrongdoing (whether in
contract, tort, or otherwise) on the part of Motorola or any Motorola Affiliate.

 

15.2     Motorola agrees to
indemnify, hold harmless and defend Licensee from and against all third-party suits,
actions, claims, damages, liabilities, costs and expenses, including attorney’s
fees, court costs and other legal expenses, arising out of or relating to
infringement of the trademarks or copyrights of any third party by the
Trademarks so long as such claims arise from Licensee’s promotion or sale of
the Products in the Territory and Licensee’s use of the Trademarks  in
accordance with the terms of this Agreement. Licensee agrees to give Motorola
written notice of any claim within ten (10) days business days of receipt by
Licensee.  Licensee’s failure to provide written notice of the claim within ten
days shall not affect its right to indemnification unless and to the extent the
delay materially prejudices Motorola’s ability to respond to the claim. 
Licensee agrees to give Motorola control of the defense of the claim and
cooperates with Motorola in the defense and any related settlement
negotiations.

 

 

 

15.3      During the term of
the Agreement, Licensee will maintain at its own expense, commercial general
liability (“CGL”) insurance including contractual liability coverage, products
and completed operations in an amount not less than one Million Dollars
($1,000,000.) per occurrence for bodily injury, personal injury and property
damage liability.  The insurance will be placed with an insurer acceptable to
Motorola, licensed for the jurisdiction in which this Agreement is performed
and having a Best’s Rating not less than A-VII.  The CGL policy will name
Motorola, Inc. as an additional insured and provide a minimum thirty (30) days
prior written notice of cancellation or material change.  Licensee shall
furnish Motorola within thirty (30) days after execution of this Agreement or,
if earlier, prior to the sale of the Products, with a certificate of insurance
stating thereon the limits of liability, the period of coverage, the parties
insured (including Licensee and Motorola), and the insurer’s agreement not to
terminate or materially modify such insurance without endeavoring to notify
Motorola in writing at least ten (10) days before such termination or
modification.  Coverage provided for Motorola shall be primary, and any
insurance maintained by Motorola shall be in excess and not contributing with
any insurance provided by Licensee.  Coverage shall be on a claims made basis. 
Motorola shall not be responsible for the payment of the premiums, charge
taxes, assessments, or other costs for the product liability insurance.

 

15.4      The existence of the
product liability insurance shall not mitigate, alter, or waive the indemnity
provisions of Section 15. 

 

 

16.         DISPUTE RESOLUTION 

 

16.1      The
Parties will attempt to settle any claim or controversy relating to this
Agreement through negotiation in good faith and a spirit of mutual cooperation.
If those attempts fail to achieve a settlement, then the dispute will be
mediated by a mutually acceptable mediator to be chosen by the Parties within
forty-five (45) days after written notice by either Party demanding mediation.
Neither Party may unreasonably withhold consent to the selection of a mediator,
and the Parties will share the costs of mediation equally. The non-binding mediation
hearing shall be conducted within forty-five (45) calendar days after the
selection of the mediator. Each Party shall bear its own attorney’s fees and
other costs. Any mediation shall be conducted in the English language.

 

 

 

16.2         
Any dispute that cannot be resolved
between the Parties through negotiation or mediation within six (6) months of
the date of the initial demand for mediation by one of 

the
Parties may then be submitted to the courts for resolution. The use of any mediation
procedures will not be construed under the doctrines of laches, waiver or
estoppel to affect adversely the rights of either Party. Nothing in this
Section will prevent either Party from resorting to judicial proceedings if
interim relief from a court is necessary to prevent serious and irreparable injury
to that Party or to others. In addition, nothing in this Section 16 shall be
construed as applying to disputes regarding the Intellectual Property Rights
(including Confidential Information) or Trademarks.

 

 

17.             
FORCE MAJEURE

 

17.1      The terms of this
Agreement are binding upon the parties hereto except where prevented, delayed
or interfered with by causes beyond the reasonable control and without the
fault or negligence of the non-performing party, including, without limitation,
riot, war, strike, significant acts of terrorism and the effects thereof, insurrection,
civil war or severe domestic instability or suspension of the banking or
foreign exchange system in any nation in the Territory or place of manufacture
of the Products, banking moratorium, or hostilities between nations,
governmental regulation (other than action taken in response to Motorola’s or
Licensee’s violation or failure to act with respect to any law or governmental
regulation, in which case the party at fault shall not be permitted to claim
the benefit of this Section 17), acts of God, fire, accidents, strikes or
earthquakes.

 

17.2     The party affected by
force
majeure shall give notice to the other party of said force majeure
event Promptly after the occurrence thereafter, stating therein the nature of
suspension of performance and reasons thereof.  Such party shall use its best
efforts to resume performance as soon as reasonably possible.  Upon restoration
of the affected party’s ability to perform its obligations hereunder, the
affected party will give immediate notice to the other party.

 

17.3     If the
force
majeure condition that prevents a party’s performance hereunder shall
continue for a period of six (6) consecutive months, and there shall be no
reasonable prospect for the immediate cure thereof despite the best efforts of
the affected party to cure the same, then either party shall have the right to
terminate this Agreement in its entirety and without liability upon ninety (90)
days prior notice to the other party.

 

18.        LIMITATION OF
LIABILITY

 

18.1     Except for third party
damages included in settlements and judgments subject to Section15.2 Motorola
shall not be liable to Licensee for lost profits, or consequential, indirect,
incidental, special or punitive damages, even if advised in advance of the
possibility of such damages.  Except for judgments or settlements subject to
Section 15.2, Motorola shall not be liable to Licensee for direct damages in
excess of the total Royalties paid by Licensee to Motorola under this
agreement.

 

 

 

 

19. 
COMPLIANCE WITH LAWS

 

 

19.1     In the performance of
this Agreement, Licensee shall comply in all material respects with published applicable
laws and regulations in the countries of said Territory. Should Licensee be or
become aware of any applicable laws or regulations which are inconsistent with
the provisions of this Agreement, Licensee shall Promptly notify Motorola of
such inconsistency. The parties then, shall in good faith, negotiate a
modification to this Agreement such that it complies with applicable law and
regulations and if the parties are unable to successfully negotiate such a
modification Motorola may terminate the license and rights granted hereunder in
that jurisdiction, and the Territory set forth in Exhibit B shall be
appropriately amended.

 

19.2  
Compliance with Laws
and Ethical Standards.  Licensee, on behalf of itself, its Affiliates and
its suppliers and subcontractors (“Supply Chain”), represents and warrants that
all Products are produced, manufactured and supplied, and Services are
rendered, in compliance in all material respects with applicable laws, rules,
regulations and standards, including those concerning environmental protection,
freedom of association, wages and humane treatment of workers, as set forth in
Exhibit G 

 

19.3 
Inspection of
Facilities.  Upon five (5) business days’ notice to Licensee, Motorola
shall have the right to conduct or have conducted, during regular business
hours, an examination of Licensee’s or Licensee’s Affiliate’s or an Approved
Manufacturer’s manufacturing, assembly, testing  and business facilities to
determine compliance with laws and ethical standards as set forth on Exhibit G. 

 

 

20        INTELLECTUAL
PROPERTY

 

20.1     No grant or
transfer of any Motorola’s Intellectual Property Rights to Licensee is given or
intended under this agreement, including any license implied or otherwise,
except as expressly provided in Section 2 of this Agreement.

