**Exhibit 10.3**

 

**[***]INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENTHAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

** **

**JOINT VENTURE AGREEMENT**

 
| Force Protection Advanced Solutions Limited   |   | (1 | ) |
|-----------------------------------------------|--------|----|---|
| Force Protection Industries, Inc.        |   | (2 | ) |
| NP Aerospace Limited                          |   | (3 | ) |
| Integrated Survivability Technologies Limited |   | (4 | ) |

 

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**[***]INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENTHAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

TABLE OF CONTENTS

 
| ** ** | ** **                                            | **Page** |
|------------|-------------------------------------------------------|----------|
|       |                                                  |     |
| 1.         | INTERPRETATION                                        | 1        |
| 2.         | THE BUSINESS OF IST                                   | 7        |
| 3.         | TERM                                                  | 11       |
| 4.         | COMPLETION                                            | 11       |
| 5.         | COVENANTS                                             | 16       |
| 6.         | DIRECTORS AND MANAGEMENT                              | 18       |
| 7.         | RESTRICTIONS ON THE  PARTIES                          | 22       |
| 8.         | GUARANTEES AND INDEMNITIES                            | 23       |
| 9.         | THE BUSINESS PLAN                                     | 29       |
| 10.        | FINANCING OF IST                                      | 30       |
| 11.        | ACCOUNTING                                            | 30       |
| 12.        | DEADLOCK                                              | 31       |
| 13.        | RESOLUTION OF DEADLOCK                                | 32       |
| 14.        | TRANSFER OF SHARES                                    | 35       |
| 15.        | OBLIGATORY TRANSFER EVENT                             | 35       |
| 16.        | TRANSFER FOLLOWING  OBLIGATORY TRANSFER EVENT         | 36       |
| 17.        | EXPERT                                                | 38       |
| 18.        | TERMINATION AND  LIQUIDATION                          | 39       |
| 19.        | COMPLETION OF THE SALE AND  PURCHASE OF SHARES IN IST | 41       |
| 20.        | STATUS OF AGREEMENT                                   | 42       |
| 21.        | INTELLECTUAL PROPERTY  RIGHTS                         | 43       |
| 22.        | CONFIDENTIALITY                                       | 43       |
| 23.        | PUBLICITY                                             | 45       |
| 24.        | DATA PROTECTION                                       | 46       |
| 25.        | FREEDOM OF INFORMATION                                | 46       |
| 26.        | WARRANTY                                              | 46       |
| 27.        | WHOLE AGREEMENT                                       | 46       |

 

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**[***]INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENTHAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

TABLE OF CONTENTS

(continued)

 
| ** **                                             | ** **                      | **Page** |
|--------------------------------------------------------|---------------------------------|----------|
|                                                   |                            |     |
| 28.                                                    | ASSIGNMENTS                     | 46       |
| 29.                                                    | VARIATION AND WAIVER            | 47       |
| 30.                                                    | COSTS                           | 47       |
| 31.                                                    | NO PARTNERSHIP                  | 47       |
| 32.                                                    | THIRD PARTY RIGHTS              | 47       |
| 33.                                                    | NOTICE                          | 48       |
| 34.                                                    | INTEREST ON LATE PAYMENT        | 49       |
| 35.                                                    | SEVERANCE                       | 50       |
| 36.                                                    | FURTHER ASSURANCE               | 50       |
| 37.                                                    | COUNTERPARTS                    | 50       |
| 38.                                                    | AGREEMENT SURVIVES  COMPLETION  | 50       |
| 39.                                                    | GOVERNING LAW AND  JURISDICTION | 51       |
| Schedule 1 - Matters reserved for shareholder approval | 51                              |
| Schedule 2 - Covenants                                 | 55                              |
| Schedule 3                                             | 56                              |

 

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**[***]INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENTHAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

**THIS AGREEMENT**is dated 31 March 2009

 

**PARTIES**

 

(1)                                  FORCEPROTECTION ADVANCED SOLUTIONS LIMITED, a company incorporated and registered inEngland and Wales with company number 06681502 whose registered office is atNarrow Quay House, Narrow Quay, Bristol, BS1 4AH (**FPAS**).

 

(2)                                  FORCEPROTECTION INDUSTRIES, INC., a company incorporated in the State of Nevada inthe United States of America with employee identification number (EIN)88-0361514 with a principal place of business at 9801 Highway 78, Ladson, SouthCarolina 29456 and whose registered agent is Corporation Service Company, 1703Laurel Street, Columbia, South Carolina 29201 (**FPII**).

 

(3)                                  NP AEROSPACELIMITED, a company incorporated and registered in England and Wales withcompany number 3472480 whose registered office is at 473 Foleshill Road,Coventry, West Midlands, CV6 5AQ (**NPA**).

 

(4)                                  INTEGRATEDSURVIVABILITY TECHNOLOGIES LIMITED a company incorporated and registered inEngland and Wales with company number 06805545 whose registered office is atNarrow Quay House, Narrow Quay, Bristol, BS1 4AH (**IST**).

 

Each a “**party**” andreferences to “**parties**” arereferences to all of them.

** **

**BACKGROUND**

 

(A)                              FPAS and NPAare to each hold shares in IST (as defined below).

 

(B)                                IST shall carryon business in accordance with the terms and conditions of this Agreement.

 

(C)                                FPAS and NPAshall exercise their rights in relation to IST in accordance with the terms andconditions of this Agreement.

** **

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** **

**[***]INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENTHAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

** **

**AGREED TERMS**

** **

**1.**                                      INTERPRETATION

 

1.1                                 The definitionsand rules of interpretation in this Clause apply in this Agreement.

** **

**ApprovalsMatrix:**the approvals matrix of the Company in the agreedform;

** **

**Articles:**the articles ofassociation of IST in the agreed form to be adopted on or prior to Completionas amended or superseded from time to time;

** **

**BaseVehicle:**means a vehicle comprised of those parts of aRelevant Vehicle which are not supplied by an NPA Group Company;

** **

**Board:**the board ofdirectors of IST as constituted from time to time;

** **

**Business:**has the meaninggiven in Clause 2;

** **

**BusinessDay:**a day (other than a Saturday or Sunday) when banks in the City ofLondon are open for business;

** **

**BusinessPlan:**has the meaning given in Clause 9;

** **

**Chairman:**means thechairman of IST;

** **

**CompaniesActs:**the Companies Act 1985 and the Companies Act 2006;

** **

**Completion:**the performance of all the obligations of the parties to this Agreementset out in Clause 4;

** **

**CompletionDate:**means the date of this Agreement;

** **

**ConfidentialInformation:**has the meaning given in Clause 22;

** **

**Control:**in relation toa body corporate, means the power of a person to secure that the affairs of thebody corporate are conducted in accordance with the wishes of that person:

 

(a)                                  by means of theholding of shares, or the possession of voting power, in or in relation to thator any other body corporate; or

 

(b)                                 by virtue ofany powers conferred by the articles of association, or any other document,regulating that or any other body corporate,

 

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**[***]INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENTHAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

and a **Change of Control**occurs if a person whocontrols any body corporate ceases to do so or if another person acquirescontrol of it, but, for the avoidance of doubt, provided that:

 

(i)                                     in the case ofNPA, Morgan Crucible remains the ultimate parent company of NPA; or

 

(ii)                                  in the case ofFPAS, FPI remains the ultimate parent company of FPAS,

 

there will not be a Changeof Control;

** **

**Covenants:**means thecovenants set out in Schedule 2;

** **

**DeadlockNotice:**has the meaning given in Clause 12.3;

** **

**DeadlockResolution Notice:**has the meaning given in Clause 13.1;

** **

**DoD:** means theUnited States Department of Defense;

** **

**EffectiveDate:**means the date of this Agreement;

** **

**EquityShares:**means the FPAS Shares and the NPA Shares;

** **

**Encumbrance:**includes any mortgage, charge (fixed or floating), pledge, lien,hypothecation, guarantee, trust, right of set-off or other third party right orinterest (legal or equitable) including any assignment by way of security,reservation of title or other security interest of any kind, howsoever createdor arising, or any other agreement or arrangement (including a sale andrepurchase agreement) having similar effect;

** **

**ExistingFPI FMS Contracts:**the contracts entered into by any FP Group Companyprior to the date of this Agreement for the supply of vehicles to UK MODthrough the DOD’s foreign military sales structure;

** **

**ExistingNPA Spares Contract:**the contract dated 1 April 2008 betweenNPA and UK MOD;

** **

**Expert:** a personappointed in accordance with Clause 17 to resolve a matter under thisAgreement;

 

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**[***]INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENTHAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

**Fair Value:**means the value of any shares determined in accordance with Clause 16;

** **

**FD:**means thefinance director of IST;

** **

**FinancialYear:**in relation to IST, means a financial accounting period of 12 monthsending on the date given in Clause 4.2(f) but, in the first year in whichIST is formed, means the period starting with the day IST is formed and endingon the date given in Clause 4.2(f);

** **

**FPASDirector:**any director appointed to the Board by FPAS;

** **

**FPII IPR:**allIntellectual Property Rights identified in the relevant FPII Sub-contract andowned by or licensed to FPII;

** **

**FPAS Share:**an ordinary share of £1 in the capital of IST designated as an FPASShare;

** **

**FPI:**ForceProtection, Inc., a company incorporated in the State of Nevada in theUnited States of America with employee identification number (EIN) 84-1383888with a principal place of business at 9801 Highway 78, Ladson, South Carolina29456 and whose registered agent is Corporation Service Company, 1703 LaurelStreet, Columbia, South Carolina 29201;

** **

**FPIISub-contract:**any sub-contract between FPII and IST for the supplyby FPII of Relevant Vehicles and/or Other Vehicles and Products;

** **

**FP GroupCompany:**FPI and any member of its Group;

** **

**Group:**in relation toa company (wherever incorporated), that company, any company of which it is aSubsidiary (its holding company) and any other Subsidiaries of any such holdingcompany; and each company in a Group is a member of the Group. Unless thecontext otherwise requires, the application of the definition of Group to anycompany at any time shall apply to the company as it is at that time;

** **

**IntellectualProperty Rights**means all intellectual property rights and includescopyrights, patents, trade marks, service marks, database rights and rights toextract data, registered and unregistered designs, rights in circuit layoutsand semi-conductor topography rights, trade secrets, rights of confidence, allwhether registered or not, 

 

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** **

**[***]INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENTHAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

applications for any of theforegoing, the right to apply for any of the foregoing and all other intellectualproperty rights and equivalent or similar rights or forms of protectionrecognised in any part of the world;

** **

**MaterialContract:**means a contract having a contract value in excessof £**[***]**;

** **

**MD:**means themanaging director of IST;

** **

**MorganCrucible:**The Morgan Crucible Company PLC, a companyincorporated and registered in England and Wales with company number 00286773whose registered office is at Quadrant, 55-57 High Street, Windsor, BerkshireSL4 1LP;

** **

**NPADirector:**any director appointed to the Board by NPA;

** **

**NPA GroupCompany:**NPA and any member of its Group;

** **

**NPA IPR**means allIntellectual Property Rights identified in the relevant NPA Sub-Contract andowned by or licensed to NPA;

** **

**NPA Share:**an ordinaryshare of £1 in the capital of IST designated as a NPA Share;

** **

**NPASub-contract:**any sub-contract between NPA and IST for theintegration of equipment onto the Relevant Vehicles and Other Vehicles andProducts and any other services to be provided by NPA to IST;

** **

**ObligatoryTransfer Event:**in relation to a party, any event specified inClause 15 that happens to that party or any member of its Group;

** **

**OtherVehicles and Products:**has the meaning given in Clause 2.1;

** **

**RelevantVehicles:**has the meaning given in Clause 2.1;

** **

**ReservedMatters:**the matters listed in Schedule 1;

** **

**Shareholders:**the holders of Equity Shares;

** **

**Subsidiary:** in relation toa company wherever incorporated (a holding company) means a “subsidiary” asdefined in section 1159 of the Companies Act 2006 and any other 

 

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**[***]INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENTHAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

company which is asubsidiary (as so defined) of a company which is itself a subsidiary of suchholding company. Unless the context otherwise requires, the application of thedefinition of Subsidiary to any company at any time shall apply to the companyas it is at that time;

** **

**Taxes Act1988:**the Income and Corporation Taxes Act 1988;

** **

**Term:** the term ofthe agreement as set out in Clause 3;

** **

**UK MOD:** means theUnited Kingdom Ministry of Defence;

** **

**UK MODContract:**any contract between IST and UK MOD in the termsentered into prior to termination of this Agreement;

** **

**US:** United Statesof America;

 

1.2                                 Clause,Schedule and paragraph headings do not affect the interpretation of thisAgreement.

