**Exhibit10.1**

**PRODUCTION LICENSE AGREEMENT**

**IRAQILIGHT ARMORED VEHICLES**

This License Agreement(the “License Agreement”) is made the 13th day of June 2006:

**Between:**

**Force Protection Industries, Inc.,**aNevada corporation, whose address is 9801 Hwy 78, Bldg #1, Ladson, SC 29456,jointly with its corporate parent Force Protection, Inc. (hereinafter referredto as “FPI”)

**-and-**

**BAE Systems Land & Armaments L.P.,**aDelaware limited partnership, acting through its Ground Systems Division, withits principle office at 1100 Bairs Road, York, PA 17404 (hereinafter referredto as “**BAE**”).

**RECITALS**

**Whereas,**FPIowns, possesses or has the right to use certain patents, patent applications,licensed technology, know-how, trade secrets, designs, copyrighted material,systems and other proprietary intellectual property (the “IP”) associated withthe Cougar variant 4x4 armored vehicle known as the Iraqi Light Armored Vehicle(the “ILAV Vehicle”); and

**Whereas,**FPIowns and possesses engineering specifications, drawings, technical data, billsof material, part numbers and other technical information relating to the ILAVVehicle, including all revisions, changes and additions thereto (the “TechnicalData Pack” or the “TDP”) and has created or will create technical manuals,tooling, systems diagrams, process flow diagrams, vendor lists, and otherdocuments and information relating to the design, performance, testing,manufacture, operation and repair of the ILAV Vehicle (collectively with theTDP, the “Confidential Information”); and

**Whereas,**FPIand BAE have agreed to team together to secure a U.S. Government contract (refW56HZV-06-D-VB01) for the manufacture and sale of Cougar ILAV Vehicles to theUS Army Tank Armament & Automotive Command (“TACOM”) it being currentlycontemplated by the parties that such contract could include up to 1050 ILAVVehicles with all options (hereinafter referred to as the “ILAV Contract”); and

**Whereas,**Aspart of such teaming arrangement the parties have agreed that (i) BAE shall actas the prime contractor under the ILAV contract and FPI shall act as itssubcontractor under a subcontract agreement (the “Subcontract”) pursuant towhich FPI shall manufacture fifty percent (50%) of the vehicles required underthe ILAV Contract (the “Subcontract Vehicles”) except as otherwise agreed to bythe parties, and (ii) that FPI shall grant to BAE a production license tomanufacture up to 1050 ILAV Vehicles under the ILAV Contract on such terms andconditions as may be acceptable to FPI.

**Grant of Production License:**

For and in considerationof the payment of the License Agreement Fee hereunder, FPI hereby grants to BAEa non-exclusive, revocable, “build to print” production license to use the IP,TDP, Improvements, as defined hereunder, and the Confidential Information,which license shall not be terminated except as provided herein, for theduration of contract W56HZV-06-D-VB01, referenced in the recitations, above:

·         Forthe purpose of manufacturing up to 1050 of the ILAV Vehicles required under theILAV Contract, such permitted use to include without limitation developingtooling and manufacturing processes, contacting vendors, procuring materials,fabricating parts, assembling components and undertaking such other customarymanufacturing activities as necessary to produce the ILAV Vehicles;

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·         Tomake additions or revisions to the TDP or Confidential Information or otherwiseto adapt, correct and otherwise conform the TDP or Confidential Information toBAE’s processes, which shall be deemed an Improvement as defined hereunder, forFPI’s unrestricted use and BAE’s use solely for the manufacture of those ILAVvehicles reserved for BAE pursuant to this License Agreement;

·         Tosell and deliver the ILAV Vehicles to TACOM as required under the ILAVContract; and

·         Onthe express condition that the parties mutually agree on the terms of theSubcontract and that the Subcontract includes a requirement that FPI be awardedproduction of not less than 50% of all ILAV Vehicles except as otherwise agreedto by the parties on terms acceptable to FPI.

