Exhibit 10.1
EMPLOYMENT AGREEMENT
AGREEMENT effective as of January 1, 2001 between Forward Industries,
Inc., a New York corporation with offices at 0000 Xxxxx Xxxx, Xxxxx X, Xxxxxxx
Xxxxx, Xxxxxxx 00000 (the "Company"), and Xxxxxx X. Xxxx residing at 00000 Xxxxx
Xxxxxx, Xxxx Xxxxx, Xxxxxxx 00000 ("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 effective as of October1, 1998 (the "Prior
Agreement").
WHEREAS, Executive has been performing services under the terms and
conditions of the Prior Agreement through the Effective Date as requested by the
Company's Board of Directors.
WHEREAS, the Company desires to terminate the Prior Agreement and
employ Executive to perform senior executive and other services for the Company,
and Executive desires to accept such employment, all on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which the
parties acknowledge, the parties agree as follows:
TERMINATION OF PRIOR AGREEMENT
The Prior Agreement is hereby terminated and shall be of no further
force and effect, and the terms and conditions of this Agreement supersede the
terms and conditions of the Prior Agreement. The Company has no remaining
obligations under the Prior Agreement.
1. EMPLOYMENT TERM
Unless terminated at an earlier date pursuant to the terms of this
Agreement, the term of employment hereunder (the "Employment Term") shall be two
(2) years, commencing on the date hereof (the "Commencement Date"). Executive
shall have the option to renew the Employment Term for an additional two (2)
year term provided that at such time, Executive is in compliance with the terms
hereof.
2. SERVICES
a. The Company hereby employs Executive for the term of this Agreement
and Executive hereby accepts such employment as the Chairman and Chief Executive
Officer of the Company on the terms and conditions set forth in this Agreement.
Executive shall perform such duties of a senior executive nature for the
Company, as shall be consistent with the provisions of the Company's By-laws in
effect on the date hereof, subject to the direction of the Board of Directors of
the Company (the "Board"). Executive shall serve the Company faithfully and to
the best of his ability and shall devote his full business time and attention to
the affairs of the Company, subject to reasonable absences for vacation and
illness as determined by the Board.
b. The headquarters for the performance of Executive's services during
the term of this Agreement shall be the principal executive offices of the
Company in Pompano Beach, Florida, unless otherwise agreed by the Company and
Executive and subject to such reasonable travel in the performance of
Executive's duties as the business of the Company may require.
3. COMPENSATION AND EXPENSE REIMBURSEMENT
a. SALARY. Executive shall be entitled to receive for all services
rendered by Executive in any capacity, an annual salary at the rate of $162,000
(payable in equal installments
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in accordance with the then prevailing practices of the Company, but in no event
less frequently than monthly), subject to adjustment upon terms agreed upon by
the Company and Executive.
b. BONUS. The Executive shall receive a bonus with respect to each full
fiscal year ended during the Employment Term equal to ten percent (10%) of the
Pre-Tax Operating Profit (if any) of the Company above $675,000 (before bonuses
paid to all sales and administrative executives and without deduction for any
compensation expense incurred by the Company in connection with any stock option
grants) as shown in or derived from its audited financial statements for each
such fiscal year. For purposes hereof, "Pre-Tax Operating Profit" shall mean net
profit before taxes and bonuses and after the payment of corporate interest.
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 then prevailing Company procedure, as
such practices may be changed from time to time by the Board. Executive shall be
reimbursed for such expenses upon submission of appropriate documentation. In
addition, the Company shall reimburse the Executive for, or pay for, the
expenses for leasing an automobile and parking not to exceed $1,000 per month.
d. STOCK OPTIONS. The Company hereby grants Executive options under the
Plan to purchase 250,000 shares of the Company's Common Stock at an exercise
price of $2.00 per share with a date of grant of January 1, 2001. Such options
shall vest upon the four-year anniversary of the date of grant; provided,
however, that all such options shall immediately vest in the event that the
Company's Common Stock price averages $3.50 per share for 180 consecutive days
(not less than 90 days of which shall be during the Employment Term), based upon
the average reported closing sale prices for the Company's Common Stock on the
Nasdaq Smallcap Market. Such options shall expire five (5) years following the
date of grant. If this
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Agreement is terminated prior to the end of the Employment Term, such options
shall expire one year after the date of such termination. Nothing contained
herein shall affect the stock options granted to Executive under Section 3.B
of the Prior Agreement. Executive acknowledges that Section 3.D of the Prior
Agreement is hereby superseded in its entirety.
e. BENEFITS. Executive shall be entitled to participate in all group
health and other insurance programs and all other fringe benefit or retirement
plans (including any 401(k) plan) or other compensatory plans which 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, but the Company shall not be
required to establish any such program or plan. In addition, the Board of
Directors may, from time to time, pay or provide for Executive such other
benefits as it may, in its sole discretion, determine.
f. BOARD OF DIRECTORS. The Executive shall serve on the Company's Board
of Directors as Chairman for the Employment Term.