 

20.2     As between
Motorola and Licensee, Motorola owns and, upon creation shall own, all rights
in the Trademarks, the trade dress, copyrights, ornamental designs, industrial
designs and design patents associated with the Product and Product Materials
and any Derivative Works created from them. Notwithstanding the foregoing, if
Licensee presents to Motorola a sample of a product that is designed to fit
mobile telephones generally and is not designed to fit a Motorola product
specifically (hereinafter a “Universal” case), and Licensee give Motorola a
right of first refusal to exclusively use the design of the Universal case as a
Product under the terms of this Agreement, then the ornamental and industrial
design rights and design patents associated with such Universal case shall be
owned by Licensee.  Licensee shall cooperate and shall execute all papers
reasonably requested by Motorola to effect registration, maintenance and
renewal of these rights, at the sole expense of Motorola.

 

 

 

 

 

 

21.       PRESS RELEASES

 

21.1     Licensee shall
make no press releases concerning the business relationship or license granted
in this Agreement or the introduction or sales of Products without Motorola’s
written agreement as to the form and content of the proposed press release.

 

 

22.       ETHICS AND CONFLICTS OF
INTEREST. 

 

22.1     Both
parties will refrain from activities that: (i) are illegal, unethical; (ii)
might bring either party into disrepute; or (iii) might constitute or represent
a serious conflict of interest or that might give the appearance of
impropriety. Both parties will cooperate fully in any investigation or
evaluation of such matters. Breach of this obligation by either party will
entitle the non-breaching party to terminate this Agreement without notice. 

 

 

23.       NOTICES

 

23.1     Any notice required or
permitted to be given under this Agreement shall be in writing and shall be
directed by one party to the other at its respective address as follows unless
otherwise provided for in this Agreement:

 

Licensor:         Robert
Vacheron

                        Category
Manager

                        Motorola,
Inc.

                        1700 Bellemeade Ct.

                        Lawrenceville, GA 30043

                        EMAIL: 
CRV009@motorola.com

 

                                               and to:

 

                                                  Scott
Offer

                                                  Corporate
Vice President 

                                                  Law
Department, Personal Communications Sector         

                                                  Motorola,
Inc.

                                                  600 North U.S. Highway 45

                                                  Libertyville , IL 60048-1286

 

 

Licensee:        Douglas
Sabra

                        Chief
Executive Officer

                        Forward
Industries

                        1801 Green Road, Suite E.

                        Pompano Beach, FL 33064

 

                        Phone:
954-360-6420

                        FAX:
954-419-9735

                        EMAIL:
dsabra@forwardindustries.com

 

 

 

 

 

And to:

 

                        Steven
A. Malsin

                        Attorney
at Law

                        237 Upper Shad Road

                        Pound Ridge, NY 10576

 

 

 

23.2     Any notice required or
permitted to be given under this Agreement shall be in writing, shall be deemed
to have been received (i) when delivered personally; (ii) when sent by
confirmed facsimile or by e-mail except for notices that relate to default
provisions; (iii) five (5) days after having been sent by registered or
certified mall, return receipt requested, postage prepaid; or (iv) one business
(1) day after deposit with a commercial overnight carrier with written
verification of receipt.

 

23.3     Either party may
change the address to which notices or requests shall be directed by written
notice to the other party, but such written notice to be effective must be
received by the other party at least thirty (30) days before the effective date
of the change of address.

 

24.        ASSIGNMENT
OF RIGHTS AND SUBLICENSE

 

24.1     The benefit of this
Agreement shall be personal to Licensee who shall not, without the prior
consent in writing of Motorola, assign its rights, or delegate its duties
hereunder, nor grant or purport to grant any sublicense in respect to the
Trademarks, to third parties.

 

24.2     Notwithstanding the
above, Licensee shall have the right to assign its rights and to delegate its
duties under this Agreement, with Motorola’s prior written consent, which shall
not be unreasonably withheld, to wholly-owned subsidiaries of Licensee. In the
event that Licensee undergoes a substantial change of ownership, whether or not
such a change results from a merger, acquisition, consolidation or otherwise,
Licensee shall have the right to assign its rights and to delegate its duties
to such new owner under this Agreement, with Motorola’s prior written consent,
provided that the substantial change of ownership does not result in a
substantial change in the nature of the Licensee’s business, a substantial
change in nature including, but not limited to, a change in product mix,
pricing structure, financial condition or method of doing business. However, in
any instance, Licensee and its assignee shall remain ultimately liable to
Motorola for all of the obligations assumed by it under the terms of the
Agreement.

 

 

 

25.   FREEDOM OF
ACTION

 

25.1         
Nothing in this Agreement shall be construed as prohibiting or
restricting Motorola or its subsidiaries from independently developing, having
developed independently, acquiring, licensing, distributing or marketing
products, services and other materials which are competitive in any form with
the Products. Licensee agrees and acknowledges that it shall not hold Motorola
liable for any lost sales or revenues in respect to the sales performance of
the Products, regardless of the reason for such lost sales or revenues
including, but not limited to, Motorola’s direction in the appearance, function
or marketing of the Products.

 

 

 

26.       APPROVALS

 

26.1      Any
approval required by this Agreement to be obtained from Motorola must be in writing
from the Category Manager and may be withheld by Motorola for any reason deemed
reasonable and justifiable in the sole determination of Motorola.  If approval
is not delivered in writing to the Licensee within fifteen (15) business days
of submission of a request for approval, the request for approval shall be
deemed to be denied.

 

 

27.       WAIVER
OF DEFAULT OR OTHER RIGHTS

 

27.1     The failure of
Motorola to insist in any one or more instances of the performance of any term,
obligation or condition of this Agreement by Licensee or to exercise any right
or privilege herein conferred upon Motorola shall not be construed as
thereafter waiving such term, obligation, or condition, or relinquishing such
right or privilege, and the acknowledged waiver or relinquishment by Motorola
of any default or right and shall not constitute waiver of any other default or
right.

 

 

28.       SEVERABILITY

 

28.1     If any provision of
this Agreement shall be determined to be illegal and unenforceable by any court
of law or any competent governmental or other authority, the remaining
provisions shall be severable and enforceable in accordance with their terms so
long as this Agreement without such terms or provisions does not fail of its
essential purpose or purposes.  The parties will negotiate in good faith to
replace any such illegal or unenforceable provision or provisions with suitable
provisions that will maintain the economic purposes and intentions of this
Agreement.

 

 

29.       SECTION
HEADINGS

 

29.1     The captions for each
Section have been inserted for the sake of convenience and shall not be deemed
to be binding upon the parties for the purpose of interpretation of this
Agreement.

 

 

30.       EXHIBITS

 

30.1     All references to
“Exhibit” or “Exhibits” herein shall mean those Exhibits A through G attached
to this Agreement, which are hereby incorporated into this Agreement as though
fully set forth herein.

 

 

31.       SURVIVAL

 

31.1     Licensee’s obligations and
agreements under Sections 6, 7, 8, 11, 12, 13,15, 16, 18, 19, 20, 21, 22, 23,
25, 27, 28, 29, 30, 31, 33, 34, 35  shall survive the termination or expiration
of this Agreement.

 

 

 

 

32.       TIME
IS OF THE ESSENCE

 

32.1     Time
is of the essence with respect to the obligations to be performed under this
Agreement.

 

 

33.       RIGHTS
CUMULATIVE

 

33.1     Except
as expressly provided in this Agreement, and to the extent permitted by law,
any remedies described in this Agreement are cumulative and not alternative to
any other remedies available at law or in equity.

                                                            

 

34.       ENTIRE
AGREEMENT

 

34.1     The provisions of this
Agreement contain the entire agreement between the parties relating to use by
Licensee of Trademarks on Products, and on Product Materials, and supersede and
cancel all prior provisions, negotiations, agreements and commitments (whether
oral or in writing) with respect to the subject matter hereof. This Agreement
shall be interpreted to achieve the objectives and intent of the parties as set
forth in the text and factual recitals of the Agreement. It is specifically
agreed that no evidence of discussions during the negotiation of the Agreement
or drafts written or exchanged may be used in connection with the
interpretation or construction of this Agreement. This Agreement may not be
released, discharged, abandoned, changed or modified in any manner except by an
instrument in writing signed by the parties. In the event of any conflict
between the provisions of this Agreement and provisions in any other agreement
with Licensee, the provisions of this Agreement shall prevail.

