Exhibit 10.4

FINAL

12/15/06

 

FORCE DYNAMICS LLC
JOINT VENTURE AGREEMENT

 

By and between

General Dynamics Land Systems Inc.

And

Force Protection, Inc.

 

 

 

 

 

GENERAL DYNAMICS LAND SYSTEMS INC. & FORCE PROTECTION, INC.
PRIVATE INFORMATION

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Table of Contents

 

 

 

 

 

 

 

Article I

 

Definitions

 

 

 

 

 

 

 

 

 

1.1

 

Definitions

 

 

 

 

 

 

 

 

 

Article II

 

Establishment and Business of Company

 

 

 

 

 

 

 

 

 

2.1

 

Formation

 

 

 

 

2.2

 

Membership Interests

 

 

 

 

2.3

 

Other Actions

 

 

 

 

2.4

 

Attaining Business Objectives

 

 

 

 

 

 

 

 

 

Article III

 

Concept of Operations

 

 

 

 

 

 

 

 

 

3.1

 

General

 

 

 

 

 

 

3.1.1

 

Equitable Principle

 

 

 

 

 

 

3.1.2

 

Company Preference

 

 

 

 

 

 

3.1.3

 

Commitment

 

 

 

 

 

 

3.1.4

 

Follow-on Proposal Submissions

 

 

 

 

 

 

3.1.5

 

International Programs

 

 

 

 

 

 

 

 

 

 

 

 

 

3.2

 

Workshare

 

 

 

 

 

 

3.2.1

 

Mutual Intent to Win

 

 

 

 

 

 

3.2.2

 

Initial Workkshare

 

 

 

 

 

 

3.2.3

 

True-Up Process

 

 

 

 

 

 

 

 

 

 

 

 

 

3.3

 

Workshare Subcontracts

 

 

 

 

 

 

3.3.1

 

Program Management

 

 

 

 

 

 

3.3.2

 

Matrix Organization

 

 

 

 

 

 

 

 

 

 

 

 

 

3.4

 

Responsibility

 

 

 

 

3.5

 

Product Approach

 

 

 

 

3.6

 

Company Operating Plan

 

 

 

 

3.7

 

Delegation of Authority

 

 

 

 

3.8

 

Key Event Timeline

 

 

 

1

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Article IV

 

Representations and Warranties

 

 

 

 

 

 

 

 

 

4.1

 

FPI Representations and Warranties

 

 

 

 

4.2

 

GDLS Representations and Warranties

 

 

 

 

4.3

 

FPI-GDLS Representation and Warranty

 

 

 

 

 

 

 

 

 

Article V

 

Dispute Resolution

 

 

 

 

 

 

 

 

 

5.1

 

Disputes

 

 

 

 

5.2

 

Damages

 

 

 

 

 

 

 

 

 

Article VII

 

Operating Principles and Procedures

 

 

 

 

 

 

 

 

 

 

 

6.1.1

 

Formation

 

 

 

 

 

 

6.1.2

 

Name

 

 

 

 

 

 

6.1.3

 

Duration

 

 

 

 

 

 

6.1.4

 

Offices

 

 

 

 

 

 

6.1.5

 

Governing Documents

 

 

 

 

 

 

 

 

 

 

 

 

 

6.2

 

Initial Capital Contributions

 

 

 

 

 

 

6.2.1

 

Contributions in Cash

 

 

 

 

 

 

6.2.2

 

Additional Contributions

 

 

 

 

 

 

 

 

 

 

 

 

 

6.3

 

Capital Accounts

 

 

 

 

 

 

 

 

 

 

 

6.5

 

Books; Accounting; Tax Elections; Reports

 

 

 

 

 

 

6.5.1

 

Books and Reports

 

 

 

 

 

 

6.5.2

 

Reports and Audits

 

 

 

 

 

 

6.5.3

 

Filing of Returns: Tax Matters Members

 

 

 

 

 

 

6.5.4

 

Annual Financial Statements

 

 

 

 

 

 

6.5.5

 

Quarterly Accounting Statements

 

 

 

 

 

 

6.5.6

 

External Auditors

 

 

 

 

 

 

6.5.7

 

Internal Audits

 

 

 

 

 

 

6.5.8

 

Internal Controls

 

 

 

 

 

 

6.5.9

 

Budgets

 

 

 

 

 

 

 

 

 

 

 

 

 

6.6

 

Allocations and Distributions

 

 

 

 

 

 

6.6.1

 

Normal Allocations

 

 

 

 

 

 

6.6.2

 

Section 754 Election

 

 

 

 

 

 

6.6.3

 

Allocations for Tax and Book Purposes

 

 

 

 

 

 

6.6.4

 

Certain Accounting Matters

 

 

 

 

 

 

6.6.5

 

Tax Allocations: Code Section 704(c)

 

 

 

 

 

 

6.6.6

 

Qualified Income Offset

 

 

 

 

 

 

6.6.7

 

Gross Income Allocation

 

 

 

 

 

 

6.6.8

 

Partnership Minimum Gain Charge-back

 

 

 

 

 

 

6.6.9

 

Partner Nonrecourse Debt Minimum Gain Charge-back

 

 

 

 

 

 

6.6.10

 

Limitations on Loss Allocations

 

 

 

 

 

 

6.6.11

 

Partner Nonrecourse Deductions

 

 

 

2

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6.6.12

 

Nonrecourse Deductions

 

 

 

 

 

 

6.6.13

 

Excess Nonrecourse Liabilities

 

 

 

 

 

 

6.6.14

 

Ordering Rules

 

 

 

 

 

 

6.6.15

 

Curative Allocations

 

 

 

 

 

 

6.6.16

 

Distributions

 

 

 

 

 

 

6.6.17

 

Set-Off

 

 

 

 

 

 

6.6.18

 

Proceeds of Any Liquidating Transaction

 

 

 

 

 

 

 

 

 

 

 

 

 

6.7

 

Membership Interests and Restrictions

 

 

 

 

 

 

6.7.1

 

Membership Interest

 

 

 

 

 

 

6.7.2

 

Removal; Withdrawal; No Transfer of Interest

 

 

 

 

 

 

6.7.3

 

Limitations on Disposition of Membership Interests

 

 

 

 

 

 

6.7.4

 

Admission of Transferee

 

 

 

 

 

 

 

 

 

 

 

 

 

6.8

 

Member’s Powers; Meetings

 

 

 

 

 

 

6.8.1

 

General Powers

 

 

 

 

 

 

6.8.2

 

The Board

 

 

 

 

 

 

6.8.3

 

Regular Meetings

 

 

 

 

 

 

6.8.4

 

Special Meetings

 

 

 

 

 

 

6.8.5

 

Attendance and Quorum

 

 

 

 

 

 

6.8.6

 

Written Consent in Lieu of Meeting

 

 

 

 

 

 

6.8.7

 

Participation in a Meeting by Electronic Means

 

 

 

 

 

 

6.8.8

 

Compensation of the Board

 

 

 

 

 

 

6.8.9

 

No Financial Interest

 

 

 

 

 

 

6.8.10

 

Board Duties

 

 

 

 

 

 

6.8.11

 

Committees

 

 

 

 

 

 

 

 

 

 

 

 

 

6.9

 

Dissolution

 

 

 

 

 

 

6.9.1

 

In General

 

 

 

 

 

 

6.9.2

 

Disassociation Option

 

 

 

 

 

 

6.9.3

 

Additional Put-Call Option

 

 

 

 

 

 

6.9.4

 

Dissolution upon Disassociation

 

 

 

 

 

 

6.9.5

 

Winding Up

 

 

 

 

 

 

6.9.6

 

Other Remedies

 

 

 

 

 

 

 

 

 

 

 

 

 

6.10

 

Dispute Resolution

 

 

 

 

 

 

 

 

 

 

 

 

 

6.11

 

Indemnification

 

 

 

 

 

 

6.11.1

 

Limitation on Personal Liability

 

 

 

 

 

 

6.11.2

 

Fiduciary Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

6.12

 

Competition; Fiduciary Duty

 

 

 

 

 

 

6.12.1

 

Competition

 

 

 

 

 

 

6.12.2

 

Waiver of Corporate Opportunity

 

 

 

 

 

 

6.12.3

 

Standard of Care; No Fiduciary Duty

 

 

 

 

 

 

 

 

 

 

 

 

 

6.13

 

Miscellaneous Provisions

 

 

 

 

 

 

6.13.1

 

Amendments

 

 

 

 

 

 

6.13.2

 

Terms

 

 

 

 

 

 

6.13.3

 

Execution of Instruments

 

 

 

 

 

 

6.13.4

 

Confidential / Proprietary Information

 

 

 

3

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6.13.5

 

Notice

 

 

 

 

 

 

6.13.6

 

Counterparts

 

 

 

 

 

 

6.13.7

 

Entire Agreement; Waiver

 

 

 

 

 

 

6.13.8

 

Severability

 

 

 

 

 

 

6.13.9

 

Successors

 

 

 

 

 

 

6.13.10

 

Governing Law

 

 

 

 

 

 

6.13.11

 

Independent Contractors; Expenses

 

 

 

 

 

 

6.13.12

 

Affiliates

 

 

 

 

 

 

6.13.13

 

Survival

 

 

 

 

 

 

6.13.14

 

Limited Liability

 

 

 

 

 

 

6.13.15

 

Performance and Responsibility

 

 

 

 

 

 

6.13.16

 

Intellectual Property and Technical Data Rights

 

 

 

 

 

 

 

 

 

 

 

Article VII

 

General

 

 

 

 

 

 

 

 

 

 

 

 

 

7.1

 

Contractual Relationship

 

 

 

 

 

 

 

 

 

 

 

 

 

7.2

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

7.3

 

Publicity

 

 

 

 

 

 

7.3.1

 

Press Release

 

 

 

 

 

 

7.3.2

 

Marketing

 

 

 

 

 

 

 

 

 

 

 

 

 

7.4

 

No Partnership or Agency

 

 

 

 

 

 

 

 

 

 

 

 

 

7.5

 

Further Assurances

 

 

 

Exhibits

 

Tab/No.

 

Section

 

Document Title

 

 

 

 

 

2

 

2.1

 

Certificate of Formation (TBD)

3

 

3.2

 

Workshare Allocation (TBD)

4

 

6.8.2

 

Board Members (TBD)

5

 

6.13.4

 

Confidential/Proprietary Data Agreement - Dated November 17, 2006

6

 

6.13.17

 

Technology and License Agreement (TBD)

 

4

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MINE RESISTANT AMBUSH PROTECTED VEHICLE PROGRAM —
FORCE DYNAMICS LLC OPERATING AGREEMENT

This Agreement is entered into and is effective as of the last date of the
signatures below, between General Dynamics Land Systems Inc. (“GDLS”), and Force
Protection, Inc. (jointly and severally with its wholly owned subsidiary Force
Protection Industries, Inc. hereinafter “FPI”).

The purpose of this Agreement is to confirm and set forth the terms and
conditions under which GDLS and FPI will work together to win and execute a
contract for the anticipated United States Government Mine Resistant Ambush
Protected Vehicle Program, including any Foreign Military Sales (“FMS”) and
direct international sales that may result therefrom. To accomplish this
purpose, the Members shall, coincident with the execution of this Agreement,
enter into the other documents referred to in this Agreement, and otherwise
furnish this joint venture assistance and enhance its opportunity for future
success, all as provided for in this Agreement.

ARTICLE I
DEFINITIONS

1.1 Definitions. The following terms, as used herein, shall have the following
meanings whether used in the singular or plural or whether upper of lower case
(some additional terms are defined within sections to which they pertain):

“Act” means Title 6, Chapter 18 (Limited Liability Company Act) of the Delaware
Code, as amended from time to time or any successor legislation governing the
conduct and affairs of the Company.

