**Exhibit 10.4**

 

**LICENCE AGREEMENT**

 

MEMORANDUM OF AGREEMENT ENTERED INTO BETWEEN:

 

**THE CSIR**

 

a statutory council, duly established under Act 46 of1988, through its Operating Unit of Defence PeaceSafety & Security (DPSS) herein represented byAndre Nepgen in his capacity as Executive Directorand he being duly authorised thereto

 

(hereinafter referred to as “the LICENSOR”)

 

and

 

**FORCE PROTECTION TECHNOLOGIES INC.**(Registration No. Nevada C18478-2002)

 

a company incorporated under the laws of Nevadawith its principal place of business at 9801 Hwy 78,Ladson, South Carolina 29456, United States ofAmerica, herein represented by Mr. GordonMcGilton in his capacity as President and he beingduly authorized thereto

 

(hereinafter referred to as “the LICENSEE”)

 

**WHEREAS**:

 

a)                                      the LICENSOR hasdeveloped technology for the protection of wheeled and tracked vehicles againstlandmines and improvised explosive devices (“IED’s”) (herein referred to as “theTECHNOLOGY”), which specifically means the invention forming the subject matterof the PATENT, and which is under the control of the LICENSOR at theCOMMENCEMENT DATE of this agreement;

 

b)                                     the LICENSEE isdesirous of obtaining a licence from the LICENSOR to perform internalresearch and development (which rights extend to tests and assessment of thepotential market for products utilizing the TECHNOLOGY at PROOF OF CONCEPTstage) and after PROOF OF CONCEPT to EXPLOIT the PATENT in the TERRITORY;

 

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

 

**NOW WHEREFORE the PARTIES hereby record their agreement as follows:**

 

----

 

1.                                       **PREAMBLE**

 

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

 

2.                                       **SCOPE OF THIS AGREEMENT**

 

2.1                               Thisagreement sets out the terms for the granting of:

 

2.1.1                      A fully paid up sole license (“License1”) is granted to LICENSEE for internal use and development purposes. Underthis License 1, the LICENSEE has the sole right (i.e. other than LICENSOR) toperform research and development, and/or conduct tests to verify, test ordevelop any aspect of the TECHNOLOGY and to assess the market for productsutilizing the TECHNOLOGY at “Proof of Concept” stage. License 1 comes intoeffect upon satisfaction of the suspensive condition stipulated in clause 4below and expires after 12 months or at PROOF OF CONCEPT, whichever comesearliest, unless extended in writing between the PARTIES.

 

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

 

2.2                                ThePARTIES enter into this agreement as independent contractors and nothing hereincontained shall be interpreted as establishing a partnership or joint venturebetween the PARTIES.

 

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

 

3.                                      **DEFINITIONS AND INTERPRETATION**

 

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

 

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

 

3.1.2                      “EXPLOIT” shall mean themanufacture, marketing, sale, offer for sale, use and import of the PRODUCTS incommercial quantities through the application of the TECHNOLOGY by theLICENSEE, and “EXPLOITATION” and “EXPLOITING” shall have correspondingmeanings;

 

2

----

 

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

 

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

 

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

 

3.1.6                      “PROOF OF CONCEPT” shall meantest piece manufacture of part of a wheel and/or a complete wheel, thetesting of such test pieces, and/or the quantification or demonstration of thelevel of protection provided to demonstrate the principle of operation of theTECHNOLOGY, but does not include optimization of a prototype or thedetermination of the limits of protection performance;

 

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

 

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

 

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

 

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

 

3.2                                 Inthis agreement, unless the context otherwise indicates:

 

3.2.1                       the headings to clauses of thisagreement are inserted for reference purposes only and shall in no way governor affect the interpretation thereof;

 

3

----

 

3.2.2                      any annexures to this agreement form anintegral part hereof and words and expressions defined in this agreementshall, unless the context otherwise requires, bear the same meaning in suchschedules;

 

3.2.3                      unless the context clearlyindicates a contrary intention, words importing the singular shall include theplural and vice versa;

 

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

 

3.2.5                      where the day on or by whichanything is to be done is not a business day, it shall be done on or by thefirst day thereafter;

 

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

 

4.                                       **SUSPENSIVE CONDITIONS**

 

4.1                               ThisAgreement is subject to the following suspensive condition:

 

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

 

4.1.2                      The suspensive condition isestablished for the benefit of the LICENSOR, and no waiver of the suspensive conditionor any part thereof shall be binding, unless similarly reduced to writingand signed by the PARTIES.