The grant of theProduction License Agreement by FPI shall in no event be construed as a grantof any other right, title or interest in and to the ILAV Vehicle, the IP, TDPor the Confidential Information, and BAE shall not use any IP, TDP orConfidential Information for any purpose other than as provided herein. BAE mayattach limited drawings and specifications to purchase orders it issues tovendors and suppliers, subject to BAE’s compliance with the protection of FPI’sinformation as provided herein, solely for production of the ILAV Vehiclespursuant to this License Agreement, but BAE shall not otherwise transfer IP,TDP or Confidential Information or sub-license any of its rights under thisLicense Agreement (whether to subcontractors or otherwise) without the expressprior written consent of FPI, and shall not assert any right, title or claim tothe IP or the Confidential Information. BAE shall have the right to provideTACOM with manuals for operation and for maintenance and repair of ILAVVehicles and any other deliverable currently required under the ILAV Contract.

**Ownership of Rights —Improvements:**

FPI will provide to BAEfor use under this agreement the TDP and Confidential Information for the ILAVVehicle and FPI shall cooperate and assist BAE in making such additions orrevisions to the TDP and Confidential Information as necessary to ensure theILAV conforms to all performance and contractual requirements of the ILAVContract, provided however that FPI shall at all times retain the exclusivelegal right, title and interest in and to the TDP and the ConfidentialInformation. BEA may propose changes to the TDP or Confidential Information,provided however that FPI shall have the exclusive right to make final changesto the TDP or to any of the Confidential Information.

BAE shall promptlydisclose to FPI any new or improved designs, specifications, developments,enhancements or derivatives developed by BAE specifically for the ILAVVehicles, relating to or capable of being used in the TDP, the ConfidentialInformation or the ILAV Vehicles, whether patentable or not, which would makethe vehicles cheaper, more effective, more easily produced, more useful or morevaluable, or would in any other way enhance the TDP, the Confidential Informationor the ILAV Vehicles (the “Improvements”). BAE hereby assigns to FPI all itsright, title and interest in and to all Improvements upon their creation byBAE, and upon such creation the Improvements shall be deemed to be part of theIP and the use by BAE of such Improvements shall be deemed to be included inand covered by this License Agreement.

**License Agreement Fee &Reports:**

Except as otherwiseprovided herein, in consideration of the License granted pursuant to thisLicense Agreement by FPI to BAE, BAE shall pay to FPI a fully earned,non-refundable license fee of $8,027 per vehicle for each ILAV Vehiclemanufactured by BAE under the ILAV Contract (the “License Agreement Fee”). Allpayments made hereunder shall be free and clear of all taxes, fees, deductionsor set-offs of whatever kind.

In the event that TACOMexercises any of the options on the ILAV Contract (“Option Vehicles”) and theParties agree that BAE will manufacture more than 50% of any Option Vehicles,then BAE shall pay FPI a fully earned, nonrefundable license fee of $16,500 foreach of the Subcontract Vehicles that would have been produced by FPI under theSubcontract but manufactured by BAE under the ILAV Contract (“AdditionalLicense Fee”).

The License Agreementfees shall become due on the last day of each calendar month in respect of allILAV Vehicles accepted by the U.S. Government customer during such month.Acceptance shall be evidenced by a DD

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Form 250, executed by theauthorized agent or employee of the U.S. Government. BAE shall provide to FPIno later than the 5th business day following the end of eachcalendar month a report setting out the number of ILAV Vehicles manufacturedduring the preceding month and the number of ILAV Vehicles accepted during thepreceding month, including their hull numbers or other identifying mark and acalculation of the amount of the License Agreement Fees payable in respect ofsuch deliveries. BAE shall include payment of the License Agreement Fees inrespect of such deliveries together with such report.

Without limiting in anyway FPI’s remedies elsewhere contained in this License Agreement, BAE shall payFPI interest on all overdue payments due to FPI under this License Agreement atthe rate of two percent (2%) per month. The payment of such interest shall notreplace any of FPI’s other rights under this License Agreement or at lawresulting from BAE’s default by failure to pay any amount due.

BAE will maintainaccurate records of all ILAV Vehicle production and deliveries with respect towhich License Agreement Fees are payable under this section, and will make suchrecord available to FPI for examination and copying, on reasonable notice,during normal business hours. BAE will also furnish copies of such records toFPI upon request. FPI will treat as confidential all and any informationobtained by FPI or its representatives from BAE under this clause and will notdisclose any such information to any third party except as required by law.