“Adjusted Capital Account Balance” means, with respect to either Member, the
balance in such Member’s Capital Account after giving effect to the following
adjustments:

·                            debits to such Capital Account of the items
described in Section 1.704-l(b)(2)(ii)(d)(4) — (6) of the Treasury Regulations,
and

·                            credits to such Capital Account of such Member’s
share of Partnership Minimum Gain or Partner Nonrecourse Debt Minimum Gain or
any amount which such Member would be required to restore under this Agreement
or otherwise.

The foregoing definition of Adjusted Capital Account Balance is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury
Regulations.

“Affiliate” of a Party means another company or partnership controlled by such
Party and

5

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specifically excludes any parent Entity of either Party.

“Agreement” means this FD Operating Agreement by and among GDLS and FPI and
those exhibits attached hereto as amended from time to time in accordance with
the terms hereof.

“Available Cash” means:

·                            all cash and cash equivalents on hand of the
Company from any source, less

·                            cash reasonably reserved by the Company or
reasonably anticipated by the Member Designees to be required (after application
of anticipated cash revenues from any source) for debts and expenses, interest
and scheduled principal payments on any indebtedness, capital expenditures,
replacements, taxes or activities in the business of the Company.

“Background Intellectual Property” (“BIP”) means any IP or Technical Data (“TD”)
owned, used, or controlled by a Party prior to the date of this Agreement or
created by a Party independent of the Program, and without reference to the
other Party’s IP.

“Capital Account” shall have the meaning set forth in Section 6.4.

“Capital Contributions” means the total amount of cash and other property
contributed to the Company by the Members.

“Certificate of Formation” means the Certificate of Formation attached to the
Agreement.

“Code” means the Internal Revenue Code of 1986, as amended from time to time and
any successor Federal law, and to the extent applicable, any Treasury
Regulations promulgated there under.

“Company” means Force Dynamics LLC (“FD”) a limited liability company governed
by this Agreement, and formed by the Members as reflected on the Certificate of
Formation.

“Control” (and derivatives thereof) means the power (whether by contract or
otherwise) to exercise a controlling influence over the management or policies
of an Entity, unless such power is solely the result of an official position
with such Entity. Any Person which beneficially owns, either directly or through
one or more controlled Entities, more than 50% of the voting equity capital of
an Entity shall be presumed to control such Entity.

“Disposition” means the sale, lease or other means (including any merger or
consolidation, tender or exchange offer, open market or private transaction or
joint venture or other collaborative venture) by which a Person ceases to
maintain Control of a business.

“Entity” means any general partnership, limited partnership, corporation,
association, cooperative, joint stock company, trust, limited liability company,
business trust, joint venture,

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unincorporated organization or governmental entity (or any department, agency or
political subdivision thereof).

“Fair Market Value” means, in reference to the Company or a Membership Interest,
the fair market value of the Company or such Membership Interest, determined in
accordance with Section 6.9.2. In reference to property or assets other than the
Company, “Fair Market Value” means the fair market value of the property or
assets as reasonably agreed to between the Members in arms length negotiations.

“Fiscal Year” means the fiscal year of the Company and shall be the same as its
taxable year, which shall be the year ending December 31 unless otherwise
required by the Code or determined by the Members. Each Fiscal Year shall
commence on the day immediately following the last day of the immediately
preceding Fiscal Year.

“FPI” means Force Protection, Inc., a publicly traded company incorporated in
Nevada with offices at 9801 Highway 78, Ladson, South Carolina USA 29456,
jointly and severally with its wholly owned operating subsidiary Force
Protection Industries, Inc. a Nevada corporation.

“FPI Proposal” means the bid proposal prepared by FPI (with the assistance of
GDLS) in response to the MRAP Solicitation (M67854-07-R-5000), to include
without limitation FPI’s Technical, Survivability, Production and Business
proposals for the Category I and Category II requirements such Solicitation.

“Foreground Intellectual Property” (“FIP”) means any IP or TD created by either
Party or by both Parties under the Program which is neither based on nor derived
from BIP.

“GAAP” mean United States generally accepted accounting principles consistently
applied as in effect from time to time.

“GDLS” means General Dynamics Land Systems Inc., a Delaware corporation with
offices at 38500 Mound Road, Sterling Heights, Michigan, USA 48310-3200.

“Hart-Scott-Rodino Act” means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, and the regulations there under, or any successor thereto, as amended
from time to time.

“Including” means including, but not limited to, including without limitation
and all like phrases.

“Intellectual Property” (“IP”) means any new invention or useful art, process,
methodology, technique, machines, manufacture or composition of matter or any
new and useful improvement of any art, process, methodology, technique, machine,
manufacture or composition of matter, any improvements or modifications of the
foregoing, as well as any works of authorship and trade secrets, whether or not
patented or subject to protection under patent, copyright or trade secret laws.

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“ILAV” means the Iraqi Light Armored Vehicle program.

“JERRV” means pre-existing USMC contracts for the procurement of the FPI Cougar
before December 18th, 2006

“JLTV” means the U.S. Government Joint Light Tactical Vehicle program.

“Lifecycle Support” means system technical support, field service, logistics
support, spare parts, training, publications and similar support activities.

“Member” means GDLS and/or FPI in their ownership capacity with the Company.

“Member Designee” means an individual appointed by a Member to represent such
Member’s Membership Interests. Neither Member shall designate an individual to
be a Designee who is not a member, manager, director, Board member or employee
of such Member, or of an Affiliate of such Member, without the written consent
of the other Member.

“Membership Interest” means the membership interest, as defined in the Act, of a
Member that represents the Member’s participation in the Company, including such
Member’s share of the Profits and Losses of the Company and right to receive
distributions from the Company’s assets, and right to vote and exercise such
other management rights as are provided in the Act or this Agreement.

“Membership Percentage” means the unit percentage equal to the quotient obtained
by dividing (i) the number of Membership Interests held by a Member by (ii) the
total number of Membership Interests held by all Members.

“Party” means GDLS or FPI, and in the plural both of them.

“Person” means an individual or Entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so permits.

“Prime Rate” means the rate of interest per annum equal to the prime rate
publicly announced by Citibank, N.A. as its prime rate (or similar base rate) in
effect at its principal office.

·                            “Profit” and “Loss” means, for tax purposes for
each Fiscal Year, or other period, an amount equal to the Company taxable income
or loss for such year or period, determined in accordance with Section 703(a) of
the Code; provided, however, that for this purpose, all items of income, gain,
loss or deduction required to be stated separately pursuant to Section
703(a)(l).

“Program” means the Mine Resistant Ambush Protected (“MRAP”) Vehicle Program, a
United States joint services program to produce and provide lifecycle support to
address the current threat of improvised explosive devices in the Middle East as
more fully described in solicitation

8

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number M67854-07-R-5000. The Program will include any and all solicitations and
RFP’s for MRAP production and Lifecycle Support and/or any follow on work which
may be performed including any program name change, changed or future program
requirements, product evolutions and technology insertions related to the MRAP
vehicles whether for U.S. or international sales, or non-military/commercial
sales. For the avoidance of doubt, the “Program” only includes the use of FPI’s
Cougar 4x4 and 6x6 armored vehicles for the MRAP Cat I and Cat II requirements
and does not include any other existing or future contracts or programs for the
Parties’ other vehicles (or vehicle variants) to include by way of illustration
and not limitation, the JERRV program, the GSTAMIDS program, the ILAV and
Mastiff programs, the Buffalo and Cheetah vehicles, the Stryker, LAV, and RG-31
vehicles, the MRAP Cat III program and/or the JLTV program.

“Program Role” means the rights and obligations of a Party, including for this
purpose, an Affiliate thereof, pursuant to the subcontracts referenced in
Article III of this Agreement, and as more particularly set out in the Business
Plan and Program Proposal to be completed by the Company’s Member Designees

“Proportional Amount” means, in connection with a Capital Contribution pursuant
to Section 6.2 (each a “Capital Call”), that amount of capital contributed by a
Member (the “Contributing Member”), other than the Member having the lowest
Proportional Percentage in response to such Capital Call (the “Lowest
Contributing Member”), which bears the same proportion to the Capital
Contribution required of the Contributing Member in response to such Capital
Call as the actual Capital Contribution of the Lowest Contributing Member in
response to such Capital Call bears to the Capital Contribution required of such
Lowest Contributing Member in response to such Capital Call.

“Proportional Percentage” means, in connection with a Capital Contribution
pursuant to Section 6.2.1 or 6.2.2, the percentage (not more than 100%) that the
actual Capital Contribution made by a Member bears to the Capital Contribution
required of such Member in response to such Capital Call.

“Tax Matters Member” shall have the meaning set forth in Section 6.5.3.

“Technical Data” (“TD”) means assembly drawings, specification control drawings,
source control drawings, parts lists, wiring diagrams, procurement data, parts
identification documentation, equipment design specifications, interface control
documents, test procedures, test specifications, trial reports, manual,
instructional materials, firmware data, software specifications, source code
listings, control commands and other software documentation, and technical
publication source data owned or used by either Party. For the avoidance of
doubt the Parties hereby agree that FPI shall at all times retain ownership of
the TD for the MRAP vehicle, and shall retain exclusive design authority over
the MRAP vehicles.

“Term” shall mean the period of the Company’s duration as determined in
accordance with Section 6.1.3.

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“Third Party” means any Person or Entity not a Party to this Agreement but shall
not include Affiliate as defined herein.

“Treasury Regulations” means the Federal income tax regulations, including any
final or temporary regulations, promulgated under the Code, as such Treasury
Regulations may be amended from time to time (it being understood that all
references herein to specific sections of the Treasury Regulations shall be
deemed also to refer to any corresponding provisions of succeeding Treasury
Regulations).

“Workshare” shall have the meaning set forth in Section 3.2.

ARTICLE II
ESTABLISHMENT AND BUSINESS OF COMPANY

2.1 Formation. The Company will be formed by the Members or their Affiliates as
a limited liability company under the Act by the filing of a Certificate of
Formation (Exhibit 2) in such form as the Parties may mutually agree on or
before January 31, 2007 (or such other date as may be agreed between the
Parties).

2.2 Membership Interests. The initial Membership Interests in the Company are
50% for GDLS and 50% for FPI.

2.3 Other Actions. The Parties will provide such other information, take such
actions and execute such documents as may reasonably be required to carry out
the purpose of this Agreement and shall perform and permit to be performed each
respective Program Role.

2.4 Attaining Business Objectives. The business objective of the Company shall
be to win the Program and to perform any development, production and lifecycle
support for the Program in accordance with FPI’s Proposal. In order to attain
this objective, the Company shall promptly implement its business plan and
develop operating plans setting forth how such objective will be achieved.

ARTICLE III
CONCEPT OF OPERATIONS

3.1. General. It is the intent of the Parties to combine their respective
strengths to market and promote FPI’s COUGAR vehicles for the Cat I and Cat II
requirements of the MRAP Program. The Parties will make available to the Company
their respective resources so that the Company may undertake to develop,
manufacture, produce and sustain any vehicles awarded under the MRAP program, in
accordance with the plan set forth in FPI’s Proposal. Understanding the
complexity of the MRAP Program, the Company will form a FPI-GDLS Team MRAP
Program Management Office that will be the Parties’ exclusive interface with the
Customer’s Program

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Management Organization, and which will have operating responsibility over the
execution of the MRAP Program. Each Party will provide personnel to the Program
Office according to the plan developed and agreed by the Board. Other than those
programs identified above in the definition of “Program”, the Parties agree that
the Company will pursue any and all future vehicle programs related to, or
arising out of, the current MRAP program.