 

 

35.       GOVERNING LAW

 

35.1                  This
Agreement is deemed to be executed in the State of Illinois and the
construction and performance of this Agreement will be construed and interpreted
according to the substantive laws of that State without regard to its conflicts
of law principles or rules.  The parties agree that any legal action or
proceeding between Motorola and Licensee with respect to this Agreement,
including the Manufacturer’s Agreement, shall be brought in the United States
District Court for the Northern District of Illinois or, if such court does not
have jurisdiction, in any court of general jurisdiction in Cook County,
Illinois.  

 

 

 

 

 

IN WITNESS WHEREOF, the parties
haves caused this Agreement to be executed in 

duplicate originals by their
duly authorized representatives on the dates indicated below.

 

 

 

 

MOTOROLA, INC.

 

 

/s/ Philip Gilchrist                  

 

By:  Philip Gilchrist

 

Title:  Vice President, Global Product Management, Mobile Devices Business

 

Date: 
May 22, 2008

 

 

FORWARD INDUSTRIES, INC.

 

 

 

/s/ Doug Sabra                       

 

BY:  Doug
Sabra

 

Title:  Chief Executive Officer

 

Date: 
May 14, 2008

 

 

EXHIBIT A

 

License between
Motorola and Forward Industries

 

 

 

Products: Carry
solutions, face plates, cleaners and decorative accessories for mobile
telephones and related accessories.

 

 

Territory:  USA, Canada, Austria, Belgium, , Denmark,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Monaco, Norway,
Portugal, Spain, Sweden, Switzerland, UK, Czech Republic, Hungary, Latvia,
Lithuania, Poland, Slovakia, Croatia, Estonia, Russia, Ukraine, Liechtenstein,
Albania, Belarus, Bosnia-Herzegovina, Bulgaria, Macedonia, Romania, Slovenia,
Uzbekistan

 

 

Royalty (for each product): 15 % of Net Sales.

 

 

 

Term:   April 1, 2008 through March 31, 2009

 

 

Sales Year:  April 1 to March 31

 

Minimum Royalty:

 

2008:

Q1 - N/A

Q2 – N/A

Q3 - $150,000

Q4 - $250,000

 

2009:

Q1 - $250,000

 

 

 

EXHIBIT B

 

 

 

The Licensed
Motorola Trademarks are: the MOTOROLA signature and the stylized M logo
(“Emsignia”) and associated Motorola Trade Dress

 

 

 

 

 

 

 

 

 

 

EXHIBIT C

 

 

TRADEMARK USE
GUIDELINES

 

 

Artistic
renderings of the Licensed Motorola Trademarks and Trade Dress shall be
provided to Licensee under the following items, which become a part of this
agreement by reference:

- Motorola
Basic Corporate Identity Standards

- Motorola
Consumer Packaging Guidelines

- Motorola
logo and artwork files

- Motorola
Global POS guidelines

 

FILES ARE
SUBJECT TO CHANGE

Motorola shall keep Licensee
appraised of any changes and, in the event such change affects inventory or
packaging in stock or in production by Licensee,  then Licensee shall be permitted
to sell such inventory and implement the change as a “running change” as soon
as practicable.

EXHIBIT D

 

 

SPECIFICATIONS

 

 

 

 

 

 Material and Methods Specification-Template for Personalization
Products supplied as a .pdf file

 

Test Validation Matrix supplied as an Excel document

 

 

 

EXHIBIT E

MANUFACTURER’S AGREEMENT

                                                                                                      

AGREEMENT dated this  ___________day
of____________________, 200_, by and among_________________________
(Address)____________ (“Licensee”) and ________________________, (Address)____________,
(“Manufacturer”), and Motorola, Inc., a Delaware Corporation (“Motorola”).

 

WHEREAS, Licensee has obtained a license from Motorola to
use the Trademarks, Motorola Trade Dress and Copyrights referred to in Exhibit
1 (collectively “Trademarks”) to this Manufacturer’s Agreement, on or in
conjunction with the product(s) referred to in Exhibit 2 (“Product(s)”) to this
Manufacturer’s Agreement; and

 

WHEREAS, Motorola owns throughout the world certain
trademark registrations for the Trademarks for use on a variety of goods; and

 

WHEREAS, Manufacturer wishes to manufacture, exclusively
for Licensee, Product(s) using the Trademarks .

 

NOW, in consideration of the foregoing, the covenants hereinafter
set forth, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties agree as follows:

 

1.                
TRADEMARKS, TRADE
DRESS, ORNAMENTAL DESIGNS

 

1.1       Manufacturer agrees that any and all rights that
may be acquired by the use of the Trademarks and Copyrights by the Manufacturer
shall inure to the sole benefit of Motorola. The Manufacturer shall execute all
papers and to make such filings as required to confirm such use inures to the
benefit of Motorola.

 

 

            1.2       As
between Motorola and Manufacturer, Motorola owns and, upon creation shall own,
all rights in the trade dress, copyrights, ornamental designs, industrial
designs and design patents associated with the Product and any packaging, 
marketing materials, point-of-sale materials, publicity, advertising, signs,
catalogs product brochures, warranty statement, user guide, and other in-box
materials relating to the Products and any derivative works created from them. 
Manufacturer shall cooperate and shall execute all papers reasonably requested
by Motorola to effect registration, maintenance and renewal of these rights, at
the sole expense of Motorola.

 

 

2.       PROTECTION AND
MAINTENANCE OF TRADEMARK

 

2.1                   Manufacturer
also agrees to cooperate and execute all papers reasonably requested by
Licensee or Motorola to effect further registration, maintenance, and renewal
of the Trademarks and Copyrights at the sole expense of Motorola and, where
applicable, to record Manufacturer as a registered user of the Trademarks. 
Manufacturer agrees not to use the Trademarks and Copyrights or any part
thereof as part of its corporate or trade name nor use any name or mark
confusingly similar to, or derivative of, the Trademarks and Copyrights.

 

2.2                   Manufacturer
further agrees not to register in any country any name or mark resembling or
confusingly similar to or derivative of the Trademarks and Copyrights.

 

2.3       Manufacturer agrees that if any application for
registration is, or has been filed in any country by Manufacturer which relates
to any name or trademark which, in the opinion of Motorola, is confusingly
similar, deceptive or misleading with respect to the Trademarks and Copyrights,
Manufacturer shall abandon immediately any such application or registration or,
at Motorola’s sole discretion, assign it to Motorola.

 

 

 

2.4       Manufacturer agrees that if it is notified by
Licensee or Motorola of any change in any of the Trademarks and Copyrights,
Manufacturer shall immediately change the Trademarks and Copyrights to conform
with such change.

 

3.         CONTRACT MANUFACTURE LIMITATION

 

3.1       Manufacturer agrees that it will not manufacture
any goods using the Trademark and Copyrights other than the Product(s)
specified by this Manufacturer’s Agreement for which Manufacturer was approved
and shall exclusively manufacture for and/or sell to Licensee any such
Product(s) during the term of Licensee’s license from Motorola to use the
Trademark and Copyrights on such Product(s).

 

 

4.   COMPLIANCE
WITH LAW AND LABOR PRACTICES

 

            4.1  Manufacturer agrees to comply with all
applicable laws, orders, rules and regulations in performing its obligations.

 

                       
4.2  Manufacturer warrants that all Products manufactured by
Manufacturer will be produced in compliance with all applicable laws, orders,
rules and regulations in the jurisdiction Manufacturer manufactures the
Products and will comply with the provisions of the Compliance with Laws and
Standards document attached hereto as Exhibit 3.