In the event that FPI’sSubcontract is terminated for default after FPI materially fails to perform anyof its obligations under the Subcontract which is capable of being cured andsuch failure continues for a period of 10 calendar days after FPI receiveswritten notice of default, BAE shall pay FPI a fully earned, nonrefundablelicense fee of $16,500 for each of the Subcontract Vehicles that would havebeen produced by FPI under the Subcontract but manufactured by BAE under theILAV Contract (“Additional License Fee”). The License Agreement Fee and anyAdditional License Fee shall be payable in respect of all ILAV Vehiclesdelivered by BAE under the ILAV Contract whether or not the Subcontract is ineffect.

**Effective Date and Duration**

This License Agreementshall be effective as from the date of signing by both parties (and providedthat the Subcontract has been signed by both parties) and shall remain ineffect until the earliest of (i) completion of all the work under the ILAVContract (contract W56HZV-06-D-VB01) (ii) termination of this agreement by FPIin the event of default by BAE as provided hereunder, or (iii) termination ofthe Subcontract for convenience.

**Representations & Warranties:**

FPI shall use its bestefforts to provide BAE with accurate TDP and Confidential Information relatingto the ILAV Vehicles but makes no warranty regarding the accuracy of such TDPor Confidential Information or the ability of BAE to manufacture the ILAVVehicles based on such information, and FPI shall have no liability to BAE withrespect to the TDP or Confidential Information or the ILAV Vehicles or the usethereof.

FPI warrants to BAE (i)that FPI owns or has the right to use the IP, TDP and the ConfidentialInformation and has paid or will pay any royalty or other fee as required forsuch ownership or right of use (ii) the FPI may grant this License Agreement toBAE and it may do so without the approval or consent of any third party, (iii)that the grant of such license to BAE does not violate any agreement bindingupon or any obligation of FPI, and (iv) that none of the IP, TDP or theConfidential Information violates or infringes any patent, copyright,trademark, service mark or other right.

FPI will indemnify BAEagainst any liability and hold BAE harmless from any pay any loss, damage, costand expense (including, without limitation, legal fees) which BAE incurs inconnection with any breach of any of the warranties hereunder or any claim by athird party alleging facts that would constitute a breach of any of suchwarranties; provided, however, that this indemnity is limited solely toliability, loss, damage, cost and expense arising out of claims by thirdparties against the BAE, and FPI may, at its expense, defend any such claim,FPI will not be liable to BAE for any cost or expense incurred by BAE after FPInotifies BAE of its election. In any event, FPI will not be liable for loss ofprofits or incidental or consequential damages.

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BAE will promptly notifyFPI of any claim against BAE covered by FPI’s warranty hereunder with fulldetails of the claim. BAE will cooperate in the defense of any such claim andwill not settle the same without FPI’s written consent unless BAE releases FPIfrom all of FPI’s obligations under this section with respect to the claim.

EXCEPT AS PROVIDEDHEREIN, THE LICENSE IS PROVIDED WITHOUT ANY WARRANTY OF ANY KING. IN NO EVENTWILL FPI BE LIABLE FOR ANY DAMAGES, INCLUDING ANY LOST PROFITS OR OTHERINCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OF THE IP, TDPAND/OR THE CONFIDENTIAL INFORMATION, OR ARISING OUT OF THE PRODUCTION OF THEILAV VEHICLES, EVEN IF BAE HAS ADVISED FPI OF THE POSSIBILITY OF SUCH DAMAGES.

**Protection of FPI’s Information:**

In connection with theperformance of the ILAV Contract, BAE may directly or indirectly become awareof or obtain technical or commercial information and/or documents of aconfidential nature relating to FPI’s armored vehicles (including by way ofillustration and not limitation the Buffalo, the Cougar and the MUV-R) FPI’sbusiness operations and/or its business relationships (collectively all suchinformation and documents that are marked as confidential shall be referred toas “FPI’s Company Information”). The parties agree to jointly mark anyinformation that has already been provided if FPI indicates to BAE that suchinformation is proprietary.

BAE shall protect andkeep secret any and all Confidential Information and FPI’s Company Informationwhich it acquires, and shall not at any time whether during the currency ofthis License Agreement or after its expiration or termination without the priorwritten consent of FPI disclose, divulge, make known, or in any waycommunicate, to any person in any part of the world, or permit or allow any ofits employees or agents to disclose, divulge, make known or in any waycommunicate to any person in any part of the world, the ConfidentialInformation or FPI’s Company Information, other than to BAE’s own employees,suppliers, subcontractors or consultants who need to know or use  such information for the limited purpose ofenabling BAE to exercise its rights or perform its obligations under thisLicense Agreement.

