Exhibit 10.4


 


LICENCE AGREEMENT


 


MEMORANDUM OF AGREEMENT ENTERED INTO BETWEEN:


 


THE CSIR


 


a statutory council, duly established under Act 46 of

1988, through its Operating Unit of Defence Peace

Safety & Security (DPSS) herein represented by

Andre Nepgen in his capacity as Executive Director

and he being duly authorised thereto


 


(hereinafter referred to as “the LICENSOR”)


 


and


 


FORCE PROTECTION TECHNOLOGIES INC.

(Registration No. Nevada C18478-2002)


 


a company incorporated under the laws of Nevada

with its principal place of business at 9801 Hwy 78,

Ladson, South Carolina 29456, United States of

America, herein represented by Mr. Gordon

McGilton in his capacity as President and he being

duly authorized thereto


 


(hereinafter referred to as “the LICENSEE”)


 


WHEREAS:


 


a)                                      the LICENSOR has
developed technology for the protection of wheeled and tracked vehicles against
landmines and improvised explosive devices (“IED’s”) (herein referred to as “the
TECHNOLOGY”), which specifically means the invention forming the subject matter
of the PATENT, and which is under the control of the LICENSOR at the
COMMENCEMENT DATE of this agreement;


 


b)                                     the LICENSEE is
desirous of obtaining a licence from the LICENSOR to perform internal
research and development (which rights extend to tests and assessment of the
potential market for products utilizing the TECHNOLOGY at PROOF OF CONCEPT
stage) and after PROOF OF CONCEPT to EXPLOIT the PATENT in the TERRITORY;


 


c)                                      the PARTIES
negotiated and reached agreement regarding the intellectual property rights to
be licensed to the LICENSEE; the EXPLOITATION of the PATENT by the LICENSEE;
and the consideration payable by the LICENSEE to the LICENSOR.


 


NOW WHEREFORE the PARTIES hereby record their agreement as follows:


 

















 


1.                                       PREAMBLE


 


The PARTIES confirm the correctness of the preamble to this agreement,
which forms an integral part thereof.


 


2.                                       SCOPE OF THIS AGREEMENT


 


2.1                               This
agreement sets out the terms for the granting of:


 


2.1.1                      A fully paid up sole license (“License
1”) is granted to LICENSEE for internal use and development purposes. Under
this License 1, the LICENSEE has the sole right (i.e. other than LICENSOR) to
perform research and development, and/or conduct tests to verify, test or
develop any aspect of the TECHNOLOGY and to assess the market for products
utilizing the TECHNOLOGY at “Proof of Concept” stage. License 1 comes into
effect upon satisfaction of the suspensive condition stipulated in clause 4
below and expires after 12 months or at PROOF OF CONCEPT, whichever comes
earliest, unless extended in writing between the PARTIES.


 


2.1.2                      Subject to the provisions of
clause 5, an exclusive license (Licence 2) will be granted to LICENSEE to
EXPLOIT the PATENT in the TERRITORY. License 2 comes into effect upon the
PARTIES agreeing in writing that PROOF OF CONCEPT has been attained.


 


2.2                                The
PARTIES enter into this agreement as independent contractors and nothing herein
contained shall be interpreted as establishing a partnership or joint venture
between the PARTIES.


 


2.3                                Neither
PARTY shall be entitled to present itself as the agent or representative of the
other PARTY and neither PARTY shall enter into any agreement or incur any
liability on behalf of the other PARTY, unless specifically authorised thereto.


 


3.                                      DEFINITIONS AND INTERPRETATION


 


3.1                                In
this agreement, unless inconsistent with or otherwise indicated by the context:


 


3.1.1                       “COMMENCEMENT DATE” shall mean
the date from which this agreement will be effective, being the date of
fulfilment of the suspensive conditions as provided for in clause 4;


 


3.1.2                      “EXPLOIT” shall mean the
manufacture, marketing, sale, offer for sale, use and import of the PRODUCTS in
commercial quantities through the application of the TECHNOLOGY by the
LICENSEE, and “EXPLOITATION” and “EXPLOITING” shall have corresponding
meanings;


 


2

















 


3.1.3                      “PARTIES” shall mean the LICENSOR
and the LICENSEE, respectively, and “PARTY” shall have a corresponding meaning;


 


3.1.4                      “PATENT” shall mean LICENSOR’s “Track
and wheel protection against landmines” patent as described in PCT Patent
Application PCT/IB2004/001717, and all subsequent patent applications in the
TERRITORY dependent on this patent application or deriving priority from this
patent application, all patents issued in the TERRITORY from any of the
foregoing applications, and all reissues and extensions of any such patents.