.

 

                       
4.3  Manufacturer warrants that all Products will be manufactured by it,
whether assembled or packaged in whole or in part, without the use of any
forced labor, prison labor or child labor, and that such Products will not be
trans-shipped for the purpose of mislabeling, evading quota or country of
origin restrictions, or avoiding compliance with provisions against forced
labor, prison labor or child labor.

 

 

 

5.   REPRESENTATION AND WARRANTIES

 

5.1       Manufacturer
further agrees and warrants that at all times:

 

(i)         it has and shall maintain all rights and
licenses needed to manufacture and sell the Products and the Products do not
infringe any patent, copyright, mask work right, moral right, trademark,
service mark, trade secret and/or all other intellectual property rights and/or
similar rights of any third party. Manufacturer is solely responsible for all
royalties, fees or other payments to secure such rights and licenses.

 

(ii)        Manufacturer shall secure and maintain all
certifications and requirements to manufacture and sell the Products and
Manufacturer shall affix all labels on the appropriate area of each Product
regarding such certifications and requirements. Manufacturer shall provide
written evidence of such certifications and approvals upon request.

 

(iii)   All Products are new, and do not contain anything
used, and Manufacturer shall have processes, procedures and documentation in
place to comply with and substantiate this representation and warranty.

 

6.  INDEMNIFICATION

 

6.1       Manufacturer agrees to indemnify, hold harmless
and defend Motorola its subsidiaries and customers with legal counsel
acceptable to Motorola from and against all suits, actions, claims, damages,
liabilities, costs and expenses, including attorneys fees, court costs and
other legal expenses (collectively “Claims”), arising out of or connected with
the Products, Manufacturer's methods of manufacturing the Products, and the
promotional or packaging material relating to the Products, except where such
Claims arise solely out of Licensee’s actions or omissions.  Motorola agrees to
give Manufacturer written notice of any claim within thirty (thirty) days of
receipt by Motorola. Motorola’s failure to provide written notice of the claim
within thirty days shall not affect its right to indemnification unless the
delay materially prejudices Manufacturer’s ability to respond to the claim. Manufacturer
shall bear full responsibility for the defense (including any settlements) of
any such claim; provided, however, that: (i) Manufacturer shall keep Motorola
informed of, and consult with Motorola in connection with the progress of such
litigation or settlement; and (ii) Manufacturer shall not have any right,
without Motorola’s prior written consent, to settle any such claim if such
settlement arises from or is part of any criminal action, suit or proceeding or
contains a stipulation to or admission or acknowledgement of, any liability or
wrongdoing (whether in contract, tort, or otherwise) on the part of Motorola or
Motorola subsidiary.

 

 

 

INSPECTION AND AUDIT

 

7.1       Manufacturer further agrees that upon seven (7)
days notice to Licensee, who shall in turn notify Manufacturer, Motorola shall
have the right to inspect, at Motorola’s expense, the manufacturing facilities
of Manufacturer during regular business hours to determine compliance of the
Product(s) manufactured by Manufacturer with the applicable Control
Specifications approved by Motorola and supplied to Manufacturer by Licensee,
and for compliance with laws, standards and labor practices.

7.2       Manufacturer further agrees that, during the
term of this Agreement and for at least five (5) years following the
termination or expiration of this Agreement, Manufacturer and its Affiliates
shall maintain at Manufacturer’s or its Affiliate’s principal office, such
books and records, including, but not limited to, production, inventory and
sales records (collectively “Books and Records”) as are necessary to
substantiate that: (i) all statements submitted to Motorola by Licensee were
true, complete and accurate with regard to the quantities of Products sold to
Licensee by Manufacturer and the countries to which they were shipped; (ii) Manufacturer
has manufactured and sold Products exclusively to Licensee in accordance with the
provisions of this Agreement; and (iii) no payments have been made, directly or
indirectly, by or on behalf of Manufacturer or Licensee to or for the benefit
of any Motorola employee or agent who may reasonably be expected to influence
Motorola’s decision to enter this Agreement or the amounts to be paid by
Licensee or Manufacturer under this Agreement.  (As used in this Section,
“payment” shall include money, property, services, and all other forms of
consideration.)  All Books and Records shall be maintained in accordance with
generally accepted accounting principles consistently applied.  During the Term
of, and for five (5) years after the termination or expiration of this
Agreement, the Books and Records shall be open to inspection, audit, and copy
by or on behalf of Motorola during business hours.

 

 

 

8.       CONFLICTING LAWS

 

          8.1        Manufacturer
agrees that should it be or become aware of any applicable laws or regulations
which are materially inconsistent with the provisions of the Manufacturer’s
Agreement, it shall notify Licensee within fifteen (15) days of becoming aware
of such material inconsistency.

 

9.       TERMINATION
AND EXPIRATION

 

            9.1        Manufacturer agrees that upon the termination or
expiration of this Manufacturer’s Agreement, Manufacturer shall execute all
papers and make such filings as necessary to terminate any registered user
agreements or similar agreements that may have been executed, filed and/or
recorded while this Manufacturer’s Agreement was in effect.

 

9.2       Manufacturer acknowledges that any material
breach by Manufacturer of this Manufacturer’s Agreement will cause irreparable
harm and damages to Licensee and/or Motorola.  If  Licensee  or Motorola
determine Manufacturer has materially breached this Manufacturer’s Agreement,
Manufacturer shall have thirty (30) days to cure such breach to the
satisfaction of Motorola  and Licensee. If Manufacturer fails to cure such
material breach in thirty (30) days, this Manufacturer’s Agreement shall
terminate. The parties of this Manufacturer’s Agreement expressly agree that
Motorola, is an intended beneficiary of this Manufacturer’s Agreement with
rights to enforce such agreement.

 

 

 

10.            
GOVERNING LAW

 

10.1     The construction and performance of this
Manufacturer’s Agreement will be governed by the internal, substantive laws of
the state of Illinois without regard to its choice of law rules.  

 

IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed in duplicate originals by its duly authorized
representative on the respective dates entered below.

 

MANUFACTURER                                        LICENSEE

 

By:    __________________________           By: 
_____________________

 

Title:  __________________________           Title: 
____________________

 

Date:  __________________________          Date: 
____________________

 

 

MOTOROLA, INC.

 

By:    __________________________

 

Title:  __________________________

 

Date:  __________________________
 

EXHIBIT 1 to Manufacturer’s Agreement
TRADEMARKS, TRADE DRESS, AND COPYRIGHTS

The Licensed
Motorola Trademarks are: the MOTOROLA signature and the stylized M logo
(“Emsignia”) and associated Motorola Trade Dress

 

 

 

 

 

 

 

 

 

 

EXHIBIT 2 to Manufacturer’s Agreement

 

PRODUCTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT 3 to
Manufacturer’s Agreement

 

Compliance with Laws and
Ethical Standards

 

 

1.        
Ethical Conduct, Anticorruption and Unfair
Business Practices

 

Motorola has historically depended on product
quality and superiority, combined with outstanding support capability, to sell
its products.  Accordingly, Manufacturer agrees to perform the services
hereunder with the highest ethical standards.  Motorola will not do business
with any entity or person where Motorola believes that payoffs or similar improper
or unethical practices are involved.  Motorola expects its Manufacturers to
abide by this policy and not to have a relationship with another entity or
person, or engage in any activity that results or may result in a conflict of
interest, or embarrassment to Motorola, or harm to Motorola's reputation.  Manufacturer will:  (i) maintain
transparency and accuracy in corporate record keeping; (ii) act lawfully and
with integrity in handling competitive data, proprietary information and other
intellectual property; and (iii) comply with legal requirements regarding fair
competition and antitrust, and accurate and truthful marketing.  Manufacturer
will not engage in corrupt practices, including public or private bribery or
kickbacks.  If Manufacturer fails to comply in any
respect with all of these requirements, then Motorola may immediately and
without liability terminate this Agreement.