 

4.1.3                      Should the suspensive conditionsnot be fulfilled within the specified time period, or any mutually agreedwritten extension thereof, this agreement shall be null and void *ab initio*, and no obligations shall lie reciprocally betweenthe PARTIES, save for the LICENSEE being required to immediately return allmatter relating to the TECHNOLOGY and the intellectual property of theLICENSOR, which may have been delivered to LICENSEE by LICENSOR.

 

5.                                       **LICENCED RIGHTS**

 

5.1                               TheLICENSOR hereby grants to the LICENSEE License 1 as provided for in clause2.1.1.

 

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

 

4

----

 

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

 

5.2.2                        anon-exclusive licence to EXPLOIT the PATENT in the RSA

 

subject to theterms and conditions as set out in this agreement.

 

5.3                               Thelicense allows for the manufacturing and sale of PRODUCTS in any countryforming part of the TERRITORY, save for the RSA where any PRODUCTS soldmust also be at least manufactured in part, or assembled, in the RSA. Export byor for LICENSEE of PRODUCTS from a country in the TERRITORY to a countryoutside the TERRITORY shall be subject to the prior written approval ofLICENSOR and such approval shall only be denied in the event that:

 

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

 

5.3.2                      Statutory or regulatory restrictionon defence-related technology supply to the specific country outside theTERRITORY prevents such exports.

 

5.4                               Shouldthe LICENSEE fail to achieve a consistent level of sales as set out in thetable below (“the minimum royalty”) through the application of the TECHNOLOGYand fail to pay over to the LICENSOR the balance between actual sales achievedand the specific minimum royalty fee, the LICENSOR shall have the right to, inits sole discretion, convert the exclusive nature of License 2 for a specific countryin the TERRITORY as provided for in 5.2.1 to a non-exclusive license, orterminate the license.

 
| **Countries forming part of the  TERRITORY** | ** ** | **Minimum  royalty payments to retain  exclusivity**                                                                        |
|---------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------|
| USA  Canada                                       |       | US$ 100 000 in year 1 of the Licence  US$ 120 000 in year 2 of the Licence  US$ 150 000 per annum thereafter |
| UK  France  Germany                               |       | US$ 100 000 total by end of year 2  US$ 100 000 in year 3 of the Licence  US$ 120 000 per annum thereafter   |
| Israel                                            |       | US$ 50 000 in year 1 of the Licence  US$ 100 000 per annum thereafter                                             |
| South Africa                                      |       | No minimum royalty fee due to  non-exclusivity of the licence                                                               |

 

5.4.1                      For the first 3 (three) yearsafter the COMMENCEMENT DATE, royalty payments from any one country in theTERRITORY in excess of that country’s minimum royalty payment, may becalculated towards the 

 

5

----

 

minimum royaltypayment of any other country in the TERRITORY where the minimum royalty paymenthas not been attained in that ROYALTY YEAR. Thereafter, each country’s minimumroyalty must be attained from sales in that country in order to maintainexclusivity of this licence.

 

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

 

5.6                                 Onthe termination of this agreement:

 

(i)                                   TheLICENSEE must do all things reasonably required by the LICENSOR to protect itsrights, titles and interests in the PATENT and other intellectual propertyowned by LICENSOR;

 

(ii)                                Allimprovements made to the TECHNOLOGY by either PARTY and which form thesubject of any claim in a patent or patent application anywhere in the worldthat is dependent on the PATENT, and/or any investments made by LICENSOR in thecourse thereof, will remain the property of the LICENSOR and the LICENSEE may makeno claim in respect of them;

 

(iii)                             or at any time before suchtermination at the request of the LICENSOR, the LICENSEE must promptly returnto the LICENSOR:

 

(a)                                  allspecifications, samples, drawing, films, pamphlets, catalogues, advertisingmaterial and other materials, documents and papers of any nature sent to the LICENSEEby the LICENSOR relating to the TECHNOLOGY or the business of the LICENSOR(other than correspondence between the PARTIES) which the LICENSEE may havein its possession or under its control; and

 

(b)                                 acopy of separate books of account and records relating to the licence kept inaccordance with clause 11 suitable for the purpose of LICENSOR keeping recordof the parties and countries whom PRODUCTS were sold to. For the avoidance ofdoubt it is specifically recorded that this provision 5.6 (iii) (b) doesnot include the original records and books of the LICENSEE but pertains tocopies of records required to be kept for regulatory and statutory purposes.

 

5.7                               Within30 days after the date on which termination of this agreement takes effect, theLICENSEE must, at its own cost, promptly return to the LICENSOR or otherwisedispose of as the LICENSOR instructs, those of the PRODUCTS and specificationsand any parts which the LICENSEE may have in its possession or under itscontrol and which are the property of the LICENSOR.