3.1.1. Equitable Principle. The Company shall operate on the principle of
equitable division of burden and benefit as between the Parties. This means that
the Parties are expected to contribute resources equally to the venture, to
share equally the costs and responsibilities associated with the performance of
the Program and to share equally the resulting benefits.

3.1.2 Company Preference. Whenever practicable, the Company will act as the
prime contractor for Program Work, and the Parties shall act as the exclusive
subcontractors; provided however that the Company and the Parties will give
effect to the production plan set forth in FPI’s Proposal consistent with the
undertaking of this agreement. Future sub-tier supplier involvement will be
mutually agreed upon by the Parties and described in Exhibit 3 per Section 3.2.

3.1.3 Commitment The Parties will not make any bids, enter contracts, or perform
any work for any mine protected vehicle business opportunities that fall within
the Program, unless mutually agreed upon by the Parties in writing. Provided,
however, the Parties recognize and agree that GDLS-C, a GDLS affiliate, may
submit the RG-31 for the Program and other solicitations.

3.1.4 Follow-On Proposal Submissions. The Company will submit any future
proposals to the U. S. Government with respect to the follow-on requirements for
the Program.

3.1.5 International Programs The Company will submit any future proposals
related to all derivative International programs (including FMS). The Parties
will mutually agree on specific International pursuits that will be undertaken
and how the business development activity will be funded. The Parties
acknowledge that GDLS-C may pursue International Programs with the RG-31 per
their existing marketing agreement.

3.2. Workshare. The Parties agree that the Workshare split based upon revenues,
shall be 50% for GDLS and 50% for FPI. This 50%/50% revenue balance shall be for
all phases of the Program including, but not limited to LRIP (“low rate initial
production”), production phases, and Life Cycle Service and Support (regardless
of any changes to the Program name or phases).

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3.2.1. Mutual Intent to Win The Parties affirm that this Joint Venture Agreement
is based on a mutual intent to join forces to win the MRAP Program. In the
interest of the Joint Venture, the Parties agree to focus on each Party’s
strengths in the initial Workshare allocation (Exhibit 3) to maximize the
competitive advantage of the bid submission. The Parties acknowledge the
potential that the initial Workshare may not be 50%/50% immediately.

3.2.2 Initial Workshare The Parties commit to the development of a draft
Workshare allocation by January 10th, 2007. A finalization of the initial
Workshare allocation will be approved by the Board no later than Feb 28th, 2007.
If the initial Workshare is not allocated 50%/50%, the Parties agree that within
six months of contract award to develop a plan to adjust the follow-on Workshare
beginning in areas that will optimize the competitiveness of the enterprise and
the financial return of the Parties. Implementation of the adjusted Workshare
will occur according to section 3.2.3 (True-Up Process).

3.2.3. True-Up Process With respect to the 50%/50% Workshare split and revenue
balance, the Members agree to annual audits by an independent Third Party and
disclosure to GLDS and FPI of only the percentage Workshare split comparison.
For reason of practicality, “True-up” to the agreed upon 50%/50% Workshare
allocation shall occur on an annual basis or as mutually agreed upon by the
Members. In any event the adjusted Workshare to achieve the cumulative 50%/50%
allocation will occur no later than the award of any follow-on delivery orders.

3.3 Workshare Subcontracts. The JV will not employ any persons directly. Except
as otherwise provided in FPI’s Proposal, the Company will subcontract the
appropriate portions of the work of the Program (“Workshare”) to GDLS and FPI in
accordance with their respective Program Roles. The Parties agree that their
Program Roles, and Workshare, will generally be allocated along conventional
business process disciplines including:

3.3.1 Program Management: Led by the Program Manager (PM) who is appointed by
the Board, in cooperation with a Deputy PM (DPM), who has overall responsibility
for the execution of the program. The PM’s main effort will be to (i) Pursue and
Win New Business, (ii) to Execute and Manage current contracts, and to (iii)
Defend and Sustain the ongoing life of the program. All other process leads
assigned by the Parties to the Program will report to the PM. They will maintain
a secondary reporting relationship to their functional leaders in their parent
organizations. The role of the PM includes responsibility for:

(i)

 

Overall program management and coordination

(ii)

 

Program Planning & Scheduling

(iii)

 

Oversight of production, to include:

 

 

a.  Purchasing & Supply Chain management

 

 

b.  Capsule Fabrication

 

 

c.  Automotive Integration

 

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d.  Final Assembly

(ii)

 

Financial Performance

(iii)

 

Delivery Schedule

(iv)

 

Testing & Vehicle Performance

(v)

 

Customer Requirements

(vi)

 

Keeping the Program Sold

3.3.2. Matrix Organization: Subcontracts from the Company to the Parties will
form a matrix organization in support of the PM. The Parties envision a Matrix
Organization consisting of the following processes and support functions:

(i)

 

Engineering, Design & Development including Configuration Management and
Quality;

(ii)

 

Production, Delivery and Support to include Integrated Logistics Support;

(iii)

 

Supply Chain Management to include material requirements planning, purchasing,
supplier spares management, and major subcontracts managements

(iv)

 

Finance to include compliance, accounting, risk management, tax, audit, and
Information Technologies

(vi)

 

Human Resources & Administration to include HR and workplace policies;

(vii)

 

Communications to include all internal employee communications, Public
Relations, and Government Relations

(viii)

 

Legal & Contracts to include proposal development, contract review, contract
negotiation, and other legal matters.

3.4 Responsibility. Each Party shall carry out and shall be wholly and
exclusively responsible for the timely and proper performance of any Workshare
allocated to it or its Affiliates by the Company. Each Party shall exert
commercially reasonable efforts to expand the Program consistent with each
Party’s customary approach to such activity.

3.5 Product Approach. The Parties intend to offer the proven family of COUGAR
vehicles in 4x4 and 6x6 configurations for the CATERGORY 1 and CATEGORY 2
requirements respectively.

3.6 Company Operating Plan. The agenda of the initial meeting of the Board of
Directors will include the approval of the designated Program Manager’s proposed
Operating Plan (Goals, Objectives, Workshare, Budget) for the Company. The
Program Manager will subsequently provide an Operating Plan review to the Board
on a quarterly basis. Each year, the Board will approve an Annual Operating plan
at the fourth quarter (Q4) meeting.

3.7 Delegation of Authority. The agenda of the initial meeting of the Board of
Directors will include the approval of any Delegations of Authority (DoA) the
Board may choose to authorize for the Company leadership team. The Company DoA
will be in compliance with both Parties’ respective DoAs

 

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3.8 Key Events Timeline

A. U.S. Government released an RFP on November 9, 2006. Current RFP states for a
minimum of two (2) Category I and two (2) Category II Vehicles for this contract
and a maximum of 1,500 — Category I and 2,600 — Category II vehicles.

B. MoU signed on Dec 5th , 2006

C. The RFP response due date is December 18, 2006.

D. Joint Venture Document and joint Bid cover letter signed Dec 18th , 2006

E. Joint Venture Established no later than January 18th, 2007

F. Initial Board Meeting convened no later than January 31st, 2007

G. The Initial order of two sample vehicles (per category) is expected in Ql
2007. Customer is expected to subject sample vehicle to rigorous test and
evaluation process in advance of main contract award.

H. Main contract award is expected to be received in April 2007.

I. Initial Deliveries will occur within sixty days of Contract Award.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

4.1 FPI Representations and Warranties. FPI represents and warrants that:

A.                     It is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada and has the requisite
power and authority: (i) to own, lease and operate its properties and assets, to
conduct its business as now conducted, (ii) to enter into, execute, and deliver
this Agreement and the other agreements to which FPI is a party, the execution
and delivery of which are contemplated hereby, (iii) and to perform its
obligations under this Agreement and the other agreements to which FPI is a
party. FPI is duly qualified to transact business and is in good standing, if
applicable, in each jurisdiction in which the failure to so qualify would have a
material adverse effect on its business, condition, results of operations,
assets or liabilities (a “Material Adverse Effect”).

B.                       It has full power and authority to execute and to
fulfill all of its obligations set forth in this Agreement and this Agreement
constitutes a valid and binding agreement of FPI in accordance with its terms.
No consent or approval of members or any public authority is required as a
condition to the validity or enforceability against FPI of this Agreement or any
other document or instrument referred to herein.

C.                       There is no provision in the certificate of
organization or operating agreement of FPI or in the corresponding documents of
any Affiliate, and no provision of any existing mortgage, indenture, contract,
financing statement, or agreement binding

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on FPI or any Affiliate, that would conflict with or in any way prevent the
execution, delivery, or carrying out of the terms of this Agreement including
any other document referred to herein.

D.                      FPI has employed no finder, broker, sales agent or other
similar intermediary in connection with the negotiation of this Agreement or any
of the transactions contemplated hereby.

E.                        All corporate action on the part of FPI, its officers,
directors and stockholders necessary for the authorization, execution and
delivery of this Agreement and the other agreements to which FPI is a party, the
execution and delivery of which are contemplated in this Agreement, the
performance of all obligations of FPI hereunder and thereunder has been taken,
and this Agreement and the other agreements to which FPI is a party, the
execution and delivery of which are contemplated in this Agreement, constitute
valid and legally binding obligations of FPI, enforceable in accordance with its
and their terms.

4.2 GDLS Representations and Warranties. GDLS represents and warrants that:

A.                     It is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the requisite
corporate power and corporate authority: (i) to own, lease and operate its
properties and assets, (ii) to conduct its business as now conducted, to enter
into, execute, and deliver this Agreement and the other agreements to which GDLS
is a party, the execution and delivery of which are contemplated hereby, (iii)
and to perform its obligations under this Agreement and the other agreements to
which GDLS is a party, GDLS is duly qualified to transact business and is in
good standing, if applicable, in each jurisdiction in which the failure to so
qualify would have a Material Adverse Effect.

B.                       It has full power and authority to execute and to
fulfill all of its obligations set forth in this Agreement and this Agreement
constitutes a valid and binding agreement of GDLS in accordance with its terms.
No consent or approval of stockholders or of any public authority is required as
a condition to the validity or enforceability against GDLS of this Agreement or
any other document or instrument referred to herein.

C.                       There is no provision in the charter or by-laws of GDLS
or corresponding documents of any Affiliate and no provision of any existing
mortgage, indenture, contract, financing statement or agreement binding on GDLS
or any Affiliate, that would conflict with or in any way prevent the execution,
delivery or carrying out of the terms of this Agreement or any other document
referred to herein.

D.                      GDLS has employed no finder, broker, sales agent or
other similar intermediary in

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connection with the negotiation of this Agreement or any of the transactions
contemplated hereby.

E.                        All corporate action on the part of GDLS, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement and the other agreements to which GDLS is a
party, the execution and delivery of which are contemplated in this Agreement,
the performance of all obligations of GDLS hereunder and thereunder has been
taken, and this Agreement and the other agreements to which GDLS is a party, the
execution and delivery of which are contemplated in this Agreement, constitute
valid and legally binding obligations of GDLS, enforceable in accordance with
its and their term.

4.3 FPI-GDLS Representation and Warranty. Each Party has the sole and exclusive
right to all IP, Background IP, and TD that it will contribute to the Program.

ARTICLE V
DISPUTE RESOLUTION

5.1 Disputes. All claims, disputes, controversies, or other matters in question
arising out of, connected with, or relating to this Agreement that cannot be
resolved by the Parties through face-to-face negotiations as detailed in Section
6.10, will be settled by binding arbitration before three arbitrators, one
arbitrator to be selected by each Party and the third to be selected by the two
so appointed. The arbitration shall be conducted in accordance with the
Commercial Rules of the American Arbitration Association then in effect. All
arbitration proceedings will be held in New York City, N.Y. The Parties may take
discovery of evidence as allowed by the arbitrators, and subject to the
arbitrators’ determination regarding its admission and use. The administrative
costs of any arbitration or litigation will be borne equally by the Parties
pending the arbitrator’s award. The arbitrators shall be bound by the express
provisions set forth in this Agreement and shall not modify any terms of this
Agreement or make any award of damages in excess of the amounts set forth in
this Agreement or grant any relief not expressly set forth in this Agreement.
The determinations of the arbitrators shall be final and, except as provided by
law, shall not be subject to judicial review. Any court of competent
jurisdiction may enforce any award or determination rendered by the arbitrators.