 

1.3                                 A reference toa Clause or a Schedule is a reference to a Clause of, or Schedule to, thisAgreement. A reference to a paragraph is to a paragraph of the relevantSchedule.

 

1.4                                 A **person**includes a natural person, acorporate or unincorporated body (whether or not having a separate legalpersonality).

 

1.5                                 Words in thesingular include the plural and in the plural include the singular.

 

1.6                                 A reference toone gender includes a reference to the other gender.

 

1.7                                 A reference toa particular statute, statutory provision or subordinate legislation is areference to it as it is in force at the date of this Agreement taking accountof any amendment or re-enactment and includes any statute, statutory provisionor subordinate legislation which it amends or re-enacts and subordinatelegislation for the time being in force made under it provided that, as betweenthe parties, no such amendment or re-enactment shall apply for the purposes ofthis Agreement to the extent that it would impose any new or extendedobligation, liability or restriction on, or otherwise adversely affect therights of, any party.

 

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**[***]INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENTHAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

1.8                                 A reference to **writing**or **written**includes faxes but not e-mail.

 

1.9                                 Documents in **agreed form**are the documents listed inSchedule 3 in the form agreed by the parties to this Agreement and initialledby them or on their behalf for identification.

 

1.10                           A reference inthis Agreement to a document is a reference to the document whether in paper orelectronic form.

 

1.11                           Where the words**include(s), including**or**in particular**are used in this Agreement,they are deemed to have the words “without limitation” following them.

 

1.12                           Any obligationin this Agreement on a person not to do something includes an obligation not toagree or allow that thing to be done.

 

1.13                           Where thecontext permits, **other**and **otherwise**are illustrative and shall notlimit the sense of the words preceding them.

** **

**2.**                                      THE BUSINESS OF IST

 

2.1                                 The business ofIST (the **Business**) is:

 

(a)                                  the design,development, manufacture, forward-integration and delivery, with IST acting asthe contracting entity on a prime contractor basis, of:

 

(i)                                     FPII’sWolfhound, Buffalo, Mastiff and Ridgback vehicles as at the date of thisAgreement and vehicles which are based on those vehicles (**Relevant Vehicles**) to the UK MOD;

 

(ii)                                  otherinnovative, fully-integrated vehicles and other products to be agreed by theShareholders in writing (**Other Vehicles andProducts**);

 

(b)                                 the provisionof whole life support (including spares, field service repairs and productupgrades) to UK MOD in relation to the Relevant Vehicles;

 

(c)                                  working with UKMOD to establish the optimum contractual structures and working relationshipsincluding:

 

(i)                                     the use of UKsub-contractors, where appropriate;

 

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**[***] INDICATES MATERIAL THAT HAS BEEN OMITTED ANDFOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIALHAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

(ii)           forming a long-term partnering relationship with UKMOD;

 

(iii)          continually seeking to develop design enhancementsthat create real value for UK MOD and working with FPII, NPA and othersub-contractors to incorporate such enhancements within the scope of work ofeach sub-contract;

 

(iv)          finding innovative and flexible solutions for UK MODsuch as availability-based procurement, integrated product delivery andthrough-life support packages and priced options; and

 

(v)           engendering a culture of openness and transparencyas demonstrated by open-book accounting and raising problems at an early stagewhen they can be resolved effectively,

 

all of which should enable IST to provide UK MODwith a value for money through-life solution on time and on budget; and

 

(d)           entering into sub-contracts with FPII, NPA and thirdparties for the supply of goods and services to enable IST to perform itsobligations.

 

2.2           IST and each of the Shareholders agree as follows:

 

(a)           Each Shareholder shall use its reasonable endeavoursto promote and develop the business of IST to the best advantage of IST;

 

(b)           IST and the Shareholders shall use their reasonableendeavours to ensure that:

 

(i)            the formation and operation of IST adds value toboth of the Shareholders; and

 

(ii)           IST becomes a viable and profitable company.

 

2.3           IST shall have places of business in both Bristoland Coventry, or in such other places as may be agreed by the parties from timeto time.

 

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**[***] INDICATES MATERIAL THAT HAS BEEN OMITTED ANDFOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIALHAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

** **

**Non-IST Supply**

 

2.4           Subject to Clause 2.17, no FP Group Company shallsupply Relevant Vehicles to UK MOD otherwise than through IST.

 

2.5           Subject to Clause 2.17, IST shall sub-contract withNPA for all integration work in relation to Relevant Vehicles it supplies to UKMOD, except in such cases where all FPAS Directors and all NPA Directorsunanimously resolve that:

 

(a)           NPA does not have the necessary expertise, capacityor resources to fulfil the relevant requirement; or

 

(b)           it is in the best interests of IST to contract witha party other than NPA,

 

in which case IST shall be entitled to contract witha sub-contractor or supplier other than NPA. Where reasonably possible, ISTshall contract with an entity based in the United Kingdom.

 

2.6           IST, FPII, FPAS and NPA will work to develop acontractual structure and specifications which maximise efficiency and avoidredundant activities and duplication of effort between contractors.

 

2.7           The parties acknowledge that UK MOD may decide toprocure Relevant Vehicles otherwise than through IST. In such circumstances,FPII shall be entitled to supply the Relevant Vehicles to UK MOD directly orthrough an entity nominated by the DoD and such supply shall not be though IST.FPII shall not be required to account to IST for any revenue generated by thatcontract. For the avoidance of doubt, FPII may complete its Existing FPI FMSContracts.

 

2.8           Where UK MOD purchases the Relevant Vehiclesotherwise than through IST and awards any integration work to NPA, NPA will beentitled to perform such contract directly and shall not be required to accountto IST for any revenue generated by that contract.

 

2.9           Where UK MOD purchases Relevant Vehicles otherwisethan through IST, the parties anticipate that IST will only be party to acontract with UK MOD if UK MOD elects to engage IST to co-ordinate integrationor through-life support.

 

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2.10         FPAS and FPII will use reasonable endeavours toassist IST in obtaining integration work in relation to any Relevant Vehiclessupplied to UK MOD otherwise than through IST.

 

2.11         Subject to NPA’s rights pursuant to Clauses 2.12 to2.15 below, all companies in the NPA Group will use reasonable endeavours toassist IST in supplying Relevant Vehicles to UK MOD.

** **

**Whole life support**

 

2.12         Subject to Clause 2.17, FPII and NPA (and members oftheir Groups) shall not bid for whole-life support (including spares,enhancements and modifications) work in relation to Relevant Vehicles for UKMOD other than through IST, except with the consent of the other Shareholder,not to be unreasonably withheld or delayed, provided that NPA may continue toprovide spares to UK MOD under the Existing NPA Spares Contract.

** **

**Competitive Bids**

 

2.13         Subject to Clause 2.17, where FPII is competing tosupply a Relevant Vehicle otherwise than through IST to UK MOD then:

 

(a)           NPA shall not form part of, or provide sub-contractservices to, a competing bidding group or consortium, save that

 

(b)           NPA may act as a sub-contractor to a competingbidding group or consortium on no better terms than those offered to IST,PROVIDED THAT, NPA commits no less resources to any IST proposal to provideintegration services in respect of that Relevant Vehicle than the resources itprovides to any competing bidding group or consortium.

 

2.14         Subject to Clause 2.17, where in respect of arequirement published by UK MOD:

 

(a)           FPII does not notify NPA within 30 days of a requestby NPA that an FP Group Company will bid to supply a Relevant Vehicle to UK MODotherwise than through IST; or

 

(b)           MOD has directed that the vehicle to be suppliedshould not be a Relevant Vehicle (either by reason of choosing sole sourceprocurement or excluding the 

 

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**[***] INDICATES MATERIAL THAT HAS BEEN OMITTED ANDFOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIALHAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

Relevant Vehicle from the competition at any time) (whether wheninviting tenders or following completion of the competition); and

 

(c)           only where and from such time as one or both of thecircumstances in subparagraphs (a) or (h) has occurred,

 

then any NPA Group Company may form part of acompeting bidding group or consortium (either as shareholder or sub-contractor)using a platform which is not a Base Vehicle.

 

2.15         Subject to Clause 2.17, where IST or an FP GroupCompany has entered but has failed to win any competition to supply anyRelevant Vehicle to UK MOD, NPA may supply any goods and/or services to thesuccessful bidding group or consortium except those goods and services which uniquelyrelate to any Relevant Vehicle.

 

2.16         Each of FPII and NPA shall procure that the membersof their respective Groups comply with the provisions of this Agreement

** **

**No restriction on UK MOD**

 

2.17         Nothing in this Agreement (including but not limitedto Clauses 2.4, 2.5 and 2.12 to 2.15) shall prevent any FP Group Company or anyNPA Group Company from:

 

(a)           supplying any goods or services to UK MOD; or

 

(b)           competing to supply any goods or services to UK MOD,

 

otherwise than through IST, whether directly orthrough a consortium arrangement, joint venture or other entity or structure,if so required by UK MOD.

** **

**UK MOD as priority customer**

 

2.18         Each of the Parties agrees that:

 

(a)           UK MOD will be the highest priority customer forIST; and

 

(b)           where IST receives orders from UK MOD and othercustomers to perform work and IST would be unable to satisfy all such orders,IST shall give priority to UK MOD’s orders,

 

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**[***] INDICATES MATERIAL THAT HAS BEEN OMITTED ANDFOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIALHAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

provided that this priority shall not require IST tobreach any existing contractual arrangements.

** **

**3.**             TERM

 

3.1           This Agreement shall come into effect on theEffective Date and shall continue in force unless and until terminated inaccordance with its terms.

** **

**4.**             COMPLETION

 

4.1           Completion shall take place on the Completion Dateat:

 

(a)           the offices of DLA Piper UK. LLP at Victoria SquareHouse, Victoria Square, Birmingham B2 4DL; or

 

(b)           any other place agreed in writing by the parties.

 

4.2           At Completion the parties shall procure that suchshareholder and board meetings of IST are held as may be necessary to:

 

(a)           increase the authorised share capital of IST to£1,000,000, divided into 1,000,000 ordinary shares of £1 each and re-designatethe shares held in IST by FPAS as FPAS Shares and shares held in it by NPA asNPA Shares, in each case to be subscribed for in accordance with Clauses 4.3and 4.4;

 

(b)           appoint:

 

(i)            Michael Moody as FPAS Director and Chairman

 

(ii)           David Hind as FPAS Director;

 

(iii)          Lenna Macdonald as FPAS Director;

 

(iv)          Michael Linton as NPA Director and MD;

 

(v)           Roger Medwell as NPA Director; and

 

(vi)          Andrew Riley as NPA Director;

 

(c)           resolve that the registered office of IST shall beat Bristol Business Park, 330 Coldharbour Lane, Bristol BS16 1EJ;

 

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**[***] INDICATES MATERIAL THAT HAS BEEN OMITTED ANDFOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIALHAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

(d)           appoint Grant Thornton UK LLP as the auditors of IST(**Auditors**);

 

(e)           appoint Barclays Bank plc as the principal bankersto IST; and

 

(f)            resolve that IST’s financial year shall end on 31 December ineach year.

 

4.3           At Completion:

 

(a)           FPAS and NPA shall procure that IST shall issuecredited as fully paid 299,999 FPAS Shares to FPAS and enter FPAS in theregister of members of IST as the holder of such FPAS Shares and issue a share certificateto FPAS in respect of all such shares;

 

(b)           in consideration for the issue of FPAS Shares, FPASshall pay £1,499,995 by telegraphic transfer to IST; and

 

(c)           FPAS and NPA shall procure that IST shall issuecredited as fully paid 300,000 NPA Shares to NPA and enter NPA in the registerof members of IST as the holder of such NPA Shares and issue a sharecertificate to NPA in respect of all such shares; and

 

(d)           in consideration for the issue of NPA Shares, NPAshall pay £1,499,995 by telegraphic transfer to IST.

