**Exhibit10.4**

**FINAL**

**12/15/06**

** **

**FORCE DYNAMICS LLC JOINT VENTURE AGREEMENT**

** **

By and between

**General Dynamics LandSystems Inc.**

And

**ForceProtection, Inc.**

** **

** **

** **

** **

** **

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

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***Tableof 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            |       |                           |
|                 |            |                                           |            |                               |            |                                |  |  |  |  |

 

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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 |   |   |

 

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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             |   |   |
|        |        |        |        |                                       |        |                                                    |        |        |  |

 

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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)                             |

 

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MINE RESISTANTAMBUSH PROTECTED VEHICLE PROGRAM —FORCE DYNAMICS LLC OPERATING AGREEMENT

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

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

ARTICLE I DEFINITIONS

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

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

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

·                            debitsto such Capital Account of the items described in Section1.704-l(b)(2)(ii)(d)(4) — (6) of the Treasury Regulations, and

·                            creditsto such Capital Account of such Member’s share of Partnership Minimum Gain orPartner Nonrecourse Debt Minimum Gain or any amount which such Member would berequired to restore under this Agreement or otherwise.

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

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

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specifically excludes anyparent Entity of either Party.

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

“Available Cash” means:

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

·                            cashreasonably reserved by the Company or reasonably anticipated by the MemberDesignees to be required (after application of anticipated cash revenues fromany source) for debts and expenses, interest and scheduled principal paymentson any indebtedness, capital expenditures, replacements, taxes or activities inthe business of the Company.

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

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

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

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

“Code” means the InternalRevenue Code of 1986, as amended from time to time and any successor Federallaw, and to the extent applicable, any Treasury Regulations promulgated thereunder.

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

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

“Disposition” means thesale, lease or other means (including any merger or consolidation, tender orexchange offer, open market or private transaction or joint venture or othercollaborative venture) by which a Person ceases to maintain Control of abusiness.

“Entity” means anygeneral partnership, limited partnership, corporation, association, cooperative,joint stock company, trust, limited liability company, business trust, jointventure,

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unincorporatedorganization or governmental entity (or any department, agency or politicalsubdivision thereof).

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

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

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

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

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

“GAAP” mean United Statesgenerally accepted accounting principles consistently applied as in effect fromtime to time.

“GDLS” means GeneralDynamics Land Systems Inc., a Delaware corporation with offices at 38500 MoundRoad, Sterling Heights, Michigan, USA 48310-3200.

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

“Including” meansincluding, but not limited to, including without limitation and all likephrases.

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

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“ILAV” means the IraqiLight Armored Vehicle program.

“JERRV” meanspre-existing USMC contracts for the procurement of the FPI Cougar beforeDecember 18th,2006

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

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

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

“Member Designee” meansan individual appointed by a Member to represent such Member’s MembershipInterests. Neither Member shall designate an individual to be a Designee who isnot a member, manager, director, Board member or employee of such Member, or ofan 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 thatrepresents the Member’s participation in the Company, including such Member’sshare of the Profits and Losses of the Company and right to receivedistributions from the Company’s assets, and right to vote and exercise suchother 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) thenumber of Membership Interests held by a Member by (ii) the total number ofMembership Interests held by all Members.

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

“Person” means anindividual or Entity, and the heirs, executors, administrators, legalrepresentatives, successors and assigns of such Person where the context sopermits.

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

·                            “Profit”and “Loss” means, for tax purposes for each Fiscal Year, or other period, anamount 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 tobe stated separately pursuant to Section 703(a)(l).

“Program” means the MineResistant Ambush Protected (“MRAP”) Vehicle Program, a United States jointservices program to produce and provide lifecycle support to address thecurrent threat of improvised explosive devices in the Middle East as more fullydescribed in solicitation

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

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

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

“Proportional Percentage”means, in connection with a Capital Contribution pursuant to Section 6.2.1 or6.2.2, the percentage (not more than 100%) that the actual Capital Contributionmade by a Member bears to the Capital Contribution required of such Member inresponse 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 controldrawings, parts lists, wiring diagrams, procurement data, parts identificationdocumentation, equipment design specifications, interface control documents,test procedures, test specifications, trial reports, manual, instructionalmaterials, firmware data, software specifications, source code listings,control commands and other software documentation, and technical publication sourcedata owned or used by either Party. For the avoidance of doubt the Partieshereby agree that FPI shall at all times retain ownership of the TD for theMRAP vehicle, and shall retain exclusive design authority over the MRAPvehicles.

“Term” shall mean theperiod of the Company’s duration as determined in accordance with Section6.1.3.

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“Third Party” means anyPerson or Entity not a Party to this Agreement but shall not include Affiliateas defined herein.

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

“Workshare” shall havethe meaning set forth in Section 3.2.

ARTICLE II ESTABLISHMENT AND BUSINESS OF COMPANY

2.1 Formation. TheCompany will be formed by the Members or their Affiliates as a limitedliability 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 January31, 2007 (or such other date as may be agreed between the Parties).

2.2 MembershipInterests. The initial Membership Interests in the Company are 50% for GDLSand 50% for FPI.

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

2.4 Attaining BusinessObjectives. The business objective of the Company shall be to win theProgram and to perform any development, production and lifecycle support forthe Program in accordance with FPI’s Proposal. In order to attain thisobjective, the Company shall promptly implement its business plan and developoperating plans setting forth how such objective will be achieved.

ARTICLE III CONCEPT OF OPERATIONS

3.1. General. Itis the intent of the Parties to combine their respective strengths to marketand promote FPI’s COUGAR vehicles for the Cat I and Cat II requirements of theMRAP Program. The Parties will make available to the Company their respectiveresources so that the Company may undertake to develop, manufacture, produceand sustain any vehicles awarded under the MRAP program, in accordance with theplan 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 willbe 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 plandeveloped and agreed by the Board. Other than those programs identified abovein the definition of “Program”, the Parties agree that the Company will pursueany and all future vehicle programs related to, or arising out of, the currentMRAP program.

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

3.1.2 Company Preference. Whenever practicable, the Company willact as the prime contractor for Program Work, and the Parties shall act as theexclusive subcontractors; provided however that the Company and the Partieswill give effect to the production plan set forth in FPI’s Proposal consistentwith the undertaking of this agreement. Future sub-tier supplier involvementwill be mutually agreed upon by the Parties and described in Exhibit 3 perSection 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 thatfall within the Program, unless mutually agreed upon by the Parties in writing.Provided, however, the Parties recognize and agree that GDLS-C, a GDLSaffiliate, may submit the RG-31 for the Program and other solicitations.