 

6

----

 

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

 

6.                                      **TITLE TO THE INTELLECTUAL PROPERTY**

 

6.1                               TheLICENSEE acknowledges that all right, title and interest in and to the PATENTvests in the LICENSOR and that it has no claim of any nature in and to thePATENT or any other intellectual property owned by LICENSOR. The LICENSEE shallnot at any time during or after termination or cancellation of this agreementdispute the validity or enforceability of such rights or of the PATENT, orcause to be done any act contesting or in any way impairing or tending toimpair any part of that right, title and interest in the PATENT and shallnot counsel or assist any other person to do so.

 

6.1.1                      LICENSOR will have first right ofrefusal to patent an improvements made by LICENSEE to the TECHNOLOGY at its owncost, in those countries forming part of the TERRITORY where LICENSEE hasEXPLOITATION rights. LICENSOR shall grant LICENSEE an exclusive royalty-freelicence under such patents in all countries in the TERRITORY except RSA and anon-exclusive, royalty-free licence in RSA on condition that LICENSEEcontributes 50% (fifty per cent) of the bona fide patenting expenses in each suchcountry where a royalty-free licence is granted. In the event that LICENSORelects not to apply for or to maintain patents in the TERRITORY on improvementsmade by LICENSEE, then LICENSEE may apply for, own and maintain suchpatents.

 

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

 

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

 

6.2.1                      Such modifications of theTECHNOLOGY will not remove any obligations or benefits of the LICENSOR andLICENSEE in terms of this agreement.

 

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

 

7

----

 

7.                                      **DELIVERY OF INTELLECTUAL PROPERTY**

 

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

 

8.                                      **OBLIGATIONS ON LICENSEE**

 

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

 

9.                                      **ROYALTIES AND MARKET REPORTS**

 

9.1                               Inconsideration for the rights granted to it in terms of License 1, the LICENSEEshall invest capital and resources equal to a minimum of US$500,000.00 (fivehundred thousand United States dollars) to test and develop the TECHNOLOGY,calculated from 1 January 2005, the PARTIES hereby recording that theLICENSEE has prior to the COMMENCEMENT DATE invested in development andresearch in the technical field covered by the TECHNOLOGY, which the LICENSORshall receive the benefit of.

 

9.2                               Inconsideration for the rights granted to it in terms of License 2 as per clause5.2.1, the LICENSEE shall pay the LICENSOR a once-off exclusivity fee in theamount of US$200,000.00 (two hundred thousand United States dollars), whichamount shall be paid in accordance with clause 9.2.1 as of date of first SALESachieved provided that the full amount is paid on or before the thirdanniversary of the COMMENCEMENT DATE of this agreement or the date oftermination of this agreement, whichever comes soonest, whether any SALES havebeen achieved or not.

 

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

 

9.3                                 Asfrom the date on which any SALES of the PRODUCTS are achieved, the LICENSEEshall further pay the LICENSOR a royalty equivalent to:

 

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

 

8

----

 

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

 

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

 

LICENSEE may deductfrom such royalty payments a pro rata portion of:

 

•                                         Bona fidetrade or quantity discounts that are standard in the industry and that aregiven with respect to such SALES, and

 

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

 

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

 

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

 

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

 

9.5                               TheLICENSEE shall within 30 (thirty) days after the end of each ROYALTY YEARprovide the LICENSOR with a statement of all sales of the PRODUCT for thatROYALTY YEAR, together with the LICENSEE’s payment in respect of royalties dueto the LICENSOR. Such a statement shall include the number of PRODUCTSmanufactured and the number sold for each month during the year and anenumeration of any deductions from the royalty.

 

9.6                               Within60 (sixty) days of the end of the LICENSEE’s financial year, the LICENSEE shalldeliver to the LICENSOR an audited statement in respect of all sales of thePRODUCTS for the previous ROYALTY YEAR. Such audited statement shall beaccompanied by payment to the LICENSOR of any shortfall in respect of royaltiesdue to the LICENSOR. Any overpayment in respect of royalties shall be deductedfrom the royalties due to the LICENSOR for the next ROYALTY YEAR.

 

10.                                 **LIABILITY FOR INTEREST ON LATE PAYMENTS**

 

10.1                           Allamounts which the LICENSEE is required to pay to the LICENSOR in terms of thisAgreement and which are not paid on due date shall bear interest at the 

 

9

----

 

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

 

10.2                          Thesaid interest shall be calculated and compounded monthly in advance from thedue date to date of payment.