4. TERMINATION FOR CAUSE
In the event of: (a) fraud against the Company, conviction of a felony,
the intentional disclosure of confidential information (unless required by
applicable law or court or other order), aiding a competitor to the detriment of
the Company, its subsidiaries or affiliates, intentionally engaging in conduct
which brings disrepute or otherwise is materially damaging to the reputation of
the Company, its subsidiaries or affiliates, performing competitive services or
acting in a competitive capacity for any other person, firm or corporation
without the prior written consent of the Company; or (b) willful misconduct,
gross negligence, prolonged and unexcused absenteeism by Executive in connection
with Executive's employment hereunder, or
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Executive's willful or intentional failure to implement the reasonable business
requests or directions of the Board, the Company shall have the right to give
Executive a termination notice, specifying the nature of the breach or failure.
If such termination notice is given pursuant to clause (a) above, the
Employment Term shall terminate upon the giving of such notice. If such
termination notice is given pursuant to clause (b) above, the Employment Term
shall terminate thirty (30) days after the giving of such notice if the
circumstances described in such notice have not been remedied by Executive
within such thirty (30)-day period. Upon the termination of the Employment Term
pursuant to this Paragraph 4, all provisions of this Agreement shall terminate
except for the provisions of Paragraphs 8 and 9. Upon the effective date of
termination of the Employment Term, the Company shall have no further obligation
to Executive hereunder, except for accrued and unpaid salary, and other
previously earned, accrued and unpaid benefits from the Company and its employee
benefit plans including any stock options vested through the date of
termination.
5. TERMINATION BY EXECUTIVE FOR GOOD REASON
a. In the event of a Change of Control (as hereinafter defined),
Executive shall have the right to terminate his employment under this Agreement
for Good Reason (as hereinafter defined) upon prior written notice to the
Company, in which case this Agreement shall terminate on the date specified in
such notice; provided that in the case of paragraph (i) of this Section 5, the
date of termination specified in such notice shall be at least thirty (30) days
after the delivery of such notice, subject to the Company's right as provided
below to remedy the event giving rise to the termination prior to the date of
termination specified in such notice. In the event of any termination of
employment by the Executive for Good Reason, the Executive shall have no further
obligations under this Agreement other than the obligations provided for in
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Section 8 and 9 hereof, and the Company shall have no further obligations under
this Agreement, except to pay to Executive all unreimbursed business-related
expenses and lump sum severance within thirty (30) days following termination
under this Section 5 in an amount equal to his base salary under Section 3a.
hereof through September 30, 2002 and the last annual bonus paid to Executive
under Section 3b. hereof. For purposes of this Agreement, the term "Good
Reason" shall mean:
(i) the assignment to Executive of any duties inconsistent in any
material respect with Executive's positions (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as
contemplated by Section 2 of this Agreement or any other action by the Company
which results in a material diminishment in such positions, authority, duties or
responsibilities, other than action or inaction which is remedied by the Company
prior to the date of termination specified in the written notice from Executive;
or
(ii) transfer by the Company of all or substantially all of its assets
to a Successor (as defined in Section 11b. hereof) without such Successor having
expressly assumed this Agreement as provided in Section 11b. hereof.
b. For purposes of this Agreement, a "Change in Control" means the
occurrence of any one of the following events: (a) any person or other entity,
including any person as defined in Section 13(d)(3) of the Exchange Act,
becoming the beneficial owner, as defined in Rule 13d-3 of the Exchange Act,
directly or indirectly, of more than fifty (50%) of the total combined voting
power of all classes of capital stock of the Company ordinarily entitled to vote
for the election of directors of the Company, (b) the Board of Directors of the
Company approving the sale of all or substantially all of the property or assets
of the Company, (c) the Board of Directors of the Company approving a
consolidation or merger of the Company with
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another corporation (other than in which the Company is the surviving
corporation), the consummation of which would result in the occurrence of an
event described in clause (a) above, or (d) a change in the Board of Directors
of the Company occurring with the result that the members of the Board of
Directors of the Company on the date hereof no longer constitute a majority of
such Board of Directors.
6. ILLNESS OR INCAPACITY
In the event of any disability, illness or other incapacity which
prevents Executive from performing services as contemplated herein, the
obligation of the Company to pay compensation to Executive 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. If Executive shall be
incapacitated for more than 120 consecutive days or 180 days in any consecutive
12-month period, the Company shall have the right to terminate this Agreement
upon 10 days' prior written notice with no further liability, except for accrued
and unpaid salary, and other previously earned, accrued and unpaid benefits from
the Company and its employee benefit plans including any stock options vested
through the date of such termination, provided that such termination shall not
prejudice any rights of Executive under any disability policies being maintained
by the Company for Executive under the terms of this Agreement. Notwithstanding
any such termination, the provisions of Paragraphs 8 and 9 will continue to
apply.
7. DEATH
This Agreement shall terminate automatically upon the death of
Executive. In such event, the Company shall pay the estate of Executive, in
addition to any amounts to which Executive's estate would otherwise be entitled
under the Company's retirement plans and group
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life insurance policy, within 30 (thirty) days after the date of death, all
compensation earned under Paragraph 3 through the date of death.