3.1.4 Follow-On Proposal Submissions. The Company will submitany future proposals to the U. S. Government with respect to the follow-onrequirements for the Program.

3.1.5 International Programs The Company will submit any futureproposals related to all derivative International programs (including FMS). TheParties will mutually agree on specific International pursuits that will beundertaken and how the business development activity will be funded. TheParties acknowledge that GDLS-C may pursue International Programs with theRG-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 phasesof the Program including, but not limited to LRIP (“low rate initial production”),production phases, and Life Cycle Service and Support (regardless of anychanges to the Program name or phases).

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

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

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

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

3.3.1Program Management: Led by the Program Manager (PM) who is appointed bythe Board, in cooperation with a Deputy PM (DPM), who has overallresponsibility for the execution of the program. The PM’s main effort will beto (i) Pursue and Win New Business, (ii) to Execute and Manage currentcontracts, and to (iii) Defend and Sustain the ongoing life of the program. Allother process leads assigned by the Parties to the Program will report to thePM. They will maintain a secondary reporting relationship to their functionalleaders in their parent organizations. The role of the PM includes responsibilityfor:
| (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 insupport of the PM. The Parties envision a Matrix Organization consisting of thefollowing 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 forthe timely and proper performance of any Workshare allocated to it or itsAffiliates by the Company. Each Party shall exert commercially reasonableefforts to expand the Program consistent with each Party’s customary approachto such activity.

3.5Product Approach. The Parties intend to offer the proven family ofCOUGAR vehicles in 4x4 and 6x6 configurations for the CATERGORY 1 and CATEGORY2 requirements respectively.

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

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

 

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** **

3.8 Key EventsTimeline

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 and2,600 — 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 lettersigned Dec 18th , 2006

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

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

G. The Initial order of two sample vehicles (percategory) is expected in Ql 2007. Customer is expected to subject samplevehicle to rigorous test and evaluation process in advance of main contractaward.

H. Main contract award is expected to be received inApril 2007.

I. Initial Deliveries will occur within sixty days ofContract Award.

**ARTICLE IVREPRESENTATIONS AND WARRANTIES**

4.1 FPIRepresentations and Warranties. FPI represents and warrants that:

A.                     It is acorporation duly organized, validly existing and in good standing under thelaws of the State of Nevada and has the requisite power and authority: (i) toown, lease and operate its properties and assets, to conduct its business asnow conducted, (ii) to enter into, execute, and deliver this Agreement and theother agreements to which FPI is a party, the execution and delivery of whichare contemplated hereby, (iii) and to perform its obligations under thisAgreement and the other agreements to which FPI is a party. FPI is dulyqualified to transact business and is in good standing, if applicable, in eachjurisdiction in which the failure to so qualify would have a material adverseeffect on its business, condition, results of operations, assets or liabilities(a “Material Adverse Effect”).

B.                       It has fullpower and authority to execute and to fulfill all of its obligations set forthin this Agreement and this Agreement constitutes a valid and binding agreementof FPI in accordance with its terms. No consent or approval of members or anypublic authority is required as a condition to the validity or enforceabilityagainst FPI of this Agreement or any other document or instrument referred toherein.

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

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

D.                      FPI hasemployed no finder, broker, sales agent or other similar intermediary inconnection with the negotiation of this Agreement or any of the transactionscontemplated hereby.

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

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

A.                     It is acorporation duly organized, validly existing and in good standing under thelaws of the State of Delaware and has the requisite corporate power andcorporate authority: (i) to own, lease and operate its properties and assets,(ii) to conduct its business as now conducted, to enter into, execute, anddeliver this Agreement and the other agreements to which GDLS is a party, theexecution and delivery of which are contemplated hereby, (iii) and to performits obligations under this Agreement and the other agreements to which GDLS isa 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 wouldhave a Material Adverse Effect.

B.                       It has fullpower and authority to execute and to fulfill all of its obligations set forthin this Agreement and this Agreement constitutes a valid and binding agreementof GDLS in accordance with its terms. No consent or approval of stockholders orof any public authority is required as a condition to the validity or enforceabilityagainst GDLS of this Agreement or any other document or instrument referred toherein.

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

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

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

E.                        Allcorporate action on the part of GDLS, its officers, directors and stockholdersnecessary for the authorization, execution and delivery of this Agreement andthe other agreements to which GDLS is a party, the execution and delivery ofwhich are contemplated in this Agreement, the performance of all obligations ofGDLS hereunder and thereunder has been taken, and this Agreement and the otheragreements to which GDLS is a party, the execution and delivery of which arecontemplated in this Agreement, constitute valid and legally bindingobligations of GDLS, enforceable in accordance with its and their term.

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

**ARTICLE VDISPUTE RESOLUTION**

5.1Disputes. All claims, disputes, controversies, or other matters inquestion arising out of, connected with, or relating to this Agreement thatcannot be resolved by the Parties through face-to-face negotiations as detailedin Section 6.10, will be settled by binding arbitration before threearbitrators, one arbitrator to be selected by each Party and the third to beselected by the two so appointed. The arbitration shall be conducted inaccordance with the Commercial Rules of the American Arbitration Associationthen 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, andsubject to the arbitrators’ determination regarding its admission and use. Theadministrative costs of any arbitration or litigation will be borne equally bythe Parties pending the arbitrator’s award. The arbitrators shall be bound bythe express provisions set forth in this Agreement and shall not modify anyterms of this Agreement or make any award of damages in excess of the amountsset forth in this Agreement or grant any relief not expressly set forth in thisAgreement. The determinations of the arbitrators shall be final and, except asprovided by law, shall not be subject to judicial review. Any court ofcompetent jurisdiction may enforce any award or determination rendered by thearbitrators.

5.2Damages. Notwithstanding any provision of this Agreement to thecontrary, neither Party will be entitled in connection with any breach orviolation of this Agreement to recover from the other or any Affiliate thereofany punitive, exemplary or other special damages or any indirect, incidental orconsequential damages, including damages relating to loss of profit, businessopportunity, business reputation or business interruption. Each Party, as a materialinducement to the other Party to enter into and perform its obligations underthis Agreement, hereby expressly waives its right to assert any claim relatingto such damages and agrees not to seek to recover such damages in connectionwith any claim, action, suit or proceeding relating to this Agreement. Theforegoing will not limit the right of either Party to indemnification in

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accordance with theprovisions of this Agreement, including any other agreement referred to herein,with respect to all components of any claim, award or judgment against suchParty 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 bythe filing of the Certificate of Formation with the State of Delaware. Pursuantto Treasury Regulation 301.7701-3, the Company, an eligible entity with atleast two members, will not file an election, but will instead default underparagraph (b) of such Treasury Regulations to be classified as a partnershipfor Federal income tax purposes.