5.2 Damages. Notwithstanding any provision of this Agreement to the contrary,
neither Party will be entitled in connection with any breach or violation of
this Agreement to recover from the other or any Affiliate thereof any punitive,
exemplary or other special damages or any indirect, incidental or consequential
damages, including damages relating to loss of profit, business opportunity,
business reputation or business interruption. Each Party, as a material
inducement to the other Party to enter into and perform its obligations under
this Agreement, hereby expressly waives its right to assert any claim relating
to such damages and agrees not to seek to recover such damages in connection
with any claim, action, suit or proceeding relating to this Agreement. The
foregoing will not limit the right of either Party to indemnification in

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accordance with the provisions of this Agreement, including any other agreement
referred to herein, with respect to all components of any claim, award or
judgment against such Party by any unaffiliated third Party.

ARTICLE VI
OPERATING PRINCIPLES AND PROCEDURES

6.1 Organization

6.1.1 Formation. The Company will be organized as a limited liability company
under the Act by the filing of the Certificate of Formation with the State of
Delaware. Pursuant to Treasury Regulation 301.7701-3, the Company, an eligible
entity with at least two members, will not file an election, but will instead
default under paragraph (b) of such Treasury Regulations to be classified as a
partnership for Federal income tax purposes.

6.1.2 Name. The name of the Company is (FORCE DYNAMICS LLC). The Company may
also conduct business under one or more assumed names approved by the Members.
The Company may not use any names, trade names, service marks or logos of either
Member or any of their respective Affiliates without the prior written consent
of such Member.

6.1.3 Duration. The period of the Company’s duration shall be perpetual, subject
to being dissolved and wound up in accordance with the Act or this Agreement.

6.1.4 Offices.

(a)                    The Company’s principal office shall be at a location TBD
by the JV Board.

(b)                   The Company’s registered agent in the State of Delaware
for the service of process is as identified in the written appointment of agent
filed in the office of the Secretary of State of Delaware contemporaneously with
the filing of the Certificate of Formation of the Company. The Members may from
time to time mutually agree to change the registered agent, and any such change
shall be reflected in appropriate filings with the Secretary of State of
Delaware.

6.1.5 Governing Documents. The Certificate of Formation and this Agreement as it
may be amended from time to time shall, subject to the provisions of the Act,
govern the affairs and conduct of the Company’s business.

6.2 Initial Capital Contributions. The Parties do not expect the requirement for
any initial Capital Contribution to the Company, with the exception of the
minimum amount that might be required by law in the formation of the Company.

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6.2.1 Contributions in Cash. No contributions shall be made that consist of
property or services, other than cash.

6.2.2 Loans. A Member may make a loan or loans to the Company only with the
written consent of the other Member; provided, however, that absent written
agreement to the contrary no Member or Member Affiliate shall be obligated to
make any loan to the Company. Loans by Members to the Company shall not be
considered Capital Contributions and the balance of such Member’s Capital
Account shall not be increased by any amount so loaned. No repayment of
principal or interest on any such loan with respect to advances made pursuant to
this Section 6.2.3 shall affect the balance of such Member’s Capital Account.
The amount of any such loans shall be a debt of the Company to such Member and
shall be payable or collectible only out of the Company assets and shall bear
interest at least equal to the Prime Rate in effect at the time of making of
such loan.

6.3 Capital Accounts. Company shall maintain a separate capital account (a
“Capital Account”) for each Member in accordance with Section l.704-l(b)(2)(iv)
of the Treasury Regulations. Subject to the following:

(a)                    Each Member’s Capital Account shall be increased by the
amount of cash and the Fair Market Value of the property actually or deemed
contributed to the Company, such Member’s allocable share of any Profits and
other items of income or gain allocated pursuant to Section 6.6 (other than
Subsection 6.6.5) of the Company and the amount of any of the Company’s
liabilities that are assumed by such Member.

(b)                   Each Member’s Capital Account shall be decreased by the
amount of cash and the Fair Market Value of the property actually distributed to
such Member by the Company, such Member’s allocable share of any Losses and
other items of deduction, loss or expense allocated pursuant to Section 6.6
(other than Subsection 6.6.5) and the amount of any liabilities of such Member
that are assumed by the Company.

(c)                    No interest shall be paid by the Company on Capital
Contributions or on balances in Capital Accounts.

(d)                   A Member shall not be entitled to withdraw any part of its
Capital Account or to receive any distributions from the Company except as
provide herein; nor shall a Member be entitled to make any loan or Capital
Contribution to the Company other than as expressly provided herein.

(e)                    Except as required by the Act, no Member shall have any
liability for the return of the Capital Contribution of any other Member.

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6.5 Books; Accounting; Tax Elections; Reports.

6.5.1 Books and Records. The Tax Matters Member shall keep, or cause to be kept,
complete and accurate books and records of account to the Company. The books of
the Company (other than books required to maintain Capital Accounts) shall be
kept on the accrual basis of accounting, and otherwise in accordance with GAAP,
and shall at all times be maintained or made available at the principal business
office of the Company. At all times the Company shall maintain its principal
business office a current list of the name and address of each Member, a copy of
the Certificate of Formation, including any amendments thereto, copies of this
Agreement and all amendments hereto, and all other records required to be
maintained pursuant to the Act. The Company shall also maintain at all times, at
its principal business office, copies of the Company’s Federal, state and local
income tax returns and reports if any and all financial statements of Company
for all years; provided, however, the Company shall not be required to maintain
copies of income tax returns and reports, if any, and any financial statements
of the Company for any year for which each Member has notified the Company in
writing that such Member’s tax year has been closed.

6.5.2 Reports and Audits. Promptly upon request, the Company shall, at the cost
and expense of the Company, furnish, or cause to be furnished, to each Member
Such information relating to the financial condition, operations of Company or
any other aspect of the Company or its business as either Member may from time
to time reasonably request. Each Member shall have the right, at all reasonable
times and upon reasonable notice during normal business hours, to audit, examine
and make copies of or extracts from the books of account of the Company or any
other Company record for any purpose reasonably related to such Member’s
interest as a Member of the Company. Such audit right may be exercised through
any designated agent or employee of such requesting Member. The Company and the
Member conducting the review shall each bear their own cost of involvement in
the review.

6.5.3 Tax Matters Member. Pursuant to Section 6231(a)(7) of the Code, or
subsequent similar provision, until changed by a resolution of the Members or
Member Designees, GDLS is hereby designated as the Tax Matters Member. The Tax
Matters member shall take such action as may be necessary to cause the other
Member to become a “notice partner” within the meaning of Section 6231(a)(8) of
the Code.

6.5.4 Annual Financial Statements. As soon as practicable following the end of
each Fiscal Year (and in any event not later than 90 days after the end of such
Fiscal Year), the Company shall prepare and deliver to each Member a balance
sheet of the Company as of the end of such Fiscal Year and the related
statements of operations, changes in Members’ equity and cash flow of the
Company for such Fiscal Year, together with appropriate notes to such financial
statements, all of which shall be prepared in accordance with GAAP and audited
and certified by the Company’s Independent Accountants. At the same time, the
Company shall deliver (at its sole expense) to each Member a report indicating
such Member’s share of all items of income, gain, loss, deduction and credit of
the Company for such Fiscal Year and any other financial information related to
the Company which is requested by either Member for Federal, state, local

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or foreign income or franchise tax purposes.

6.5.5 Quarterly Accounting Statements. As soon as practicable following the end
of each calendar quarter (and in any event not later than 45 days after the end
of such quarter), the Company shall prepare and deliver to each Member a balance
sheet of the Company as of the end of such quarter and the related statements of
operations, changes in Members’ equity and cash flow for such quarter and for
the Fiscal Year to date and such other reports as may be reasonably requested.

6.5.6 External Auditors. The Company’s Independent Accountants shall be
appointed by the Members. Such Independent Accountants of the Company shall be a
nationally recognized certified public accounting firm. The Company’s books and
records of account shall be audited at least annually, at the expense of the
Company, by the Company’s Independent Accountants, who shall, as a result of
their review, render their opinion that the financial statements present fairly,
in all material respects, the financial position of the Company in conformity
with GAAP.

6.5.7 Internal Audits. Internal audits may be conducted by either Member, or its
nationally recognized certified public accounting firm, at its own expense.

6.5.8 Internal Controls. The Company shall take appropriate action to adopt an
adequate system of internal controls consistent with the principles of this
Section. An adequate system of internal controls shall be a process within the
Company designed to provide reasonable assurance regarding the achievement of
the following primary objectives:

(a)       Reliability and integrity of information

(b)       Compliance with policies, plans, procedures, laws and regulations

(c)       The safeguarding of assets

(d)       The economical and efficient use of resources

(e)       The accomplishment of established objectives and goals for operations
or programs.

6.5.9 Budgets. The Company shall cause yearly operating and capital budgets to
be prepared and presented for approval to the Members at least 30 days prior to
the beginning of the year to which such budgets relate. Such budgets shall
include a business plan for the budget year. (Such agreed upon budget and
business plan for any given year shall be a “Budget”).

6.6 Allocations and Distributions.

6.6.1 Normal Allocations. Except as otherwise provided by this Article 5, the
Profit and Loss of the Company for each Fiscal Year (or portion thereof) shall
be determined as of the end of each Fiscal Year (or portion thereof). All Profit
and Loss of the Company shall be allocated among the Members pro rata in
accordance with the Members’ respective Membership Interests.

6.6.2 Section 754 Election. At the request of both Members, the Company shall
elect,

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pursuant to Section 754 of the Code, to adjust the basis of the Company property
as permitted and provided in Sections 734 and 743 of the Code.

6.6.3 Allocations for Tax and Book Purposes. Except as otherwise provided
herein, any allocation to a Member for a Fiscal Year or other period of a
portion of the Profit or Loss, or of a specially allocated item, shall be
determined to be an allocation to that Member of the same proportionate part of
each item of income, gain, loss, deduction or credit, as the case may be, as is
earned, realized or available by or to the Company for Federal tax purposes.

6.6.4 Certain Accounting Matters. For purposes of determining Profit, Loss or
any other items allocable to any period, such items shall be determined on a
daily, monthly or other basis, as determined by the Member Designees using any
permissible method under Section 706 of the Code and the Treasury Regulations
promulgated thereunder.

6.6.5 Distributions (Other Than Proceeds of Any Liquidating Transaction).
Subject to the Act, and except as set forth in Section 6.6.18 or otherwise
agreed by the Members, Available Cash shall be applied and distributed to the
Members from time to time at the Member’s election and in accordance with their
Membership Interests at the time of distribution.

6.6.6 Set-Off. The Company shall make distributions without regard to any claims
that the Company or either Member may have against any other Member or any
Affiliate of a Member.

6.6.7 Proceeds of Any Liquidating Transaction. Upon the occurrence of any
transaction involving the Disposition of all or substantially all of the assets
of the Company (a “Liquidating Transaction”), all Available Cash resulting there
from (or from any other source during the period of winding up the Company)
shall be applied (i) first, to the payment of, or to the making of reasonable
provisions for payment of, any debts or liabilities of the Company to creditors;
and (ii) second, to the Members in proportion to and to the extent of the
positive Capital Accounts after giving effect to any other distributions
provided for in this Agreement and all Capital Account Adjustments for the
taxable year in which the liquidation occurs. All payments under this Section
6.6.7 shall be made soon as reasonably practicable and in any event by the end
of the Fiscal Year in which such Liquidating Transaction occurs or, if later,
within 90 days after the date of such Liquidating Transaction.