The foregoing shall notapply in the event that the Confidential Information or FPI’s CompanyInformation (i) was in the public domain at the time of disclosure orthereafter enters the public domain through no breach of this or any otherAgreement by BAE; (ii) was, at the time of receipt, otherwise known to BAEwithout restrictions as to use or disclosure; (iii) becomes known to BAE from asource other than FPI without breach of this or any other Agreement by BAE;(iv) is developed independently by BAE and without the reliance uponConfidential Information or FPI’s Company Information disclosed hereunder, or(v) is disclosed with the written approval of FPI.

BAE acknowledges that theConfidential Information and FPI’s Company Information is and will be disclosedto it on the express condition that it be used only for the limited andspecific purpose of BAE exercising its rights and performing its obligationsunder this License Agreement and BAE will not otherwise use or attempt to useany of the Confidential Information or FPI’s Company Information for its ownadvantage or gain directly or indirectly. BAE shall not use or attempt to useany of the Confidential Information or FPI’s Company Information in any mannerwhich may cause or be calculated to cause injury or loss (including injury orloss of or to, goodwill, customer confidence, commercial relationships orintellectual property rights) to FPI or any company related to FPI. BAE shallnot copy the Confidential Information or FPI’s Company Information or allow itto be copied in whole or in part except as required under this agreement,without the prior written consent of FPI.

BAE shall take or causeto be taken such reasonable precautions as may be necessary to maintain thesecrecy and confidentiality of the Confidential Information and FPI’s CompanyInformation and to prevent its disclosure, including ensuring that eachemployee, sub-contractor or consultant of BAE who comes into possession of theConfidential Information or FPI’s Company Information or any part of it entersinto a confidentiality agreement in favor of FPI binding the employee,sub-contractor or consultant to kept the Confidential Information secret andconfidential, in terms substantially the same as the provisions hereof.

Subject only to theprovisions hereof, BAE will immediately upon demand, either deliver up to FPIor destroy (and certify to FPI the proper destruction of) all material (whetherdocuments, microfilm, magnetic tape, cassette or disk, computer software, laserdisk, or any other medium of storing or recording information) comprising orcontaining any of the Confidential Information and FPI’s Company Information,including any and all copies in whole or in

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part thereof and anymaterial on which BAE has itself recorded or stored in any form theConfidential Information or FPI’s Company Information or any part of it.

Nothing herein willprevent the disclosure of information that is required to be disclosed in orderto comply with any applicable law or legally binding order of any court,government, semi-government authority or administrative or judicial body,provided that BAE:

·         informs FPI in writing, with as much advancenotice as possible, of the proposed disclosure, giving full details of thecircumstances of the proposed disclosure and of the relevant information to bedisclosed;

·         gives FPI a reasonable opportunity tochallenge the proposed disclosure in a court of law or other appropriate body;

·         furnishes only that portion of theConfidential Information or FPI’s Company Information which it is advised bywritten opinion of its legal counsel is legally required to be disclosed; and

·         exercisesits best efforts to obtain reliable assurances that confidential treatment willbe accorded to the Confidential Information.

The obligations hereunderrelating to the treatment of the Confidential Information and FPI’s CompanyInformation shall survive the termination of this agreement for a period ofthree years.

**Protection of BAE’s Information:**

In connection with theperformance of the ILAV Contract, FPI may directly or indirectly become awareof or obtain technical or commercial information and/or documents of aconfidential nature relating to BAE’s armored vehicles (including by way ofillustration and not limitation the Bradley, the M109 Self-Propelled Howitzer,the M88 Recovery Vehicle and the Amphibious Assault Vehicle). BAE’s businessoperations and/or its business relationships (collectively all such informationand documents that are marked as confidential shall be referred to as “BAE’sCompany Information”).

FPI shall protect andkeep secret any and all BAE’s proprietary and/or confidential information andBAE’s Company Information which it acquires, and shall not at any time whetherduring the currency of this License Agreement or after its expiration ortermination without the prior written consent of BAE disclose, divulge, makeknown, or in any way communicate, to any person in any part of the world, orpermit or allow any of its employees or agents to disclose, divulge, make knownor in any way communicate to any person in any part of the world, the BAE’sproprietary and/or confidential information or BAE’s Company Information, otherthat to FPI’s own employees, suppliers, subcontractors or consultants who needto know or use such information for the limited purpose of enabling FPI toexercise its rights or perform its obligations under this License Agreement.