 

2.        
Antidiscrimination and Humane Treatment of
Workers

 

            a.         Manufacturer will employ workers on
the basis of their ability to do the job and not on the basis of their personal
characteristics or beliefs.

 

            b.         Manufacturer will assure that
Products (including parts) will not be produced, manufactured, mined, or
assembled with the use of forced, prison, or indentured labor, including debt
bondage, or with the use of illegal child labor in violation of International
Labor Conventions for minimum age (ILO-C138) and child labor (ILO-C182).  If Manufacturer
recruits contract workers, Manufacturer will pay agency recruitment commissions,
will not require workers to remain in employment for any period of time against
their will, and will not impose any early termination penalties on workers.  If
Manufacturer provides housing or eating facilities, Manufacturer will assure
the facilities are operated and maintained in a safe, sanitary and dignified
manner.

 

            c.         Manufacturer will operate safe,
healthy and fair working environments, including managing operations so levels
of overtime do not create inhumane working conditions.  Manufacturer will pay
workers at least the minimum legal wage, or where no wage laws exist, the local
industry standard.  Manufacturer will assure that workers are free to join, or
refrain from joining, associations of their own choosing, unless otherwise
prohibited by law.  Manufacturer will not routinely require workers to work in
excess of six consecutive days without a rest day.

 

3.        
Environmental Protection

 

            a.         Manufacturer will implement a
functioning environmental management system in accordance with ISO 14001 or
equivalent.  Third-party registration is recommended but not required.

 

            b.         Manufacturer certifies that Products
and their parts do not contain and are not manufactured with a process that
uses any Class I ozone-depleting substances (as identified in 40 CRF Part 82
Appendix A to Subpart A, or as subsequently identified by the U.S.
Environmental Protection Agency as Class I ozone-depleting substances).  For
Products imported into the United States, Manufacturer will provide Motorola
with a completed and signed ODS Certification Questionnaire, accessible at the
following URL:  http://www.motorola.com/suppliers/materialsdisclosure 

 

 

 

 

            c.         For Products used as parts for
Motorola products, including the packaging used with such products and any
manuals that accompany such products in the ordinary course, Manufacturer will
provide material disclosure or certification, as defined in Motorola’s
Controlled and Reportable Materials Disclosure Process, accessible at the following
URL:   http://www.motorola.com/suppliers/materialsdisclosure 

 

 

4.        
Material Safety Data Sheets

 

Manufacturer will electronically provide material safety
data sheets, chemical safety data sheets, or equivalent documentation for all
chemicals sold to Motorola.  For all chemicals supplied or imported into the
United States, Manufacturer will certify that the chemicals are listed on the
Toxic Substances Control Act, 15 USCS §2601, et. seq., chemical inventory, or
are subject to an exemption specified in the material safety data sheets.

 

5.        
Imports and Customs 

 

Manufacturer will comply with all import and customs laws,
regulations and administrative determinations of the importing country.  Manufacturer
will comply with the security criteria of the importing country’s government
security program.  If Manufacturer is providing Products to be delivered to, or
Services to support delivery to, the U.S., Manufacturer will comply with the
security criteria of the U.S. Customs and Border Protection’s Customs-Trade
Partnership against Terrorism (C-TPAT) Program (available on  http://www.cbp.gov ).

 

 

6.        
Export Restriction

 

If Manufacturer is the exporter of record for any shipments,
Manufacturer will obtain all export authorizations from the U.S. government or other governments that may be required to lawfully make such shipments. 

 

 

7.        
Utilization of Small Business Concerns

 

If applicable, Manufacturer will comply with the provisions
of U.S. Federal Acquisition Regulation (FAR) 52.219-8 pertaining to Utilization
of Small Business Concerns, as well as any other state and local, small and
other business utilization laws.

 

8.        
Equal Opportunity

 

If applicable, Manufacturer will comply with the provisions
of FAR 52.222-21, 52.222-26, 52.222-35, and 52.222-36 pertaining to Segregated
Facilities, Equal Opportunity, Equal Opportunity for Veterans, and Affirmative
Action for Workers with Disabilities.  If applicable, Manufacturer will
maintain, at each establishment, affirmative action programs required by the
rules of the U.S. Secretary of Labor (41 CFR 60-1 and 60-2). 

 

9.        
Government Subcontract

 

If an Order is issued under a government contract, Manufacturer
will comply with the terms of the government contract that appear on the Order,
and with any other applicable laws, regulations and executive orders.

 

 

 

10.       
Manufacturer Diversity

 

If Manufacturer is located in the United States or is
supplying Products to Motorola locations based in the United States, Manufacturer will track and report its Supply Chain’s spend with minority-owned,
women-owned and disabled veteran-owned business enterprises located in the United States.  Manufacturer and Motorola will agree on a goal for Manufacturer’s Supply
Chain spend, based upon a percentage of Manufacturer’s total gross revenues
under this Agreement.  Manufacturer will submit quarterly progress reports, in
a format designated by Motorola, by the twenty-fifth day of the month following
the end of each calendar quarter.  All reports will be forwarded to the
Motorola Manufacturer Diversity Group, 2501 S. Price Road, M/D G1232, Chandler, AZ  85248, or sent via email to  supplierdiversity@motorola.com .

 

11.       
Product Safety and Regulatory Compliance

 

Manufacturer
will ensure that all Products and services provided comply with all applicable
regulations and laws, including all applicable product safety, environmental,
and recycling regulations and laws.

 

12.       
ICT
Manufacturer Self Assessment Questionnaire

 

Upon
Motorola’s request, Manufacturer will obtain a subscription to the Global
e-sustainability Initiative (GeSI) and Electronic Industry Code of Conduct’s
(EICC) online system E-TASC at  www.E-TASC.com
and complete the ICT Supplier Self-Assessment within that system.  Details
regarding this ICT Supplier Self Assessment Questionnaire and Motorola
Corporate Responsibility initiatives are available for review at:   http://compass.mot.com/web/wikinethome . 

 

 

 

 

 

 

 

 

EXHIBIT F

 

 

PRODUCT
WARRANTY

 

 

Licensee
shall include a written warranty statement on or in all Product
packaging. Such warranty shall, at a minimum:

 

	comply
     with all applicable laws of the country or countries in which the Product
     is sold;
	specify
     what components the warranty covers;
	specify
     the time period of the warranty, which shall be no less than one (1) and
     no more than five (5) years from date of purchase;
	specify
     the remedy (e.g. repair, replacement, or refund) if the Product
     does not conform to the warranty;
	specify
     the Licensee’s toll-free telephone number available to Product
     purchasers for warranty and other support;
	to the
     extent allowed by law, exclude consequential, incidental and punitive
     damages and limit any remedies to repair, replace or refund; and
	clearly indicate that Motorola is not responsible for warranty support
of the Product
	
	be substantively equivalent to the sample warranty statement below: 

 

The
following statement shall be used for all goods sold in the United States:

Statement
of Limited Warranty: (Licensee) warrants that for a period of — years from
the date of purchase that this product 1) is free from defects in materials and
workmanship and 2) conforms to its specifications. If this product does not
function as warranted during the warranty period, (Licensee), at its option,
will either replace this product with one that is functionally equivalent or
will refund your purchase price. These are your exclusive remedies under this
warranty. Please call 1-800 (XXXXXXXX) for warranty service.