6.7 Membership Interests and Restrictions

6.7.1. Membership Interest. All Membership Interests in the Company shall be of
the same class and group. In the event of an increase or decrease in a Member’s
Membership Interest pursuant to this Agreement, the Member’s Company Interest
shall be adjusted accordingly.

6.7.2. Removal; Withdrawal; No Transfer of Interest.

(a)                     A Member may not be removed as a Member of the Company
other than as expressly provided herein or in the Act.

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(b)                    A Member may not withdraw from the Company without the
written consent of the other Member, unless otherwise provided in this
Agreement.

(c)                     Except as expressly provided in Section 6.7.3, a
Member’s Membership Interest in the Company shall not be transferred without the
written consent of the other Member.

(d)                    Except as expressly provided in Section 6.7.4, any
permitted transfer of a Member’s Membership Interest shall not entitle the
transferee to be admitted to the Company as a Member.

6.7.3. Limitations on Disposition of Membership Interests.

(a)                     Generally. Except as expressly set forth in Article 6,
neither Member shall, without written consent of the other Member, sell, assign,
transfer, or otherwise dispose of its Membership Interest (or any part thereof).
The giving or withholding of consent to any such disposition shall be entirely
within the discretion of the Member requested to give such consent; provided,
however, that, subject to Section 6.7.3(c) below, such consent shall not be
unreasonably withheld following reasonable opportunity to review the management
and financial capability of a new Party introduced for good and necessary
business reason. Any attempted disposition other than as permitted by the terms
of this Agreement shall be void and of no effect. Any permitted transferee of a
Membership Interest pursuant to this Agreement must, simultaneously with its
acquisition of the Membership Interest, execute an addendum to this Agreement,
setting forth its agreement to be bound by the terms of this Agreement, and
assuming all obligations of its assignor with respect to the acquired Membership
Interest, on terms reasonably satisfactory to the other Member.

(b)                    Transfers to an Affiliate. Each Member shall be entitled
to transfer all, but not less than all, of its Membership Interest ( a
“Transferee Interest”) to an Affiliate (which, for purposes of this Section
6.7.3(b) only shall include any parent Entity) of such Member, provided that
contemporaneously with the transfer of such interest, the Affiliate to which
such Transferee Interest is transferred shall join in an execute with the
Members a written addendum to this Agreement pursuant to which such Affiliate
agrees to be bound by all the terms and provisions of this Agreement and to
perform and discharge the obligations and liabilities which are attributable to
the Transferee Interest. No such

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transfer to an Affiliate hereunder shall relieve the transferring Member of its
obligations and liabilities under this Agreement without the express written
consent of the non-transferring Member. Notwithstanding anything to the contrary
contained in this Section 6.7.3, no transfer of a Transferee Interest to an
Affiliate may take place without the consent of the other Member if such
transfer would result in the termination of the Company within the meaning of
Section 708 of the Code.

(c) Sales to Third Parties.

i.                            Except for transfers of a Membership Interest to
an Affiliate pursuant to Section 6.7.3(b), if at any time either GDLS or FPI or
any transferee of a Membership Interest pursuant to Section 6.7.3(b) (the
“Initiating Party”) intends to dispose of all (but not less than all) of is
Membership Interest whether alone or as part of a larger transaction (the
“Offered Interest”) then the Initiating Party shall give a notice (“the Offer
Notice”) to the other Member (the “Non-Initiating Party”), offering to sell the
Offered Interest to the Non-Initiating Party, which notice shall set forth the
proposed price (which shall be payable all in cash), the name and identity of
the proposed purchaser, and all material terms and conditions. The
Non-Initiating Party shall then have 90 days in which to notify the Initiating
Party that it (i) desires to purchase the Offered Interest at the price set
forth in the Offer Notice and on terms and conditions the same as those set
forth in the Offer Notice (an “Acceptance Notice”), or (ii) does not desire to
purchase the Offered Interest (a “Refusal Notice”) and whether or not consent to
the transfer is given or provided in Section 6.7.3(a).

ii.                         If the Non-Initiating Party gives an Acceptance
Notice in accordance with subparagraph (i) above, on the 180th day after the
Offer Notice or on such other date as the Parties agree upon the Non-Initiating
Party shall purchase from the Initiating Party and the Initiating Party shall
sell to the Non-Initiating Party at the price and on the terms and conditions
set forth in the Offer Notice the Offered Interest. The Non-Initiating Party may
designate one or more Affiliates to purchase all or any part of the Offered
Interest, provided that each such designee shall comply with the applicable
terms of this Section 6.7.3 with respect to such purchase and that the entire
Membership Interest to be sold must be purchased by the Non-Initiating Party or
its designees.

 

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iii.                      If the Non-Initiating Party delivers a Refusal Notice,
or fails to deliver an Acceptance Notice or Refusal Notice, in accordance with
subparagraph (i) above, the Initiating Party may sell all, but not less than
all, of its Membership Interest to a third person if: (w) such sales is on the
terms and conditions, including the price, at least as favorable to the
Initiating Party as those set forth in the Offer Notice; (x) an agreement of
sale is executed and delivered and the sale closed within 180 days after the
later of the receipt of the Refusal Notice and the end of the 90 day period
referred to in subparagraph (i) above; (y) the purchaser agrees in writing to be
subject to the terms and conditions of this Agreement and such transfer is
permissible under any contract awarded to the Company in respect of the Program;
and (z) the Initiating Party and proposed purchaser comply with subparagraph (d)
below, and if not, the Membership Interest shall again the subject to the right
of first offer.

iv.                                   If either Member becomes obligated to sell
its Membership Interest pursuant to the provisions of subparagraph (ii) of this
Section 6.7.3(c) (a “Seller”), such Membership Interest shall be sold as set
forth in this subparagraph (iv). The closing of this sale shall be held at the
Company’s headquarters (or such other place as to which the Parties may agree)
on the date provided by subparagraph (ii) of this Section 6.7.3(c). At such
closing, the Seller shall convey and assign to the purchaser or purchasers, free
and clear of all liens, claims and encumbrances, the Membership Interest to be
sold and shall execute and deliver to the purchaser or purchasers all documents
which may be required to give effect to the disposition and acquisition of such
interest, and the purchaser or purchasers shall pay to the Seller, in
immediately available funds, the purchase price determined as provided by
subparagraph (ii) for the interest being sold. The obligation of the Seller to
sell and the obligation of the purchaser or purchasers to purchase at such
closing such interest shall be subject to the following conditions: No
preliminary or permanent injunctions or other order, decree or ruling issued by
a court of competent jurisdiction or by a governmental regulatory or
administrative agency or commission shall be in effect which would prohibit such
conveyance (provided that the Parties shall use good faith efforts to avoid the
issuance of, and, if issued, to cause the lifting of, any such order, decree or
ruling); any applicable waiting period under the Hart-Scott-Rodino Act or any
other applicable law shall have expired and any other applicable law shall have
expired and any other applicable governmental approvals and

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clearances necessary to permit such sales shall have been obtained; each
purchaser shall have received a representation and warranty in form and
substance reasonably satisfactory to it that the Seller has good and marketable
title to the interest being conveyed, free and clear of all liens, claims and
encumbrances, and has full right, power and authority to effect such conveyance;
and there shall have been no materials adverse change (or changes which in the
aggregate are materially adverse) in the Company’s business, assets or
liabilities occurring after the date the Offer Notice was given, as the ease may
be (provided that the purchaser(s) may waive either of the last two conditions).

v.                        Upon the closing of a sale to the Non-Initiating Party
hereunder, the Initiating Party and its Affiliates shall covenant not to (x)
solicit any employees of the Company, or (y) take any action that can reasonably
be expected to interfere with the Company’s or the Members’ relationships with
its customers, for a five year period after the completion of the transaction.
Notwithstanding the foregoing, Section 6.7.3(c)(v)(x) above shall not prohibit
the Initiating Party or its Affiliates from (x) acquiring a business or group of
businesses in a transaction where such competitive business or group of
businesses is not the primary purpose of such acquisition and constitutes less
than 10% of the annual sales volume of the acquired business or group of
businesses as a whole based on the preceding fiscal year, or (y) acquiring
shares of stock, partnership or other equity interests in any entity as
investments in such Initiating Party’s or its Affiliates’ pension funds or funds
of any other employee benefit plan, provided that such interests are acquired
and held for investment purposes only.

(d)                    Compliance with Laws. Either Member proposing to make a
transfer of its Membership Interest pursuant to this Section 6.7.3 and the
proposed transferee shall obtain (at their sole cost and expense, but with all
reasonable cooperation from the Company) any waivers, consents or approvals from
any third person (including any U. S. or other governmental authority) which may
be necessary in connection with the proposed transfer and the admission of the
proposed transferee as a Member, if applicable. The other Member may require
that the transferor Member and the proposed transferee provide opinions of
counsel or other reasonable assurances to the Company that the transfer (i) does
not violate any law applicable to the Company, the transferor Member or the
proposed transferee, including the Securities Act of 1933, as amended, (ii) will
not cause the Company to become subject to regulation of any governmental
authority to which it is not then subject, and (iii) will not cause violation of
any of the Company’s material agreements.

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6.7.4. Admission of Transferee. A transferee of the Membership Interest of a
Member shall be admitted to the Company in the place and stead of such Member
only with the express written consent of the other Member(s), in addition to
satisfying the other requirements of this Agreement.

6.8 Member’s Powers; Meetings.

6.8.1 General Powers.

(a)                     The property, affairs, and business of the Company shall
be managed by the Members. In addition to the powers and authority expressly
conferred on it by this Agreement, the Members may exercise all such powers of
the Company, and do all such lawful acts and things as are permitted by the Act,
the Certificate of Formation and the Agreement. The Members hereby delegate all
power and authority to manage the business and affairs of the Company to the
Member Designees as a group, or as provided hereunder (including Section 6.8.6).
Except as otherwise provided by the Act, other applicable law or the Certificate
of Formation, all policies and other matters to be determined by the Members
shall be determined by a majority vote of the Member Designees present at a
meeting at which a quorum is present. The Member Designees are representatives
of the Members and are not “managers” of the Company within the meaning of the
Act.

(b)                    In addition to other matters coming before them, the
Member Designees shall consider and take appropriate action in connection with
the following matters (the “Important Matters”): (i) a change in the Company’s
name or the adoption of an assumed name under which to conduct the Company’s
business, (ii) the approval and adoption of any annual or longer term business
plan including the annual capital and operating budgets contained therein and
strategic plans and plans regarding technologies, or any deviations from such
plans once approved, (iii) any determination of “Available Cash”, (iv) changing
the nature of the Company’s business, or expanding or reducing the scope of the
Company’s operations, (v) any transaction (including amendments) between the
Company, on the one hand, and GDLS or FPI, on the other hand, or their
respective Affiliates, other than arms’ length transactions in the ordinary
course of business, (vi) amending the Certificate of Formation, (vii) issuance
of additional Membership Interests, and the consideration therefore, or the
raising of funds in any manner which would dilute the Membership Interest of
cither Member, (viii) other than as provided in this Agreement or specified in a
business plan adopted by the Member Designees, the creation of any debt or debt
obligation of the Company or the creation of any mortgage, lien, pledge or other
encumbrance on Company’s assets, (ix) the granting of any licenses or other
lights regarding important intangible assets by the Company, (x) the

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merger, sale or disposition of all or a substantial part of the assets of
Company, . (xi) amending or waiving the terms of this Agreement or any documents
referred to in the Agreement, (xii) any call upon the Members to contribute
additional capital in respect of their existing Membership Interests which is
not included in a Budget, (xiii) any change in the Company’s fiscal year or
change in the Company’s accounting practices and procedures (including internal
accounting standards), (xiv) entering into any significant contract other than
contracts that are entered into the ordinary course of business, and contracts
reflected in the Budget, (xv) authorization of the issuance, sale or purchase of
any interest in any other business venture, (xvi) casting of the Company’s vote
as a shareholder, member or other owner, in any other business entity or
association, (xvii) Member distributions not expressly permitted pursuant to the
terms of this Agreement, (xviii) any advance to suppliers or to any person other
than business expenses undertaken in ordinary course, (xix) other than as
specified in a business plan adopted by the Member Designers, any capital
expenditure, (xx) designation of a Chief Executive Board member, a Chief
Financial Board member and a Secretary, and (xxi) investments in any Entity.

