CONSULTING AGREEMENT
CONSULTING AGREEMENT, effective as of the 1st day of October, 1998,
between FORWARD INDUSTRIES, INC., a New York corporation with offices at 000
Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Company"), and XXXXXXXX X.
XXXXXXXXX, residing at 000 Xxxxxxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Consultant").
Consultant had been rendering services to the Company pursuant to an
employment agreement effective as of September 30, 1997 and expiring September
30, 2000, subject to a five-year consulting period (the "Prior Agreement").
The Company desires to terminate the Prior Agreement and engage
Consultant to perform consulting services for the Company, and Consultant
desires to perform such services, on the terms and conditions hereinafter set
forth.
1. 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.
2. Services; Term
Consultant hereby agrees to provide his services as a consultant to
the Company with respect to matters relating to the management of the Company
for a period of five (5) years commencing on the date hereof and terminating on
September 30, 2003. The period covered by this Agreement is referred to herein
as the "Term". Consultant shall retain the title of Chairman of the Board for
the first six months of this Agreement and shall be Chairman Emeritus for the
balance of
the Term. Consultant shall provide the services required of him hereunder as
and when they shall be reasonably requested by the Company.
3. Consulting Fee; Severance Payment
(a) During the Term, the Company shall pay Consultant at the rate of
$200,000 per annum (the "Consulting Fee") (payable in equal installments 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 Consultant. Payments to Consultant as herein provided shall
constitute payment in full for Consultant's services rendered pursuant to this
Agreement. Without limiting the foregoing, Consultant acknowledges and agrees
that all applicable federal, state and local payroll taxes and other like
charges relating to payments received by Consultant pursuant to this Agreement
are Consultant's sole responsibility. In addition, Consultant shall repay all
outstanding loans due to the Company out of his Consulting Fee during the Term.
(b) In addition, Consultant shall receive a severance payment in
exchange for the termination of the Prior Agreement and for the services to be
rendered hereunder in the amount of $350,000, of which $200,000 is payable on
January 1, 1999 and $150,000 is payable on the 15-month anniversary thereof.
(c) All stock options owned by Consultant shall be repriced at an
exercise price of $1.10 per share as of the date hereof.
4. Benefits
(a) Consultant shall be entitled to participate in any retirement,
disability, medical, pension, profit sharing, group insurance, or any other
plan or arrangement, or in any other benefits now or hereafter generally
available to executives of the Company.
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(b) If the Consultant dies during the Term, the salary provided for in
Paragraph 3(a) will be paid to the end of the month in which the death occurs.
Thereafter, if the Company is the recipient of at least $1,000,000 of insurance
on the life of Consultant, the Company will pay to the Consultant's Widow (the
"Widow") or, if the Consultant's spouse has pre-deceased him, to the
Consultant's estate, a monthly death benefit of $10,000, payable on the first
day of each month during the 10 year period following the date of the
Consultant's death, commencing with the first calendar month following the
month in which the Consultant died; if the Widow dies prior to the end of such
10 year period, then after the Widow's death, such monthly payments will be
made to the Widow's estate for the balance of such 10 year period. If the
Company is not the recipient of at least $1,000,000 of insurance on the life of
the Consultant, such monthly death benefits will be paid for a period of three
years, followed by monthly death benefits of $5,000 for seven years; if the
Widow dies prior to the end of such 10-year period, then, upon the Widow's
death, such payments shall cease. In addition, upon such death of Consultant,
the Company shall procure medical insurance for the Widow comparable to that
received by executives of the Company until she reaches the age of 65. Payments
will be made by mail to the recipient at such address as the recipient may
designate in writing to the Company from time to time.
5. Expenses
(a) The Company shall reimburse Consultant for all reasonable
out-of-pocket expenses for such items of travel, business entertainment and
miscellaneous expenses as may be reasonably incurred by him in connection with
the performance of his services hereunder and in accordance with the prevailing
Company procedure, as such practices may be changed from time to time by the
Board. In addition, in recognition of Consultant's need for an automobile for
business purposes, the Company will provide Consultant during the Term with an
automobile, and shall
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reimburse Consultant, on a dollar for dollar basis, for all reasonable expenses
incurred by Consultant in connection therewith including, without limitation,
all maintenance, repairs, insurance and costs incident thereto, all comparable
to those presently provided to Consultant by the Company.