 

4.4           Further subscription for shares:

 

(a)           Subject to the terms of this Agreement:

 

(i)            FPAS shall apply for the allotment and issue to itof 200,000 additional Equity Shares on 6 July 2009, such shares to bedesignated as FPAS Shares;

 

(ii)           NPA shall apply for the allotment and issue to it of200,000 additional Equity Shares on 6 July 2009, such shares to bedesignated as NPA Shares,

 

(the Further SubscriptionShares) in each case at a subscription price of £5 per Equity Share (the ShareSubscription Price).

 

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(b)           IST shall accept such applications for FurtherSubscription Shares.

 

(c)           Upon receipt of the aggregate Subscription Price forthe number of Further Subscription Shares subscribed for by and from each ofFPAS and NPA, IST shall issue the number of Further Subscription Sharessubscribed and paid for by each of FPAS and NPA fully paid and designated asFPAS Shares and NPA Shares (as appropriate) and shall procure that their namesbe entered in the register of members of IST as the respective holders of thenumber of Further Subscription Shares so allotted and issued to them and shallforthwith issue to each of them an appropriate definitive share certificate executedby IST.

 

(d)           If the Subscription Price is not received fromeither FPAS or NPA (the Defaulting Subscriber) on 6 July 2009 or suchlater date as may be agreed by the Shareholders (the Subscription Date) ISTshall notify the Defaulting Subscriber that it is in default of its obligationto subscribe for Further Subscription Shares and shall give the DefaultingSubscriber notice (the Default Notice) that the Defaulting Subscriber mustsubscribe in cleared funds for Further Subscription Shares within 10 BusinessDays from the Subscription Date (the Long Stop Date). Failure by IST to give aDefault Notice in accordance with this Clause 4 shall not relieve theDefaulting Subscriber from any obligation or liability arising under thisClause 4.4 and shall not invalidate any action of IST taken pursuant to it.

 

(e)           If a Defaulting Subscriber has not subscribed incleared funds for Further Subscription Shares by the Long Stop Date, IST shallnotify whichever of FPAS or NPA is not the Defaulting Subscriber (the Non-DefaultingSubscriber) of such failure within five Business Days of the Long Stop Date andshall invite the Non-Defaulting Subscriber to subscribe for FurtherSubscription Shares in respect of the Further Subscription Shares which are thesubject of the Default Notice (a Defaulted Shares Application) within 30Business Days of the Long Stop Date.

 

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(f)            A Non-Defaulting Subscriber shall have the right butnot the obligation to subscribe for the Further Subscription Shares which arethe subject of the Default Notice within 30 Business Days of the Long StopDate.

 

(g)           Upon receipt of the aggregate Subscription Price forthe number of Further Subscription Shares subscribed for by and from theNon-Defaulting Subscriber, IST shall accept such Defaulted Shares Applicationand issue the number of Further Subscription Shares subscribed and paid for bythe Non-Defaulting Subscriber fully paid and designated as either FPAS Sharesand NPA Shares (as appropriate) and shall procure that the name of theNon-Defaulting Subscriber be entered in the register of members of IST as theholder of the number of Further Subscription Shares so allotted and issued toit and shall forthwith issue to it an appropriate definitive share certificateby IST.

 

(h)           Notwithstanding any other provision of thisAgreement, in the event that FPAS or NPA is in default of its obligations underthis Clause 4.4 and does not subscribe in full in accordance with Clause 4.4 onor before the Long Stop Date, the following shall apply:

 

(i)            the Reserved Matters referred to in Schedule 1 shallbe deemed to be limited to the following only and Clause 5 and Clause 6.6 shallbe qualified accordingly:

 

(A)          no shares shall be issued to any person (savepursuant to employees or officers pursuant to a share incentive scheme approvedby the Board) other than on a pre-emptive basis in accordance with theArticles;

 

(B)           any contract to be entered into between IST and anyFP Group Company or NPA Group Company shall be on arm’s length terms;

 

(C)           no alteration shall be made to the rights attachingto any class of Equity Shares which does not apply to all classes of EquityShares;

 

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(ii)           the restrictions in Clause 2 shall not apply to theNon-Defaulting Subscriber;

 

(iii)          the Non-Defaulting Subscriber shall be entitled toremove the current Chairman and appoint a replacement.

 

(iv)          the requirement for the consent of any Director ofIST appointed by the Defaulting Shareholders pursuant to Clauses 2.5 and 6.8shall not apply;

 

(v)           the Defaulting Subscriber shall be entitled toappoint no more than one director to the Board in aggregate; and

 

(vi)          Clause 7.2 shall not apply.

 

4.5           At Completion FPAS and NPA shall procure that ISTshall adopt the Business Plan that has been prepared for the Financial Year andwhich is in agreed form.

 

4.6           FPAS and NPA waive, or agree to procure the waiverof, any rights or restrictions which may exist in the Articles or otherwisewhich might prevent the allotment and issue of the FPAS Shares and NPA Sharespursuant to Clause 4.3, Clause 4.4 and Schedule 1.

 

4.7           The Shareholders shall procure that:

 

(a)           the Auditors shall, at the expense of the Company, beinstructed to certify the amount of the profits for each accounting referenceperiod which are available for distribution by the Company at the same time asthey sign their report on the audited accounts of the Company for theaccounting reference period in question; and

 

(b)           (insofar as is lawful) **[***]**% of the amount of the Company’s profits available fordistribution in respect of each financial year during the term of thisagreement shall be distributed by the Company to the Shareholders by way of dividendpro-rata to the proportion of issued Shares held by that Shareholder (subjectto the restriction that no payment of any dividend will reduce the balance ofthe cash held at the Company’s bank to below £**[***]**on the day of payment).

 

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**5.**             COVENANTS

** **

**Reserved Matters**

 

5.1           Each Shareholder covenants with the otherShareholder to take such steps as it is reasonably able to take to procure thatIST does not, and each Shareholder will procure that each of its respectiveappointed directors of IST shall not (so far as such directors are lawfullyable), transact any business that is the subject of a Reserved Matter withoutthe prior consent of all other Shareholders.

 

5.2           IST covenants with the Shareholders that it shallnot transact any business the subject of a Reserved Matter without the priorconsent of all Shareholders.

 

5.3           For the avoidance of doubt, where this Agreementprovides for the delegation of powers to IST or to any of the directors of IST,such delegation and such powers remain subject to the provisions of Clause 5.1and Clause 5.2.

 

5.4           For the avoidance of doubt, where this Agreementprovides certain rights to FPAS and NPA, unless otherwise stated, the exerciseof any such rights remain subject to the provisions of Clause 5.1 and Clause5.2.

 

5.5           Where all FPAS Directors and all NPA Directors inoffice unanimously approve a matter which would otherwise fall within paragraph26, 27, 29, 31 and 34 of Schedule 1, the provisions of Clauses 5.1 and 5.2shall not apply in respect of such matter.

** **

**Consents**

 

5.6           Where any consent or approval of the Shareholders isrequired or sought in respect of any provision of this Agreement theShareholders shall have a complete and unfettered discretion as to whether ornot to give the consent or approval and whether or not to impose any terms,conditions or limitations on any such consent or approval.

 

5.7           No consent or approval to be given by theShareholders in this Agreement shall be valid unless given in writing or inaccordance with Clause 5.8.

 

5.8           Where the consent or approval of a Shareholder isrequired under this Agreement, it shall not be valid unless:

 

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(a)           in the case ofFPAS:

 

(i)            it is given bya FPAS Director voting in favour of a resolution of the Board in respect of thematter in question and evidenced by the signed minutes of the appropriate Boardmeeting or a duly signed written directors’ resolution or some other documentin which the relevant matter is approved; or

 

(ii)           if a FPASDirector declines to give a decision on the matter (which he is entitled to doat his discretion), FPAS gives its consent or approval in writing.

 

(b)           in the case ofNPA it is given by all NPA Directors voting in favour of a resolution of theBoard in respect of the matter in question and evidenced by the signed minutesof the appropriate Board meeting or a written directors’ resolution duly signedby all such persons or some other document in which the relevant matter isapproved; or

 

5.9           IST shallpromptly supply to the Shareholders and/or the FPAS Directors and Chairman andthe NPA Directors and MD, as the case may be, all information and documentsnecessary to enable them to give proper consideration to any matter on whichtheir consent or approval is sought.

 

5.10         EachShareholder covenants with the other Shareholders and IST in the terms of theCovenants.

 

5.11         IST covenantswith each of the parties (save for itself) in the terms of the Covenants.

 

5.12         The ReservedMatters and the Covenants shall bind the Shareholders and IST respectivelyduring such time as any Shareholder or their valid successors and assigns arethe registered holder or beneficial owner of any share capital in IST.

 

5.13         Each of theReserved Matters and Covenants shall be construed independently of each of theothers so that if one or more of them shall be held to be invalid as anunreasonable

 

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restraintof trade or for any other reason whatsoever then the remaining Reserved Mattersand Covenants shall be valid to the extent that they are not held to be soinvalid.

 

**6.**             DIRECTORS AND MANAGEMENT

** **

**Directorsand the Board**

 

6.1           IST shall bemanaged by a board of six directors (the **Board**)consisting of:

 

(a)           a Chairmannominated by FPAS;

 

(b)           the MDnominated by NPA.

 

(c)           two Directorsnominated by FPAS (of whom one may be the FD), ;

 

(d)           two additionalDirectors nominated by NPA.

 

6.2           The terms ofappointment of all Directors (including any remuneration) must be approved byall of the Shareholders.

 

6.3           The Board shalldelegate to the MID all necessary power and authority to undertake, conduct andcarry-on the day-to-day management and operations of IST. The MD shall reportto and take strategic direction from the Board.

 

6.4           The FD willwork closely with the MD as FPAS’s key contact for day-to-day operationalissues. The FD’s approval, not to be unreasonably withheld or delayed, shall berequired for all material financial transactions in accordance with theApprovals Matrix agreed between FPAS and NPA from time to time.

 

6.5           The MD, FD andother senior management roles identified in this Agreement shall be full-timeappointments and each party shall permit any relevant individual previously orconcurrently employed by it to devote 100% of his time to his role within ISTduring the term of his employment or secondment to IST.

 

6.6           The Board hasresponsibility for the supervision and management of IST and its business butshall obtain the approval of the Shareholders in accordance with Clause 5.8before taking any decision in relation to any Reserved Matter.

 

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6.7           Subject toClause 6.1, each Shareholder may nominate a director, and remove a directorwhom it nominated (in each case as a director) by giving notice to IST and theother Shareholder. The appointment or removal takes effect on the date on whichthe notice is received by IST or, if a later date is given in the notice, onthat date. Each Shareholder will consult with the other prior to anyappointment or removal of a director provided that no Shareholder may so removea director prior to the expiry of a contract relating to the provision of hisor her services in place with IST, without the consent of the otherShareholders.

 

6.8           The Shareholderremoving a Director shall indemnify and keep indemnified IST against any claimconnected with the Director’s removal from office.

 

6.9           The MD and theFD (or in the absence of either of such persons another director of ISTappointed by the appointer of such person) shall have responsibility forconsidering whether any amendment, variation or extension of any MaterialContract (including without limitation the MOD Contract, the FP Subcontract andthe NPA Subcontract) shall require approval by the Board or the Shareholders.In the event that such parties are unable to reach agreement within fiveBusiness Days of commencing discussion of the same, such matter shall bereferred to the Board and shall require unanimous approval of all FPASDirectors and NPA Directors in office to be effected and in the absence of suchagreement shall be a Reserved Matter (subject always to Clause 4.4(h)). In theevent that such amendment, variation or exclusion shall give rise to additionalcontract value in excess of £**[***]**,such amendment, variation or extension shall require unanimous approval of allFPAS Directors and NPA Directors in office to be effected and in the absence ofsuch agreement shall be a Reserved Matter (subject always to Clause 4.4(h)).

 

**Boardmeetings**

 

6.10         The Board shallmeet at least once a quarter to be held at a location to be agreed.

 

6.11         A director may,and at the request of a director or the company secretary shall, call a meetingof directors at any time.

 

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6.12         IST shallensure that at least seven days’ written notice of a meeting of directors isgiven to all directors entitled to receive notice accompanied by:

 

(a)           an agendaspecifying in reasonable detail the matters to be raised at the meeting; and

 

(b)           copies of anypapers to be discussed at the meeting.

 

6.13         A shorterperiod of notice of a meeting of directors may be given if at least one FPASDirector and all NPA Directors agree in writing.