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

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

6.1.4 Offices.

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

(b)                   The Company’sregistered agent in the State of Delaware for the service of process is asidentified in the written appointment of agent filed in the office of theSecretary of State of Delaware contemporaneously with the filing of theCertificate of Formation of the Company. The Members may from time to timemutually agree to change the registered agent, and any such change shall bereflected in appropriate filings with the Secretary of State of Delaware.

6.1.5 GoverningDocuments. The Certificate of Formation and this Agreement as it may beamended from time to time shall, subject to the provisions of the Act, governthe affairs and conduct of the Company’s business.

6.2 Initial CapitalContributions. The Parties do not expect the requirement for any initialCapital Contribution to the Company, with the exception of the minimum amountthat might be required by law in the formation of the Company.

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

6.2.2 Loans. AMember may make a loan or loans to the Company only with the written consent ofthe other Member; provided, however, that absent written agreement to thecontrary no Member or Member Affiliate shall be obligated to make any loan tothe Company. Loans by Members to the Company shall not be considered CapitalContributions and the balance of such Member’s Capital Account shall not beincreased by any amount so loaned. No repayment of principal or interest on anysuch loan with respect to advances made pursuant to this Section 6.2.3 shallaffect the balance of such Member’s Capital Account. The amount of any suchloans shall be a debt of the Company to such Member and shall be payable orcollectible only out of the Company assets and shall bear interest at leastequal 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”) foreach Member in accordance with Section l.704-l(b)(2)(iv) of the TreasuryRegulations. Subject to the following:

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

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

(c)                    No interestshall be paid by the Company on Capital Contributions or on balances in CapitalAccounts.

(d)                   A Member shallnot be entitled to withdraw any part of its Capital Account or to receive anydistributions from the Company except as provide herein; nor shall a Member beentitled to make any loan or Capital Contribution to the Company other than asexpressly provided herein.

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

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6.5 Books; Accounting;Tax Elections; Reports.

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

6.5.2 Reports andAudits. Promptly upon request, the Company shall, at the cost and expenseof the Company, furnish, or cause to be furnished, to each Member Suchinformation relating to the financial condition, operations of Company or anyother aspect of the Company or its business as either Member may from time totime reasonably request. Each Member shall have the right, at all reasonabletimes and upon reasonable notice during normal business hours, to audit,examine and make copies of or extracts from the books of account of the Companyor any other Company record for any purpose reasonably related to such Member’sinterest as a Member of the Company. Such audit right may be exercised throughany designated agent or employee of such requesting Member. The Company and theMember conducting the review shall each bear their own cost of involvement inthe review.

6.5.3 Tax MattersMember. Pursuant to Section 6231(a)(7) of the Code, or subsequent similarprovision, until changed by a resolution of the Members or Member Designees, GDLSis hereby designated as the Tax Matters Member. The Tax Matters member shalltake such action as may be necessary to cause the other Member to become a “noticepartner” within the meaning of Section 6231(a)(8) of the Code.

6.5.4 Annual FinancialStatements. 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 Companyas 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 whichshall be prepared in accordance with GAAP and audited and certified by theCompany’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 ofall items of income, gain, loss, deduction and credit of the Company for suchFiscal Year and any other financial information related to the Company which isrequested by either Member for Federal, state, local

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or foreign income orfranchise tax purposes.

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

6.5.6 ExternalAuditors. The Company’s Independent Accountants shall be appointed by theMembers. Such Independent Accountants of the Company shall be a nationallyrecognized certified public accounting firm. The Company’s books and records ofaccount shall be audited at least annually, at the expense of the Company, bythe Company’s Independent Accountants, who shall, as a result of their review,render their opinion that the financial statements present fairly, in allmaterial respects, the financial position of the Company in conformity withGAAP.

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

6.5.8 InternalControls. The Company shall take appropriate action to adopt an adequatesystem of internal controls consistent with the principles of this Section. Anadequate system of internal controls shall be a process within the Companydesigned to provide reasonable assurance regarding the achievement of thefollowing primary objectives:

(a)       Reliability and integrity of information

(b)       Compliancewith policies, plans, procedures, laws and regulations

(c)       Thesafeguarding of assets

(d)       Theeconomical and efficient use of resources

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

6.5.9 Budgets. TheCompany shall cause yearly operating and capital budgets to be prepared andpresented for approval to the Members at least 30 days prior to the beginningof the year to which such budgets relate. Such budgets shall include a businessplan for the budget year. (Such agreed upon budget and business plan for anygiven year shall be a “Budget”).

6.6 Allocations andDistributions.

6.6.1 NormalAllocations. Except as otherwise provided by this Article 5, the Profit andLoss of the Company for each Fiscal Year (or portion thereof) shall bedetermined as of the end of each Fiscal Year (or portion thereof). All Profitand Loss of the Company shall be allocated among the Members pro rata inaccordance with the Members’ respective Membership Interests.

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

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

6.6.3 Allocations forTax and Book Purposes. Except as otherwise provided herein, any allocationto a Member for a Fiscal Year or other period of a portion of the Profit orLoss, or of a specially allocated item, shall be determined to be an allocationto 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 oravailable by or to the Company for Federal tax purposes.

6.6.4 CertainAccounting Matters. For purposes of determining Profit, Loss or any otheritems allocable to any period, such items shall be determined on a daily,monthly or other basis, as determined by the Member Designees using anypermissible method under Section 706 of the Code and the Treasury Regulationspromulgated 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 totime at the Member’s election and in accordance with their Membership Interestsat the time of distribution.

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

6.6.7 Proceeds of AnyLiquidating Transaction. Upon the occurrence of any transaction involvingthe Disposition of all or substantially all of the assets of the Company (a “LiquidatingTransaction”), all Available Cash resulting there from (or from any othersource 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 theMembers in proportion to and to the extent of the positive Capital Accountsafter giving effect to any other distributions provided for in this Agreementand all Capital Account Adjustments for the taxable year in which theliquidation occurs. All payments under this Section 6.6.7 shall be made soon asreasonably practicable and in any event by the end of the Fiscal Year in whichsuch Liquidating Transaction occurs or, if later, within 90 days after the dateof such Liquidating Transaction.

6.7 Membership Interestsand Restrictions

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

6.7.2. Removal;Withdrawal; No Transfer of Interest.

(a)                     A Member maynot be removed as a Member of the Company other than as expressly providedherein or in the Act.

