Exhibit 2
SETTLEMENT AGREEMENT
Settlement Agreement, dated April 11, 2002 (this "Agreement"), by and
between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual residing at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇.
▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Ellin"), ▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual residing at ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("▇▇▇▇▇ ▇▇▇▇▇"), Atlantis
Equities, Inc., a New York corporation ("Atlantis"), ▇▇▇▇▇▇ ▇▇▇▇▇ Family 1997
Trust, a trust formed under the laws of the State of New York (the "Trust"),
▇▇▇▇▇▇ ▇▇▇▇▇ Profit Sharing Plan, an employee benefit plan formed under the laws
of the United States (the "Plan", and together with Ellin, ▇▇▇▇▇ ▇▇▇▇▇, Atlantis
and the "Trust", the "Ellin Group"), and Forward Industries, Inc., a New York
corporation (the "Company").
WHEREAS, members of the Ellin Group own of record and/or beneficially
695,700 shares of common stock, par value $0.01 per share, of the Company (the
"Common Stock");
WHEREAS, members of the Ellin Group have from time to time stated their
views with respect to certain corporate governance and other matters relating to
the Company and its business and affairs; and
WHEREAS, the Ellin Group and the Company desire to resolve all outstanding
disagreements that have arisen between them and to set forth the resolution of
such disagreements in this Settlement Agreement and the Standstill Agreement and
Release annexed as exhibits hereto (this Settlement Agreement, collectively with
such exhibits, the "Agreements");
NOW, THEREFORE, the parties hereto, in consideration of the premises
hereinabove set forth, the mutual promises, conditions and undertakings set
forth herein and other good and valuable consideration, intending to be legally
bound hereby, do set forth their agreement as follows:
1. REPRESENTATIONS AND WARRANTIES. (a) Each individual member of the Ellin Group
hereby represents and warrants that he or she (i) has the requisite power and
legal capacity to enter into the Agreements; (ii) is subject to no condition,
conflict, disability, limitation or other restriction with respect to the
execution and delivery of the Agreements and discharge of his or her obligations
relating thereto under the terms of any agreement, contract, arrangement or
understanding, whether written or oral or the terms of any order, ruling,
decision or decree of any court, administrative body or other governmental
agency; (iii) together with the other members of the Ellin Group, accounts for
100% of the record and beneficial ownership of Common Stock (including
securities convertible into and exercisable or exchangeable for Common Stock)
owned by Ellin, his Affiliates, associates and all other persons with whom Ellin
would constitute a group; (iv) has duly executed and delivered each Agreement,
and each such Agreement constitutes his/her binding obligation enforceable in
accordance with its respective terms; and (v) is subject to no requirement or
obligation with respect to any authorization, approval or other action by, or
any notice or application to, or any registration or filing with, any Federal,
State or local governmental authority, agency, department or other regulatory
body in connection with the due execution, delivery and performance of the
Agreements pursuant to any applicable laws or any order, ruling, decision or
decree of any court or administrative body, except for such
filings as may be required pursuant to Section 13 under the Securities Exchange
Act of ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇ ▇▇▇");
(b) each of Atlantis, the Plan and the Trust hereby represents and warrants that
(i) it is duly organized under the laws of the jurisdiction of its organization
and is validly subsisting as a corporation, Plan or trust, respectively,
thereunder; (ii) it has the requisite power and authority to enter into the
Agreements and perform its obligations hereunder and thereunder; (iii) together
with the other members of the Ellin Group, accounts for 100% of the record and
beneficial ownership of Common Stock (including securities convertible into and
exercisable or exchangeable for Common Stock) owned by Ellin, his Affiliates,
associates and all other persons with whom Ellin would constitute a group; (iv)
the execution and delivery of the Agreements and the performance of its
obligations hereunder and thereunder have been duly authorized by all necessary
corporate or other applicable action and do not contravene the certificate of
incorporation or bylaws, or other charter documents and instruments of such
entity, as the case may be, and do not and will not violate the provisions of
any agreement, indenture, contract, arrangement or understanding, whether
written or oral, or the terms of any order, ruling, decision or decree of any