 

6.14         Matters not onthe agenda, or business conducted in relation to those matters, may not beraised at a meeting of directors unless all the directors agree in writing.

 

6.15         The quorum atany meeting of directors is:

 

(a)           for anybusiness that is the subject of a Reserved Matter, all directors or theiralternates; and

 

(b)           for any otherbusiness, one FPAS Director (or his alternate) and one NPA Director (or hisalternate) (in each case provided one is in office).

 

6.16         Where a meetingis adjourned under Clause 6.19, the quorum for the adjourned meeting shall beany two directors.

 

6.17         No businessshall be conducted at any meeting of directors unless a quorum is present atthe beginning of the meeting and at the time when there is to be voting on anybusiness.

 

6.18         If the Chairmanfor the time being is unable to attend any meeting of the Board the Shareholderwho appointed him shall be entitled to appoint another Director appointed by itto act as Chairman at the meeting.

 

6.19         If a quorum isnot present within 30 minutes after the time specified for a directors’ meetingin the notice of the meeting then it shall be adjourned for five (5) BusinessDays at the same time and place.

 

6.20         A meeting ofdirectors shall be adjourned to another time or date at the request of all theFPAS Directors or all the NPA Directors present at the meeting. No business maybe

 

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conductedat a meeting after such a request has been made. No more than one suchadjournment may be made in respect of a meeting.

 

6.21         Meetings ofdirectors shall make decisions by passing resolutions:

 

(a)           for anybusiness that is the subject of a Reserved Matter, if all Directors cast theirvote for it; and

 

(b)           for any otherbusiness, if more votes are cast for it than against it provided that if anequal number of votes are cast for and against the resolution, the Chairmanshall use his best efforts to reconcile the different opinions of thedirectors. If he is unsuccessful, the matter shall be decided by use of theChairman’s additional vote, to be exercised at his discretion.

 

6.22         Except asprovided by Clauses 6.21 and 6.24, at a meeting of directors, each director hasone vote.

 

6.23         An FPASDirector or a NPA Director absent from a meeting may appoint any person (exceptan existing director representing the other class of shares) to act as hisalternate at the meeting. For the purposes of the meeting the alternatedirector:

 

(a)           shall be theFPAS Director or NPA Director by whom he is appointed and may vote in place ofthe FPAS Director or NPA Director; and

 

(b)           where theperson appointed as an alternate is already a director of IST in his own right,shall also be a director (and may vote) in his own right.

 

6.24         If each of theShareholders is not represented at any meeting of the Board by the maximumnumber of FPAS Directors and NPA Directors which such Shareholder is entitledto appoint (whether present in person or by alternate), then one of thedirectors so nominated by the Shareholder which is represented by fewerdirectors shall be entitled at that meeting to such additional vote or votes asshall result in the directors so present representing each Shareholder havingin aggregate the number of votes which could have been exercised by suchmaximum number of directors.

 

6.25         The directorsparticipate in a directors’ meeting, or part of a director’s meeting, when:

 

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(a)           the meeting hasbeen called and takes place in accordance with this Agreement; and

 

(b)           they can eachcommunicate to the others any information or opinions they have on anyparticular item of the business of the meeting.

 

6.26         In determiningwhether directors are participating in a directors’ meeting, it is irrelevantwhere any director is or how they communicate with each other.

 

6.27         If all the directorsparticipating in a meeting are not in the same place, they may decide that themeeting is to be treated as taking place wherever any of them is.

** **

**Organisationalmatters**

 

6.28         The partiesagree that it is essential that IST has a high-calibre, dedicated managementteam (the **Management Team**) whichunderstands the FPAS and NPA cultures (as well as the culture of UK MOD) and isfocused on building up IST into a substantial company within the UK andinternational defence manufacturing sector.

 

6.29         Where FPAS andNPA transfer personnel to IST, they will ensure that such personnel arereplaced in their previous roles within FPAS and NPA so as to enable them to befully committed to IST. FPAS and NPA will ensure that the establishment andmanagement of IST does not result in disruption to existing contractualobligations to the UK MOD.

 

6.30         Subject toClause 5 and Schedule 1, senior management shall be recruited by the MD andDavid Hind (or any replacement or successor to David Hind, as nominated byFPAS), who will work together in the recruitment process

 

6.31         The roles,responsibilities and terms of employment of all senior management and theorganisational structure of IST must be approved by both Shareholders.

 

6.32         TheShareholders agree that one senior manager of IST will be selected to ensurecompliance with all export control requirements, including but not limited totechnical assistance agreements, manufacturing licence agreements and any otherrelated compliance issues.

 

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**7.**             RESTRICTIONS ON THE PARTIES

 

7.1           Each of theShareholders shall not, and each of the Shareholders shall procure that eachmember of their respective Groups shall not, during the times specified inClause 7.4 below, offer employment to, enter into a contract for the servicesof, or attempt to solicit or seek to entice away from IST any individual who isat the time of, or in six month period prior to, the offer, or attempt, adirector, officer, secondee or employee holding an executive or managerialposition with IST or procure or facilitate the making of any such offer orattempt by any other person.

 

7.2           NPA shall not,and NPA shall procure that each NPA Group Company shall not, during the timesspecified in Clause 7.4 below, offer employment to, enter into a contract forthe services of, or attempt to solicit or seek to entice away from FPAS or anyFP Group Company, any individual who is at the time of the offer, or attempt, adirector, officer or employee holding an executive or managerial position withFPAS or any FP Group Company or procure or facilitate the making of any suchoffer or attempt by any other person.

 

7.3           FPAS and FPIIshall not, and FPAS and FPII shall procure that each FP Group Company shallnot, during the times specified in Clause 7A below, offer employment to, enterinto a contract for the services of, or attempt to solicit or seek to enticeaway from NPA or any NPA Group Company, any individual who is at the time ofthe offer, or attempt, a director, officer or employee holding an executive ormanagerial position with NPA or any NPA Group Company or procure or facilitatethe making of any such offer or attempt by any other person.

 

7.4           The timesduring which the restrictions set out in this Clause 7 apply are:

 

(a)           any time whenthe party in question is a Shareholder; and

 

(b)           for a period oftwo years after the party in question ceases to be a Shareholder.

 

**8.**             GUARANTEES AND INDEMNITIES

** **

**FPEmployees**means Mark Draisey, Mike Bowling and Phil Gall;

 

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**NPAEmployees**means Mike Linton and Scott Seefelt;

** **

**TransferDate**means the Completion Date;

** **

**TransferRegulations**means the Transfer of Undertakings (Protection of Employment)Regulations 2006 as amended;

 

8.1           **Background**

 

The parties do not believethat the establishment of IST under this Agreement constitutes a “relevanttransfer” within the meaning of the Transfer Regulations. However, in order toestablish IST FPAS and FPI will second the FP Employees and NPA will second theNPA Employees to provide certain services to IST. In addition, in order toprovides its functions IST also envisages employing a number of employeesdirectly and where necessary engaging contractors to provide services on aconsultancy basis subject to standard terms and conditions as agreed betweenIST, NPA and FPAS.

 

8.2           **FP Employees**

 

(a)           In the eventthat the establishment of IST under this Agreement is found to constitute a “relevanttransfer” within the meaning of the Transfer Regulations and, as a result, thecontracts of employment of any of the FP Employees shall have effect from andafter the Transfer Date as if originally made between IST and the FP Employees(the “Transferred FP Employees”), then the provisions in Clause 8.2(b) toClause 8.2(d) inclusive below shall apply.

 

(b)           All wages,salaries, bonus and commission payments, contributions to pension schemes andany other emoluments (whether monetary or otherwise), tax and national insurancecontributions relating to the Transferred FP Employees accrued up to andincluding the Transfer Date shall be paid or borne by FPAS and by ISTthereafter and all necessary apportionments shall be made.

 

(c)           FPAS shall payto IST on Completion a sum equal to the cost to IST of providing all holidayentitlements and holiday pay accrued to the Transferred FP Employees up to andincluding the Transfer Date.

 

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(d)           FPAS shall indemnifyIST and NPA and any NPA Group Company and keep IST and NPA and any NPA GroupCompany indemnified against all and any costs, expenses, liabilities, damagesand losses arising out of any claim, demand, action or proceeding which is madeor brought against NPA and/or any NPA Group Company and/or IST at any time:

 

(i)            by aTransferred FP Employee and which relates to circumstances or events occurringor arising on or prior to the Transfer Date in relation to or arising out ofhis or her employment (including without limitation in relation to obligationsto inform and consult under the Transfer Regulations) save to the extent thatany such claim, demand, action or proceedings arise from the act or omission ofIST or NPA or any NPA Group Company; or

 

(ii)           by a tradeunion or any other body or person representing all or any of the Transferred FPEmployees and relates to circumstances or events occurring or arising on orprior to the Transfer Date including without limitation in relation toobligations to inform and/or consult appropriate representatives (whether underthe Transfer Regulations or otherwise)) save to the extent that any such claim,demand, action or proceedings arise from the act or omission of IST or NPA orany NPA Group Company.

 

8.3           If, at anytime, any contract of employment of any employee or former employee of FPAS whois not an FP Employee is deemed or alleged to have been effected between ISTand such person or any liability in respect of such person is deemed or allegedto have transferred to IST as a result of the Transfer Regulations:

 

(a)           IST shallwithin 15 Business Days of becoming aware of the application or allegedapplication of the Transfer Regulations to any such contract notify FPAS inwriting that such employment contract is deemed or alleged to have effect as iforiginally made between such person and IST; and

 

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(b)                                 FPASmay, within 10 Business Days of receipt of such notice, offer employment to anyrelevant person and:

 

(i)                                     ifsuch offer is accepted; or

 

(ii)                                  ifsuch offer is not accepted within 10 Business Days after being made; or

 

(iii)                               ifno such offer is made by FPAS within 10 Business Days

 

then IST may terminate any such person’s employmentby giving lawful notice and in compliance with the statutory dismissalprocedure.

 

8.4                                 FPASshall fully indemnify and keep IST indemnified in full against anyloss which IST incurs in connection with or arising out of:

 

(a)                                  thetermination of employment of any person in accordance with this Clause 8.4(provided notice of such termination is given within 30 Business Days of ISTnotifying FPAS of the application or alleged application of the TransferRegulations to any such contract;

 

(b)                                 thecosts of all salary (including notice payments) and other emoluments (includingtax and national insurance payments thereon) in relation to any such personwhose employment is terminated in accordance with this Clause 8.4 as incurredby IST from the alleged date of transfer to the date of such termination(provided notice of such termination is given within 30 Business Days of ISTnotifying FPAS of the application or alleged application of the TransferRegulations to any such contract); and

 

(c)                                  anyclaim made at any time by or on behalf of any such person in connection with orarising directly or indirectly out of their employment or engagement by FPAS orany act, omission, event or occurrence taking place on or before the allegeddate of transfer save for in respect of any acts or omissions of IST.

 

8.5                                 ISTshall indemnify FPAS and any FP Group Company and keep FPAS and FPAS GroupCompany indemnified against all and any costs, expenses, liabilities, damagesand losses arising out of any claim, demand, action or proceeding which is madeor brought by a 

 

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Transferred FP Employee against FPAS and anyFP Group Company at any time and relates to circumstances or events occurringor arising after the Transfer Date in relation to or arising out of his or heremployment and in respect of which Clause 8.2(d) does not apply and inrespect of any failure by IST to comply with its information and consultationobligations under the Transfer Regulations save to the extent that such failurearises from the act or omission of FPAS.

 

8.6                                 **NPA Employees**

 

(a)                                  Inthe event that the establishment of IST under this Agreement is found toconstitute a “relevant transfer” within the meaning of the Transfer Regulationsand, as a result, the contracts of employment of any of the NPA Employees shallhave effect from and after the Transfer Date as if originally made between ISTand the NPA Employees (the “Transferred NPA Employees”), then the provisions inClauses 8.6(b) to 8.6(d) inclusive below shall apply.

 

(b)                                 Allwages, salaries, bonus and commission payments, contributions to pensionschemes and any other emoluments (whether monetary or otherwise), tax andnational insurance contributions relating to the Transferred NPA Employeesaccrued up to and including the Transfer Date shall be paid or borne by NPA andby IST thereafter and all necessary apportionments shall be made.

 

(c)                                  NPAshall pay to IST on Completion a sum equal to the cost to IST of providing allholiday entitlements and holiday pay accrued to the Transferred NPA Employeesup to and including the Transfer Date.