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(b)                    A Member maynot withdraw from the Company without the written consent of the other Member,unless otherwise provided in this Agreement.

(c)                     Except asexpressly provided in Section 6.7.3, a Member’s Membership Interest in theCompany shall not be transferred without the written consent of the otherMember.

(d)                    Except asexpressly provided in Section 6.7.4, any permitted transfer of a Member’sMembership Interest shall not entitle the transferee to be admitted to theCompany as a Member.

6.7.3. Limitations onDisposition of Membership Interests.

(a)                     Generally.Except as expressly set forth in Article 6, neither Member shall, withoutwritten consent of the other Member, sell, assign, transfer, or otherwisedispose of its Membership Interest (or any part thereof). The giving orwithholding of consent to any such disposition shall be entirely within thediscretion of the Member requested to give such consent; provided, however,that, subject to Section 6.7.3(c) below, such consent shall not be unreasonablywithheld following reasonable opportunity to review the management andfinancial capability of a new Party introduced for good and necessary businessreason. Any attempted disposition other than as permitted by the terms of thisAgreement shall be void and of no effect. Any permitted transferee of a MembershipInterest pursuant to this Agreement must, simultaneously with its acquisitionof the Membership Interest, execute an addendum to this Agreement, settingforth its agreement to be bound by the terms of this Agreement, and assumingall obligations of its assignor with respect to the acquired MembershipInterest, on terms reasonably satisfactory to the other Member.

(b)                    Transfersto an Affiliate. Each Member shall be entitled to transfer all, but notless than all, of its Membership Interest ( a “Transferee Interest”) to anAffiliate (which, for purposes of this Section 6.7.3(b) only shall include anyparent Entity) of such Member, provided that contemporaneously with thetransfer of such interest, the Affiliate to which such Transferee Interest istransferred shall join in an execute with the Members a written addendum tothis Agreement pursuant to which such Affiliate agrees to be bound by all theterms and provisions of this Agreement and to perform and discharge theobligations and liabilities which are attributable to the Transferee Interest.No such

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transfer to an Affiliate hereunder shall relieve thetransferring Member of its obligations and liabilities under this Agreementwithout the express written consent of the non-transferring Member. Notwithstandinganything to the contrary contained in this Section 6.7.3, no transfer of aTransferee Interest to an Affiliate may take place without the consent of theother Member if such transfer would result in the termination of the Companywithin the meaning of Section 708 of the Code.

(c) Sales to Third Parties.

i.                            Exceptfor transfers of a Membership Interest to an Affiliate pursuant to Section6.7.3(b), if at any time either GDLS or FPI or any transferee of a MembershipInterest pursuant to Section 6.7.3(b) (the “Initiating Party”) intends todispose of all (but not less than all) of is Membership Interest whether aloneor as part of a larger transaction (the “Offered Interest”) then the InitiatingParty shall give a notice (“the Offer Notice”) to the other Member (the “Non-InitiatingParty”), offering to sell the Offered Interest to the Non-Initiating Party,which notice shall set forth the proposed price (which shall be payable all incash), the name and identity of the proposed purchaser, and all material termsand conditions. The Non-Initiating Party shall then have 90 days in which tonotify the Initiating Party that it (i) desires to purchase the OfferedInterest at the price set forth in the Offer Notice and on terms and conditionsthe 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”) andwhether or not consent to the transfer is given or provided in Section6.7.3(a).

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

 

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iii.                      If theNon-Initiating Party delivers a Refusal Notice, or fails to deliver anAcceptance Notice or Refusal Notice, in accordance with subparagraph (i) above,the Initiating Party may sell all, but not less than all, of its MembershipInterest 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 setforth in the Offer Notice; (x) an agreement of sale is executed and deliveredand the sale closed within 180 days after the later of the receipt of theRefusal 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 andconditions of this Agreement and such transfer is permissible under anycontract awarded to the Company in respect of the Program; and (z) theInitiating Party and proposed purchaser comply with subparagraph (d) below, andif not, the Membership Interest shall again the subject to the right of firstoffer.

iv.                                   Ifeither Member becomes obligated to sell its Membership Interest pursuant to theprovisions of subparagraph (ii) of this Section 6.7.3(c) (a “Seller”), suchMembership Interest shall be sold as set forth in this subparagraph (iv). Theclosing of this sale shall be held at the Company’s headquarters (or such otherplace 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 andassign to the purchaser or purchasers, free and clear of all liens, claims andencumbrances, the Membership Interest to be sold and shall execute and deliverto the purchaser or purchasers all documents which may be required to giveeffect to the disposition and acquisition of such interest, and the purchaseror purchasers shall pay to the Seller, in immediately available funds, thepurchase price determined as provided by subparagraph (ii) for the interestbeing sold. The obligation of the Seller to sell and the obligation of thepurchaser or purchasers to purchase at such closing such interest shall besubject to the following conditions: No preliminary or permanent injunctions orother order, decree or ruling issued by a court of competent jurisdiction or bya governmental regulatory or administrative agency or commission shall be ineffect which would prohibit such conveyance (provided that the Parties shalluse good faith efforts to avoid the issuance of, and, if issued, to cause thelifting of, any such order, decree or ruling); any applicable waiting periodunder the Hart-Scott-Rodino Act or any other applicable law shall have expiredand any other applicable law shall have expired and any other applicablegovernmental approvals and

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clearances necessary topermit such sales shall have been obtained; each purchaser shall have receiveda representation and warranty in form and substance reasonably satisfactory toit that the Seller has good and marketable title to the interest beingconveyed, free and clear of all liens, claims and encumbrances, and has fullright, power and authority to effect such conveyance; and there shall have beenno materials adverse change (or changes which in the aggregate are materiallyadverse) in the Company’s business, assets or liabilities occurring after thedate the Offer Notice was given, as the ease may be (provided that thepurchaser(s) may waive either of the last two conditions).

v.                        Upon theclosing of a sale to the Non-Initiating Party hereunder, the Initiating Partyand its Affiliates shall covenant not to (x) solicit any employees of theCompany, or (y) take any action that can reasonably be expected to interferewith the Company’s or the Members’ relationships with its customers, for a fiveyear 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 itsAffiliates from (x) acquiring a business or group of businesses in atransaction where such competitive business or group of businesses is not theprimary purpose of such acquisition and constitutes less than 10% of the annualsales volume of the acquired business or group of businesses as a whole basedon the preceding fiscal year, or (y) acquiring shares of stock, partnership orother equity interests in any entity as investments in such Initiating Party’sor its Affiliates’ pension funds or funds of any other employee benefit plan,provided that such interests are acquired and held for investment purposesonly.