 


3.1.5                      “PRODUCTS” shall mean a wheel or
track that incorporates or employs the TECHNOLOGY in any way.


 


3.1.6                      “PROOF OF CONCEPT” shall mean
test piece manufacture of part of a wheel and/or a complete wheel, the
testing of such test pieces, and/or the quantification or demonstration of the
level of protection provided to demonstrate the principle of operation of the
TECHNOLOGY, but does not include optimization of a prototype or the
determination of the limits of protection performance;


 


3.1.7                       “ROYALTY YEAR” shall mean a
period of 12 (twelve) calendar months, starting on the first day of April of
each calendar year;


 


3.1.8                      “SALES” shall mean sales of the
PRODUCT by the LICENSEE or any of its affiliates, partners, sub-contractors or
the like, to a third party and shall include PRODUCTS sold, rented, leased or
otherwise exchanged for value and such PRODUCTS employ the TECHNOLOGY as part of
the design; or rendering of commercial services using the TECHNOLOGY in any
manner.


 


3.1.9                      “TECHNOLOGY” shall mean
processes, know-how and technologies pertaining to the protection of wheeled
and tracked vehicles against landmines and IED’s as disclosed and claimed in
the PATENT.


 


3.1.10                “TERRITORY” shall mean, for purposes of
License 2, the United States of America, its territories and possessions (“USA”),
Canada, the United Kingdom (“UK”), France, Germany, Israel and the Republic of
South Africa (“RSA”), or as amended from time to time in terms of the
provisions of this agreement.


 


3.2                                 In
this agreement, unless the context otherwise indicates:


 


3.2.1                       the headings to clauses of this
agreement are inserted for reference purposes only and shall in no way govern
or affect the interpretation thereof;


 


3

















 


3.2.2                      any annexures to this agreement form an
integral part hereof and words and expressions defined in this agreement
shall, unless the context otherwise requires, bear the same meaning in such
schedules;


 


3.2.3                      unless the context clearly
indicates a contrary intention, words importing the singular shall include the
plural and vice versa;


 


3.2.4                      reference to any one gender shall
include the other gender and any reference to a natural person shall include a
legal persona and vice versa;


 


3.2.5                      where the day on or by which
anything is to be done is not a business day, it shall be done on or by the
first day thereafter;


 


3.2.6                       any number of days is prescribed
in this agreement, these shall be reckoned as calendar days, exclusively of the
first, inclusively of the last day, unless the last day falls on a weekend or
on a public holiday, in which case the last day shall be the next succeeding
day which is not a weekend or a public holiday.


 


4.                                       SUSPENSIVE CONDITIONS


 


4.1                               This
Agreement is subject to the following suspensive condition:


 


4.1.1                      That all approvals required by
the South African Reserve Bank for the rights granted in terms of this
agreement are obtained within 6 (six) months from the date of signature of this
agreement. The date of fulfilment of the suspensive condition, shall be the
COMMENCEMENT DATE of this agreement.


 


4.1.2                      The suspensive condition is
established for the benefit of the LICENSOR, and no waiver of the suspensive condition
or any part thereof shall be binding, unless similarly reduced to writing
and signed by the PARTIES.


 


4.1.3                      Should the suspensive conditions
not be fulfilled within the specified time period, or any mutually agreed
written extension thereof, this agreement shall be null and void ab initio, and no obligations shall lie reciprocally between
the PARTIES, save for the LICENSEE being required to immediately return all
matter relating to the TECHNOLOGY and the intellectual property of the
LICENSOR, which may have been delivered to LICENSEE by LICENSOR.


 


5.                                       LICENCED RIGHTS


 


5.1                               The
LICENSOR hereby grants to the LICENSEE License 1 as provided for in clause
2.1.1.


 


5.2                               The
LICENSOR hereby grants to the LICENSEE, subject to PROOF OF CONCEPT, License 2
as set out in clause 2.1.2, being:


 


4

















 


5.2.1                        an
exclusive licence to EXPLOIT the PATENT in the USA, Canada, the UK, France,
Germany and Israel; and


 


5.2.2                        a
non-exclusive licence to EXPLOIT the PATENT in the RSA


 


subject to the
terms and conditions as set out in this agreement.