court, administrative body or other governmental agency; to which such entity is
a party or by which it may be bound, and the Agreements constitute its binding
obligations enforceable in accordance with the respective terms thereof; and (v)
no authorization, approval or other action by, no notice or application to, and
no registration or filing with, any Federal, State or local governmental
authority, agency, department or other regulatory body is required for the due
execution, delivery and performance of this Agreement pursuant to any applicable
laws or the order, ruling, decision or decree of any court or other
administrative body, except for such filings as may be required pursuant to
Section 13 under the Exchange Act;
(c) the Company hereby represents and warrants that (i) it is corporation duly
organized and validly subsisting under the laws of the State of New York; (ii)
it has the requisite power and authority to enter into the Agreements and
perform its obligations hereunder and thereunder; (iii) the execution and
delivery of the Agreements and the performance of its obligations hereunder and
thereunder have been duly authorized by all necessary corporate action, do not
contravene its certificate of incorporation or bylaws and do not and will not
violate the provisions of any agreement, indenture, contract, arrangement or
understanding, whether written or oral, or the terms of any order, ruling,
decision or decree of any court, administrative body or other governmental
agency; to which the Company is a party or by which it may be bound and the
several Agreements constitute its binding obligations enforceable in accordance
with the respective terms thereof; and (iv) no authorization, approval or other
action by, no notice or application to, and no registration or filing with, any
Federal, State or local governmental authority, agency, department or other
regulatory body is required for the due execution, delivery and performance of
this Agreement pursuant to any applicable laws or the order, ruling, decision or
decree of any court or other administrative body, except for such filings as may
be required pursuant to Section 13 under the Exchange Act.
(d) As used in this Agreement, the term "beneficial ownership" with respect to
any securities has the meaning set forth in Rule 13d-3 under the Exchange Act;
the terms "affiliates" and "associates" have the meanings as defined under the
Exchange Act and the term "group" is used within the meaning of Section 13(d) of
the Exchange Act and the rules promulgated thereunder.
(e) The foregoing representations and warranties shall not terminate upon the
execution and delivery of this Agreement but shall survive until such time as
the Standstill Agreement referred to in Section 5 hereof is terminated in
accordance with its terms.
2. APPOINTMENT OF DIRECTORS. Contemporaneously with the execution and delivery
of this Agreement, (i) two members of the Company's Board of Directors (the
"Board of Directors") will resign as members of the Board of Directors and (ii)
the Board of Directors of the Company shall nominate and appoint Mr. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇ ▇▇▇▇ to fill the vacancies on the Board of Directors
resulting from such resignations, each to serve as a non-employee director on
the Board of Directors. It is the intention of the Board of Directors to
appoint each of ▇▇. ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇ as members of the compensation and
audit committees, respectively, of the Board of Directors.
3. REIMBURSEMENT OF CERTAIN EXPENSES. The Company shall reimburse Ellin up to a
maximum of $100,000 for his reasonable, out-of-pocket expenses for legal fees
and disbursements actually incurred by Ellin in connection with the
disagreements arising between Ellin and the Company, its officers or its
directors during the 18 months next preceding the date of this Agreement (the
"Claims"). All such legal fees and expenses to be reimbursed in respect of the
Claims must be substantiated and documented in accordance with the Company's
current payment policies. The Company shall effect such reimbursement by issuing
its checks to Ellin's attorneys upon their delivery to the Company of
appropriate documentation that substantiates the nature and expenditure of legal
fees and expenses incurred in respect of the Claims.
4. ENGAGEMENT LETTER. Contemporaneously with the execution and delivery of this
Agreement, Atlantis and the Company shall enter into an engagement letter, in
substantially the form annexed hereto as Exhibit A, pursuant to which Atlantis
will perform certain services for the Company, as set forth therein.
5. STANDSTILL AGREEMENT. Contemporaneously with the execution and delivery of
this Agreement, the parties hereto shall execute and deliver the Standstill
Agreement, of even date herewith, in substantially the form annexed hereto as
Exhibit B.