6.8.2 The Board. Within 30 days of the execution of this agreement, GDLS shall
appoint three Member Designees and FPI shall appoint three Member Designees
(collectively referred to as the “Board”) to represent such Member’s Membership
Interest (including authority to execute documents on behalf of the Company in
accordance with the terms of this Agreement). Member Designees on the Board
shall serve until such time as the Member appointing them selects a successor.
The initial Board shall be the individuals named on Exhibit 4. Neither Member
shall designate a person to be a Board member who is not a member, manager,
director, Board member or employee of such Member or of an Affiliate of such
Member without the consent of the other Member. Among such Board members, there
shall be a Chairman, Vice-Chairman, Secretary, and Treasurer. Initially, FPI
shall appoint from among its Member Designees one person to be Chairman and GDLS
shall appoint from among its Member Designees one person to be Vice-Chairman.
Subsequently the Member designating these positions may change but at all times
the Member designating the Treasurer shall be different from the Member
designating the Chairman. There may be such other management and administrative
personnel as determined and appointed by the Board members from time to time. A
Board member may hold more than one office. Decisions of the Board shall be made
by majority vote. Each Member shall be entitled to vote on all Company matters,
and each member shall have one vote. The Chairman shall not have a tie-breaking
vote.

6.8.3 Regular Meetings. The Board shall meet in such place as the Board shall
determine, at least quarterly. Written notice of the time, place, and purposes
of each regular meeting of the Board shall be given by the Secretary and shall
be served personally, or by fax, or first class mail, or electronic mail on each
Board member not less than 14 nor more than 60 days before the meeting. Such
notice shall be directed to each Board member at the address set forth in the
notice provision of this Agreement or such other address as the Member has
communicated to the Secretary pursuant to this Agreement.

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6.8.4 Special, Meetings. A special meeting may be called by any Board member
upon 3 business days written or electronic notice to each Board member at his or
her last address provided, which notice may be waived by such Board member.
Special meeting notices shall state the purposes of the proposed meeting.

6.8.5 Attendance and Quorum. If a Board member is unable to attend a Board
meeting, the Member appointing such Board member shall have the right, at its
option, to appoint an alternate Board member who will replace, for all purposes,
the absent Board member at such meeting. A quorum for the transaction of
business at any properly called Board’ meeting shall be four Board members,
which must include two GDLS Designees and two FPI Designees, and except as
otherwise required by this Agreement and the Act, any action or decision taken
or made at a duly held meeting shall be the act of the Members.

6.8.6 Written Consent in Lieu of Meeting. Any action which may be taken at any
Board meeting may be taken without a meeting, without prior notice, and without
a vote, if a consent in writing, setting forth the action so taken, shall be
signed by all of the Board members.

6.8.7 Participation in a Meeting by Electronic Means. A Board member may
participate in a meeting by means of telephone or video conference or similar
communications equipment by means of which all persons participating in the
meeting can hear and address each other. Participation in a meeting pursuant to
this section shall, constitute presence in person at such meeting.

6.8.8 Compensation of the Board. The Board members shall receive no compensation
from the Company for their services as Board members but may receive
reimbursement of expenses according to policies established by the Members.
Nothing in this provision shall preclude a Board member from serving the Company
in some other capacity and receiving compensation for such other service.

6.8.9 No Financial Interest. Board members shall have no financial interest in
the Company’s profits or losses by virtue of their positions on the Board.

6.8.10 Board Duties

(a) Appointment and Term of Office; Removal

The Board members shall be appointed by the Members. Each Board member shall
serve until his or her successor has been duly appointed and qualified or until
his or her earlier death, resignation or removal. Any Board member may resign at
any time by giving written notice to the Member which appointed such Board
member and the Secretary, so that a successor may be appointed by such Member.
Any Board member may be removed at any time with or without cause, with a
successor being appointed by the Member that initially appointed such Board
member.

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(b) Duties of Board members

(i)                        The Chairman shall perform such duties as may be
designated by the Members, including, if present, presiding at all Board
meetings.

(ii)                     The Vice-Chairman shall assume the Chairman’s duties in
the Chairman’s absence or disability.

(iii)                  The Treasurer shall in general perform all duties
incident to the office of Treasurer, including responsibility for all funds and
securities of the Company, as well as all financial reporting and internal
accounting controls.

(iv)                 The Secretary shall in general perform all duties incident
to the office of Secretary, including to give, or cause to be given notice of
all Board meetings, prepare minutes of each meeting, including all actions
taken, and promptly distribute such minutes or proceedings to all Board members.

(v)                    All other Board members shall have duties as determined
by the Board.

(c) Delegation. At their first meeting after the date of this Agreement, the
Board will approve a Delegation of Authority setting forth those matters and
transactions which may be undertaken by Board members and other Member
Designees.

6.8.11 Program Management Team The Board shall appoint a Program Manager, which
shall include be at a minimum a Director appointed by GDLS, and Deputy Program
Manager which shall be appointed by FPI. The Program Management Team shall work
closely with one another regularly, including with respect to attainment of the
business plan, significant contract commitments by or on behalf of the Company,
and appointment of such management personnel as it from time to time deems
necessary and appropriate to perform the activities and operations of the
Company, and it may take such actions as are authorized by the Board. A report
of status and significant actions taken by the Program Management Team shall be
made at the next following meeting of the Board.

(a) Other Committees. The Board may in their discretion, by resolution adopted
at any meeting, create such committees as they may deem advisable. Each such
committee shall consist of at least one GDLS appointed Member Designee and at
least one FPI appointed Member Designee, and shall have and may exercise such
powers, and shall perform such duties, as may be delegated by the Board. All
significant action by any such committee shall be reported to the Board at their
next following meeting. The Board may, if they so elect, review and modify any
action taken by any such committee. The Board shall have the power at any time
to remove any

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member of any such committee, with or without cause, and to fill vacancies in
and to dissolve any such committee.

6.9 Dissolution.

6.9.1 In General. The Company shall dissolve and its affairs shall be wound up
on the first to occur of the following: (a) at any time, or upon the happening
of any event, specified in the Act, the Certificate of Formation or this
Agreement or an agreement calling for such dissolution and winding up; (b) by
the Members acting by unanimous vote; (c) the Government cancels the Program;
(d) failure of the U. S. Government to award a contract to the Company for the
Program within three (3) years of the effective date of the Agreement, unless
this period is extended by the unanimous agreement of the Members; (e)
completion of all the work required to be performed under, and settlement of all
disputes and expiration of all warranties arising in connection with, all
contracts awarded to the Company for the Program, and resolution or appropriate
provision for all other Company obligations, in the event the Company has been
awarded work on the Program; or (f) upon a Liquidating Transaction as defined in
6.6.7 or following any twelve (12) months period of inactivity.

6.9.2 Disassociation Option. Subject to any legal requirements to the contrary,
GDLS hereby grants to FPI and FPI hereby grants to GDLS, (a) an option to
acquire all its Membership Interest (referred to herein, together with the
option described in Section 6.9.3, as the “Disassociation Option”), for the Fair
Market Value as of the date of the notice described below, or (b) an option to
dissolve the Company in accordance with the principles in Section 6.9.4, either
such option to be exercisable by the nondefaulting Member by written notice of
exercise given at any time during a period of 90 days after the nondefaulting
Party gives written notice that any of the following events of default shall
have occurred with respect to the other Member: (i) institution by a Member of
proceedings for relief as a debtor under laws for the relief of debtors or by
filing a petition in bankruptcy, (ii) entering into any arrangement, assignment,
reorganization or composition with creditors or for the benefit of creditors,
(iii) a general suspension of payments to creditors, (iv) filing by a Member of
a petition for appointment of a receiver, liquidator, or trustee for
substantially all of its business or properties, (v) filing of a petition or
other documents for winding up or dissolution by the Member, (vi) attempts by a
Member to transfer or sell its Membership Interest in the Company in violation
of the provisions of this Agreement, or (vii) the material breach by a Member or
its Affiliates of the provisions of this Agreement. In the event that any of the
foregoing events of default occur, the defaulting Member may cure its default
within the 90-days notice period set forth herein. Upon the cure of such default
within such period, the notice of election to exercise the Disassociation Option
shall be deemed withdrawn by the nondefaulting Member.

The phrase “Fair Market Value” refers to the fair market value of the Company
determined as follows:

i.                           Representatives of the defaulting and the
nondefaulting Members shall negotiate in good faith for a period of 30 days to
determine the fair market

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value of the Company for purposes hereof. If such representatives cannot agree
on the fair market value within such 30 day period, then each Member shall
choose one appraiser, each of whom shall determine the Fair Market Value of the
Company. Each appraiser shall be a nationally recognized firm expert in
valuation and shall be independent of all Members.

ii.                          If the higher of the two values determined by the
appraisers referred to in clause (i) is no more than 20% greater than the lower
value, then Fair Market Value shall be the mean average of such two values.

iii.                       If the higher of the two values determined by the
appraisers referred to in clause (i) is more than 20% greater than the lower
value, then the Members shall pick a third appraiser within 30 days and such
third appraiser shall determine the Fair Market Value of the Company.

iv.                      If the value determined by such third appraiser is
within the range of the first two values, then the fair market value of the
Company as determined by such third appraiser shall be the Fair Market Value of
the Company.

v.                         If the values determined by such third appraiser are
outside of the range of the first two values, then the Fair Market Value of the
Company shall be the median of the three values.

vi.                      The above-described determination of Fair Market Value
will be final and binding on the Members. The Fair Market Value of a Member’s
interest shall be determined in accord with the Membership Interest.

6.9.3 Additional Put-Call Option.

(a)                     In the event of a material breach of this Agreement as
described in clause (vii) of Section 6.9.2, then the non-breaching Party shall
further have the right (referred to herein, together with the option described
in Section 6.9.2, as the “Disassociation Option”) to either (i) require the
breaching Party to purchase all of the non-breaching Party’s Membership Interest
at a price equal to the Fair Market Value of such Membership Interest (the “Put
Option”), or (ii) require the breaching Party to sell to the non-breaching Party
all of the breaching Party’s Membership Interest at a price equal to the Fair
Market Value of such Membership Interest (the “Call Option”). The non-breaching
Party may exercise the Put Option or the Call Option by giving written notice of
such exercise to the breaching Party within the 90 days period set forth in
Section 6.9.2, subject to the breaching Party’s right to cure as further set
forth in Section 6.9.2. Fair Market Value of the Membership Interest to be sold
and purchased will be determined as provided in Section 6.9.2. The closing of
the sale and purchase pursuant to

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the Put Option or the Call Option, as the case may be, shall take place, as
promptly as practicable following exercise of the option, at such time and place
as may be decided by the non-breaching Member.