 

This product
is manufactured, distributed or sold by XXXXXX, official licensee for this
product.  Motorola, the Motorola logo
trademarks and the Motorola trade dress are owned by Motorola, Inc. and are
used under license from Motorola. Please contact XXXXXX at YYYYYYYY for
questions/comments, warranty, support, or service related to this product

 

This
warranty will be voided by misuse, improper physical environment, accident, or improper
maintenance by you. THIS WARRANTY REPLACES ALL OTHER WARRANTIES OR CONDITIONS,
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OR
CONDITIONS OF MERCHANTABILITY AN]) FITNESS FOR A PARTICULAR PURPOSE. THESE
WARRANTIES GIVE YOU SPECIFIC LEGAL RIGHTS AND YOU MAY ALSO HAVE OTHER RIGHTS
WHICH VARY FROM JURISDICTION TO JURISDICTION. SOME JURISDICTIONS DO NOT ALLOW
THE EXCLUSION OR LIMITATION OF EXPRESS OR IMPLIED WARRANTIES, SO THE ABOVE
EXCLUSION OR LIMITATION MAY NOT APPLY TO YOU. IN THAT EVENT, SUCH WARRANTIES
ARE LIMITED IN DURATION TO THE WARRANTY PERIOD. NO WARRANTIES APPLY AFTER THAT
PERIOD.

 

 

 

Circumstances
may arise where, because of a default on (Licensee’s) part or other liability,
you are entitled to recover damages from (Licensee). In each such instance,
regardless of the basis on which you are entitled to claim damages from
(Licensee) (including fundamental breach, negligence, misrepresentation, or
other contract or tort claim), (Licensee) is only liable for:

 

1.          damages for bodily injury (including death) and damage to
real property and

tangible
personal property; and

2.          the amount of any other actual direct
damages or loss, up to the greater of $500 or

the price
paid for this product.

 

UNDER NO CIRCUMSTANCES IS
(Licensee) OR XXX LIABLE FOR ANY OF THE FOLLOWING: (1) THIRD-PARTY CLAIMS
AGAINST YOU FOR LOSSES OR DAMAGES (OTHER THAN THOSE UNDER THE FIRST ITEM LISTED
ABOVE); (2) LOSS OF, OR DAMAGE TO, YOUR RECORDS OR DATA: OR (3) SPECIAL,
INCIDENTAL OR INDIRECT DAMAGES OR FOR ANY ECONOMIC CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS OR SAVINGS), EVEN IF (Licensee) OR XXX ARE INFORMED OF
THEIR POSSIBILITY. SOME JURISDICTIONS DO NOT ALLOW THE

EXCLUSION OR LIMITATION OF
INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE EXCLUSION OR LIMITATION MAY
NOT APPLY TO YOU.

 

 

 

 EXHIBIT G

 

Compliance with Laws and
Ethical Standards

 

 

1.        
Ethical Conduct, Anticorruption and Unfair
Business Practices

 

Motorola has historically depended on product
quality and superiority, combined with outstanding support capability, to sell
its products.  Accordingly, Licensee agrees to perform the services hereunder
with the highest ethical standards.  Motorola will not do business with any entity
or person where Motorola believes that payoffs or similar improper or unethical
practices are involved.  Motorola expects its Licensees to abide by this policy
and not to have a relationship with another entity or person, or engage in any
activity that results or may result in a conflict of interest, or embarrassment
to Motorola, or harm to Motorola's reputation.  Licensee will:  (i) maintain transparency and
accuracy in corporate record keeping; (ii) act lawfully and with integrity in
handling competitive data, proprietary information and other intellectual
property; and (iii) comply with legal requirements regarding fair competition
and antitrust, and accurate and truthful marketing.  Licensee will not engage
in corrupt practices, including public or private bribery or kickbacks.  If Licensee fails to comply in any respect with all of these
requirements, then Motorola may immediately and without liability terminate
this Agreement.

 

2.        
Antidiscrimination and Humane Treatment of
Workers

 

            a.         Licensee will employ workers on the
basis of their ability to do the job and not on the basis of their personal
characteristics or beliefs.

 

            b.         Licensee will assure that Products
(including parts) will not be produced, manufactured, mined, or assembled with
the use of forced, prison, or indentured labor, including debt bondage, or with
the use of illegal child labor in violation of International Labor Conventions
for minimum age (ILO-C138) and child labor (ILO-C182).  If Licensee recruits
contract workers, Licensee will pay agency recruitment commissions, will not
require workers to remain in employment for any period of time against their
will, and will not impose any early termination penalties on workers.  If Licensee
provides housing or eating facilities, Licensee will assure the facilities are
operated and maintained in a safe, sanitary and dignified manner.

 

            c.         Licensee will operate safe, healthy
and fair working environments, including managing operations so levels of
overtime do not create inhumane working conditions.  Licensee will pay workers
at least the minimum legal wage, or where no wage laws exist, the local
industry standard.  Licensee will assure that workers are free to join, or
refrain from joining, associations of their own choosing, unless otherwise prohibited
by law.  Licensee will not routinely require workers to work in excess of six
consecutive days without a rest day.

 

3.        
Environmental Protection

 

            a.         Licensee will implement a functioning
environmental management system in accordance with ISO 14001 or equivalent. 
Third-party registration is recommended but not required.

 

            b.         Licensee certifies that Products and
their parts do not contain and are not manufactured with a process that uses
any Class I ozone-depleting substances (as identified in 40 CRF Part 82
Appendix A to Subpart A, or as subsequently identified by the U.S.
Environmental Protection Agency as Class I ozone-depleting substances).  For
Products imported into the United States, Licensee will provide Motorola with a
completed and signed ODS Certification Questionnaire, accessible at the
following URL:  http://www.motorola.com/content.jsp?globalObjectId=8343

 

 

 

            c.         For
Products used as parts for Motorola products, including the packaging used with
such products and any manuals that accompany such products in the ordinary
course, Licensee will provide material disclosure or certification, as defined
in Motorola’s Controlled and Reportable Materials Disclosure Process, accessible
at the following URL:   http://www.motorola.com/mot/doc/1/1501_MotDoc.pdf   

 

4.        
Material Safety Data Sheets

 

Licensee will electronically provide material safety data
sheets, chemical safety data sheets, or equivalent documentation for all
chemicals sold to Motorola.  For all chemicals supplied or imported into the
United States, Licensee will certify that the chemicals are listed on the Toxic
Substances Control Act, 15 USCS §2601, et. seq., chemical inventory, or are
subject to an exemption specified in the material safety data sheets.

 

5.        
Imports and Customs 

 

Licensee will comply with all import and customs laws,
regulations and administrative determinations of the importing country.  Licensee
will comply with the security criteria of the importing country’s government
security program.  If Licensee is providing Products to be delivered to, or
Services to support delivery to, the U.S., Licensee will comply with the
security criteria of the U.S. Customs and Border Protection’s Customs-Trade
Partnership against Terrorism (C-TPAT) Program (available on http://www.cbp.gov).

 

 

6.        
Export Restriction

 

If Licensee is the exporter of record for any shipments, Licensee
will obtain all export authorizations from the U.S. government or other
governments that may be required to lawfully make such shipments.  

 

 

7.        
Utilization of Small Business Concerns

 

If applicable, Licensee will comply with the provisions of
U.S. Federal Acquisition Regulation (FAR) 52.219-8 pertaining to Utilization of
Small Business Concerns, as well as any other state and local, small and other
business utilization laws.

 

8.        
Equal Opportunity

 

If applicable, Licensee will comply with the provisions of
FAR 52.222-21, 52.222-26, 52.222-35, and 52.222-36 pertaining to Segregated
Facilities, Equal Opportunity, Equal Opportunity for Veterans, and Affirmative
Action for Workers with Disabilities.  If applicable, Licensee will maintain,
at each establishment, affirmative action programs required by the rules of the
U.S. Secretary of Labor (41 CFR 60-1 and 60-2). 