(d)                    Compliancewith Laws. Either Member proposing to make a transfer of its MembershipInterest pursuant to this Section 6.7.3 and the proposed transferee shallobtain (at their sole cost and expense, but with all reasonable cooperationfrom the Company) any waivers, consents or approvals from any third person (includingany U. S. or other governmental authority) which may be necessary in connectionwith the proposed transfer and the admission of the proposed transferee as aMember, if applicable. The other Member may require that the transferor Memberand the proposed transferee provide opinions of counsel or other reasonableassurances to the Company that the transfer (i) does not violate any lawapplicable to the Company, the transferor Member or the proposed transferee,including the Securities Act of 1933, as amended, (ii) will not cause theCompany to become subject to regulation of any governmental authority to whichit is not then subject, and (iii) will not cause violation of any of theCompany’s material agreements.

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6.7.4. Admission ofTransferee. A transferee of the Membership Interest of a Member shall beadmitted to the Company in the place and stead of such Member only with theexpress written consent of the other Member(s), in addition to satisfying theother 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. Inaddition to the powers and authority expressly conferred on it by thisAgreement, the Members may exercise all such powers of the Company, and do allsuch lawful acts and things as are permitted by the Act, the Certificate ofFormation and the Agreement. The Members hereby delegate all power andauthority to manage the business and affairs of the Company to the MemberDesignees as a group, or as provided hereunder (including Section 6.8.6).Except as otherwise provided by the Act, other applicable law or theCertificate of Formation, all policies and other matters to be determined bythe Members shall be determined by a majority vote of the Member Designeespresent at a meeting at which a quorum is present. The Member Designees arerepresentatives of the Members and are not “managers” of the Company within themeaning of the Act.

(b)                    In addition toother matters coming before them, the Member Designees shall consider and takeappropriate action in connection with the following matters (the “ImportantMatters”): (i) a change in the Company’s name or the adoption of an assumedname under which to conduct the Company’s business, (ii) the approval andadoption of any annual or longer term business plan including the annualcapital and operating budgets contained therein and strategic plans and plansregarding technologies, or any deviations from such plans once approved, (iii)any determination of “Available Cash”, (iv) changing the nature of the Company’sbusiness, 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 thanarms’ length transactions in the ordinary course of business, (vi) amending theCertificate of Formation, (vii) issuance of additional Membership Interests,and the consideration therefore, or the raising of funds in any manner whichwould dilute the Membership Interest of cither Member, (viii) other than asprovided in this Agreement or specified in a business plan adopted by theMember Designees, the creation of any debt or debt obligation of the Company orthe creation of any mortgage, lien, pledge or other encumbrance on Company’sassets, (ix) the granting of any licenses or other lights regarding importantintangible assets by the Company, (x) the

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merger, sale or disposition of all or a substantial partof the assets of Company, . (xi) amending or waiving the terms of thisAgreement or any documents referred to in the Agreement, (xii) any call uponthe Members to contribute additional capital in respect of their existingMembership Interests which is not included in a Budget, (xiii) any change inthe Company’s fiscal year or change in the Company’s accounting practices andprocedures (including internal accounting standards), (xiv) entering into anysignificant contract other than contracts that are entered into the ordinarycourse of business, and contracts reflected in the Budget, (xv) authorizationof the issuance, sale or purchase of any interest in any other businessventure, (xvi) casting of the Company’s vote as a shareholder, member or otherowner, in any other business entity or association, (xvii) Member distributionsnot expressly permitted pursuant to the terms of this Agreement, (xviii) anyadvance to suppliers or to any person other than business expenses undertakenin ordinary course, (xix) other than as specified in a business plan adopted bythe Member Designers, any capital expenditure, (xx) designation of a ChiefExecutive Board member, a Chief Financial Board member and a Secretary, and(xxi) investments in any Entity.

6.8.2 The Board. Within30 days of the execution of this agreement, GDLS shall appoint three MemberDesignees and FPI shall appoint three Member Designees (collectively referredto as the “Board”) to represent such Member’s Membership Interest (includingauthority to execute documents on behalf of the Company in accordance with theterms of this Agreement). Member Designees on the Board shall serve until suchtime as the Member appointing them selects a successor. The initial Board shallbe the individuals named on Exhibit 4. Neither Member shall designate a personto be a Board member who is not a member, manager, director, Board member oremployee of such Member or of an Affiliate of such Member without the consentof the other Member. Among such Board members, there shall be a Chairman,Vice-Chairman, Secretary, and Treasurer. Initially, FPI shall appoint fromamong its Member Designees one person to be Chairman and GDLS shall appointfrom among its Member Designees one person to be Vice-Chairman. Subsequentlythe Member designating these positions may change but at all times the Memberdesignating the Treasurer shall be different from the Member designating theChairman. There may be such other management and administrative personnel asdetermined and appointed by the Board members from time to time. A Board membermay hold more than one office. Decisions of the Board shall be made by majorityvote. Each Member shall be entitled to vote on all Company matters, and eachmember 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 leastquarterly. Written notice of the time, place, and purposes of each regularmeeting of the Board shall be given by the Secretary and shall be servedpersonally, or by fax, or first class mail, or electronic mail on each Boardmember not less than 14 nor more than 60 days before the meeting. Such noticeshall be directed to each Board member at the address set forth in the noticeprovision of this Agreement or such other address as the Member hascommunicated 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 3business days written or electronic notice to each Board member at his or herlast address provided, which notice may be waived by such Board member. Specialmeeting notices shall state the purposes of the proposed meeting.

6.8.5 Attendance andQuorum. If a Board member is unable to attend a Board meeting, the Memberappointing such Board member shall have the right, at its option, to appoint analternate Board member who will replace, for all purposes, the absent Boardmember at such meeting. A quorum for the transaction of business at anyproperly called Board’ meeting shall be four Board members, which must includetwo GDLS Designees and two FPI Designees, and except as otherwise required bythis Agreement and the Act, any action or decision taken or made at a duly heldmeeting shall be the act of the Members.

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

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

6.8.8 Compensation ofthe Board. The Board members shall receive no compensation from the Companyfor their services as Board members but may receive reimbursement of expensesaccording to policies established by the Members. Nothing in this provisionshall preclude a Board member from serving the Company in some other capacityand receiving compensation for such other service.

6.8.9 No FinancialInterest. Board members shall have no financial interest in the Company’sprofits or losses by virtue of their positions on the Board.