 

10.3                          TheLICENSOR’s rights to charge interest on outstanding amounts shall not detractfrom any other rights that the LICENSOR may have in terms of thisagreement.

 

11.                                **ACCOUNTING RECORDS**

 

11.1                         TheLICENSEE shall keep full, true and accurate books of account and records inaccordance with generally accepted accounting practice containing allparticulars that may be necessary for the purpose showing the amount ofroyalties payable to the LICENSOR in terms of this agreement. Such books ofaccount and records shall be kept at the premises where the LICENSEE’s businessis carried on.

 

11.2                         TheLICENSEE shall permit the LICENSOR at any time during business hours, but notmore frequently than once in each ROYALTY YEAR, to have a representative of theLICENSOR’s selection, provided than he/she is a qualified chartered accountantor lawyer and is reasonably acceptable to LICENSEE, examine all of theaforementioned books of account and records (including information stored incomputer readable form) and to take copies of all such documents, books andrecords to determine whether all appropriate accounting of royalties hereunderand payments thereof have been made. The representative shall retain allinformation examined or copied in confidence and shall disclose to LICENSORonly the accuracy of the payments made under this Agreement. The examination may onlyconsider books and records for transactions that occurred three years or lessbefore the date of such examination.

 

11.3                         Therecords and documentation required by this clause 11 must be kept by theLICENSEE for 3 years from the termination of this agreement. LICENSOR may conductone examination under clause 11.2 within 90 (ninety) days after termination ofthis agreement.

 

12.                                **WARRANTIES BY THE LICENSOR**

 

12.1                           TheLICENSOR warrants and represents that:

 

12.1.1                it is free to grant the licenceconferred by this agreement;

 

12.1.2                that it is the owner of the PATENT butdoes not warrant the validity and/or merchantability thereof to produce ormarket the PRODUCTS, nor that the PRODUCTS will obtain any regulatory approvalthat may be required, the LICENSOR hereby expressly excluding any otherwarranties, whether implied or by law.

 

10

----

 

13.                                **CONFIDENTIALITY**

 

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

 

13.2                         TheLICENSEE shall use the information imparted to it for the EXPLOITATION of theTECHNOLOGY pursuant to this agreement and for no other purposes.

 

13.3                         IfLICENSEE uses any proprietary technology or know-how of any third party otherthan that licensed to the LICENSEE by this agreement in the manufacture of thePRODUCTS without the prior written consent of the LICENSOR, which consent shallnot be unreasonably withheld, the use of such third party technology andknow-how shall not have any effect on the royalties payable to the LICENSOR interms of Clause 9 above.

 

14.                                **INFRINGEMENT**

 

14.1                         Ifduring the currency in force of this agreement any infringement or illegal useof the TECHNOLOGY or the PATENT in the TERRITORY by any third party should cometo the attention of the LICENSEE, then and in such event the LICENSEE shallnotify the LICENSOR of such infringement or illegal use.

 

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

 

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

 

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

 

11

----

 

14.5                         TheLICENSEE shall be entitled to any damages awarded in or license income derivedfrom proceedings instituted in terms of Clause 14.4.

 

15.                                **CESSION AND ASSIGNMENT**

 

The rights and obligations of the LICENSEE are personal and may notbe ceded, assigned, let or otherwise disposed of in any manner whatsoeverwithout the prior written consent of the LICENSOR, provided, however, thatLICENSEE may assign this agreement and the rights granted herein, subjectto South African regulatory approval and approval by the LICENSOR whichapproval shall not unreasonably be withheld or delayed, to a third party whoacquires substantially all of LICENSEE’S assets associated with practice underthis agreement.

 

16.                                **SUBLICENSING OR SUBCONTRACTING**

 

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

 

17.                                **INDEMNITY AND LIABILITY**

 

17.1                         TheLICENSEE shall indemnify the LICENSOR against all claims of whatsoever natureand provide guarantees to LICENSOR to that effect, which may be madeagainst it arising out of the EXPLOITATION by LICENSEE of the PATENT or theTECHNOLOGY or the manufacture, sale or use of PRODUCTS.

 

17.2                         Anyclaims for damages that may be instituted by LICENSEE against the LICENSORin terms of this agreement, shall be limited to an amount equal to the actualamount of direct damages, or the aggregate amount of all payments made to theLICENSOR under the terms of this agreement, whichever is the least. Thismaximum liability shall be an aggregate liability for all claims howsoeverarising, whether by contract, in delict or otherwise. Neither PARTY shall beliable to the other for any consequential or indirect damages arising from thisagreement.