The forgoing shall notapply in the event that the Confidential Information or BAE’s CompanyInformation (i) was in the public domain at the time of disclosure orthereafter enters the public domain through no breach of this or any otherAgreement by FPI; (ii) was, at the time of receipt, otherwise known to FPIwithout restrictions as to use or disclosure; (iii) becomes known to FPI from asource other than BAE without breach of this or any other Agreement by FPI;(iv) is developed independently by FPI and without the reliance upon BAE’sproprietary and/or confidential information or BAE’s Company Informationdisclosed hereunder, or (v) is disclosed with the written approval of BAE.

FPI acknowledges that theBAE’s proprietary and/or confidential information and BAE’s Company Informationis and will be disclosed to it on the express condition that it be used onlyfor the limited and specific purpose of FPI exercising its rights andperforming its obligations under this License Agreement and FPI will nototherwise use or attempt to use any of the BAE’s proprietary and/orconfidential information or BAE’s Company Information for its own advantage orgain directly or indirectly. FPI shall not use or attempt to use any of the BAE’sproprietary and/or confidential information or BAE’s Company Information in anymanner which may cause or be calculated to cause injury or loss (includinginjury or loss of or to, goodwill, customer confidence, commercialrelationships or intellectual property rights) to BAE or any company related toBAE. FPI shall not copy the BAE’s proprietary and/or confidential informationor BAE’s Company Information or allow it to be copied in whole or in partyexcept as required under this agreement, without the prior written consent ofBAE.

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FPI shall take or causeto be taken such reasonable precautions as may be necessary to maintain thesecrecy and confidentiality of the BAE’s proprietary and/or confidentialinformation and BAE’s Company Information and to prevent its disclosure,including ensuring that each employee, sub-contractor or consultant of FPI whocomes into possession of the BAE’s proprietary and/or confidential informationor BAE’s Company Information or any part of it enters into a confidentialityagreement in favor of BAE binding the employee, sub-contractor or consultant tokept the BAE’s proprietary and/or confidential information secret andconfidential, in terms substantially the same as the provisions hereof.

Subject only to theprovisions hereof, FPI will immediately upon demand, either deliver up to BAEor destroy (and certify to BAE the proper destruction of) all material (whetherdocuments, microfilm, magnetic tape, cassette or disk, computer software, laserdisk, or any other medium of storing or recording information) comprising orcontaining any of the BAE’s proprietary and/or confidential information and BAE’sCompany Information, including any and all copies in whole or in part thereofand any material on which FPI has itself recorded or stored in any form the BAE’sproprietary and/or confidential information or BAE’s Company Information or BAE’sCompany Information or any part of it.

Nothing herein willprevent the disclosure of information that is required to be disclosed in orderto comply with any applicable law or legally binding order of any court,government, semi-government authority or administrative or judicial body,provided that FPI:

·         Informs BAE in writing, with as much advancenotice as possible, of the proposed disclosure, giving full details of thecircumstances of the proposed disclosure and of the relevant information to bedisclosed;

·         Gives BAE a reasonable opportunity tochallenge the proposed disclosure in a court of law or other appropriate body;

·         Furnishes only that portion of the BAE’sproprietary and/or confidential information or BAE’s Company Information whichit is advised by written opinion of its legal counsel is legally required to bedisclosed; and

·         Exercisesits best efforts to obtain reliable assurances that confidential treatment willbe accorded to the BAE’s proprietary and/or confidential information.

The obligations hereunderrelating to the treatment of the BAE’s proprietary and/or confidentialinformation and BAE’s Company Information shall survive the termination of thisagreement for a period of three years.

**Infringements & Exclusions:**

Each party shall notifythe other immediately of any actual, suspected or anticipated infringement ofthe IP or any misuse of the Confidential Information of which it becomes aware.The notification shall contain suggestions as to the damage or potential damagewhich either or both parties are then suffering or are likely to suffer fromsuch an infringement or misuse.

FPI may in its absolutediscretion determine whether or not to take legal or other action against anythird party for an actual or threatened or suspected infringement of the IP orany misuse of the Confidential Information, and if FPI elects to take legal orother action FPI:

·         shall bear all costs of the action;

·         shall have sole control over the form andconduct of such action;

·         may settle, compromise or discontinue theaction as it thinks fit;

·         shall be entitled to any award of costs and/ordamages made in relation to such action; and

·         shallindemnify BAE against any costs or damages for which BAE may become liable as aresult of the proceedings provided that BAE has not authorized or contributedto the acts giving rise to the liability.