 

(d)                                 NPAshall indemnify IST and FPAS and any FP Group Company and keep IST and FPAS andany FP Group Company indemnified against all and any costs, expenses,liabilities, damages and losses arising out of any claim, demand, action orproceeding which is made or brought against FPAS and/or any FP Group Companyand/or IST at any time:

 

(i)                                     bya Transferred NPA Employee and which relates to circumstances or eventsoccurring or arising on or prior to the Transfer Date in relation to or 

 

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arising out of his or her employment(including without limitation in relation to obligations to inform and consultunder the Transfer Regulations) save to the extent that any such claim, demand,action or proceedings arise from the act or omission of IST or FPAS or any FPGroup Company; or

 

(ii)                                  bya trade union or any other body or person representing all or any of theTransferred NPA Employees and relates to circumstances or events occurring orarising on or prior to the Transfer Date including without limitation inrelation to obligations to inform and/or consult appropriate representatives(whether under the Transfer Regulations or otherwise)) save to the extent thatany such claim, demand, action or proceedings arise from the act or omission ofIST or FPAS or any FP Group Company.

 

8.7                                 If,at any time, any contract of employment of any employee or former employee ofNPA who is not an NPA Employee is deemed or alleged to have been effectedbetween IST and such person or any liability in respect of such person isdeemed or alleged to have transferred to IST as a result of the TransferRegulations:

 

(a)                                  ISTshall within 15 Business Days of becoming aware of the application or allegedapplication of the Transfer Regulations to any such contract notify NPA inwriting that such employment contract is deemed or alleged to have effect as iforiginally made between such person and IST; and

 

(b)                                 NPAmay, within 10 Business Days of receipt of such notice, offer employment to anyrelevant person and:

 

(i)                                     ifsuch offer is accepted; or

 

(ii)                                  ifsuch offer is not accepted within 10 Business Days after being made; or

 

(iii)                               ifno such offer is made by NPA within 10 Business Days

 

then IST may terminate any such person’s employmentby giving lawful notice and in compliance with the statutory dismissalprocedure.

 

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8.8                                 NPAshall fully indemnify and keep IST indemnified in full against any loss whichIST incurs in connection with or arising out of

 

(a)                                  thetermination of employment of any person in accordance with this Clause 8.8(provided notice of such termination is given within 30 Business Days of ISTnotifying NPA of the application or alleged application of the TransferRegulations to any such contract;

 

(b)                                 thecosts of all salary (including notice payments) and other emoluments (includingtax and national insurance payments thereon) in relation to any such personwhose employment is terminated in accordance with this Clause 8.8 as incurredby IST from the alleged date of transfer to the date of such termination(provided notice of such termination is given within 30 Business Days of ISTnotifying NPA of the application or alleged application of the TransferRegulations to any such contract); and

 

(c)                                  anyclaim made at any time by or on behalf of any such person in connection with orarising directly or indirectly out of their employment or engagement by NPA orany act, omission, event or occurrence taking place on or before the allegeddate of transfer save for in respect of any acts or omissions of IST.

 

8.9                                 ISTshall indemnify NPA and keep NPA and any NPA Group Company indemnified againstall and any costs, expenses, liabilities, damages and losses arising out of anyclaim, demand, action or proceeding which is made or brought by a TransferredNPA Employee against NPA or any NPA Group Company at any time and relates tocircumstances or events occurring or arising after the Transfer Date inrelation to or arising out of his or her employment and in respect of whichClause 8.6(d) does not apply and in respect of any failure by IST tocomply with its information and consultation obligations under the TransferRegulations save to the extent that such failure arises from the act oromission of NPA or any NPA Group Company.

 

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**9.**                                      THE BUSINESS PLAN

 

9.1                                 TheMD and FD will jointly develop an annual business plan (the **Business Plan**) setting out the followingyear’s expected revenue and cost components for the production and sale ofproducts and shall include in relation to the Financial Year to which itrelates:

 

(a)                                  acashflow statement giving:

 

(i)                                     anestimate of the working capital requirements; and

 

(ii)                                 anindication of the amount (if any) that it is considered prudent to retain, forthe purpose of meeting those requirements, out of those profits of the previousFinancial Year that are available for distribution to shareholders;

 

(b)                                 amonthly projected profit and loss account;

 

(c)                                  anoperating budget (including capital expenditure requirements) and balance sheetforecast;

 

(d)                                 amanagement report giving business objectives for the year;

 

(e)                                  afinancial report which shall include an analysis of the estimated results ofIST for the previous Financial Year compared with the Business Plan for thatyear, identifying variations in sales revenues, costs and other material items;and

 

(f)                                    abusiness development and marketing plan.

 

9.2                                 TheBusiness Plan for the Financial Year in which IST is formed shall be in agreedform and adopted by IST at Completion.

 

9.3                                Otherthan as set out in Clause 9.2, the Business Plan for every other Financial Yearshall be prepared by the MD and FD and presented to the Board no later than 45days before the end of the preceding Financial Year (the first day being thefirst day of the Financial Year to which the plan relates) for approval by theBoard. For the avoidance of doubt, notwithstanding any Reserved Matter beingreferred to or included in the relevant Business Plan, the provisions ofClauses 5.1 and 5.2 shall apply to the transacting of such Reserved Matter.

 

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**10.**                            FINANCING OF IST

 

10.1                        TheShareholders envisage that IST shall be self-financed from its own cashflow andcontributions as agreed from FPAS and NPA.

 

10.2                        There isno obligation on the Shareholders or any members of their respective Groups toprovide any further finance to IST but, if they agree to do so, theShareholders shall each provide the same amount on the same terms unless theyagree otherwise in writing. For the avoidance of doubt, the failure of aShareholder to provide additional funding where such funding and its terms havebeen agreed shall be deemed to constitute a material breach of this Agreement.

 

**11.**                            ACCOUNTING

 

11.1                        IST shallat all times maintain accurate and complete accounting and other financialrecords including all corporation tax computations and related documents andcorrespondence with HM Revenue & Customs in accordance with therequirements of all applicable laws and generally accepted accountingprinciples applicable in the United Kingdom.

 

11.2                        IST shallcause to be kept, at its registered office in the United Kingdom full and properledgers and other books of account of all receipts and disbursements and otherfinancial activities of IST.

 

11.3                        Each partyand its authorised representatives shall be allowed access at all reasonabletimes to examine the books and records of IST.

 

11.4                        IST shallsupply each party with the financial information necessary to keep the partyinformed about how effectively the Business of IST is performing and inparticular shall supply each party with:

 

(a)                                  acopy of each year’s Business Plan when presented to the Board in accordancewith Clause 9.3;

 

(b)                                 acopy of the audited accounts of IST prepared in accordance with the lawsapplicable in and the accounting standards, principles and practices generally 

 

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accepted in the United Kingdom, within 10Business Days of said audited accounts being approved by the Board; and

 

(c)                                  monthlymanagement accounts of IST to be supplied within 15 Business Days of the end ofthe month to which they relate (the first day being the first day of thefollowing month) and the accounts shall include a profit and loss account, abalance sheet and a cashflow statement.

 

11.5                        Each partyshall be entitled to require IST, and IST shall as soon as possible comply withsuch a request, to provide any documents, information and correspondencenecessary (at the cost of the party making the request) to enable the relevantparty to comply with filing, elections, returns or any other requirements of HMRevenue & Customs or of any other revenue or tax authority.

 

**12.**                            DEADLOCK

 

12.1                        There is adeadlock if a resolution is proposed at a properly convened meeting ofShareholders or of the Board and one of the following applies:

 

(a)                                  thereis no quorum at the meeting and no quorum at the meeting when it is reconvenedfollowing an adjournment;

 

(b)                                 subjectto the Board following the procedure set out in Clause 6.21, where there is ameeting of the Board and an equal number of votes are cast for and against theresolution proposed; or

 

(c)                                  wherethere is a meeting of Shareholders and an equal number of votes of Shareholdersare cast for and against the resolution;

 

(d)                                 inrespect of any Reserved Matter, the consent of FPAS and NPA is not obtained tothe matter in question.

 

12.2                        There isno deadlock if a meeting, or adjournment, is inquorate because the person whoproposed the resolution does not attend.

 

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12.3                          EitherShareholder may within 10 Business Days of the meeting at which the deadlockarises (the first day being the day after the meeting) serve notice on theother Shareholder (**Deadlock Notice**):

 

(a)                                  statingthat in its opinion a deadlock has occurred; and

 

(b)                                 identifyingthe matter giving rise to the deadlock.

 

12.4                           TheShareholders undertake that they shall:

 

(a)                                  onthe date of service of the Deadlock Notice, refer the matter giving rise to thedeadlock to:

 

(i)                                     inNPA’s case, the Global CEO of the Carbon Division of Morgan Crucible; and

 

(ii)                                  inFPAS’ case, the chairman of the ultimate parent company of FPAS, forresolution; and

 

(b)                                 useall reasonable endeavours in good faith to resolve the dispute.

 

**13.**                               RESOLUTION OF DEADLOCK

 

13.1                          A **Deadlock Resolution Notice**is a noticeserved by one. Shareholder on the other in which the server offers, at theprice for each share specified in the notice (in cash and not on deferredterms), either to sell all its shares in IST to the recipient of the DeadlockResolution Notice or to buy all the recipient’s shares in IST.

 

13.2                          ADeadlock Resolution Notice may not be revoked.

 

13.3                          If theShareholders are unable to resolve a deadlock arising under Clause 12.1 within10 Business Days from the date the deadlock matter is referred to therespective persons under Clause 12.4, then either Shareholder may within fiveBusiness Days of the Mediation Expiry Date (defined in Clause 13.8 below)(thefirst day is the day after the day of expiry) serve a Deadlock ResolutionNotice on the other.

 

13.4                          Subjectto Clause 13.7 no party shall commence any court proceedings until theprocedures in Clause 13.4 to Clause 13.6 have been completed.

 

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13.5                          No partyshall be entitled to suspend the performance of its undisputed obligationsunder this agreement merely by reason of the reference of any dispute to thedispute resolution procedure contained in this Clause.

 

13.6                           Theparties shall attempt in good faith to resolve the dispute by a procedure ofmediation in accordance with the Centre for Effective Dispute Resolutionmediation rules or Model Mediation Procedure in force at the commencementof the mediation, (or in the event that the Centre for Effective DisputeResolution has ceased to exist as at the time of the commencement of themediation, mediation rules or a model mediation procedure offered by anyother body offering commercial mediation services which shall be selected bythe Shareholder initiating or pursuing the dispute), which procedure shall becommenced within five Business Days of the expiry of the 10 Business Day periodin Clause 13.3 above by written notification by any Shareholder to the otherthat it wishes to initiate mediation (**Notification**)(or longer if so agreed by the Shareholders). In the event that any provisionof such mediation rules or model mediation procedure conflicts with anyprovision of this Clause the provisions of this Clause shall take precedence.In the event that any timescales contained in such mediation rules ormodel mediation procedure conflicts with the timescales referred to in thisClause the timescales contained in such mediation rules or model mediationprocedure shall be amended accordingly such that the timescales referred to inthis Clause shall be adhered to.

 

13.7                          In theevent that resolution of the dispute is achieved in consequence of suchmediation procedure, such resolution shall be reduced to writing and, once itis signed by the duly authorised representatives of the parties, shall bebinding on the parties. Unless concluded by a written legally binding agreementall discussions and negotiations connected with the mediation procedurereferred to in Clause 13.4 shall be conducted in confidence and withoutprejudice to the rights of the parties in any future legal or otherproceedings. Nor may such matters be produced or relied upon in evidence in anysuch proceedings.

 

13.8                           If anydispute to which this Clause relates is not resolved by the mediation procedurereferred to in Clause 13.4 and Clause 13.5 within a period of 20 Business Daysfrom Notification (or longer if so agreed in writing by the Shareholders), themediation 

 

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procedure shall be terminated and, theDeadlock Resolution procedure shall continue in accordance with 13.10 followingthe expiry of a further five Business Days (the **Mediation Expiry Date**).

 

13.9                        Thedispute resolution process contained in this Clause 13 shall not impose anyprecondition on any Shareholder or otherwise prevent or delay any Shareholderfrom commencing proceedings in any court of competent jurisdiction in relationto any dispute in which the Shareholder requires an order (whetherinterlocutory or final) restraining the other Shareholder from doing any act orcompelling the other Shareholder to do any act.