 


5.3                               The
license allows for the manufacturing and sale of PRODUCTS in any country
forming part of the TERRITORY, save for the RSA where any PRODUCTS sold
must also be at least manufactured in part, or assembled, in the RSA. Export by
or for LICENSEE of PRODUCTS from a country in the TERRITORY to a country
outside the TERRITORY shall be subject to the prior written approval of
LICENSOR and such approval shall only be denied in the event that:


 


5.3.1                      LICENSOR has granted exclusive
rights in that country to a third party with respect to the PATENT or the
TECHNOLOGY and such third party’s rights may be infringed by LICENSEE’s
intended export to that country, or


 


5.3.2                      Statutory or regulatory restriction
on defence-related technology supply to the specific country outside the
TERRITORY prevents such exports.


 


5.4                               Should
the LICENSEE fail to achieve a consistent level of sales as set out in the
table below (“the minimum royalty”) through the application of the TECHNOLOGY
and fail to pay over to the LICENSOR the balance between actual sales achieved
and the specific minimum royalty fee, the LICENSOR shall have the right to, in
its sole discretion, convert the exclusive nature of License 2 for a specific country
in the TERRITORY as provided for in 5.2.1 to a non-exclusive license, or
terminate the license.


 


	
  Countries forming part of the

  TERRITORY

  	
   

  	
  Minimum
  royalty payments to retain

  exclusivity

  
	
  USA

  Canada

  	
   

  	
  US$ 100 000 in year 1 of the Licence

  US$ 120 000 in year 2 of the Licence

  US$ 150 000 per annum thereafter 

  
	
  UK

  France

  Germany

  	
   

  	
  US$ 100 000 total by end of year 2

  US$ 100 000 in year 3 of the Licence

  US$ 120 000 per annum thereafter

  
	
  Israel

  	
   

  	
  US$ 50 000 in year 1 of the Licence

  US$ 100 000 per annum thereafter

  
	
  South Africa

  	
   

  	
  No minimum royalty fee due to
  non-exclusivity of the licence

  



 


5.4.1                      For the first 3 (three) years
after the COMMENCEMENT DATE, royalty payments from any one country in the
TERRITORY in excess of that country’s minimum royalty payment, may be
calculated towards the 


 


5

















 


minimum royalty
payment of any other country in the TERRITORY where the minimum royalty payment
has not been attained in that ROYALTY YEAR. Thereafter, each country’s minimum
royalty must be attained from sales in that country in order to maintain
exclusivity of this licence.


 


5.5                                 The
LICENSOR is entitled to call from time to time for information on the
endeavours being made by the LICENSEE and is entitled on reasonable notice and
by appointment to enter the premises of the LICENSEE to inspect work being done
and to receive information in reply to any relevant inquiry made by it.


 


5.6                                 On
the termination of this agreement:


 


(i)                                   The
LICENSEE must do all things reasonably required by the LICENSOR to protect its
rights, titles and interests in the PATENT and other intellectual property
owned by LICENSOR;


 


(ii)                                All
improvements made to the TECHNOLOGY by either PARTY and which form the
subject of any claim in a patent or patent application anywhere in the world
that is dependent on the PATENT, and/or any investments made by LICENSOR in the
course thereof, will remain the property of the LICENSOR and the LICENSEE may make
no claim in respect of them;


 


(iii)                             or at any time before such
termination at the request of the LICENSOR, the LICENSEE must promptly return
to the LICENSOR:


 


(a)                                  all
specifications, samples, drawing, films, pamphlets, catalogues, advertising
material and other materials, documents and papers of any nature sent to the LICENSEE
by the LICENSOR relating to the TECHNOLOGY or the business of the LICENSOR
(other than correspondence between the PARTIES) which the LICENSEE may have
in its possession or under its control; and


 


(b)                                 a
copy of separate books of account and records relating to the licence kept in
accordance with clause 11 suitable for the purpose of LICENSOR keeping record
of the parties and countries whom PRODUCTS were sold to. For the avoidance of
doubt it is specifically recorded that this provision 5.6 (iii) (b) does
not include the original records and books of the LICENSEE but pertains to
copies of records required to be kept for regulatory and statutory purposes.


 


5.7                               Within
30 days after the date on which termination of this agreement takes effect, the
LICENSEE must, at its own cost, promptly return to the LICENSOR or otherwise
dispose of as the LICENSOR instructs, those of the PRODUCTS and specifications
and any parts which the LICENSEE may have in its possession or under its
control and which are the property of the LICENSOR.