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BAE will give FPI allauthority, information and assistance requested by FPI to assist it toinitiate, litigate, settle or compromise any proceedings by FPI in respect ofany such infringement or misuse.

**Default by BAE:**

If BAE breaches any ofthe restrictions on use of the License Agreement or the obligations relating tothe protection of IP, TDP, Improvements, Confidential Information or FPI’sCompany Information, or if BAE fails to pay when due any amount owing underthis License Agreement and such failure continues for a period of ten (10)calendar days, or if BAE fails to perform any of its other obligations underthis License Agreement or materially fails to perform any of its obligationsunder the Subcontract which is capable of being cured and such failurecontinues for a period of ten (10) calendar days after BAE receives writtennotice of the default, FPI may terminate this License Agreement upon writtennotice to BAE of the termination. FPI’s rights under this Section are inaddition to, and are not a limitation on or in substitution for, any otherrights which FPI has by reason of any default, including, without limitation,any claim for damages.

**Post Termination-Expiration:**

Expiration or terminationof this License Agreement shall not relieve BAE of any obligation to pay to FPIany license fees or other amount that had accrued prior to such expiration ortermination, and shall not relieve FPI from the obligation to protect BAE’sCompany Information or BAE’s obligation to protect IP, TDP, ConfidentialInformation, Improvements and FPI’s Company Information as provided herein.

On the termination ofthis License Agreement for any reason, BAE shall:

·         immediately cease to use any of the IP, TDP,Improvements Confidential Information, and/or FPI Company Information;

·         immediately stop manufacturing the ILAVVehicles;

·         immediately deliver to FPI an inventorylisting all ILAV Vehicles manufactured pursuant to the terms of this LicenseAgreement by BAE but as yet undelivered; and

·         immediatelydeliver to FPI all material (whether drawings, prototypes, or any other mediumof storing or recording or embodying information) comprising or containing anyof the IP, TDP, Improvements, Confidential Information and FPI CompanyInformation, including any and all copies in whole or in part thereof and anymaterial on which BAE has recorded or stored in any form the ConfidentialInformation or any part of it.\

**Restriction on Disclosure:**

BAE acknowledges that theILAV Vehicle is a defense article subject to applicable Federal export andimport regulations, including but not limited to, the U.S. Arms Export ControlAct, as amended (22 U.S.C. §§ 2751-2799), the International Traffic in ArmsRegulations, as amended (22 C.F.R. Part 120 et seq.), the Export AdministrationAct, as amended (50 U.S.C. §§ 2401-2420), the U.S. Export AdministrationRegulations, as amended (15 C.F.R. § 730 et seq.) and the requirements of theNational Industrial Security Program Operating Manual (“NISPOM”). BAE (and itssubcontractors, vendors and suppliers) shall not export, disclose, furnish orotherwise provide any technical information or services relating to the ILAV toany foreign person or entity, whether within the U.S. or abroad, withoutobtaining in advance FPI’s prior approval and (if required) appropriate U.S.Government export authorization.

**Miscellaneous:**

Notices. All communications and notices under or inconnection with this License Agreement shall be in writing and shall be mailedby certified mail, return receipt requested, postage prepaid, or personallydelivered or telefaxed. All such communications shall be mailed or delivered tothe appropriate address or telefax number set forth on the signature pagehereof. Any notice so mailed shall be deemed to be given two (2) business daysafter when so mailed, and any notice so delivered shall be deemed to be givenwhen receipted for by, or actually received by, an authorized officer of BAE orFPI, as the case may be.

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Other License Agreements.  This License Agreement replaces andsupersedes all prior agreements and understandings between the parties inrespect of the subject matter set forth herein, including the interim letter ofauthority issued by FPI to BAE dated June 21, 2006. This License Agreement isintended to enable BAE to perform the work required under the ILAV Contract andis executed in conjunction with and as a condition precedent to theSubcontract. In the event of any conflict between this License Agreement andthe Subcontract, this License Agreement shall prevail.