 

18.                                **FORCE MAJEURE**

 

18.1                         APARTY is not liable for a failure to perform any of its obligations underthis agreement insofar as it proves:

 

18.1.1                that the failure was due to animpediment beyond its control;

 

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

 

12

----

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

19.                                **DISPUTE RESOLUTION AND GOVERNING LAW**

 

19.1                         Inthe event of any dispute arising between the PARTIES as a result of thisagreement, the dispute will be referred to the executive management of therespective PARTIES to attempt to resolve the dispute. The executive managementof the PARTIES have the option to agree on mutually acceptable mediation orarbitration proceedings, failing which the dispute will be subject to Clause19.2 below.

 

19.2                         Thisagreement shall be governed by and interpreted in accordance with the laws ofthe Republic of South Africa and any dispute arising therefrom shall beadjudicated by a competent high court in South Africa to which exclusivejurisdiction the PARTIES hereby agree (unless otherwise agreed to between thePARTIES at the time).

 

13

----

 

19.3                         Theprovisions of this Clause 19 shall survive termination of this agreement.

 

20.                                **CANCELLATION**

 

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

 

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

 

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

 

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

 

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

 

20.3                         Anytermination of this agreement shall not absolve the PARTIES from the obligationto observe the confidentiality measures and other restraints as set out herein.

 

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

 

21.                                **WHOLE AGREEMENT**

 

21.1                         Thisdocument constitutes the whole of the agreement (to the exclusion of all else)between the PARTIES relating to the subject matter hereof, and also supersedesall previous agreements pertaining to the same subject matter, whether writtenor otherwise, between the PARTIES.

 

21.2                         Noamendment, alteration, addition, variation or consensual cancellation of thisdocument will be valid unless in writing and signed by the PARTIES.

 

14

----

 

22.                                **WAIVER**

 

22.1                         Nowaiver of any of the terms or conditions of this agreement will be binding forany purpose unless expressed in writing and signed by the PARTY giving the sameand any such waiver will be effective only in the specific instance and for thepurpose given.

 

22.2                         Nofailure or delay on the part of either PARTY in exercising any right,power or privilege will operate as a waiver, nor will any single or partialexercise of any right, power or privilege preclude any other or furtherexercise thereof or the exercise of any other right, power or privilege.

 

23.                                **DOMICILIUM AND NOTICES**

 

The PARTIES hereby choose *domicilium citandi etexecutandi* for all purposes in terms hereof as follows:

 

**The CSIR**,The Executive Director:Defence, Peace, Safety & Security, Meiring Naude Road,Scientia,Pretoria, 0002

 

**FORCEPROTECTION TECHNOLOGIES INC,**The President Force Protection Technologies Inc9801 Highway 78 Ladson South Carolina 29456

 

23.1                         EitherPARTY shall be entitled to change its *domicilium citandi etexecutandi* by giving written notice thereof to the other, providedthat such change shall not take effect until receipt by the other PARTY of suchnotice.

 

23.2                         Allnotices to be given by hand by the PARTIES to each other in terms hereof shallbe given to the aforesaid addresses by delivery thereto, or if by posting byprepaid registered mail, or by telefax to the following addresses:

 

**The CSIR**P O Box 395 Pretoria0001 Fax No. :+ 27 12 841-3803

 

15

----

 

**FORCEPROTECTION TECHNOLOGIES INC**VP: Legal Affairs9801 Highway 78 Ladson SC 29456 United States of America Fax No. :  (+1) 843 553-1311

 

24.                                 **NOTICES**

 

24.1                         Allnotices in terms of this agreement shall be in writing addressed to the chosenaddress of the PARTY and shall be sent by prepaid registered post or courier,or shall be physically delivered, or shall be sent by facsimile to the numbersas set out in Clause 23 above (or to any replacement number), provided thatproof of delivery can be provided.

 

24.2                         Postedand couriered notices shall be deemed to have been received on the 5thbusiness day following posting.

 

25.                                **SEVERABILITY**

 

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

 

26.                                **COSTS**

 

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

 

Signed at Pretoria  on this 6thday of July  2007.

 
| As witnesses: |
|---------------|
|          |   |   |
| 1.            | /s/ illegible |   |   |
|          |   |   |   |
| 2.            | /s/ illegible |   | /s/ J. Strydan |   |
|          |   | For **CSIR** |

 

 

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

 
| As witnesses: |
|---------------|
|          |   |   |
| 1.            | /s/ Raymond Pollard |   |   |
|          |   |   |   |
| 2.            | /s/ John Wall III____ |   | /s/ Gordon R. McGilton |   |
|          |   | For **FORCE PROTECTION   TECHNOLOGIES INC.** |

 

16

----