(b)                    In the event of exercise of any Disassociation Option,
(i) the Membership Interest of the selling Party shall be transferred and
assigned to the purchaser free and clear of any security interests or other
liens or encumbrances, and (ii) each Party shall execute and deliver to the
other such instruments as the other may reasonably request in connection with
the consummation of the sale and purchase.

6.9.4 Dissolution upon Disassociation. Upon the occurrence of any event
enumerated in Section 6.9.1, the Company shall dissolve, unless, within 90 days
thereafter, the Disassociation Option is exercised.

6.9.5 Winding Up. Upon dissolution, the Company shall cease carrying on its
business and affairs and shall proceed to the orderly liquidation of the
Company’s assets and termination of the Company, and the proceeds of such sale
or other disposition of assets, together with other available proceeds, shall be
applied proceeds and shall be distributed as described in Section 6.6.7 if
applicable.

6.9.6 Other Remedies. Nothing in this Article 6 shall limit either Member’s
right to enforce any provision of this Agreement by an action at law or equity,
nor shall an election to dissolve the Company pursuant to this Article 6 relieve
either Member of any liability for any prior or subsequent breach of this
Agreement or another document referred to herein.

6.10 Dispute Resolution. The Parties shall attempt to resolve all disputes in
good faith in a reasonable time and manner. A dispute not resolved shall be
referred in writing to any Board member for resolution via a Special Board
Meeting. In the event the Board fails to resolve the dispute within 10 days of
such meeting, either Party may commence arbitration in accordance with Article 5
herein.

6.11 Indemnification. The Company shall defend, indemnify and hold harmless
either Member, and any of their respective Member Designees, directors, offices,
employees, shareholders, heirs and personal representatives, and may defend,
indemnify and hold harmless any Company agent, who is made or threatened to be
made a Party to any suit or proceeding (whether civil, administrative, criminal
or investigative), by reason of the fact that such person is or was a Member,
Member Designee, Board member or employee of the Company or serves or served any
other enterprise at the request of the Company as a director, manager, Board
member, employee, fiduciary or member (an “Indemnified Person”) to the fullest
extent permitted by law. Such indemnity shall include any loss, expense
(including attorneys’ and experts’ fees and costs), damage or injury suffered or
sustained by an Indemnified Person by reason of any acts, omissions or alleged
acts or omissions of the Indemnified Person on or reasonably believed to be on
behalf of or not opposed to the Company or in, or reasonably believed to be in,
furtherance of the

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interest of the Company or not opposed to the Company’s interest; provided that
the acts, omissions or alleged acts or omissions were not (i) performed or
omitted fraudulently, in bad faith or in self-dealing to the detriment of the
Company, (ii) in knowing violation of law, or (iii) in willful breach of this
Agreement or a document referred to in this Agreement. Any such indemnification
shall only be from the assets of the Company.

The Company shall not be required to indemnify a person in connection with a
proceeding initiated by such person against the Company if the proceeding was
not authorized by the Members. The ultimate determination of entitlement to
indemnification of any Indemnified Person shall be made by the Members in such
manner as the Members may determine. The payment of any expenses in advance of
the final disposition of the proceedings shall be made only upon receipt of an
undertaking by the Indemnified Person to repay all amounts advanced if it should
be ultimately determined that the Indemnified Person is not entitled to be
indemnified under this Article 10 or otherwise.

Any and all indemnity obligations of the Company with respect to any Indemnified
Person shall survive any termination of this Agreement.

6.11.1 Limitations on Personal Liability. No Member Designee or Board member
shall be personally liable to the Company or its Members for monetary damages
for breach of fiduciary duty as a Member Designee or Board member except for
liability for acts or omissions not in good faith or which involve intentional
misconduct or, a knowing violation of law. Nothing herein shall limit or
otherwise affect the obligation or right of the Company to indemnify any other
individual to the full extent permitted by law.

6.11.2 Fiduciary Insurance. The Members may, to the full extent permitted by
law, authorize an appropriate Board member or Board members to purchase and
maintain at the Company’s expense insurance (i) to indemnify the Company for any
obligations which it incurs as a result of the indemnification of Member
Designees and Board members under the provisions of this Section 6.11.2, and
(ii) to indemnify Members, Member Designees and Board members in instances in
which they may not otherwise be indemnified by the Company under the provisions
of this Section 6.11.2.

6.11.3 Mutual Provision. Each Party will indemnify and hold harmless the other
Party and the Company for any breech of their representations and warranties.

6.11.4 Each Party shall defend, indemnify and hold harmless the other Party and
the Company for any loss, expense (including attorneys’ and experts’ fees and
costs), damage or injury suffered or sustained by such Party or Company arising
out of or related to a claim that any product or service provided by the
indemnifying Party under the Program infringes the patent, trademark, trade
secret, copyright or other intellectual property rights of any third Party,
provided that the indemnified Party or Company notifies the indemnifying Party
promptly in writing of any such claim, and that the indemnifying Party may use
counsel of its choosing and has sole conduct of the defense of such claim.

 

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6.12 Competition: Fiduciary Duty.

6.12.1 Competition. Except as specifically stated to the contrary, nothing in
this Agreement shall prevent the Company from competing with the Members or any
of their Affiliates or other Members or any of their Affiliates from competing
with the Company or the other Members or any of their Affiliates.

6.12.2 Waiver of Corporate Opportunity. Except as expressly stated herein
(including Section 3.1.1), no Member or any Affiliate shall be under any
fiduciary or other obligation to the Company or the other Members or their
respective Affiliates so as to prevent or impede a Member or any Affiliate from
participating in and enjoying the benefits of any business which such Member or
any Affiliate is permitted to engage in. Such legal doctrines as corporate
opportunity, business opportunity or partnership duties sometimes applied to
person having fiduciary obligations shall not apply with respect to any
participation by a Member, Member Designee or Affiliate thereof in any business
activity or endeavor permitted under the provisions of this Agreement.

6.12.3 Standard of Care: No Fiduciary Duty.

(a) Either Member or Member Designee, in the performance of such Member’s or
Designee’s duties, shall be fully protected in relying in good faith on
information, opinions, reports or statements, including financial statements,
books of account any other financial data, if prepared or presented by: (i) one
or more Board members or employees of the Company, whom the Member or Designee
believes to be reliable and competent in the matters presented, or (ii) legal
counsel, certified public accountants, or other persons as to matters which the
Member or Designee believes to be within such person’s professional or expert
competence.

(b) Each Member Designee shall represent the interest of the Member which
appointed such Designee and shall have no fiduciary duty or responsibility to
the Company or the other Member in his or her capacity as such Designee,
provided that the foregoing shall in no way eliminate or limit the liability of
any Designee to the Company for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law.

(c) Subject to Section 6.8.1(b)(v), the Members (and Affiliates of, and persons
who are otherwise related to, a Member) shall have the right to contract and
otherwise deal with the Company with respect to the sale, purchase or lease of
real and/or personal property, the rendition of services, the lending of money
and for other purposes in arms length transactions, and to receive the purchase
price, costs, fees, commissions, interest, compensation and other forms of
consideration in connection therewith, without being subject to claims for
self-dealing.

(d) In principle, and without modification to the provisions of this Agreement
or any

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document referred to herein, all contractual or other commercial dealings
between the Company and each of the Members and their respective Affiliates
shall be negotiated on a commercial, arms’ length basis. Subject to the terms of
this Agreement and any documents referred to herein, the Company shall not be
required to purchase services or components from either Member, but may seek
quotes for the supply of services or components in normal course.

6.13 Miscellaneous Provisions.

6.13.1 Amendments. This Agreement may only be amended by a written amendment
approved and executed by each of the Members.

6.13.2 Terms. Nouns and pronouns will be deemed to refer to the masculine,
feminine, neuter, singular and plural, as the identity of the person or persons,
firm or corporation may in the context require.

6.13.3 Execution of Instruments. All agreements, consents, deeds, contracts,
proxies, covenants, bonds, checks, drafts, bills of exchange, notes, acceptances
and endorsement, and all evidences of indebtedness and other documents,
instruments or writings of any nature whatsoever, shall be signed by such Board
members, agents or employees of the Company, or any one of them, and in such
manner, as from time to time may be determined (either generally or in specific
instances) by the Members or by such Board member or Board members or agents to
whom the Members may delegate the power so to determine.

6.13.4 Proprietary Information. Each of the Parties shall comply with Exhibit 5,
the Mutual Proprietary Information Agreement, and shall in any event take all
necessary steps to assure that any Proprietary Information as defined in Exhibit
5, including FIP developed under this Agreement, is protected from disclosure to
Third Parties or unauthorized use by the other Party. Except as otherwise
provided herein and if required by a Party’s internal operating procedures,
Proprietary Information may be shared with an Affiliate subject to Section
6.13.12. In any conflict between the terms of this Agreement and the terms of
the Mutual Proprietary Information Agreement, the terms of the latter shall
govern.

6.13.5 Notice. Any notice, Financial reports, other reports and other
communication to a Member required or permitted hereunder shall be made in
writing in the English language and shall be delivered in person, or sent by
first-class mail and facsimile, or electronic mail addressed to the address of
such Member set forth below or to such other address as such Members shall have
communicated in writing to the other. Any such notice shall be considered to
have been given upon receipt by the intended recipient.

Notices or communication to FPI shall be sent to:

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Force Protection, Inc.
9801 Highway 78
Ladson, South Carolina 29456
Attention: Chief Operating Officer
Fax No: (843) 553-3832

Notices or communications to GDLS shall be sent to:

General Dynamics Land Systems Inc.
38500 Mound Road
Sterling Heights, Michigan USA 48310-3200
Attention: Julie Percy, Director of Contracts, Ground Combat Systems
Fax No. 586-825-5199
Email: percyj@gdls.com

6.13.6 Counterparts. This Agreement may be executed in any number of
counterparts. Each of such counterparts shall be deemed to be an original, and
all such counterparts shall together constitute but one instrument.

6.13.7 Entire Agreement; Waiver. This Agreement and the other documents referred
to herein, constitute the entire agreement among the Parties and contain all of
the agreements among the Parties with respect to the subject matter hereof and
supersede all prior agreements and negotiations between the Parties, concerning
the subject matter herein. Failure by a Member to enforce any term or condition
of this Agreement, or to exercise any right hereunder, shall not be construed as
thereafter waiving such term, condition or right; and in no event shall any
course of dealing, custom or usage of trade modify, alter or supplement any term
of this Agreement.

6.13.8 Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provisions were omitted.

6.13.9 Successors. Subject to the provisions of this Agreement relating to
transferability, this Agreement shall be binding upon and inure to the benefit
of the Parties to this Agreement, their successors and permitted assigns.

6.13.10 Governing Law. This Agreement shall be governed by the laws of the State
of Delaware, without reference to its conflicts of law provisions.

6.13.11 Independent Contractors; Expenses. This Agreement does not constitute
either Party, the partner, agent or legal representative of the other Party,
excepting only to the extent that the Company is classified as a partnership for
U. S. Federal income tax purposes and the Members are treated as “partners” for
such tax purposes. Each Party is an independent contractor,

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responsible for its own expenses, including attorneys’ and other professional
fees incurred in connection with the transactions contemplated by this
Agreement. Neither Party is authorized to create any obligation on behalf of the
other Party.

6.13.12 Affiliates. Each Party shall cause each of its affiliates to comply with
any condition required to be complied with by such Affiliate and to fulfill any
obligation required to be fulfilled by it, pursuant to this Agreement.

6.13.13 Survival. The provisions of Article 5, and Sections 6.5.3, 6.9.5, 6.9.6,
6.11, 6.12, and 6.13.4 of this Agreement shall survive any termination of this
Agreement or the dissolution of the Company.