 

9.        
Government Subcontract

 

If an Order is issued under a government contract, Licensee
will comply with the terms of the government contract that appear on the Order,
and with any other applicable laws, regulations and executive orders.

 

10.       
Licensee Diversity

 

If Licensee is located in the United States or is supplying
Products to Motorola locations based in the United States, Licensee will track
and report its Supply Chain’s spend with minority-owned, women-owned and
disabled veteran-owned business enterprises located in the United States.  Licensee and Motorola will agree on a goal for Licensee’s Supply Chain spend, based
upon a percentage of Licensee’s total gross revenues under this Agreement. 
Licensee will submit quarterly progress reports, in a format designated by
Motorola, by the twenty-fifth day of the month following the end of each
calendar quarter.  All reports will be forwarded to the Motorola Licensee
Diversity Group, 2501 S. Price Road, M/D G1232, Chandler, AZ 85248, or sent via email to  supplierdiversity@motorola.com .

 

 

 

11.       
Product Safety and Regulatory Compliance

 

Licensee
will ensure that all Products and services provided comply with all applicable
regulations and laws, including all applicable product safety, environmental,
and recycling regulations and laws.

 

12.       
ICT
Licensee Self Assessment Questionnaire

 

Upon
Motorola’s request, Licensee will obtain a subscription to the Global
e-sustainability Initiative (GeSI) and Electronic Industry Code of Conduct’s
(EICC) online system E-TASC at  www.E-TASC.com
and complete the ICT Supplier Self-Assessment within that system.  Details
regarding this ICT Supplier Self Assessment Questionnaire and Motorola
Corporate Responsibility initiatives are available for review at:   http://compass.mot.com/web/wikinethome .Exhibit 10.12

 

 

 

AMENDED AND
RESTATED EMPLOYMENT AGREEMENT

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(this “Agreement”), dated as of the 12th day of August, 2008, between Forward
Industries, Inc., a New York corporation having its principal offices at 1801
Green Road, Suite E, Pompano Beach, Florida 33064 (the “Company”), and Douglas
W. Sabra, residing at 7441 Brunswick 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 employment agreement between him and the Company dated
as of December 27, 2005, effective as of October 1, 2005, and amended as of January
2, 2008 (the “Prior Agreement”);

WHEREAS, the Company and Executive desire to
amend and restate the Prior Agreement in order to reflect their current
agreements as to the terms of employment, with effect from the date of
execution of this Agreement (“Effective Date”);

NOW, THEREFORE, in consideration of the mutual
covenants herein contained and other good and valuable consideration, the
receipt of which the parties hereby acknowledge, the parties agree as follows:

1.        
PRIOR AGREEMENT

The parties hereto hereby
agree that (a) the terms of this Amended and Restated Agreement shall govern
the terms of employment of Executive by the Company, and (b) the Company has no
obligations to Executive under the Prior Agreement that have not been
discharged except in respect of accrued and unpaid salary to the date of
execution hereof, unused personal days and vacation time accrued in respect of
the fiscal year ended September 30, 2008, and pension, medical benefits, and
other benefits granted to all employees generally as such benefits have accrued
on behalf of Executive consistent with the terms of the Prior Agreement and as
continued pursuant to this Agreement.

 

 

2.        
EMPLOYMENT
TERM

Unless earlier terminated in
accordance with the terms of this Agreement, the term of employment hereunder
(the “Term”) shall commence on the Effective Date and expire on December 31 , 2009.  Upon expiration of the Term, this Agreement shall be automatically
renewed for successive terms of one year each; provided, however, that if
either party provides written notice to the other party of its or his
determination not to so renew not later than 90 (ninety) days prior to the expiration
of the Term, or any renewal thereof, as the case may be, this Agreement and
Executive’s employment shall terminate at the end of the Term or such renewal
term, as the case may be.  In the event that the Company is the party giving notice
of non-renewal, this shall be treated as a termination without Cause and
governed by the terms of Section 6 or Section 8, as the case may be.

3         
EMPLOYMENT DUTIES AND SERVICES

(a)        On
the terms and conditions herein set forth, the Company hereby employs Executive
as its President (chief executive officer) 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 executive 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 executive officer
of corporations of similar size and business as the Company, subject to the
direction of the Company’s Board of Directors (the “Board”).  Subject to
election thereto by the shareholders of the Company at the annual or other
meeting from time to time, for so long as he serves as President Executive
shall serve as a member of the Board, for which he shall not be entitled to
additional compensation.  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 as determined by the Compensation Committee of the Board
(the “Compensation Committee”).  Executive will not engage, directly or
indirectly, in any other business or occupation during the Term. 

 

-2-

 

(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, (iii) engaging in charitable and civic activities, and (iv) engaging
in such other limited activities on behalf of family interests as have been or
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.

4.        
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 $250,000 per annum, payable in equal
installments in accordance with the prevailing practices of the Company (but
not less frequently than monthly). 

(b)       
Bonus;
Calculation and Payment.  The Executive shall be eligible to receive a
bonus (“Bonus”) with respect to each full fiscal year or part thereof (except
to the extent expressly provided in Section 4(b), 5, 6, or 7(b) hereof) in
respect of his employment hereunder, as set forth in this Section 4.  The amount
of Bonus, if any, that Executive may earn in any fiscal year during the Term
hereof pursuant to this Section 4(b) shall be based on the extent to which, if
any, the Company achieves all or a percentage of, or exceeds, Target (as
defined below) in each such fiscal year, in accordance with guidelines, or a
formula, for earning such bonus as fixed by the Compensation Committee in its
sole discretion not later than the date referred to in the next paragraph.

-3-

 

“Target” means, with respect to any fiscal year, the
amount of pre-tax income or other measure of operating results of the Company as
determined by the Compensation Committee of the Board in its sole discretion, projected
for achievement, in whole or in part, in such fiscal year by the Compensation
Committee for the purpose of establishing Executive’s right to receive Bonus
compensation in respect of such fiscal year.  The Compensation Committee shall
determine the Target, together with the formulas for earning Bonus hereunder, after
the Board has adopted the Annual Budget in respect of each fiscal year during
the Term hereof but not later than the 75th day of each such fiscal
year.  The Compensation Committee may determine that the amount of Bonus for
such purposes may be pro rated based on Target being achieved, exceeded, or
missed.

Bonus compensation, if any, payable pursuant to Section 4(b) shall be payable to
Executive not earlier than the date on which the Company’s audited financial
statements relating to the fiscal year in respect of which such Bonus
compensation is payable are first filed with the Securities and Exchange
Commission (the “Commission”) pursuant to Section 13 or 15(d) under the
Securities Exchange Act of 1934 (“Exchange Act”) nor later than the tenth (10th)
business day after such date.  If Executive is otherwise entitled to
payment of a Bonus pursuant to this Section 4(b) and the terms of this Agreement
but has not served as an employee for the full fiscal year in respect of which
such Bonus is payable, Executive, or his estate, shall be entitled to payment,
at the time specified in the next preceding sentence, of a ratable portion of
such Bonus to which he or his estate is entitled, based on the ratio that the
actual number of days in such fiscal year during which he served as an Employee
pursuant to this Agreement and is so entitled bears to 365; provided,
however, that no Bonus (pro-rated or otherwise) shall be payable in respect of a
fiscal year during which Executive is employed hereunder solely for the first
fiscal quarter thereof because of expiration of the Term, or any renewal thereof
as a result of notice of non-renewal furnished pursuant to Section 2; and 
provided, further, that if Executive’s employment was terminated as a result
of notice pursuant to Section 5, 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.