 


6

















 


5.8                               If,
on termination of this agreement, LICENSEE has PRODUCTS in stock that are the
property of LICENSEE or a LICENSEE customer, LICENSEE may sell or deliver,
as the case may be, such PRODUCTS in the TERRITORY within 12 (twelve)
months after such termination provided LICENSEE pays to LICENSOR applicable
royalties under clause 9.3.


 


6.                                      TITLE TO THE INTELLECTUAL PROPERTY


 


6.1                               The
LICENSEE acknowledges that all right, title and interest in and to the PATENT
vests in the LICENSOR and that it has no claim of any nature in and to the
PATENT or any other intellectual property owned by LICENSOR. The LICENSEE shall
not at any time during or after termination or cancellation of this agreement
dispute the validity or enforceability of such rights or of the PATENT, or
cause to be done any act contesting or in any way impairing or tending to
impair any part of that right, title and interest in the PATENT and shall
not counsel or assist any other person to do so.


 


6.1.1                      LICENSOR will have first right of
refusal to patent an improvements made by LICENSEE to the TECHNOLOGY at its own
cost, in those countries forming part of the TERRITORY where LICENSEE has
EXPLOITATION rights. LICENSOR shall grant LICENSEE an exclusive royalty-free
licence under such patents in all countries in the TERRITORY except RSA and a
non-exclusive, royalty-free licence in RSA on condition that LICENSEE
contributes 50% (fifty per cent) of the bona fide patenting expenses in each such
country where a royalty-free licence is granted. In the event that LICENSOR
elects not to apply for or to maintain patents in the TERRITORY on improvements
made by LICENSEE, then LICENSEE may apply for, own and maintain such
patents.


 


6.1.2                      LICENSOR will own all
improvements made by it. Such improvements made by LICENSOR and related patents
will, subject to any statutory or regulatory approvals required be licensed to
LICENSEE in the TERRITORY, subject to the terms of this agreement including the
royalty provisions, provided the PARTIES are able to agree on the minimum
royalty payable in respect of the licence to such improvements.


 


6.2                                The
LICENSOR does, however, grant the LICENSEE the right, where and when necessary,
to modify the TECHNOLOGY for its specific needs and applications subject to the
following conditions:


 


6.2.1                      Such modifications of the
TECHNOLOGY will not remove any obligations or benefits of the LICENSOR and
LICENSEE in terms of this agreement.


 


6.2.2                      The LICENSEE will provide the
LICENSOR with copies or drawings of the final TECHNOLOGY for each case.


 


7

















 


7.                                      DELIVERY OF INTELLECTUAL PROPERTY


 


It is recorded that the LICENSOR has simultaneously with the signing of
this agreement, delivered to the LICENSEE one current copy of the PATENT
LICENSEE acknowledges that it is fully acquainted with the TECHNOLOGY and the
PATENT and need no further information or assistance from LICENSOR to be able
to EXPLOIT the PATENT.


 


8.                                      OBLIGATIONS ON LICENSEE


 


The LICENSEE undertakes to use its best endeavours to EXPLOIT the
PATENT by means of manufacturing and selling of PRODUCTS based on the
TECHNOLOGY to create and satisfy the market for the PRODUCTS throughout the
TERRITORY to the extent of at least meeting minimum royalty payments to
LICENSOR as provided for in clause 5.4.


 


9.                                      ROYALTIES AND MARKET REPORTS


 


9.1                               In
consideration for the rights granted to it in terms of License 1, the LICENSEE
shall invest capital and resources equal to a minimum of US$500,000.00 (five
hundred thousand United States dollars) to test and develop the TECHNOLOGY,
calculated from 1 January 2005, the PARTIES hereby recording that the
LICENSEE has prior to the COMMENCEMENT DATE invested in development and
research in the technical field covered by the TECHNOLOGY, which the LICENSOR
shall receive the benefit of.


 


9.2                               In
consideration for the rights granted to it in terms of License 2 as per clause
5.2.1, the LICENSEE shall pay the LICENSOR a once-off exclusivity fee in the
amount of US$200,000.00 (two hundred thousand United States dollars), which
amount shall be paid in accordance with clause 9.2.1 as of date of first SALES
achieved provided that the full amount is paid on or before the third
anniversary of the COMMENCEMENT DATE of this agreement or the date of
termination of this agreement, whichever comes soonest, whether any SALES have
been achieved or not.