6.8.10 Board Duties

(a) Appointment andTerm of Office; Removal

The Board members shallbe appointed by the Members. Each Board member shall serve until his or hersuccessor has been duly appointed and qualified or until his or her earlierdeath, resignation or removal. Any Board member may resign at any time bygiving written notice to the Member which appointed such Board member and theSecretary, so that a**successormay be appointed by such Member. Any Board member may be removed at any timewith or without cause, with a successor being appointed by the Member thatinitially appointed such Board member.

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(b) Duties of Board members

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

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

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

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

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

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

6.8.11 ProgramManagement Team The Board shall appoint a Program Manager, which shallinclude be at a minimum a Director appointed by GDLS, and Deputy ProgramManager which shall be appointed by FPI. The Program Management Team shall workclosely with one another regularly, including with respect to attainment of thebusiness plan, significant contract commitments by or on behalf of the Company,and appointment of such management personnel as it from time to time deemsnecessary and appropriate to perform the activities and operations of theCompany, and it may take such actions as are authorized by the Board. A reportof status and significant actions taken by the Program Management Team shall bemade at the next following meeting of the Board.

(a) OtherCommittees. The Board may in their discretion, by resolution adopted at anymeeting, create such committees as they may deem advisable. Each such committeeshall consist of at least one GDLS appointed Member Designee and at least oneFPI appointed Member Designee, and shall have and may exercise such powers, andshall perform such duties, as may be delegated by the Board. All significantaction by any such committee shall be reported to the Board at their nextfollowing meeting. The Board may, if they so elect, review and modify anyaction taken by any such committee. The Board shall have the power at any timeto remove any

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

6.9 Dissolution.

6.9.1 In General.The Company shall dissolve and its affairs shall be wound up on the first tooccur 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 anagreement calling for such dissolution and winding up; (b) by the Membersacting by unanimous vote; (c) the Government cancels the Program; (d) failureof the U. S. Government to award a contract to the Company for the Programwithin three (3) years of the effective date of the Agreement, unless thisperiod is extended by the unanimous agreement of the Members; (e) completion ofall the work required to be performed under, and settlement of all disputes andexpiration of all warranties arising in connection with, all contracts awardedto the Company for the Program, and resolution or appropriate provision for allother Company obligations, in the event the Company has been awarded work on theProgram; or (f) upon a Liquidating Transaction as defined in 6.6.7 or followingany twelve (12) months period of inactivity.

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

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

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

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

ii.                          If thehigher 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 shallbe the mean average of such two values.

iii.                       If thehigher 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 athird appraiser within 30 days and such third appraiser shall determine theFair Market Value of the Company.

iv.                      If the valuedetermined 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 appraisershall be the Fair Market Value of the Company.

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

vi.                      Theabove-described determination of Fair Market Value will be final and binding onthe Members. The Fair Market Value of a Member’s interest shall be determinedin accord with the Membership Interest.

6.9.3 AdditionalPut-Call Option.

(a)                     In the eventof a material breach of this Agreement as described in clause (vii) of Section6.9.2, then the non-breaching Party shall further have the right (referred toherein, together with the option described in Section 6.9.2, as the “DisassociationOption”) to either (i) require the breaching Party to purchase all of thenon-breaching Party’s Membership Interest at a price equal to the Fair MarketValue of such Membership Interest (the “Put Option”), or (ii) require thebreaching Party to sell to the non-breaching Party all of the breaching Party’sMembership Interest at a price equal to the Fair Market Value of suchMembership Interest (the “Call Option”). The non-breaching Party may exercisethe Put Option or the Call Option by giving written notice of such exercise tothe breaching Party within the 90 days period set forth in Section 6.9.2, subjectto 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 bedetermined as provided in Section 6.9.2. The closing of the sale and purchasepursuant 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 eventof exercise of any Disassociation Option, (i) the Membership Interest of theselling Party shall be transferred and assigned to the purchaser free and clearof any security interests or other liens or encumbrances, and (ii) each Partyshall execute and deliver to the other such instruments as the other mayreasonably request in connection with the consummation of the sale andpurchase.

6.9.4 Dissolution uponDisassociation. Upon the occurrence of any event enumerated in Section6.9.1, the Company shall dissolve, unless, within 90 days thereafter, theDisassociation Option is exercised.

6.9.5 Winding Up.Upon dissolution, the Company shall cease carrying on its business and affairsand shall proceed to the orderly liquidation of the Company’s assets andtermination of the Company, and the proceeds of such sale or other dispositionof assets, together with other available proceeds, shall be applied proceedsand 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 anyprovision of this Agreement by an action at law or equity, nor shall anelection to dissolve the Company pursuant to this Article 6 relieve eitherMember of any liability for any prior or subsequent breach of this Agreement oranother document referred to herein.

6.10 DisputeResolution. The Parties shall attempt to resolve all disputes in good faithin a reasonable time and manner. A dispute not resolved shall be referred inwriting to any Board member for resolution via a Special Board Meeting. In theevent 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 oftheir respective Member Designees, directors, offices, employees, shareholders,heirs and personal representatives, and may defend, indemnify and hold harmlessany Company agent, who is made or threatened to be made a Party to any suit orproceeding (whether civil, administrative, criminal or investigative), byreason of the fact that such person is or was a Member, Member Designee, Boardmember or employee of the Company or serves or served any other enterprise atthe request of the Company as a director, manager, Board member, employee,fiduciary or member (an “Indemnified Person”) to the fullest extent permittedby law. Such indemnity shall include any loss, expense (including attorneys’and experts’ fees and costs), damage or injury suffered or sustained by anIndemnified Person by reason of any acts, omissions or alleged acts oromissions of the Indemnified Person on or reasonably believed to be on behalfof or not opposed to the Company or in, or reasonably believed to be in,furtherance of the

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interest of the Companyor not opposed to the Company’s interest; provided that the acts, omissions oralleged acts or omissions were not (i) performed or omitted fraudulently, inbad faith or in self-dealing to the detriment of the Company, (ii) in knowingviolation of law, or (iii) in willful breach of this Agreement or a documentreferred to in this Agreement. Any such indemnification shall only be from theassets of the Company.

The Company shall not berequired to indemnify a person in connection with a proceeding initiated bysuch person against the Company if the proceeding was not authorized by theMembers. The ultimate determination of entitlement to indemnification of anyIndemnified Person shall be made by the Members in such manner as the Membersmay determine. The payment of any expenses in advance of the final dispositionof the proceedings shall be made only upon receipt of an undertaking by theIndemnified Person to repay all amounts advanced if it should be ultimatelydetermined that the Indemnified Person is not entitled to be indemnified underthis Article 10 or otherwise.