-4-

 

(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 entitled to a monthly allowance, subject to the approval and
discretion of the Compensation Committee, to defray the expense of the lease of
an automobile (including monthly lease cost, maintenance, insurance, and
operating expense) for Executive’s use in connection with the discharge of his
duties under this Agreement, the amount of which allowance 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.

-5-

 

 

(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.

5.        
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 5(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; 

-6-

            (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 5 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 5,
termination shall be effective on the thirtieth (30th) day after the
notice referred to in the first sentence of this Section 5 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; 

 

-7-

(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 5;

(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 5 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.

6.        
TERMINATION BY EXECUTIVE FOR GOOD
REASON OR TERMINATION WITHOUT CAUSE PRIOR TO CHANGE IN CONTROL

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

 

-8-

 

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

(ii) Salary, at the
annualized rate in effect on the date of termination of Executive’s employment
(or, in the event a reduction in Salary is a basis for termination for Good
Reason, then the Salary in effect immediately prior to such reduction), for a
period of (A) in case of executive’s termination for Good Reason, six months
following such termination, or (B) in case of termination by the Company
without cause, the greater of (x) six months or (y) the balance of the Term (or
renewal thereof, as the case may be) remaining after the date of termination
set forth in such notice, in either case 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 4(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

-9-

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

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

For
purposes of this Agreement, subject to Section 8(D), the term “Good Reason”
shall mean:

(i)
the assignment to Executive without his written consent of any duties
inconsistent in any material respect with Executive’s chief executive position
(including employment status, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 3 of this Agreement or
any other action by the Company that results in a material diminishment in such
positions, authority, duties, or responsibilities, other than such assignment
or other action that is remedied by the Company prior to the date of
termination specified in the written notice from Executive:  

(ii) a decrease in annual Salary rate;

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

-10-

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

7.         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 8(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 8(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 7;

(iii) subject to Section
8(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 4(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.

-11-

(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 3, 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 4 shall be reduced to the extent of any amount received by Executive
pursuant to any disability insurance policy maintained and paid for by the
Company, and (ii) no bonus compensation shall accrue or be earned, or count
toward proration.  Termination under this Section shall not prejudice any
rights of Executive under disability policies being maintained by the Company
for Executive under the terms of this Agreement, if any.

8.        
TERMINATION
UPON CHANGE OF CONTROL

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

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

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

-12-

(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 8;

(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 4(b);

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

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

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

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

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

-13-

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

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

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

-14-

 

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

For purposes of this
definition, the term:

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

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

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

(D)       “Good Reason” as
used in Section 8 (1) shall include, in addition to the circumstances specified
in Section 6 of this Agreement, a removal of the Executive from, or any failure
to elect or re-elect or, as the case may be, nominate the Executive as a member
of the Board and (2) shall not exist as a reason for Executive to terminate his
employment after a Change of Control notwithstanding anything to the contrary
in Section 6 where the Change of Control arises in connection with the
circumstances described in clause (b)(iii) of this Section 8 and Executive’s
employment by the entity surviving such consolidation, merger, combination, or
reorganization qualifies him as not lower than the third ranking executive of
such entity in terms of executive authority and salary and other measures of
compensation.. 

-15-

 

9.        
OBLIGATIONS
UPON TERMINATION, ETC.

(a)        Upon the
termination of employment, all provisions of this Agreement shall terminate
except for this Section 9, Sections 10, 11 and 12, the terms of which shall
survive such termination, and the Company shall have no further obligation to
Executive hereunder, except as herein expressly provided.  The Company shall
comply with the terms of settlement of all deferred compensation arrangements
to which Executive is a party in accordance with his duly executed deferral
election forms.  

(b)        In the event of a
termination of employment by Executive on his own initiative during the Term or
any renewal thereof by delivery of written notice of such resignation ten
business days in advance, other than due to Disability or termination for Good
Reason, Executive shall have the same entitlements as provided in Section 5,
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 5, 6, 7, 8, or 9, as the case may be,
shall operate to fully discharge and release the Company and its directors,
officers, employees, subsidiaries, affiliates, shareholders, successors,
assigns, agents, and representatives (all of the foregoing collectively, the
“releasees”) from any further obligation or liability with respect to
Executive’s rights under this Agreement.  Other than payment and performance as
aforesaid, none of the releasees shall have any further obligation or liability
to Executive or any other person under this Agreement arising out of
termination of Executive’s employment under this Agreement.  The Company shall
have the right to condition the payment of any severance or other amounts
pursuant to Section 5, 6, 7, 8, or 9 upon delivery by Executive to the Company
of a release in form and substance satisfactory to the Company releasing any
and all claims the Executive, his estate, representatives, and assigns may have
against the Company and any other releasee arising out of this Agreement.
 -16-

 

10.      
COVENANTS

Executive agrees that during the Term, any renewal
thereof, and for one full year after expiration or termination of the Term or
any renewal thereof (except in the case of clause (a), as to which Executive’s
covenant shall not be limited in time), he shall not, without the express prior
written consent of the Company, directly or indirectly, either individually or
as an employee, officer, director, agent, partner, shareholder, consultant,
option holder, joint venturer, contractor, nominee, lender of money, guarantor,
investor, owner,  or in any other capacity:

(a)        except
as required in the course of performing his duties as an Executive hereunder, disclose,
copy, divulge, furnish, distribute or make available in any medium whatsoever
to any firm, company, corporation, organization, or other entity or person
(including but not limited to actual or potential customers or competitors or
government officials), or otherwise misappropriate trade secrets, intellectual
property, or other confidential or non-public information of or concerning the
Company, its Subsidiaries or affiliates or the business of any of the
foregoing, including without limitation, customer lists, product designs and
product know-how, launch information or plans pertaining to Company or customer
products, arrangements for supplying customers, methods of operation and
organization, sources of supply and arrangements with vendors, product
development, business plans and strategies; provided, however, Executive
may make disclosures as and to the extent required by applicable law or
compelled upon court or administrative order, provided, further,
however, that in the event that Executive is so required or compelled, he shall
notify the Company not fewer than ten (10) business days in advance of such
disclosure in order to afford it the reasonable opportunity to obtain a
protective order or other remedy to limit the scope of such disclosure (it
being understood and agreed that, if such disclosure is required by applicable
law, Executive shall upon the Company’s request furnish the source and
precedents with respect to such requirement).  For purposes of this Section 10,
information shall not be deemed confidential if it is within the public domain
or becomes publicly known other than through disclosure by Executive in
violation of this provision; (ii) 

-17-

 

(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 10 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.

-18-

 

(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
10 (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.

11.      
SEPARABILITY

Executive agrees that the
provisions of Section 10 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.

-19-

12.      
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 10 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.

-20-

13.      
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.

-21-

 

(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:

Douglas W. Sabra 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

-22-

 

(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 10, 11 and 12 shall survive termination of
this Agreement.

(h)       
Counterparts. 
This Agreement may be executed in counterparts, each of which shall be deemed
an original, and each party may become a party hereto by executing a
counterpart hereof.  This Agreement and any counterpart so executed shall be
deemed to be one and the same instrument.  It shall not be necessary in making
proof of this Agreement or any counterpart hereof to produce or account for any
of the other counterparts.

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

(j)        
Headings. 
The headings in this Agreement are for convenience of reference only and shall
not control or affect the meaning or construction of this Agreement.

 

IN WITNESS WHEREOF, the parties have executed
this Agreement as of the 12th day of August 2008, intending it to be
effective on and as of the Effective Date.

 

	
		DOUGLAS W. SABRA
	
		
		FORWARD
INDUSTRIES, INC.

	 	  
	
		/s/ Douglas W. Sabra
	
		By:
      /s/ James O. McKenna  

	
		 
	
		Title:   Chief Financial
Officer

 

 

-23-

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