 


9.2.1                      The once-off exclusivity fee
provided for in this clause 9.2 shall be paid as a “double royalty”, which the
PARTIES agree is an additional amount or amounts equal to and under similar
payment frequency as the royalties payable in terms of clause 3 hereafter.


 


9.3                                 As
from the date on which any SALES of the PRODUCTS are achieved, the LICENSEE
shall further pay the LICENSOR a royalty equivalent to:


 


•                                         US$250.00 (two
hundred and fifty United States dollars) per PRODUCT sold by or for LICENSEE in
any country if the applicable PRODUCT is a wheel, and


 


8

















 


•                                         US$1,000 (one
thousand United States dollars) per PRODUCT sold by or for LICENSEE in any
country if the applicable PRODUCT is a vehicle track.


 


The aforesaid royalty
shall be paid for the life of the PATENT in any country in the TERRITORY,
regardless of the royalty’s country of origin in the TERRITORY.


 


LICENSEE may deduct
from such royalty payments a pro rata portion of:


 


•                                         Bona fide
trade or quantity discounts that are standard in the industry and that are
given with respect to such SALES, and


 


•                                         Sales, tariff,
import, export or excise duties or taxes imposed on such SALES and paid by
LICENSEE in circumstances where it cannot be accounted to the end user.


 


9.3.1                       For the purpose of clause 9.3,
PRODUCTS are sold when shipped or invoiced, whichever occurs first.


 


9.3.2                       If this agreement is terminated
for any reason during a ROYALTY YEAR then, for the purpose of this clause, the
date of termination will be regarded the end of that ROYALTY YEAR.


 


9.4                               The
PARTIES shall, in good faith, review the royalty after a period of 2 (two)
years from the COMMENCEMENT DATE in order to, for example, agree on
inflation-driven adjustments if needed.


 


9.5                               The
LICENSEE shall within 30 (thirty) days after the end of each ROYALTY YEAR
provide the LICENSOR with a statement of all sales of the PRODUCT for that
ROYALTY YEAR, together with the LICENSEE’s payment in respect of royalties due
to the LICENSOR. Such a statement shall include the number of PRODUCTS
manufactured and the number sold for each month during the year and an
enumeration of any deductions from the royalty.


 


9.6                               Within
60 (sixty) days of the end of the LICENSEE’s financial year, the LICENSEE shall
deliver to the LICENSOR an audited statement in respect of all sales of the
PRODUCTS for the previous ROYALTY YEAR. Such audited statement shall be
accompanied by payment to the LICENSOR of any shortfall in respect of royalties
due to the LICENSOR. Any overpayment in respect of royalties shall be deducted
from the royalties due to the LICENSOR for the next ROYALTY YEAR.


 


10.                                 LIABILITY FOR INTEREST ON LATE PAYMENTS


 


10.1                           All
amounts which the LICENSEE is required to pay to the LICENSOR in terms of this
Agreement and which are not paid on due date shall bear interest at the 


 


9

















 


prime overdraft
rate charged by ABSA Bank Ltd. from time to time to its preferred clients.


 


10.2                          The
said interest shall be calculated and compounded monthly in advance from the
due date to date of payment.


 


10.3                          The
LICENSOR’s rights to charge interest on outstanding amounts shall not detract
from any other rights that the LICENSOR may have in terms of this
agreement.


 


11.                                ACCOUNTING RECORDS


 


11.1                         The
LICENSEE shall keep full, true and accurate books of account and records in
accordance with generally accepted accounting practice containing all
particulars that may be necessary for the purpose showing the amount of
royalties payable to the LICENSOR in terms of this agreement. Such books of
account and records shall be kept at the premises where the LICENSEE’s business
is carried on.


 


11.2                         The
LICENSEE shall permit the LICENSOR at any time during business hours, but not
more frequently than once in each ROYALTY YEAR, to have a representative of the
LICENSOR’s selection, provided than he/she is a qualified chartered accountant
or lawyer and is reasonably acceptable to LICENSEE, examine all of the
aforementioned books of account and records (including information stored in
computer readable form) and to take copies of all such documents, books and
records to determine whether all appropriate accounting of royalties hereunder
and payments thereof have been made. The representative shall retain all
information examined or copied in confidence and shall disclose to LICENSOR
only the accuracy of the payments made under this Agreement. The examination may only
consider books and records for transactions that occurred three years or less
before the date of such examination.