Any and all indemnityobligations of the Company with respect to any Indemnified Person shall surviveany termination of this Agreement.

6.11.1 Limitations onPersonal Liability. No Member Designee or Board member shall be personallyliable to the Company or its Members for monetary damages for breach offiduciary duty as a Member Designee or Board member except for liability foracts or omissions not in good faith or which involve intentional misconduct or,a knowing violation of law. Nothing herein shall limit or otherwise affect theobligation or right of the Company to indemnify any other individual to thefull extent permitted by law.

6.11.2 FiduciaryInsurance. The Members may, to the full extent permitted by law, authorizean appropriate Board member or Board members to purchase and maintain at theCompany’s expense insurance (i) to indemnify the Company for any obligationswhich it incurs as a result of the indemnification of Member Designees andBoard members under the provisions of this Section 6.11.2, and (ii) toindemnify Members, Member Designees and Board members in instances in whichthey may not otherwise be indemnified by the Company under the provisions ofthis Section 6.11.2.

6.11.3 MutualProvision. Each Party will indemnify and hold harmless theother Party and the Company for any breech of their representations andwarranties.

6.11.4 Each Partyshall defend, indemnify and hold harmless the other Party andthe Company for any loss, expense (including attorneys’ and experts’ fees andcosts), damage or injury suffered or sustained by such Party or Company arisingout of or related to a claim that any product or service provided by theindemnifying Party under the Program infringes the patent, trademark, tradesecret, copyright or other intellectual property rights of any third Party,provided that the indemnified Party or Company notifies the indemnifying Partypromptly in writing of any such claim, and that the indemnifying Party may usecounsel 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 shallprevent the Company from competing with the Members or any of their Affiliatesor other Members or any of their Affiliates from competing with the Company orthe other Members or any of their Affiliates.

6.12.2 Waiver ofCorporate Opportunity. Except as expressly stated herein (including Section3.1.1), no Member or any Affiliate shall be under any fiduciary or otherobligation to the Company or the other Members or their respective Affiliatesso as to prevent or impede a Member or any Affiliate from participating in andenjoying the benefits of any business which such Member or any Affiliate ispermitted to engage in. Such legal doctrines as corporate opportunity, businessopportunity or partnership duties sometimes applied to person having fiduciaryobligations shall not apply with respect to any participation by a Member,Member Designee or Affiliate thereof in any business activity or endeavorpermitted under the provisions of this Agreement.

6.12.3 Standard ofCare: No Fiduciary Duty.

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

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

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

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

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document referred to herein, all contractual or othercommercial dealings between the Company and each of the Members and theirrespective 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 fromeither Member, but may seek quotes for the supply of services or components innormal course.

6.13 MiscellaneousProvisions.

6.13.1 Amendments.This Agreement may only be amended by a written amendment approved and executedby 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 orcorporation may in the context require.

6.13.3 Execution ofInstruments. All agreements, consents, deeds, contracts, proxies,covenants, bonds, checks, drafts, bills of exchange, notes, acceptances andendorsement, and all evidences of indebtedness and other documents, instrumentsor 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, asfrom 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 theMembers may delegate the power so to determine.

6.13.4 ProprietaryInformation. Each of the Parties shall comply with Exhibit 5, the MutualProprietary Information Agreement, and shall in any event take all necessarysteps to assure that any Proprietary Information as defined in Exhibit 5,including FIP developed under this Agreement, is protected from disclosure toThird Parties or unauthorized use by the other Party. Except as otherwiseprovided herein and if required by a Party’s internal operating procedures,Proprietary Information may be shared with an Affiliate subject to Section6.13.12. In any conflict between the terms of this Agreement and the terms ofthe Mutual Proprietary Information Agreement, the terms of the latter shallgovern.

6.13.5 Notice. Anynotice, Financial reports, other reports and other communication to a Memberrequired or permitted hereunder shall be made in writing in the Englishlanguage and shall be delivered in person, or sent by first-class mail andfacsimile, or electronic mail addressed to the address of such Member set forthbelow or to such other address as such Members shall have communicated inwriting to the other. Any such notice shall be considered to have been givenupon receipt by the intended recipient.

Notices or communicationto FPI shall be sent to:

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

Notices or communicationsto GDLS shall be sent to:

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

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

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

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

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

6.13.10 Governing Law.This Agreement shall be governed by the laws of the State of Delaware, withoutreference to its conflicts of law provisions.

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

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responsible for its ownexpenses, including attorneys’ and other professional fees incurred inconnection with the transactions contemplated by this Agreement. Neither Partyis 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 conditionrequired to be complied with by such Affiliate and to fulfill any obligationrequired 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, and6.13.4 of this Agreement shall survive any termination of this Agreement or thedissolution of the Company.

6.13.14 LimitedLiability. Except as otherwise provided by the Act or this Agreement, thedebts, obligations and liabilities of the Company, whether arising in contract,tort or otherwise, shall be solely the debts, obligations and liabilities ofthe Company, and the Members shall not be obligated personally for any suchdebt, obligation or liability of the Company solely by reason of being a memberof the Company. The Members shall not be required to lend any funds to theCompany. Each of the Members shall only be liable to make payment of itsrespective contributions as and when due hereunder and other payments asexpressly provided in this Agreement. If and to the extent a Member’scontribution shall be fully paid, such Member shall not, except as required bythe express provisions of the Act regarding repayment of sums wrongfullydistributed to Members, be required to make any further contributions.

6.13.16 IntellectualProperty (IP), Background Intellectual Property (BIP), Foreground IntellectualProperty (FIP) and Technical Data (TD) Rights. Other than asexpressly set forth below, no rights in a Party’s BIP are licensed,transferred, or granted by this Agreement and each Party hereby reserves all rightsin its BIP, including any improvements or derivative works based on such BIP,Concerning any FIP created by either Party without contribution or input fromthe other, under or in connection with the Program and without reference to theother Party’s BIP, the creating Party shall own same exclusively. With respectto any FIP created jointly by the Parties, without reference to either Party’sBIP, under or in connection with the Program, the Parties shall own samejointly and each shall be permitted to use such FIP to carry out itsobligations with respect to the Program and thereafter for its own purposessubject to any restrictions referenced herein or agreed upon by the Parties inwriting. To the extent that jointly created FIP or TD is created using, basedupon or derived from BIP, the Parties shall establish a process to deal withthe 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 priorwritten consent of the other Party or unless the Parties conclude a writtenagreement with respect to such exploitation.