 

13.10                  The recipient ofa Deadlock Resolution Notice may choose to do either of the following, at theprice for each share specified in the Deadlock Resolution Notice, by serving acounter-notice within 10 Business Days of receiving the Deadlock ResolutionNotice (the first day is the day after the day of receipt):

 

(a)                                  buyall the shares in IST of the server of the Deadlock Resolution Notice; or

 

(b)                                 sellall its shares in IST to the server of the Deadlock Resolution Notice.

 

13.11                  If nocounter-notice is served within the period of 10 Business Days available, therecipient of the Deadlock Resolution Notice is deemed to have accepted theoffer in the Deadlock Resolution Notice at the expiry of that period.

 

13.12                  The service of acounter-notice, or deemed acceptance of the Deadlock Resolution Notice, shallbind the Shareholders to buy and sell the shares (as the case may be) on theterms set out in Clause 19.

 

13.13                  If bothShareholders serve a Deadlock Resolution Notice under Clause 13.3, theDeadlock Resolution Notice containing the highest price per share shall beeffective.

 

13.14                  If at the end ofthe 10 Business Days period specified in Clause 13.3 neither Shareholder hasserved a Deadlock Resolution Notice, either Shareholder may elect by writtennotice served on the other Shareholder for IST to be wound up in accordancewith Clause 18 (**Wind Up Notice**)provided that such Wind Up Notice is served within 20 Business Days 

 

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of the relevant Shareholder being entitled toserve a Wind Up Notice pursuant to this Clause 13.14.

 

13.15                    References inthis Clause to shares held by a Shareholder in IST are to all the shares in ISTheld by that Shareholder and not to some only of those shares.

 

**14.**                              TRANSFER OF SHARES

 

14.1                          Each ofthe Shareholders hereby agree and undertake to each other that it will nottransfer its shares in IST other than pursuant to the terms of Clause 14.2 orClauses 14.3 or with the written consent of the other Shareholder and that itwill not create any Encumbrance over any of its shares in IST which wouldprevent the application of Clause 16 below.

 

14.2                          FPAS maytransfer the FP Shares to a FP Group Company without the consent of NPA. FPASundertakes to NPA to procure that any such transferee shall re-transfer the FPShares to another FP Group Company immediately prior to such transferee ceasingto be a FP Group Company.

 

14.3                          NPA maytransfer the NPA Shares to an NPA Group Company without the consent of FPAS.NPA undertakes to FPAS to procure that any such transferee shall re-transferthe NPA Shares to another NPA Group Company immediately prior to suchtransferee ceasing to be a NPA Group Company.

 

**15.**                               OBLIGATORY TRANSFER EVENT

 

If anything mentioned in this Clause happens to acompany which is a member of a Shareholder’s Group it is an **Obligatory Transfer Event**in respect ofthat Shareholder and the provisions of Clause 16 apply provided that the Buyer(as defined in Clause 16) shall have subscribed and paid for its full amount ofEquity Shares in accordance with the terms of Clause 4.4:

 

(a)                                  theliquidation (voluntary or otherwise) of the company , other than:

 

(i)                                    agenuine solvent reconstruction or amalgamation in which a new company assumes(and is capable of assuming) all the obligations of the company; or

 

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(ii)                                  thesolvent liquidation of a dormant company;

 

(b)                                 aChange of Control of the company other than a Change of Control of FPI orMorgan Crucible;

 

(c)                                  anorder is made by a court of competent jurisdiction, or a resolution is passed,for the administration of the company, or documents are filed with the courtfor the appointment of an administrator, or notice of intention to appoint anadministrator is given by the company, or its directors or by a qualifyingfloating charge holder (as defined in paragraph 14 of Schedule B1 to theInsolvency Act 1986) or any equivalent proceeding in any other jurisdiction;

 

(d)                                 anystep is taken by any person other than a member of the other Shareholder’sGroup (and is not withdrawn or discharged within 90 days) to appoint areceiver, administrative receiver or manager in respect of the whole or asubstantial part of the assets or undertaking of the Shareholder or any companyin the Shareholder’s Group;

 

(e)                                  thecompany being unable to pay its debts as they fall due for the purposes ofsection 123 of the Insolvency Act 1986 or any equivalent proceeding in anyother jurisdiction;

 

(f)                                    thecompany entering into a composition or arrangement with its creditors;

 

(g)                                 anychargor enforcing any charge created over any shares held by the company inIST.

 

**16.**                               TRANSFER FOLLOWING OBLIGATORY TRANSFER EVENT

 

16.1                           Wherean Obligatory Transfer Event happens to a party (in this Clause the **Seller**) it shall give notice of it to theother party (in this Clause the **Buyer**)as soon as possible and, if it does not, it is deemed to have given such noticeon the date on which the Buyer becomes aware of such Obligatory Transfer Event(**Notice of Obligatory Transfer Event**).

 

16.2                           As soonas practicable after service, or deemed service, of the Notice of ObligatoryTransfer Event, the Shareholders shall seek to agree the value of the Seller’sshares and in 

 

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the absence of such agreement within 10Business Days after service, or deemed service, of the Notice of ObligatoryTransfer Event, shall procure that IST appoints an Expert in accordance withClause 17 to determine the Fair Value of the Seller’s shares in IST (**Sale Shares**).

 

16.3                        The Buyerhas the right, but not the obligation, within 10 Business Days of receivingnotification of the Fair Value determined by the Expert (the first day beingthe day after the Buyer receives the Fair Value notification) to serve a noticeon the Seller to buy all of the Sale Shares at the Fair Value.

 

16.4                        In thisClause the **Fair Value**of the SaleShares shall be the value that the Expert certifies to be the fair market valuein his opinion based on the following assumptions:

 

(a)                                  thevalue of the shares in question is that proportion of the fair market value ofthe entire issued share capital of IST that the Sale Shares bear to the thentotal issued share capital of IST (with no premium or discount for the size ofthe Seller’s shareholding or for the rights or restrictions applying to theshares under this Agreement or the Articles);

 

(b)                                 thesale is between a willing buyer and a willing seller on the open market;

 

(c)                                  thesale is taking place on the date that the Obligatory Transfer Event occurred;

 

(d)                                 ifIST is then carrying on its Business as a going concern, on the assumption thatit shall continue to do so;

 

(e)                                  theshares are sold free of all Encumbrances; and

 

(f)                                    totake account of any other factors that the Expert reasonably believes should betaken into account.

 

16.5                        If anyproblem arises in applying any of the assumptions set out in Clause 16.4, theExpert shall resolve the problem in whatever manner he shall, in his absolutediscretion, think fit.

 

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16.6                        The Expertshall be requested to determine the Fair Value of the Sale Shares within 10Business Days of his appointment and to notify the Buyer and Seller in writingof his determination.

 

16.7                        Theservice of a notice to buy under Clause 16.3 shall bind the Shareholders to buyand sell the shares, as the case may be, in accordance with Clause 19.

 

16.8                        If at theend of the period specified in Clause 16.3 the Buyer has not served a notice tobuy the Sale Shares, the Buyer may elect by written notice served on the Sellerfor IST to be wound up in accordance with Clause 18 (**Wind Up Notice**) provided that such Wind Up Notice is servedwithin 28 days of the Buyer being entitled to serve a Wind Up Notice pursuantto this Clause 16.8.

 

**17.**                            EXPERT

 

17.1                        An **Expert**is a person appointed in accordancewith this Clause to resolve a matter under Clause 16 of this Agreement.

 

17.2                        TheShareholders shall endeavour to agree on the appointment of an independentExpert.

 

17.3                        If theShareholders are unable to agree on an Expert within seven days of eitherShareholder serving details of a suggested expert on the other, eitherShareholder shall then be entitled to request the then President of theInstitute of Chartered Accountants in England and Wales to appoint an Expertwho is an accountant of repute with experience in the valuation of privatecompanies limited by shares.

 

17.4                        If theExpert dies or becomes unwilling or incapable of acting, or does not deliverthe decision within the time required by this Clause then:

 

(a)                                  eitherShareholder may apply to the then President of the Institute of CharteredAccountants in England and Wales to discharge the Expert and to appoint areplacement Expert with the required expertise; and

 

(b)                                 thisClause applies in relation to the new Expert as if be were the first Expertappointed.

 

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17.5                        Allmatters under this Clause shall be conducted, and the Expert’s decision shallbe written, in the English language.

 

17.6                        TheShareholders are entitled to make submissions to the Expert and shall provide(or procure that others including IST provide) the Expert with such assistanceand documents as the Expert reasonably requires for the purpose of reaching adecision, subject to the Expert agreeing to give such confidentialityundertakings as the Shareholders may reasonably require.

 

17.7                        To theextent not provided for by this Clause, the Expert may in his reasonablediscretion determine such other procedures to assist with the conduct of thedetermination as he considers just or appropriate, including (to the extent heconsiders necessary) instructing professional advisers to assist him inreaching his determination.

 

17.8                        EachShareholder shall with reasonable promptness supply, and shall procure thatothers within their respective Groups, supply the other Shareholder with allinformation and give each other access to all documentation and personnel asthe other Shareholder reasonably requires to make a submission under thisClause.

 

17.9                        The Expertshall act as an expert and not as an arbitrator. The Expert’s written decisionon the matters referred to him shall be final and binding on the Shareholdersin the absence of manifest error or fraud.

 

17.10                  Each Shareholdersshall bear its own costs in relation to the reference to the Expert. The Expert’sfees and any costs properly incurred by him in arriving at his determination(including any fees and costs of any advisers appointed by the Expert) shall beborne by the Shareholders equally or in such other proportions as the Expertshall direct.

 

**18.**                            TERMINATION AND LIQUIDATION

 

18.1                        Except forthe provisions which this Clause states shall continue in full force aftertermination, this Agreement shall terminate:

 

(a)                                  whenonly a FP Group Company or a NPA Group Company holds shares in IST; or

 

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(b)                                 whena resolution is passed by shareholders or creditors, or an order made by acourt or other competent body or person instituting a process that shall leadto IST being wound up and its assets being distributed among IST’s creditors,shareholders or other contributors.

 

18.2                        Thefollowing provisions of this Agreement remain in full force after termination:

 

(a)                                  Clause1 (Interpretation);

 

(b)                                 Clause7 (Restrictions on the Parties);

 

(c)                                  Clause8 (Guarantees and Indemnities);

 

(d)                                 thisClause;

 

(e)                                  Clause22 (Confidentiality);

 

(f)                                    Clause27 (Whole agreement);

 

(g)                                 Clause29 (Variation and waiver);

 

(h)                                 Clause30 (Costs);

 

(i)                                     Clause33 (Notice);

 

(j)                                     Clause35 (Severance);

 

(k)                                  Clause39 (Governing law and jurisdiction).

 

18.3                        Terminationof this Agreement shall not affect any rights or liabilities that the partieshave accrued under it up until the point of Termination.

 

18.4                        Where ISTis to be wound up and its assets distributed, the Shareholders shall agree asuitable basis for dealing with the interests and assets of IST and shallendeavour to ensure that:

 

(a)                                  allexisting contracts of IST are performed to the extent that there are sufficientresources;

 

(b)                                 ISTshall not enter into any new contractual obligations;

 

(c)                                  ISTis dissolved and its assets are distributed as soon as practical; and

 

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**[***] INDICATESMATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEENREQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIESEXCHANGE ACT OF 1934, AS AMENDED.**

 

(d)                                 anyother proprietary information or intellectual property rights belonging to ororiginating from a party shall be returned to it by the other party or IST andall such proprietary information or intellectual property rights shall be erasedfrom the computer systems (to the extent possible) of IST and the party who isreturning it.

 

18.5                        Where anyparty is required by any law, regulation or governmental or regulatoryauthority to retain any proprietary information (or copies of such information)of the other party or IST, it shall notify the other party in writing of suchretention giving details of the information that it has been required toretain.

 

**19.**                            COMPLETION OF THE SALE AND PURCHASE OF SHARES INIST

 

19.1                        ThisClause applies only to transfers between the Shareholders pursuant to Clause 13(Resolution of Deadlock) and Clause 16 (Transfer following Obligatory TransferEvent).

 

19.2                        The saleof shares under this Agreement shall be completed at the registered office ofthe Company on the tenth Business Day:

 

(a)                                  afterthe deemed acceptance of a Deadlock Resolution Notice under Clause 13.11 orreceipt of a counter-notice to a Deadlock Resolution Notice under Clause 13.10;or

 

(b)                                 afterservice of a notice to buy under Clause 16.3.