8. NON-COMPETITION AND TRADE SECRETS
a. CONFIDENTIALITY AND WORK PRODUCT. During the term of this Agreement
and thereafter without limitation of time, Executive shall not knowingly
divulge, furnish, or make available to any third person, company, corporation or
other organization (including but not limited to customers, competitors or
government officials), except in the course of performing his duties as an
Executive hereunder or with the Company's prior written consent, trade secrets
or other confidential information concerning the Company, its subsidiaries or
affiliates or the business of any of the foregoing, including without
limitation, confidential methods of operation and organization and confidential
sources of supply and customer lists, but Executive may make disclosures as
required by applicable law or orders without prior written notice to the
Company. For purposes of this Paragraph 8, information shall not be deemed
confidential if it (i) is within the public domain, or (ii) becomes publicly
known other than through disclosure by Executive in violation of this provision.
b. NON-COMPETITION. During the Employment Term and for a period of one
(1) year thereafter, Executive agrees not to directly or indirectly, own,
control, manage, operate, participate or invest in, including, but not limited
to, as an officer, director, shareholder, employee, consultant, agent, or
otherwise be connected with, in any manner, any business, enterprise or venture
which is engaged in the business of manufacturing and/or distributing of
carrying cases supplied to the cellular telephone, home medical equipment,
laptop computer, photography, video or audio industries and any other business
engaged in by the Company during the Employment Term, except that nothing in
this subparagraph shall be deemed to
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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 over the counter.
c. SOLICITATION. During the Employment Term and for a period of one (1)
year thereafter, Executive agrees not to directly or indirectly solicit, employ
or retain or arrange to have any other person, firm or other entity 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, technician or engineer of the Company, its subsidiaries or affiliates.
d. In the event Executive shall violate any provisions of this
Paragraph 8 (which provisions Executive hereby acknowledges are reasonable and
equitable), Executive shall no longer be entitled to and hereby waives any and
all rights to any termination payment under this Agreement.
9. SEPARABILITY
Executive agrees that the provisions of Paragraph 8 hereof constitute
independent and separable covenants, for which Executive is receiving
consideration which shall survive the termination of employment and which shall
be enforceable by the Company notwithstanding any rights or remedies the Company
may have under any other provision hereof.
10. SPECIFIC PERFORMANCE
Executive acknowledges that:
(i) the services to be rendered under the provisions of this Agreement
are of a special character and it would be difficult to replace such services;
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(ii) the Company is relying on the covenants contained herein,
including, without limitation, those contained in Paragraph 8 above, as a
material inducement for entering into this Agreement;
(iii) the Company may be damaged if the provisions hereof are not
specifically enforced; and
(iv) 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 otherwise, 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 which that the Company may have.
11. MISCELLANEOUS
a. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
employment agreement between the parties and may not be modified, amended or
terminated (other than pursuant to the terms hereof) except by a written
instrument executed by the parties hereto. All other agreements between the
parties pertaining to the employment or remuneration of Executive not
specifically contemplated hereby or incorporated or merged herein are terminated
and shall be of no further force or effect.
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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 (with Executive's consent, not to be unreasonably withheld), to any
successor to the business of the Company, or to any subsidiaries or affiliates
of the Company. In the event that Executive does not consent to the assignment
of this Agreement, the Company shall have the right, provided it is otherwise in
compliance with this Agreement, to terminate this Agreement automatically with
no further liability, except for accrued and unpaid salary, and other previously
earned, accrued and unpaid benefits from the Company and its employee benefit
plans, including any stock options vested through the date of termination. 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" shall
mean any corporation or other business entity which succeeds to substantially
all of the assets or conducts the business of the Company, whether directly or
indirectly, by purchase, merger, consolidation or otherwise.
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
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construed as a waiver of the right to insist upon strict adherence to that term
or any other term of this Agreement on that or any other occasion.
d. PROVISIONS OVERLY BROAD. In the event that any term or provision of
this Agreement shall be deemed by a court of competent jurisdiction to be overly
broad in scope, duration or area of applicability, the court considering the
same shall have the power and hereby is authorized and directed to modify such
term or provision to limit such scope, duration or area, or all of them, so that
such term or provision is no longer overly broad and to enforce the same as so
limited. Subject to the foregoing sentence, in the event that any provision of
this Agreement shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall attach only to such provision and shall not
affect or render invalid or unenforceable any other provision of this Agreement.
e. NOTICES. Any notice permitted or required hereunder shall be in
writing and shall be deemed to have been given on the date of delivery or, if
mailed by certified mail, postage prepaid, return receipt requested, documented
overnight courier, or by facsimile transmission, on the date mailed or
transmitted.
(i) If to Executive to:
Xxxxxx Xxxx 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: President
with a copy to:
Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
F. 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. 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.
h. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EXECUTIVE FORWARD INDUSTRIES, INC.
/s/ By: /s/
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Xxxxxx Xxxx Name: Xxxxxxx Xxxxxxxxx
Title:President
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