 


11.3                         The
records and documentation required by this clause 11 must be kept by the
LICENSEE for 3 years from the termination of this agreement. LICENSOR may conduct
one examination under clause 11.2 within 90 (ninety) days after termination of
this agreement.


 


12.                                WARRANTIES BY THE LICENSOR


 


12.1                           The
LICENSOR warrants and represents that:


 


12.1.1                it is free to grant the licence
conferred by this agreement;


 


12.1.2                that it is the owner of the PATENT but
does not warrant the validity and/or merchantability thereof to produce or
market the PRODUCTS, nor that the PRODUCTS will obtain any regulatory approval
that may be required, the LICENSOR hereby expressly excluding any other
warranties, whether implied or by law.


 


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13.                                CONFIDENTIALITY


 


13.1                         The
PARTIES undertake to maintain the confidentiality of all of the information
imparted to each other pursuant to this agreement, including the TECHNOLOGY.
Neither PARTY may divulge, or permit to be divulged to any person any
aspect of such confidential information otherwise than for the purposes of this
agreement.


 


13.2                         The
LICENSEE shall use the information imparted to it for the EXPLOITATION of the
TECHNOLOGY pursuant to this agreement and for no other purposes.


 


13.3                         If
LICENSEE uses any proprietary technology or know-how of any third party other
than that licensed to the LICENSEE by this agreement in the manufacture of the
PRODUCTS without the prior written consent of the LICENSOR, which consent shall
not be unreasonably withheld, the use of such third party technology and
know-how shall not have any effect on the royalties payable to the LICENSOR in
terms of Clause 9 above.


 


14.                                INFRINGEMENT


 


14.1                         If
during the currency in force of this agreement any infringement or illegal use
of the TECHNOLOGY or the PATENT in the TERRITORY by any third party should come
to the attention of the LICENSEE, then and in such event the LICENSEE shall
notify the LICENSOR of such infringement or illegal use.


 


14.2                         It
shall be within the discretion of the LICENSOR to determine what steps shall be
taken against an infringer and the LICENSEE shall co-operate fully with the
LICENSOR in whatever measures, including legal action, are taken to bring any
infringement or illegal use to an end.


 


14.3                         Any
amount of damages awarded in, or license income derived from, such action as
contemplated in 14.2 above shall, after deduction of all legal costs incurred
and which could be shown to the satisfaction of the LICENSOR as not having been
recovered from the infringing party, be payable to the LICENSEE, which amount
shall be reflected as income from SALES in the next ROYALTY YEAR statement as
contemplated in Clause 9.6 above, and royalty payable on this amount shall be
calculated by using the average sales price of PRODUCTS in the ROYALTY YEAR to
determine the equivalent number of PRODUCTS.


 


14.4                         Should
the LICENSOR refuse to institute action as contemplated in 14.2 above, the
LICENSEE may after indemnifying the LICENSOR against any costs, bring any
proceedings of whatever nature arising out of the infringement or illegal use
of the PATENT or the TECHNOLOGY with the prior written consent of the LICENSOR,
which consent shall not be unreasonably withheld. LICENSOR will cooperate in
any such action, including being named as a party if necessary to permit the
action to proceed.


 


11

















 


14.5                         The
LICENSEE shall be entitled to any damages awarded in or license income derived
from proceedings instituted in terms of Clause 14.4.


 


15.                                CESSION AND ASSIGNMENT


 


The rights and obligations of the LICENSEE are personal and may not
be ceded, assigned, let or otherwise disposed of in any manner whatsoever
without the prior written consent of the LICENSOR, provided, however, that
LICENSEE may assign this agreement and the rights granted herein, subject
to South African regulatory approval and approval by the LICENSOR which
approval shall not unreasonably be withheld or delayed, to a third party who
acquires substantially all of LICENSEE’S assets associated with practice under
this agreement.


 


16.                                SUBLICENSING OR SUBCONTRACTING


 


The LICENSEE shall not have the right to grant sub-licenses in any
country in the world under this agreement without prior written consent from the
LICENSOR who may not withhold consent unreasonably, and which consent
shall in any event be subject to obtaining any required statutory or regulatory
approvals and the terms relating to royalty payments as provided for in this
agreement.