 

19.3                        Atcompletion the party selling the shares shall:

 

(a)                                  transferthe shares free from all Encumbrances by way of a duly completed share transferform to the buyer together with the relevant share certificate and such otherdocuments as the buyer may reasonably require to show good title to the sharesor enable it to be registered as the holder of the shares;

 

(b)                                 deliverthe resignations of any directors appointed by the selling party to take effectat completion and acknowledging that they have no claims against IST;

 

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(c)                                  warrantthat it has no right to require IST to issue it with any share capital or othersecurities and that no Encumbrance affects any unissued shares or other securitiesof IST;

 

(d)                                 warrantthat it is the beneficial owner of the shares being sold;

 

(e)                                  warrantthat no commitment has been given to create an Encumbrance affecting the sharesbeing sold (or any unissued shares or other securities of IST) and that no personhas claimed any rights in respect thereof;

 

(f)                                    undertaketo do all it can, at its own cost, to give the buyer the full legal andbeneficial title to the shares; and

 

(g)                                 provideIST with a waiver in writing of any rights such party may have to be issuedwith any share capital or other securities in IST.

 

19.4                        Atcompletion the buying party shall pay the purchase price by telegraphictransfer to the selling party or its lawyers (in the event that the sellingparty has notified the buying party that such lawyers have been irrevocablyauthorised by the selling party to receive it).

 

19.5                        At orbefore completion IST shall repay any loans made by the selling party to IST(together with any interest accrued thereon) and the parties shall use theirreasonable endeavours to procure that the selling party is released from anyguarantees and/or security arrangements that it has given in respect of IST andits business.

 

19.6                        Theparties shall procure the registration (subject to due stamping by the buyer)of the transfer of shares in IST pursuant to this Clause and each of themconsents to such transfer and registration pursuant to this Agreement and theArticles.

 

19.7                        The sharesshall be sold with all rights that attach, or may in the future attach, to them(including the right to receive all dividends and distributions declared, madeor paid on or after the events referred to in Clause 19.2(a) or Clause19.2(b) as appropriate.

 

19.8                        The partybuying the shares is not obliged to complete the purchase of any of the sharesbeing sold unless the purchase of all the shares being sold is completedsimultaneously.

 

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19.9                          If theparty selling the shares fails to complete the transfer of shares as requiredunder this Clause, IST:

 

(a)                                  isirrevocably authorised to appoint any person to transfer the shares on theselling party’s behalf and to do anything else that the party buying the sharesmay reasonably require to complete the sale; and

 

(b)                                 mayreceive the purchase price in trust for the party selling the shares, giving areceipt that shall discharge the party buying the shares.

 

**20.**                               STATUS OF AGREEMENT

 

20.1                          Eachparty shall, to the extent that it is able to do so, exercise all its votingrights and other powers in relation to IST to procure that the provisions ofthis Agreement are properly and promptly observed and given full force andeffect according to the spirit and intention of the agreement.

 

20.2                          If anyprovision in the memorandum or Articles of IST conflicts with any provision ofthis Agreement, this Agreement shall prevail.

 

20.3                          Theparties shall, when necessary, exercise their powers of voting and any otherrights and powers they have to amend, waive or suspend a conflicting provisionin the memorandum or Articles to the extent necessary to permit IST and itsbusiness to be administered as provided in this Agreement.

 

**21.**                               INTELLECTUAL PROPERTY RIGHTS

 

21.1                           FPIIshall own and retain all FPII IPR and NPA shall own and retain all NPA IPR, in eachcase, subject to the terms of the FPII Sub-contract and the NPA Sub-contract.

 

**22.**                               CONFIDENTIALITY

 

22.1                           In thisClause **Confidential Information**meansany information:

 

(a)                                  whicheither party may have or acquire (whether before or after the date of thisAgreement) in relation to the customers, suppliers, business, assets or affairsof 

 

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IST (including, withoutlimitation, any information provided pursuant to Clause 11);

 

(b)                                 whicheither party or any member of its Group may have or acquire (whether before orafter the date of this Agreement) in relation to the customers, suppliers,business, assets or affairs of the other party or any member of the other party’sGroup, as a consequence of the negotiations relating to this Agreement or anyother agreement or document referred to in this Agreement or the performance ofthe agreement or any other agreement or document referred to in this Agreement;or

 

(c)                                  whichrelates to the contents of this Agreement (or any agreement or arrangemententered into pursuant to this Agreement),

 

but excludes the information in Clause 22.2.

 

22.2                           Informationis not Confidential Information if:

 

(a)                                  itis or becomes public knowledge other than as a direct or indirect result of theinformation being disclosed in breach of this Agreement;

 

(b)                                 eitherparty can establish to the reasonable satisfaction of the other party that itfound out the information from a source not connected with the other party orits Group and that the source is not under any obligation of confidence inrespect of the information;

 

(c)                                  eitherparty can establish to the reasonable satisfaction of the other party that theinformation was known to the first party before the date of this Agreement andthat it was not under any obligation of confidence in respect of theinformation; or

 

(d)                                 theparties agree in writing that it is not confidential.

 

22.3                          Eachparty shall at all times use all reasonable endeavours to keep confidential (andto ensure that its employees, agents, Group members and the employees andagents of such Group members, and IST (in respect of information specified inClause 22.1(b) and 

 

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Clause 22.1(c)) shall keep confidential) anyConfidential Information and shall not use or disclose any such ConfidentialInformation except:

 

(a)                                  toanother member of the FP Group or NPA Group, as the case may be, or to a party’sprofessional advisers where such disclosure is for a purpose related to theoperation of this Agreement;

 

(b)                                 withthe written consent of such of IST or the party or any member of its Group thatthe information relates to;

 

(c)                                  asmay be required by law or by the rules of any recognised stock exchange,or governmental or other regulatory body, when the party concerned shall, ifpracticable, supply a copy of the required disclosure to the other before it isdisclosed and incorporate any amendments or additions reasonably required by theother and which would not thereby prevent the disclosing party from complyingwith its legal obligations;

 

(d)                                 toany tax authority to the extent reasonably required for the purposes of the taxaffairs of the party concerned or any member of its Group; or

 

(e)                                  ifthe information comes within the public domain (otherwise than as a result ofthe breach of this Clause 22.3).

 

22.4                        Each partyshall inform (and shall use all reasonable endeavours to procure that anySubsidiary and IST shall inform) any officer, employee or agent or anyprofessional adviser advising it in relation to the matters referred to in thisAgreement, or to whom it provides Confidential Information, that suchinformation is confidential and shall require them:

 

(a)                                  tokeep it confidential; and

 

(b)                                 notto disclose it to any third party (other than those persons to whom it hasalready been disclosed in accordance with the terms of this Agreement).

 

22.5                        Upontermination of this Agreement, either party may demand from the other and ISTthe return of any documents containing Confidential Information in relation tothe first party 

 

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by notice in writing whereupon the otherparty shall (and shall use all reasonable endeavours to ensure that its Groupmembers, and its officers and employees and those of its Group members and ISTshall):

 

(a)                                  returnsuch documents; and

 

(b)                                 destroyany copies of such documents and any other document or other recordreproducing, containing or made from or with reference to the ConfidentialInformation,

 

save, in each case, for any submission to or filingswith governmental, tax or regulatory authorities. Such return or destructionshall take place as soon as practicable after the receipt of any such notice.

 

22.6                        Theobligations of each of the parties in this Clause 22 shall continue withoutlimit in time and notwithstanding termination of this Agreement for any cause.

 

**23.**                            PUBLICITY

 

23.1                        Any publicannouncements in relation this Agreement and/or the formation of IST requirethe prior written consent of both Shareholders.

 

**24.**                            DATA PROTECTION

 

24.1                        TheShareholders acknowledge that IST may be subject to the requirements of theData Protection Act 1998 and shall therefore make all reasonable efforts toensure that they and IST comply with any obligations arising as a result

 

**25.**                            FREEDOM OF INFORMATION

 

25.1                        Theparties acknowledge that IST may be subject to the requirements of the Freedomof Information Act 2000 as a result of its dealings with the UK MOD and shalltherefore make all reasonable efforts to ensure that they and IST perform anydisclosure obligations arising as a result.

 

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**26.**                               WARRANTY

 

Each party warrants and represents to the otherthat, at the date of this Agreement, IST has not carried on any business, hasno assets or liabilities, has no employees and is not a party to any contractsexcept as necessary to comply with Clause 4.

 

**27.**                               WHOLE AGREEMENT

 

27.1                           ThisAgreement, and any documents referred to in it constitute the whole agreementbetween the Shareholders or any relevant Group company and supersede anyprevious arrangement, understanding or agreement between them relating to thesubject matter they cover.

 

27.2                          Eachparty acknowledges that in entering into this Agreement, and any documentsreferred to in it, it does not rely on, and shall have no remedy in respect of,any statement, representation, assurance or warranty of any person other thanas expressly set out in this Agreement or those documents.

 

27.3                           Nothingin this Clause 27 operates to limit or exclude any liability for fraud.

 

**28.**                               ASSIGNMENTS

 

28.1                          Noperson may assign, or grant any Encumbrance over or deal in any way with, anyof its rights under this Agreement or any document referred to in it withoutthe prior written consent of all the parties (such consent not to beunreasonably conditioned, withheld or delayed).

 

28.2                           Eachperson that has rights under this Agreement is acting on its own behalf.

 

**29.**                               VARIATION AND WAIVER

 

29.1                           Avariation of this Agreement shall be in writing and signed by or on behalf ofall parties.

 

29.2                          A waiverof any right under this Agreement is only effective if it is in writing and itapplies only to the person to which the waiver is addressed and thecircumstances for which it is given.

 

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29.3                         A personthat waives a right in relation to one person, or takes or fails to take anyaction against that person, does not affect its rights against any otherperson.

 

29.4                         Nofailure to exercise or delay in exercising any right or remedy provided underthis Agreement or by law constitutes a waiver of such right or remedy or shallprevent any future exercise in whole or in part thereof.

 

29.5                         No singleor partial exercise of any right or remedy under this Agreement shall precludeor restrict the further exercise of any such right or remedy.

 

29.6                         Unlessspecifically provided otherwise, rights and remedies arising under thisAgreement are cumulative and do not exclude rights and remedies provided bylaw.

 

**30.**                               COSTS

 

Unless otherwise provided, all costs in connectionwith the negotiation, preparation, execution and performance of this Agreement,shall be borne by the party that incurred the costs.

 

**31.**                             NO PARTNERSHIP

 

The parties to this Agreement are not in partnershipwith each other and there is no relationship of principal and agent betweenthem.

 

**32.**                             THIRD PARTY RIGHTS

 

32.1                         A personwho is not a party to this Agreement shall not have any rights under or in connectionwith it by virtue of the Contracts (Rights of Third Parties) Act 1999.

 

32.2                         The rightof the parties to terminate, rescind or agree any amendment, variation, waiveror settlement under this Agreement is not subject to the consent of any personthat is not a party to the agreement.

 

**33.**                             NOTICE

 

33.1                         A noticegiven under this Agreement:

 

(a)                                  shallbe in writing in the English language (or be accompanied by a properly preparedtranslation into English);

 

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(b)                                 shallbe sent for the attention of the person, and to the address, or fax number,given in this Clause 33 (Or such other address, fax number or person as therelevant party may notify to the other party, such notice to take effect fivedays from the notice being received); and

 

(c)                                  shallbe:

 

(i)                                     deliveredpersonally; or

 

(ii)                                  deliveredby commercial courier; or

 

(iii)                               sentby fax; or

 

(iv)                              sentby recorded delivery.

