Exhibit 10.2


 


FORM OF GUARANTY 


 


1.                                       Identification.


 


This Guaranty (the “Guaranty”), dated as of November 18,
2005, is entered into by Force Protection Industries, Inc., a Nevada corporation
(“Guarantor”), for the benefit
of the parties identified on Schedule A hereto (each a “Lender” and
collectively, the “Lenders”).


 


2.                                       Recitals.


 


2.1                                 Guarantor is a direct or indirect subsidiary
of Force Protection, Inc., a Nevada corporation (“Parent”).  The Lenders have made, are
making and will be making loans to Parent (the “Loans”).  Guarantor will obtain substantial benefit
from the proceeds of the Loans.


 


2.2                                 The Loans are and will be evidenced by
certain promissory notes (each a “Note” and collectively, the “Notes”) issued
by Parent on, about or after the date of this Guaranty pursuant to subscription
agreements dated at or about the date hereof (“Subscription Agreements”).  The Notes are further identified on Schedule A
hereto and were and will be executed by Parent as “Borrower” or “Debtor” for
the benefit of each Lender as the “Holder” or “Lender” thereof.


 


2.3                                 In consideration of the Loans made and to be
made by Lenders to Parent and for other good and valuable consideration, and as
security for the performance by Parent of its obligations under the Notes and
as security for the repayment of the Loans and all other sums due from Debtor
to Lenders arising under the Notes, Subscription Agreements and any other
agreement between or among them relating to the foregoing (collectively, the “Obligations”),
Guarantor, for good and valuable consideration, receipt of which is
acknowledged, has agreed to enter into this Guaranty.  Obligations include all future advances by
Lenders to Parent made by Lenders pursuant to the Subscription Agreement.


 


2.4                                 The Lenders have appointed Barbara R. Mittman
as Collateral Agent pursuant to that certain Collateral Agent Agreement dated
at or about November 16, 2005 (“Collateral Agent Agreement”), among the
Lenders and Collateral Agent.


 


3.                                       Guaranty.


 


3.1                                 Guaranty.  Guarantor hereby unconditionally
and irrevocably guarantees, jointly and severally with any other Guarantor, the
punctual payment, performance and observance when due, whether at stated
maturity, by acceleration or otherwise, of all of the Obligations now or
hereafter existing, whether for principal, interest (including, without
limitation, all interest that accrues after the commencement of any insolvency,
bankruptcy or reorganization of Parent, whether or not constituting an allowed
claim in such proceeding), fees, commissions, expense reimbursements,
liquidated damages, indemnifications or otherwise (such obligations, to the
extent not paid by Parent being the “Guaranteed Obligations”), and agrees to
pay any and all costs, fees and expenses (including reasonable counsel fees and
expenses) incurred by Collateral Agent and the Lenders in enforcing any rights
under the guaranty set forth herein. 
Without limiting the generality of the foregoing, Guarantor’s liability
shall extend to all amounts that constitute part of the Guaranteed Obligations
and would be owed by Parent to Collateral Agent and the Lenders, but for the
fact that they are unenforceable or not allowable due to the existence of an
insolvency, bankruptcy or reorganization involving Parent.


 


3.2                                 Guaranty Absolute. 
Guarantor guarantees that the Guaranteed Obligations will be paid
strictly in accordance with the terms of the Notes, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of Collateral Agent or the Lenders with respect
thereto.  The obligations of Guarantor
under this Guaranty are independent of the Guaranteed Obligations, and a
separate action or actions may be brought and prosecuted against Guarantor to
enforce such obligations, irrespective of whether any action is brought against
Parent or any other Guarantor or whether Parent or any other Guarantor is
joined in any such action or


 


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actions.  The liability of Guarantor under this Guaranty
constitutes a primary obligation, and not a contract of surety, and to the
extent permitted by law, shall be irrevocable, absolute and unconditional
irrespective of, and Guarantor hereby irrevocably waives any defenses it may
now or hereafter have in any way relating to, any or all of the following:


 


(a)  any lack of validity or enforceability of the Notes or any
agreement or instrument relating thereto;


 


(b)  any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations, or any other
amendment or waiver of or any consent to departure from the Notes, including,
without limitation, any increase in the Guaranteed Obligations resulting from
the extension of additional credit to Parent or otherwise;


 


(c)  any taking, exchange, release, subordination or
non-perfection of any Collateral, or any taking, release or amendment or waiver
of or consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations;


 


(d)  any change, restructuring or termination of the corporate,
limited liability company or partnership structure or existence of Parent; or


 


(e)  any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any representation
by Collateral Agent or the Lenders that might otherwise constitute a defense
available to, or a discharge of, Parent or any other guarantor or surety.