 


17.                                INDEMNITY AND LIABILITY


 


17.1                         The
LICENSEE shall indemnify the LICENSOR against all claims of whatsoever nature
and provide guarantees to LICENSOR to that effect, which may be made
against it arising out of the EXPLOITATION by LICENSEE of the PATENT or the
TECHNOLOGY or the manufacture, sale or use of PRODUCTS.


 


17.2                         Any
claims for damages that may be instituted by LICENSEE against the LICENSOR
in terms of this agreement, shall be limited to an amount equal to the actual
amount of direct damages, or the aggregate amount of all payments made to the
LICENSOR under the terms of this agreement, whichever is the least. This
maximum liability shall be an aggregate liability for all claims howsoever
arising, whether by contract, in delict or otherwise. Neither PARTY shall be
liable to the other for any consequential or indirect damages arising from this
agreement.


 


18.                                FORCE MAJEURE


 


18.1                         A
PARTY is not liable for a failure to perform any of its obligations under
this agreement insofar as it proves:


 


18.1.1                that the failure was due to an
impediment beyond its control;


 


18.1.2                that it could not reasonably be
expected to have taken the impediment and its effects upon the party’s ability
to perform into account at the time of the conclusion of the contract; and


 


12

















 


18.1.3                 that it could not reasonably have
avoided or overcome the impediment or at least its effects.


 


18.2                           An
impediment in Clause 18.1 may result from events such as the following,
this enumeration not being exhaustive:


 


18.2.1                 war, whether declared or not, civil
war, civil violence, riots and revolution, acts of piracy, acts of sabotage;


 


18.2.2                natural disasters such as violent
storms, cyclones, earthquakes, tidal waves, floods, destruction by lightning;


 


18.2.3                 explosions, fire, destruction of
machines, of factories and of any kind of installations;


 


18.2.4                boycotts, strikes and lock-outs of all
kinds, go-slows, occupation of factories and premises, and work stoppages;


 


18.2.5                acts of authority, whether lawful of
unlawful, apart from acts for which the party seeking relief has assumed
the risk by virtue of any other provisions of this agreement and apart from
the matters mentioned in Clause 18.3.


 


18.3                          For
the purposes of Clause 18.1, “impediment” does not include lack of
authorisations, of licenses, or permits or of regulatory or other approvals
necessary in any country in the TERRITORY for the performance of this licence.


 


18.4                          Relief
from liability for non-performance by reason of the provisions of Clause 18
shall commence on the date upon which the PARTY seeking relief gives notice of
the impediment relied upon and shall terminate upon the date upon which such
impediment ceases to exist; provided that if such impediment continues for a
period of more than 6 (six) Months either PARTY shall be entitled to terminate
this agreement by written notice to the other PARTY.


 


19.                                DISPUTE RESOLUTION AND GOVERNING LAW


 


19.1                         In
the event of any dispute arising between the PARTIES as a result of this
agreement, the dispute will be referred to the executive management of the
respective PARTIES to attempt to resolve the dispute. The executive management
of the PARTIES have the option to agree on mutually acceptable mediation or
arbitration proceedings, failing which the dispute will be subject to Clause
19.2 below.


 


19.2                         This
agreement shall be governed by and interpreted in accordance with the laws of
the Republic of South Africa and any dispute arising therefrom shall be
adjudicated by a competent high court in South Africa to which exclusive
jurisdiction the PARTIES hereby agree (unless otherwise agreed to between the
PARTIES at the time).


 


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19.3                         The
provisions of this Clause 19 shall survive termination of this agreement.


 


20.                                CANCELLATION


 


20.1                         Should
a PARTY be in breach of any of the terms or conditions hereof and fail to
remedy such breach within 30 (thirty) days after the receipt of written notice,
then the aggrieved PARTY shall be entitled at such PARTY’s option to institute
proceedings immediately for enforcement of the terms of this agreement, or
alternatively and without further notice to declare this agreement cancelled;
all of which may be done without prejudice to any claim the aggrieved
PARTY may have for damages arising from breach of contract or any other
cause.


 


20.2                           Any
PARTY may terminate this agreement at any time by giving to the other (“the
defaulting PARTY”) notice of such termination if:


 


20.2.1                the defaulting PARTY is, other than for
the purposes of reconstruction or amalgamation, placed under voluntary or
compulsory liquidation or under judicial management or under receivership or
under the equivalent of any of the foregoing;


 


20.2.2                 a final and unappeasable judgement
against the defaulting PARTY remains unsatisfied for a period of 30 (thirty)
days or more after it comes to the notice of the management of the defaulting
PARTY;


 


20.2.3                the defaulting PARTY makes any arrangement
or compromise with its creditors generally, or ceases, or threatens to cease,
to carry on business.