 

33.2                           Theaddresses for service of notice are:

 

(a)                                  FORCEPROTECTION ADVANCED SOLUTIONS LIMITED

 
| Address:              |   | Narrow Quay House, Narrow Quay, Bristol BS1  4AH                 |
|-----------------------|--------|------------------------------------------------------------------|
|                  |   |                                                             |
| For the attention of: |   | Lenna Macdonald (Corporate  Secretary)/Charles Mathis (Director) |
|                  |   |                                                             |
| Fax number:           |   | +44 0117 902 4400                                                |

 

(b)                                 FORCEPROTECTION INDUSTRIES, INC

 
| Address:              |   | 9801 Highway 78, Ladson, South Carolina  29456 |
|-----------------------|--------|------------------------------------------------|
|                  |   |                                           |
| For the attention of: |   | General Counsel                                |
|                  |   |                                           |
| Fax number:           |   | (843) 553 1311                                 |

 

(c)                                  NPAEROSPACE LIMITED

 
| Address:              |   | 473 Foleshill Road, Coventry, West  Midlands, CV6 5AQ |
|-----------------------|--------|-------------------------------------------------------|
|                  |   |                                                  |
| For the attention of: |   | The Managing Director                                 |
|                  |   |                                                  |
| Fax number:           |   | +44 2476687313                                        |
|                  |   |                                                  |
| With a copy to:       |   |                                                  |

 

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| THE MORGAN CRUCIBLE COMPANY PLC |
|---------------------------------|
|                            |   |   |
| Address:                        |   | Quadrant, 55-57 High St, Windsor,  Berkshire, SL4 1LP |
|                            |   |   |
| FAO:                            |   | The General Counsel |
|                            |   |   |
| FAX:                            |   | +44 1753 850872 |

 

33.3                         A noticeis deemed to have been received:

 

(a)                                  ifdelivered personally, at the time of delivery; or

 

(b)                                 ifdelivered by commercial courier, at the time of signature of the courier’sreceipt; or

 

(c)                                  ifsent by fax, at the time of transmission; or

 

(d)                                 ifsent by recorded delivery, 48 hours from the date of posting; or

 

(e)                                  ifdeemed receipt under the previous paragraphs of this sub-Clause is not withinbusiness hours (meaning 9.00 am to 5.30 pm Monday to Friday on a day that isnot a public holiday in the place of receipt), when business next starts in theplace of deemed receipt.

 

33.4                         To proveservice it is sufficient to prove that the notice was transmitted by fax to thefax number of the party or, in the case of post, that the envelope containingthe notice was properly addressed and posted.

 

**34.**                             INTEREST ON LATE PAYMENT

 

34.1                         Where asum is required to be paid under this Agreement but is not paid before or onthe date the parties agreed, the person due to pay the sum shall also pay anamount equal to interest on that sum at the rate set out in Clause 34.2 for theperiod beginning with the date on which the payment was due arid ending withthe date the sum is paid (and the period shall continue after as well as beforejudgment).

 

34.2                         The rateof interest shall be **[***]**% perannum above the base lending rate from time to time of Barclays Bank plc.Interest shall accrue on a daily basis and be compounded quarterly.

 

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34.3                           ThisClause 34 is without prejudice to any claim for interest under the Late Paymentof Commercial Debts (Interest) Act 1998.

 

**35.**                               SEVERANCE

 

35.1                           If anyprovision of this Agreement (or part of a provision) is found by any court oradministrative body of competent jurisdiction to be invalid, unenforceable orillegal, the other provisions shall remain in force.

 

35.2                           If anyinvalid, unenforceable or illegal provision would be valid, enforceable orlegal if some part of it were deleted or modified, the provision shall applywith whatever modification is necessary to give effect to the commercialintention of the parties.

 

**36.**                               FURTHER ASSURANCE

 

Without prejudice to Clause 4, each party shallpromptly execute and deliver all such documents, and do all such things, as theother party may from time to time reasonably require for the purpose of givingfull effect to the provisions of this Agreement.

 

**37.**                               COUNTERPARTS

 

This Agreement may be executed in any number ofcounterparts, each of which is an original and which together have the sameeffect as if each party had signed the same document.

 

**38.**                               AGREEMENT SURVIVES COMPLETION

 

This Agreement (other than obligations that havealready been fully performed) remains in full force after Completion.

 

**39.**                               GOVERNING LAW AND JURISDICTION

 

39.1                           ThisAgreement and, subject to Clause 13, any disputes or claims arising out of orin connection with its subject matter, are governed by and construed inaccordance with the law of England.

 

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39.2                         Subjectto Clause 13, the parties irrevocably agree that the courts of England haveexclusive jurisdiction to settle any dispute or claim that arises out of or inconnection with this Agreement.

 

This Agreementhas been entered into on the date stated at the beginning of it.

 

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**Schedule 1**

 

Matters reserved for shareholder approval

 

1                                          Permittingthe registration of any person as a member of IST other than FPAS and NPA inrelation to the investment referred to in Clause 4 and any of their validtransferees in accordance with the terms of this Agreement (such validtransferees to include for the avoidance of doubt any members of theirrespective Groups).

 

2                                          Issuingor granting any right or option to subscribe for or otherwise acquire any share(s) inIST or consolidating or sub-dividing or altering any of the rights attached toany of the issued shares in IST or any purchase by IST of any of its own sharesor any increase or reduction of its share capital (save as contemplated byClause 4.4) or repayment of any amounts standing to the credit of any sharepremium account or capital redemption reserve or otherwise reorganising itsshare capital or entering into any scheme or arrangement with its creditors.

 

3                                          Alteringthe name of IST.

 

4                                          Alteringin any respect the memorandum or Articles of IST or the rights attaching to anyof its shares.

 

5                                          Changingthe nature of IST’s Business or the commencement of any new business by ISTwhich is not ancillary to the Business.

 

6                                          Makingany acquisition or disposal by IST of any material asset(s) otherwise thanin the ordinary course of business.

 

7                                          Creatingor granting any Encumbrance over the whole or any part of the Business,undertaking or assets of IST or agreeing to do so.

 

8                                          Anyborrowing by IST in excess of the amounts set out in any annual Business Planapproved by the Board.

 

9                                          Withoutprejudice to Clause 4.7(b), any recommendation for the declaration and paymentof dividends.

 

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10                                    Anyprovision of any guarantees in respect of the obligations of any person otherthan asubsidiary (direct or indirect) of IST, other than in the ordinary course ofbusiness.

 

11                                    Theinitial delegation of authority to the MD and any other executive officers andany material changes to such delegation.

 

12                                    Anychange in the number or method of selecting the members of the Board.

 

13                                    Anychange to the Approvals Matrix.

 

14                                    Establishingany employee incentive share scheme.

 

15                                    Subscribingor otherwise acquiring or disposing of any shares in the capital of any othercompany.

 

16                                    Ceasingor proposing to cease to carry on the business of IST or for it to be wound upsave where it is insolvent.

 

17                                    Applyingor permitting its directors to apply to petition to the. Court for anadministration order to be made in respect of IST.

 

18                                    Establishingor acquiring any new branch agency trading establishment or business orclosing or disposing of any such branch agency trading establishment orbusiness.

 

19                                    Makingany change to IST’s:

 

(a)                                  auditors;

 

(b)                                 bankersor the terms of the mandate given to such bankers in relation to itsaccount(s); or

 

(c)                                  accountingreference date or its accounting policies (save in respect of any alterationrequired to comply with generally accepted accounting practice in the UK).

 

20                                    Engagingany employee on terms that either his contract cannot be terminated by threemonths’ notice or less or his emoluments and/or commissions or bonuses are orare likely to be at the rate of £**[***]**perannum or more or increasing the emoluments and/or commissions or bonuses of anyemployee to more than £**[***]**per 

 

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annum or varying the terms of employment ofany employee earnings (or so that after such variation he will or is likely toearn) more than £**[***]**per annum.

 

21                                    Varyingor making any binding decisions on the terms of employment and service of anydirector or increasing or varying the salary or other benefits of any suchofficer or appoint or dismissing any such officer other than in accordance withthe express provisions of this Agreement.

 

22                                    Makingany loan or advance or giving any credit (other than in the ordinary course ofbusiness) to any person or acquiring any loan capital of any corporate body(wherever incorporated).

 

23                                    Conductingany dispute material to IST save for the collection of debts arising in theordinary course of the business carried on by IST or any application for aninterim injunction or other application or action (including interim defence)which is urgently required in the best interests of IST in circumstances inwhich it is not reasonably practicable to obtain prior consent as aforesaid.

 

24                                    Proposingor implementing any pension scheme or varying any of the benefits payable tomembers of any pension scheme.

 

25                                    Payingor agreeing to pay any dividend or making or agreeing to make any distributionto any Shareholder.

 

26                                    Theincurring by IST of capital expenditure in excess of £**[***]**per item or in excess of £**[***]**in aggregate during any financialyear of IST.

 

27                                    Theentering into by IST of any Material Contract or, subject to Clause 6.9, theamendment, variation or extension of any Material Contract.

 

28                                    Theentering into by IST of any contract or arrangement outside the ordinary courseof trading or otherwise than at arm’s length.

 

29                                    Thedecision whether IST submits a tender for any contract or arrangement where thegoods or services to be provided by IST in circumstances where such tender ifit were successful would lead to a Material Contract.

 

57

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**[***]INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENTHAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

30                                    Thelicensing of intellectual property rights by IST to any party other thanpursuant to the MOD Contract, the FPAS Sub-contract or the NPA Sub-contract.

 

31                                    Subjectto Clause 6.9, the making of any amendments to the MOD Contract.

 

32                                    Thesurrender whether for consideration or otherwise of losses or other amountseligible for relief from taxation by IST to any Shareholder or member of itsrelevant Group.

 

33                                    Engagingor substituting any secondee or consultant on terms where such secondment orconsultant cost exceeds £**[***]**perannum or its pro-rated equivalent if for part only of a year.

 

34                                    Subjectto Clause 6.9, the amendment, variation or extension of either of the FPSubcontract and the NPA Subcontract.

 

58

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**[***]INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENTHAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

**Schedule 2**

 

Covenants

 

1                                          ISTshall:

 

(a)                                  ISTwill adopt the Business Plan and use its reasonable endeavours to implement it;

 

(b)                                 effectany expansion or development of the Business only in accordance with theBusiness Plan or other operating budgets and business plans previously approvedby the Board and through IST (or a wholly owned subsidiary thereof);

 

(c)                                  insurewith a reputable insurance office and shall keep so insured at all times allits assets and undertakings against loss or damage or such other risks and insuch manner and to such extent as shall be in accordance with good commercialpractice or otherwise as the Shareholders may reasonably require in writing andshall ensure that the same are reviewed annually by its insurance brokers andshall supply a copy of such review to the Shareholders;

 

(d)                                 useall its reasonable endeavours to ensure that all know-how and confidentialinformation of IST is kept confidential;

 

(e)                                  advisethe Shareholders in writing promptly of any material litigation;

 

(f)                                    haveand maintain all licences and authorisations necessary under any law orregulation affecting the conduct of its business;

 

(g)                                 preserveand defend its Intellectual Property Rights to the extent commerciallyappropriate to do so.

 

1.2                                 Eachof the Shareholders undertakes with the other Shareholder and IST (in itscapacity as a shareholder of IST) to use its reasonable endeavours to do allthings necessary to procure that the provisions of this Agreement and theArticles are duly performed and observed.

** **

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**[***]INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENTHAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIESEXCHANGE ACT OF 1934, AS AMENDED.**

** **

**Schedule 3**

 

Agreed Form Documents

 

ApprovalsMatrix

 

Agreed KeySecondment Terms

 

Business Plan

 

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**[***]INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENTHAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED.**

 

Signed by MichaelMoody

 

for and onbehalf of FORCE

 
| PROTECTION INDUSTRIES, INC.               |
|-------------------------------------------|
|                                      |
|                                      | /s/ Michael  Moody |
|                                      |   |
|                                      | Director |
|                                      |   |
|                                      |   |
| Signed by Roger Medwell                   |   |
|                                      |   |
| for and on behalf of NP AEROSPACE LIMITED |   |
|                                      |   |
|                                      | /s/ Roger  Medwell |
|                                      |   |
|                                      | Director |
|                                      |   |
|                                      |   |
| Signed by Michael Linton                  |   |
|                                      |   |
| for and on behalf of INTEGRATED           |   |
| SURVIVABILITY TECHNOLOGIES                |   |
| LIMITED                                   |   |
|                                      |   |
|                                      | /s/ Michael  Linton |
|                                      |   |
|                                      | Director |
|                                      |   |
|                                      |   |
| Signed by Lenna Macdonald                 |   |
|                                      |   |
| for and on behalf of FORCE PROTECTION     |   |
| ADVANCED SOLUTIONS LIMITED                |   |
|                                      |   |
|                                      | /s/ Lenna  Ruth Macdonald |
|                                      |   |
|                                      | Director |

 

----