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

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**ARTICLE VIIGENERAL**

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

7.2 Costs and Expenses.

A.                     Each Partyshall bear all of its costs and expenses which may arise out of the preparationof this Agreement and the documents contemplated by this Agreement with theexception of fees associated with creation of the Company which shall bereimbursed by the Company.

B.                       All costsand expenses in connection with operating the Company will be borne by eachParty 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 orotherwise making any public statements with respect to this Agreement or thetransactions contemplated hereby and shall not issue any press release or makeany public statement or permit to the Company to do same without mutualconsent, except as may be required by law and then only with such priorconsultation.

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 bythe Members. The marketing plan for the Program will be developed andimplemented by the Company in coordination with the Members’ businessdevelopment, communications, marketing and sales staffs.

7.3.3. GovernmentRelations GDLS shall have the lead with respect to planning, coordinationand execution of all federal political lobbying campaigns, including lobbyingactivities, lobbying contacts and the associated costs of lobbying on behalf ofthe Company. GD Corporation, the parent of GDLS, will be responsible forreporting lobbying activities and contacts with covered federal officials tothe U.S. Congress on a semiannual basis as defined in the Lobbying DisclosureAct of 1995, PL-104-65.

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

(b)                   For thepurposes of the Program, no employee of either Party, or their affiliates, willbe authorized to attempt to influence an officer or employee of any federalagency, a Member of Congress, an officer or employee of Congress, or an employeeof a Member

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of Congress in connection with any federal contract.

(c)                    FederalPolitical Government Relations Campaign Plans will be briefed back to the Boardof the Company.

(d)                   GDLS recognizesthat 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 actin the manner contemplated by the provisions of this Agreement.

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

 
| **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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**AMENDMENTONETo Force* Dynamics, LLC Joint Venture Agreement**

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

**I.**

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

II.

In consideration of themutual covenants contained herein, and other good and valuable considerationthe Parties agree that the Agreement shall be, and is amended in part asfollows:

1.                         In anyand all places in the Agreement where there is reference to the “Mine ResistantAmbush Protected Vehicle Program” or “MRAP”, it shall now read as alsoreferencing the “Medium Mine Protected Vehicle” or “MMPV”.

2.                         Add tothe definitions section the following. “MMPV” means the US Government MediumMine Protected Vehicle Program.

3                          Replacein its entirety the definition of “Program” with the following, “Program” manthe Mine Resistant Ambush Protected (“MRAP”) Vehicle Program, a United Statesjoint services’ program to produce and provide lifecycle support to address thecurrent threat of improvised explosive devices in the Middle East as more fullydescribed in solicitation number M67854-O7-R-5000 and/or the Medium MineProtected Vehicle Program (“MMPV) as more fully described in solicitationnumber W56HZV-O7-R-O315. The Program will include any and all solicitations andRFP’s for MRAP and/or MMPV production and Lifecycle Support and/or any followon work which may be performed including any program name change, changed orfuture program requirements, product evolutions and technology insertionsrelated 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 MRAPCat I and Cat II and the MRAP CAT n for MMPV requirements and does not includeany other existing or future contracts or programs for the Parties’ othervehicles (or vehicle variants) to include by way of illustration and notlimitation, the JERRV program, the ILAV and Mastiff program, the Buffalo andCheetah vehicles, the Striker, LAV, and RG-31 vehicles, the MRAP Cat IIIprogram and/or the JLTV program.

4.                         Paragraph3.1. Is replaced in its entirety with the following: “General It is theintent of the Parties to combine their respective strengths to market andpromote FPI’s COUGAR vehicles for the Cat I and Cat II requirements of the MRAPProgram and the MMPV Program. The Parties will make available to the Companytheir 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 inFPTs Proposal and MMPV in accordance with the plan set forth in the proposal tobe submitted by this JV. Understanding the complexity of the MRAP Program andMMPV Program, the Company will form a FPI-GDLS Team MRAP Program ManagementOffice that will be the Parties’ exclusive interface with the Customer’sProgram Management Organization, and which will have operating responsibilityover the execution of the MRAP and MMPV Programs. Each Party will providepersonnel to the Program Office according to the plan developed and agreed bythe Board. Other than those programs identified above in the definition of “Program”,the Parties agree that the Company will pursue any and all future vehicleprograms related to, or arising out of the current MRAP or MMPV programs.

5.                         Paragraph3.2.1 is replaced in its entirety with the following, “3.2.1. Mutual Intentto Win The Parties affirm that this Joint Venture Agreement is based on amutual intent to join forces to win the MRAP and MMPV Programs. In the interestof the Joint Venture, the Parties agree to focus on each Party’s strengths inthe MRAP Workshare allocation (Exhibit 3) to maximize the competitive advantageof the bid submission. The MMPV Workshare allocation shall be as indicated inExhibit 3. The Parties acknowledge the potential that the initial MRAPWorkshare may not be 50%/50% immediately.”

6.                         Paragraph3.5 Product Approach is replaced in its entirety with the following: “TheParties intend to offer for the MRAP Program the proven family of COUGARvehicles in 4x4 and 6x6 configurations for the CATERGORY 1 and CATEGORY 2requirements respectively. The Parties intend to offer the COUGAR vehicles in6X6 configuration for the MMPV Program.

7.                         Paragraph3.8 is modified to add the following: MMPV Key Events Timeline:

A.                      USGovernment Release of RFP on 3 April 2007

B                           RFPresponse due date is 2 May 2007

C.                        MainContract Award is expected to be received in July 2007

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

**III**

The balance of theprovisions of said Joint Venture Agreement remain in full force and effect,unaltered and unchanged by this subsequent Amendment 1, except where the termsthereof 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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**AMENDMENTTWOTo Force Dynamics, LLC Joint Venture Agreement**

This Amendment Two ismade this 29th day**ofMarch 2007, whose forming members are Force Protection Inc. (“FPI”), GeneralDynamics Land Systems Inc. (“GDLS).

**I.**

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

**II.**

In consideration of themutual covenants contained herein, and other good and valuable considerationthe Parties agree that the Agreement shall be, and is amended in part asfollows:

1.                         TheForce Dynamics Board of Directors in its regular meeting held on 23 January2007 unanimously agreed that Paragraph 6.5.6 of the Joint Venture Agreementhaving to do with the use of outside auditors is not required.

2.                         Thesubstance of paragraph 6.5.6 of the Joint Venture Agreement is deleted in toentirety and the paragraph is marked as “Reserved”.

**III.**

The balance of theprovisions of said Joint Venture Agreement remain in full force and effect,unaltered and unchanged by this subsequent Amendment Two, except where theterms 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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