 


20.3                         Any
termination of this agreement shall not absolve the PARTIES from the obligation
to observe the confidentiality measures and other restraints as set out herein.


 


20.4                         LICENSEE
may terminate or cancel this agreement without cause at any time upon 60-days
advance written notice to LICENSOR. In such event, the exclusivity fee payable
under Clause 9.2 above shall remain fully payable regardless of the timing of
the termination by LICENSEE, and the minimum royalties for each ROYALTY YEAR up
to such termination will also be payable under Clauses 5.4 and 9.3.2 above.


 


21.                                WHOLE AGREEMENT


 


21.1                         This
document constitutes the whole of the agreement (to the exclusion of all else)
between the PARTIES relating to the subject matter hereof, and also supersedes
all previous agreements pertaining to the same subject matter, whether written
or otherwise, between the PARTIES.


 


21.2                         No
amendment, alteration, addition, variation or consensual cancellation of this
document will be valid unless in writing and signed by the PARTIES.


 


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22.                                WAIVER


 


22.1                         No
waiver of any of the terms or conditions of this agreement will be binding for
any purpose unless expressed in writing and signed by the PARTY giving the same
and any such waiver will be effective only in the specific instance and for the
purpose given.


 


22.2                         No
failure or delay on the part of either PARTY in exercising any right,
power or privilege will operate as a waiver, nor will any single or partial
exercise of any right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.


 


23.                                DOMICILIUM AND NOTICES


 


The PARTIES hereby choose domicilium citandi et
executandi for all purposes in terms hereof as follows:


 


The CSIR,

The Executive Director:

Defence, Peace, Safety & Security, 

Meiring Naude Road,

Scientia,

Pretoria, 0002


 


FORCE
PROTECTION TECHNOLOGIES INC, 
 The President 

Force Protection Technologies Inc

9801 Highway 78 

Ladson 

South Carolina 29456


 


23.1                         Either
PARTY shall be entitled to change its domicilium citandi et
executandi by giving written notice thereof to the other, provided
that such change shall not take effect until receipt by the other PARTY of such
notice.


 


23.2                         All
notices to be given by hand by the PARTIES to each other in terms hereof shall
be given to the aforesaid addresses by delivery thereto, or if by posting by
prepaid registered mail, or by telefax to the following addresses:


 


The CSIR 
 P O Box 395 

Pretoria

0001 

Fax No. :+ 27 12 841-3803


 


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FORCE
PROTECTION TECHNOLOGIES INC  

VP: Legal Affairs

9801 Highway 78 

Ladson 

SC 29456 

United States of America 

Fax No. :  (+1) 843 553-1311


 


24.                                 NOTICES


 


24.1                         All
notices in terms of this agreement shall be in writing addressed to the chosen
address of the PARTY and shall be sent by prepaid registered post or courier,
or shall be physically delivered, or shall be sent by facsimile to the numbers
as set out in Clause 23 above (or to any replacement number), provided that
proof of delivery can be provided.


 


24.2                         Posted
and couriered notices shall be deemed to have been received on the 5th
business day following posting.


 


25.                                SEVERABILITY


 


In the event that any of the provision of this agreement are found to
be invalid, unlawful or unenforceable, such terms shall be severable from the
remaining  terms, which shall continue to
be valid and enforceable.


 


26.                                COSTS


 


Each PARTY shall bear its own costs in regard to the negotiations and
finalisation of this license agreement.


 


Signed at Pretoria  on this 6th
day of July  2007.


 


	
  As witnesses:

  
	
   

  	
   

  	
   

  
	
  1.

  	
  /s/ illegible

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  /s/ illegible

  	
   

  	
  /s/ J. Strydan

  	
   

  
	
   

  	
   

  	
  For CSIR

  



 


 


Signed at Charleston, S.C. on this 29th day of May 2007.


 


	
  As witnesses:

  
	
   

  	
   

  	
   

  
	
  1.

  	
  /s/ Raymond Pollard

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  /s/ John Wall III____

  	
   

  	
  /s/ Gordon R. McGilton

  	
   

  
	
   

  	
   

  	
  For FORCE PROTECTION 

  TECHNOLOGIES INC.

  



 


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