(b) The Company shall pay the fees and expenses of legal counsel for
Consultant for services rendered in connection with the preparation of this
Agreement.
6. Termination
This Agreement may be terminated prior to the end of the Term by the
Company if (i) Consultant shall willfully commit any act or omit to take any
action in bad faith or to the material detriment of the Company, or (ii)
Consultant shall breach this Agreement in any material respect. In the event
that this Agreement is terminated in accordance with this Paragraph 6, the
Company shall have no further obligation to Consultant under this Agreement
after the date of such termination, except that Consultant shall be entitled to
receive any consideration to which he is entitled pursuant to Paragraph 3
thereof which has accrued and has not been paid up to and including the date of
termination. Consultant's death or incapacity at any time during the Term to
render such consulting services hereunder or death will not affect the
Company's obligation to pay compensation pursuant to Section 3 hereof,
provided, however, the Company may, at its option, purchase insurance to cover
the costs of such obligations. Notwithstanding anything to the contrary
contained in Section 2 above, Consultant shall not be required to attend at the
Company's offices in Westbury, New York or at any other place designated by the
Company in order to be entitled to any consultive compensation, and Consultant
may, at his sole option, render any such services from his residence.
7. Non-Competition and Trade Secrets
(a) Confidentiality and Work Product. During the Term and thereafter
without limitation of time, Consultant shall not knowingly divulge, furnish, or
make available to any third
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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 a Consultant hereunder or with the Company's prior
written consent or as may be provided by applicable law, rules or regulations,
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 Consultant may make
disclosures as required by applicable law or orders without prior written
notice to the Company. For purposes of this Paragraph 7, information shall not
be deemed confidential if it (i) is within the public domain, or (ii) becomes
publicly known other than through disclosure by Consultant in violation of this
provision.
(b) Non-Competition. During the Term and for a period of three (3)
years thereafter, Consultant 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 Consultant Term, except that nothing in
this subparagraph shall be deemed to prohibit Consultant 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 Term and for a period of three (3) years
thereafter, Consultant agrees not to directly or indirectly solicit, employ or
retain or arrange to have any other
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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.
8. Separability
Consultant agrees that the provisions of Paragraph 7 hereof constitute
independent and separable covenants, for which Consultant is receiving
consideration which shall survive the termination of the consultancy and which
shall be enforceable by the Company notwithstanding any rights or remedies the
Company may have under any other provision hereof.
9. Relationship of the Parties
Nothing contained in this Agreement shall authorize, empower or
constitute Consultant as the agent of the Company in any manner; authorize or
empower Consultant to assume or create any obligation or responsibility
whatsoever, express or implied, on behalf of or in the name of the Company; or
authorize or empower Consultant to bind the Company in any manner or to make
any representation, warranty, or commitment on behalf of the Company, without
the prior written consent of the Company.
10. Notices
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, sent by overnight courier or facsimile transmission or
delivered against receipt to the party to whom it is to be given at the address
of such party set forth in the preamble to this Agreement (or to such other
address as the party shall have furnished in writing in accordance with the
provisions of this Paragraph 10). Any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof; any
notice sent by overnight courier shall be deemed given on the next business
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day after delivery to the courier; any notice sent by facsimile transmission
shall be deemed given upon receipt (electronically or otherwise); and any
notice delivered against receipt shall be deemed given upon receipt, except in
each case for a notice changing a party's address which shall be deemed given
at the time of receipt thereof.
11. Waiver
Any waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term
of this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
12. Binding Effect; Assignment
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, the successors and assigns of the Company and the assigns,
heirs and personal representatives of Consultant; provided, however, that
Consultant may not assign, transfer or otherwise convey any of his rights or
delegate any of his duties under this Agreement without the written consent of
the Company.
13. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to principles governing
conflicts of law.
14. Entire Agreement
This Agreement represents the entire agreement with respect to the
matters contemplated herein, supercedes any prior oral or written agreements or
undertakings between the
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parties with respect to such matters and may not be modified or amended except
in a writing duly executed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
FORWARD INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Chief Executive Officer
/s/ Xxxxxxxx X. Xxxxxxxxx
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Xxxxxxxx X. Xxxxxxxxx
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