6. EXCHANGE ACT FILINGS. Contemporaneously with the execution and delivery of
this Agreement (but in any event not later than one business day thereafter),
(i) the Ellin Group shall file an amended Schedule 13D with the Securities and
Exchange Commission in accordance with applicable rules and regulations of the
Exchange Act in order to reflect the terms and conditions of this Agreement, or,
if required in the reasonable opinion of legal counsel to Ellin, file a new
Statement on Schedule 13D, in either case in substantially the form annexed
hereto as Exhibit C, and (ii) as the parties may agree, Ellin or the Company,
may cause to be issued a press release that describes or summarizes the
agreements and undertakings set forth herein. The language to be contained in
the amended Schedule 13D, or the new Schedule 13D, as the case may be, and the
press release, as the case may be, shall have been agreed upon in form and
substance by Ellin and the Company prior to such filing and issuance,
respectively. None of the Ellin Group or any member thereof shall thereafter
during the Standstill Period (as such term is defined in the Standstill
Agreement) file an amendment to said Schedule 13D, file a new Schedule 13D or
issue any press release with respect to the subject matter hereof or of the
Standstill Agreement unless
and until the Company shall have agreed in form and substance to the contents
thereof prior to such filing or release.
7. GENERAL RELEASES. (a) Contemporaneously with the execution and delivery of
this Agreement, Ellin and each other member of the Ellin Group shall execute and
deliver to the Company a general release (the "Ellin Releases") of all claims
against, or relating to, the Company, its officers, directors, agents and
attorneys and their respective affiliates, including without limitation the
Claims, in substantially the form annexed hereto as Exhibit D-1.
(b) Contemporaneously with the execution and delivery of this Agreement, the
Company shall execute and deliver to each member of the Ellin Group a general
release (the "Company Releases") of all claims against each member of the Ellin
Group, and where applicable their respective officers, directors, trustees,
agents and attorneys and their respective affiliates, including without
limitation the Claims, in substantially the form annexed hereto as Exhibit D-2.
8. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof.
(b) All costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
(c) This Agreement may not be amended, changed, supplemented, or otherwise
modified or terminated, except upon the execution and delivery of a written
agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
(d) All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be given (and shall be deemed to have been duly
received if given) by hand delivery of telecopy (with a confirmation copy sent
for next day delivery via courier service, such as Federal Express), or by any
courier service, such as Federal Express, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
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If to Ellin:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
copy to:
▇▇▇▇▇ Raysman ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to ▇▇▇▇▇ ▇▇▇▇▇:
▇▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
copy to:
▇▇▇▇▇ Raysman ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.]
If to Atlantis Equities, Inc.:
Atlantis Equities, Inc.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to ▇▇▇▇▇▇ ▇▇▇▇▇ Family 1997 Trust:
▇▇▇▇▇▇ ▇▇▇▇▇ Family 1997 Trust
▇▇▇▇▇▇ ▇▇▇▇▇, Trustee
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to ▇▇▇▇▇▇ ▇▇▇▇▇ Profit Sharing Plan:
c/o ▇▇▇▇▇▇ ▇▇▇▇▇, Trustee
c/o Atlantis Equities, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Company:
Forward Industries, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
or too such other address as to the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(e) Whenever possible, each provision or portion of any provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law but if any provision or potion of any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any provision
in such jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein.
(f) All rights, powers and remedies provided under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and not
alternative, and the exercise of any thereof by any party shall not preclude the
simultaneous or later exercise of any other such right, power or remedy by such
party. The failure of any party hereto to exercise any right, power or remedy
provided under this Agreement or otherwise available in respect hereof at law or
in equity, or to insist upon compliance by any other party hereto with its
obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver by such party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.
(g) This Agreement shall be governed and construed in accordance with the laws
of the State of New York, without giving effect to the principles of conflicts
of laws thereof.
(h) Any suit, action or proceeding arising under or relating to this Agreement
shall be brought in the Courts of the State of New York, and the parties hereto
consent to the jurisdiction of any such courts, agree to service of process in
any such suit, action or proceeding in any such
court and agree that any such court and agree that any such court will be the
proper and convenient forum for any such suit, action or proceeding.
(i) The agreements, undertakings, obligations and covenants set forth herein or
in any Exhibit hereto on the part of the members of the Ellin Group shall bind
them jointly and severally.
(j) The descriptive headings used herein are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
(k) This Agreement may be executed in counterparts, each of which shall be
deemed to be an original, but all of which, taken together, shall constitute one
and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
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ATLANTIS EQUITIES, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
By:
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President
▇▇▇▇▇▇ ▇▇▇▇▇ FAMILY 1997 TRUST
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇, Trustee
--------------------------------
By:
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇ ▇▇▇▇▇ PROFIT SHARING PLAN
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
By:
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Trustee
FORWARD INDUSTRIES, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman and CEO