6.13.14 Limited Liability. Except as otherwise provided by the Act or this
Agreement, the debts, obligations and liabilities of the Company, whether
arising in contract, tort or otherwise, shall be solely the debts, obligations
and liabilities of the Company, and the Members shall not be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a member of the Company. The Members shall not be required to
lend any funds to the Company. Each of the Members shall only be liable to make
payment of its respective contributions as and when due hereunder and other
payments as expressly provided in this Agreement. If and to the extent a
Member’s contribution shall be fully paid, such Member shall not, except as
required by the express provisions of the Act regarding repayment of sums
wrongfully distributed to Members, be required to make any further
contributions.

6.13.16 Intellectual Property (IP), Background Intellectual Property (BIP),
Foreground Intellectual Property (FIP) and Technical Data (TD) Rights. Other
than as expressly set forth below, no rights in a Party’s BIP are licensed,
transferred, or granted by this Agreement and each Party hereby reserves all
rights in its BIP, including any improvements or derivative works based on such
BIP, Concerning any FIP created by either Party without contribution or input
from the other, under or in connection with the Program and without reference to
the other Party’s BIP, the creating Party shall own same exclusively. With
respect to any FIP created jointly by the Parties, without reference to either
Party’s BIP, under or in connection with the Program, the Parties shall own same
jointly and each shall be permitted to use such FIP to carry out its obligations
with respect to the Program and thereafter for its own purposes subject to any
restrictions referenced herein or agreed upon by the Parties in writing. To the
extent that jointly created FIP or TD is created using, based upon or derived
from BIP, the Parties shall establish a process to deal with the appropriate use
of such FIP or TD by either Party outside the Program. Neither Party will
exploit such jointly created FIP or TD without the prior written consent of the
other Party or unless the Parties conclude a written agreement with respect to
such exploitation.

6.13.17 Technology License. The Parties agree to conclude no later than January
31st, 2007, a detailed technology and license agreement (Exhibit 6) between the
Parties and the Company covering the rights and responsibilities related to
intellectual property.

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ARTICLE VII
GENERAL

7.1 Contractual Relationship. In principle, and without modification to the
provisions of this Agreement, including any other documents referred to in this
Agreement, all contractual or other commercial dealings between Company and each
of the Parties and their respective Affiliates shall be negotiated on a
commercial, arm’s-length basis.

7.2 Costs and Expenses.

A.                     Each Party shall bear all of its costs and expenses which
may arise out of the preparation of this Agreement and the documents
contemplated by this Agreement with the exception of fees associated with
creation of the Company which shall be reimbursed by the Company.

B.                       All costs and expenses in connection with operating the
Company will be borne by each Party in accordance with this Agreement.

7.3 Publicity.

7.3.1 Press Release. The Parties will consult with each other before issuing any
press releases or otherwise making any public statements with respect to this
Agreement or the transactions contemplated hereby and shall not issue any press
release or make any public statement or permit to the Company to do same without
mutual consent, except as may be required by law and then only with such prior
consultation.

7.3.2 Marketing. The Company will conduct marketing activities (trade show
exhibits, advertising, print and video) in support of the Program as mutually
agreed by the Members. The marketing plan for the Program will be developed and
implemented by the Company in coordination with the Members’ business
development, communications, marketing and sales staffs.

7.3.3. Government Relations GDLS shall have the lead with respect to planning,
coordination and execution of all federal political lobbying campaigns,
including lobbying activities, lobbying contacts and the associated costs of
lobbying on behalf of the Company. GD Corporation, the parent of GDLS, will be
responsible for reporting lobbying activities and contacts with covered federal
officials to the U.S. Congress on a semiannual basis as defined in the Lobbying
Disclosure Act of 1995, PL-104-65.

(a)                    For the purposes of the Program, FPI agrees to conduct
only those federal political lobbying activities as agreed to by the Board.

(b)                   For the purposes of the Program, no employee of either
Party, or their affiliates, will be authorized to attempt to influence an
officer or employee of any federal agency, a Member of Congress, an officer or
employee of Congress, or an employee of a Member

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of Congress in connection with any federal contract.

(c)                    Federal Political Government Relations Campaign Plans
will be briefed back to the Board of the Company.

(d)                   GDLS recognizes that FPI may be involve in the activities
described in Section 7.3.3.

7.4 Further Assurances. Each Party will use commercially reasonable efforts to
cause the Company to act in the manner contemplated by the provisions of this
Agreement.

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In Witness Whereof, the Parties hereto have executed this document intending to
be bound by the obligations set forth herein. The Parties hereby agree that this
Agreement may be executed in one or more counterpart copies and that such
counterpart copies may be exchanged by facsimile. Facsimile signatures shall
have the same force and effect as original signatures.

 

Force Protection, Inc.

 

 

 

 

 

 

 

 

By:

 

/s/ Gordon McGilton

 

 

Name: Gordon McGilton

 

 

Chief Executive Officer

 

 

December 15, 2006

 

 

 

General Dynamics Land Systems Inc.

 

 

 

 

 

 

 

 

By:

 

/s/ David K. Heebner

 

 

 

Name: David K. Heebner

 

 

 

 

President, GDLS

 

 

 

 

December 15, 2006

 

 

 

 

 

 

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AMENDMENT ONE
To Force* Dynamics, LLC Joint Venture Agreement

This Amendment One is made this 28th day of March 2007, whose forming members
are Force Protection Inc. (“FPI”), General Dynamics Land Systems Inc. (“GDLS):

I.

FPI and GDLS entered into the Force Dynamics, LLC Joint Ventura Agreement dated
15 December 2007, which “Agreement” is the subject of this Amendment One.

II.

In consideration of the mutual covenants contained herein, and other good and
valuable consideration the Parties agree that the Agreement shall be, and is
amended in part as follows:

1.                         In any and all places in the Agreement where there is
reference to the “Mine Resistant Ambush Protected Vehicle Program” or “MRAP”, it
shall now read as also referencing the “Medium Mine Protected Vehicle” or
“MMPV”.

2.                         Add to the definitions section the following. “MMPV”
means the US Government Medium Mine Protected Vehicle Program.

3                          Replace in its entirety the definition of “Program”
with the following, “Program” man the Mine Resistant Ambush Protected (“MRAP”)
Vehicle Program, a United States joint services’ program to produce and provide
lifecycle support to address the current threat of improvised explosive devices
in the Middle East as more fully described in solicitation number
M67854-O7-R-5000 and/or the Medium Mine Protected Vehicle Program (“MMPV) as
more fully described in solicitation number W56HZV-O7-R-O315. The Program will
include any and all solicitations and RFP’s for MRAP and/or MMPV production and
Lifecycle Support and/or any follow on work which may be performed including any
program name change, changed or future program requirements, product evolutions
and technology insertions related to the MRAP and/or MMPV vehicles whether for
US or international sales, or non-military/commercial sales. For the avoidance
of doubt, the “Program” only includes the use of FPI s Cougar 4x4 and 6x6
armored vehicles for the MRAP Cat I and Cat II and the MRAP CAT n for MMPV
requirements and does not include any other existing or future contracts or
programs for the Parties’ other vehicles (or vehicle variants) to include by way
of illustration and not limitation, the JERRV program, the ILAV and Mastiff
program, the Buffalo and Cheetah vehicles, the Striker, LAV, and RG-31 vehicles,
the MRAP Cat III program and/or the JLTV program.

4.                         Paragraph 3.1. Is replaced in its entirety with the
following: “General It is the intent of the Parties to combine their respective
strengths to market and promote FPI’s COUGAR vehicles for the Cat I and Cat II
requirements of the MRAP Program and the MMPV Program. The Parties will make
available to the Company their respective resources so that the Company may
undertake to develop, manufacture, produce and sustain any vehicles awarded
under the

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MRAP program, in accordance with the plan set forth in FPTs Proposal and MMPV in
accordance with the plan set forth in the proposal to be submitted by this JV.
Understanding the complexity of the MRAP Program and MMPV Program, the Company
will form a FPI-GDLS Team MRAP Program Management Office that will be the
Parties’ exclusive interface with the Customer’s Program Management
Organization, and which will have operating responsibility over the execution of
the MRAP and MMPV Programs. Each Party will provide personnel to the Program
Office according to the plan developed and agreed by the Board. Other than those
programs identified above in the definition of “Program”, the Parties agree that
the Company will pursue any and all future vehicle programs related to, or
arising out of the current MRAP or MMPV programs.

5.                         Paragraph 3.2.1 is replaced in its entirety with the
following, “3.2.1. Mutual Intent to Win The Parties affirm that this Joint
Venture Agreement is based on a mutual intent to join forces to win the MRAP and
MMPV Programs. In the interest of the Joint Venture, the Parties agree to focus
on each Party’s strengths in the MRAP Workshare allocation (Exhibit 3) to
maximize the competitive advantage of the bid submission. The MMPV Workshare
allocation shall be as indicated in Exhibit 3. The Parties acknowledge the
potential that the initial MRAP Workshare may not be 50%/50% immediately.”

6.                         Paragraph 3.5 Product Approach is replaced in its
entirety with the following: “The Parties intend to offer for the MRAP Program
the proven family of COUGAR vehicles in 4x4 and 6x6 configurations for the
CATERGORY 1 and CATEGORY 2 requirements respectively. The Parties intend to
offer the COUGAR vehicles in 6X6 configuration for the MMPV Program.

7.                         Paragraph 3.8 is modified to add the following: MMPV
Key Events Timeline:

A.                      US Government Release of RFP on 3 April 2007

B                           RFP response due date is 2 May 2007

C.                        Main Contract Award is expected to be received in July
2007

D.                       Initial Deliveries of test articles will occur within
120 days after Contract Award.

III

The balance of the provisions of said Joint Venture Agreement remain in full
force and effect, unaltered and unchanged by this subsequent Amendment 1, except
where the terms thereof conflict herewith, in which event this instrument shall
control.

 

Force Protection, Inc.

 

General Dynamics Land Systems Inc.

 

 

 

 

 

 

 

By:

 

/s/ Raymond W. Pollard

 

By:

 

/s/ J.L. Farina Percy

 

 

Raymond W. Pollard

 

 

 

J.L. Farina Percy

Title:

 

Chief Operating Officer

 

Title:

 

Director Ground Combat Contracts

 

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AMENDMENT TWO
To Force Dynamics, LLC Joint Venture Agreement

This Amendment Two is made this 29th day of March 2007, whose forming members
are Force Protection Inc. (“FPI”), General Dynamics Land Systems Inc. (“GDLS).

I.

FPI and GDLS entered into the Force Dynamics, LLC Joint Venture Agreement dated
15 December 2007, which “Agreement” is the subject of this Amendment Two.

II.

In consideration of the mutual covenants contained herein, and other good and
valuable consideration the Parties agree that the Agreement shall be, and is
amended in part as follows:

1.                         The Force Dynamics Board of Directors in its regular
meeting held on 23 January 2007 unanimously agreed that Paragraph 6.5.6 of the
Joint Venture Agreement having to do with the use of outside auditors is not
required.

2.                         The substance of paragraph 6.5.6 of the Joint Venture
Agreement is deleted in to entirety and the paragraph is marked as “Reserved”.

III.

The balance of the provisions of said Joint Venture Agreement remain in full
force and effect, unaltered and unchanged by this subsequent Amendment Two,
except where the terms thereof conflict herewith, in which event this instrument
shall control.

 

Force Protection, Inc.

 

General Dynamics Land Systems Inc.

 

 

 

 

 

 

 

By:

 

/s/ Raymond W. Pollard

 

By:

 

/s/ J.L. Farina Percy

 

 

Raymond W. Pollard

 

 

 

J.L. Farina Percy

Title:

 

Chief Operating Officer

 

Title:

 

Director Ground Combat Contracts

 

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