Assignment.  Either party may transfer and assign itsrights and obligations under this License Agreement to any entity whichsucceeds to its business and assets by acquisition, merger or consolidation orwhich purchases the business and all or substantially all of the assets of thetransferor. Except as so provided, neither party may transfer or assign any ofits rights and obligations under this License Agreement without the writtenconsent of the other party.

Indemnity.  BAE agrees to indemnify FPI and its officers,directors, employees, representatives, assigns, successors and affiliates (eachan “Indemnitee”) against, and to hold each Indemnitee harmless from, any andall, claims, damages, liabilities and related costs and expenses to thirdparties asserting or alleging personal injury arising from the operation or useof the ILAV Vehicles licensed hereunder, including reasonable attorneys’ fees,incurred by or asserted against any Indemnitee.

GOVERNING LAW AND FORUM;WAIVER OF JURY TRIAL.  THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED AND GOVERNED UNDER THELAWS OF THE STATE OF NEW YORK, WITHOUT REGARD FOR ANY PROVISIONS THEREOFRELATING TO CONFLICT OF LAWS. THE PARTIES HERETO HEREBY IRREVOCABLY (A) SUBMITTO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK FOR THE PURPOSE OFANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THISAGREEMENT OR ANY OTHER LOAN DOCUMENTS; (B) AGREE THAT ALL CLAIMS IN RESPECT OFSUCH SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT;AND (C) WAIVE ANY OBJECTION ANY OF THEM MAY NOW OR HEREAFTER HAVE AS TO THEVENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THATSUCH COURT IS AN INCONVENIENT FORUM. ANY JUDICIAL PROCEEDING BY ANY PARTYHERETO AGAINST ANY OTHER PARTY HERETO, DIRECTLY OR INDIRECTLY, ANY MATTER INANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANYOTHER SECURITY INSTRUMENT SHALL BE BROUGHT ONLY IN A FEDERAL OR STATE COURTSITTING IN THE BOROUGH OF MANHATTAN IN THE CITY AND STATE OF NEW YORK. EACH OFBAE AND FPI WAIVES THE RIGHT TO A JURY TRIAL WITH RESPECT TO ANY SUIT, ACTIONOR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THISAGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCEOF ANY SUCH RIGHTS OR OBLIGATIONS. BAE ACKNOWLEDGES AND AGREES THAT ANY BREACHOF THIS LICENSE AGREEMENT COULD CAUSE IRREPARABLE DAMAGE OR LOSS TO FPI FORWHICH MONETARY DAMAGES WOULD BE INSUFFICIENT, THUS BAE AGREES THAT IN ADDITIONTO ANY OTHER REMEDIES AVAILABLE HEREUNDER, FPI SHALL HAVE THE RIGHT TOINJUNCTIVE RELIEF, IN THE EVENT OF ANY ACTUAL OR THREATENED BREACH HEREOF.

Invalidity.  If one or more of the provisions of thisLicense Agreement shall be held invalid, illegal, or unenforceable, suchholding shall not affect any other provision of this document.

Survival of LicenseAgreement. All representations, warranties, covenants, andagreements contained herein shall bind BAE and its successors and assigns, andshall inure to the benefit of FPI and its successors and assigns.

Waivers.  Rights and remedies of FPI hereunder arecumulative, and the exercise or partial exercise of any right or remedy shallnot preclude the exercise of any other right or remedy. No failure to exerciseand no delay in exercising any power or right under this License Agreementshall operate as a waiver thereof.

IN WITNESSWHEREOF, the parties hereto have caused this instrument to be duly executed asof the date first above written. The parties agree that this License Agreementmay be signed in counter-part copies and that facsimile copies of suchcounterparts shall be binding upon the parties to the same extent as theoriginals.

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| **FORCE PROTECTION INDUSTRIES, INC.**     |
|-------------------------------------------|
|                                      |
| By:                                       |   /s/ Raymond Pollard |   |
| Name: Raymond Pollard                     |
| Title: Chief Operating Officer            |
|                                      |
| Date:                                     | July 24, 2006 |   |
|                                      |
|                                      |
| **BAE SYSTEMS LAND & ARMAMENTS L.P.** |
| **Ground Systems Division**               |
|                                      |
| By:                                       | /s/ S. Rajagopal |   |
| Name: S. Rajagopal                        |
| Title: V.P. and General Manager           |
|                                      |
| Date:                                     | July 24, 2006 |   |
|                                           |  |  |  |  |  |  |

 

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