 


This Guaranty shall continue
to be effective or be reinstated, as the case may be, if at any time any
payment of any of the Guaranteed Obligations is rescinded or must otherwise be
returned by Collateral Agent, the Lenders or any other entity upon the
insolvency, bankruptcy or reorganization of the Parent or otherwise (and
whether as a result of any demand, settlement, litigation or otherwise), all as
though such payment had not been made.


 


3.3                                 Waiver.  Guarantor hereby waives
promptness, diligence, notice of acceptance and any other notice with respect
to any of the Guaranteed Obligations and this Guaranty and any requirement that
Collateral Agent or the Lenders or exhaust any right or take any action against
any Borrower or any other person or entity or any Collateral.  Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated
herein and that the waiver set forth in this Section 3.3 is
knowingly made in contemplation of such benefits.  Guarantor hereby waives any right to revoke
this Guaranty, and acknowledges that this Guaranty is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.


 


3.4                                 Continuing Guaranty; Assignments.  This
Guaranty is a continuing guaranty and shall (a) remain in full force and
effect until the later of the indefeasible cash payment in full of the
Guaranteed Obligations and all other amounts payable under this Guaranty, the
Subscription Agreements and Notes, (b) be binding upon Guarantor, its
successors and assigns and (c) inure to the benefit of and be enforceable
by the Lenders and their successors, pledgees, transferees and assigns.  Without limiting the generality of the
foregoing clause (c), any Lender may pledge, assign or otherwise transfer
all or any portion of its rights and obligations under this Guaranty (including,
without limitation, all or any portion of its Notes owing to it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted such Collateral Agent or Lender herein or
otherwise.


 


3.5                                 Subrogation.  No Guarantor will exercise any
rights that it may now or hereafter acquire against the Collateral Agent or any
Lender or other Guarantor (if any) that arise from the existence, payment,
performance or enforcement of such Guarantor’s obligations under this Guaranty,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification, whether or not such claim, remedy
or right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from the Collateral Agent or
any Lender or other Guarantor (if any), directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security solely
on account of such claim, remedy or right, unless and until all of the
Guaranteed Obligations and all other amounts payable under this Guaranty shall
have been indefeasibly paid in full in cash.


 


3.6                                 Maximum Obligations. Notwithstanding any provision herein
contained to the contrary, Guarantor’s liability with respect to the
Obligations shall be limited to an amount not to exceed, as of any date of
determination, the


 


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amount
that could be claimed by Lenders from Guarantor without rendering such claim
voidable or avoidable under Section 548 of the Bankruptcy Code or under
any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.


 


4.                                       Miscellaneous.


 


4.1                                 Expenses.  Guarantor shall pay to the
Lenders, on demand, the amount of any and all reasonable expenses, including,
without limitation, attorneys’ fees, legal expenses and brokers’ fees, which
the Lenders may incur in connection with exercise or enforcement of any the
rights, remedies or powers of the Lenders hereunder or with respect to any or
all of the Obligations.


 


4.2                                 Waivers, Amendment and Remedies.  No
course of dealing by the Lenders and no failure by the Lenders to exercise, or
delay by the Lender in exercising, any right, remedy or power hereunder shall
operate as a waiver thereof, and no single or partial exercise thereof shall
preclude any other or further exercise thereof or the exercise of any other
right, remedy or power of the Lenders. 
No amendment, modification or waiver of any provision of this Guaranty
and no consent to any departure by Guarantor therefrom, shall, in any event, be
effective unless contained in a writing signed by the Majority in Interest (as
such term is defined in the Collateral Agent Agreement) or the Lender or
Lenders against whom such amendment, modification or waiver is sought, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.  The
rights, remedies and powers of the Lenders, not only hereunder, but also under
any instruments and agreements evidencing or securing the Obligations and under
applicable law are cumulative, and may be exercised by the Lenders from time to
time in such order as the Lenders may elect.


 


4.3                                 Notices.  All notices or other
communications given or made hereunder shall be in writing and shall be
personally delivered or deemed delivered the first business day after being
faxed (provided that a copy is delivered by first class mail) to the party to
receive the same at its address set forth below or to such other address as
either party shall hereafter give to the other by notice duly made under this
Section:


 


	
  To Parent and Guarantor, to:

  	
  Force Protection, Inc.

  
	
   

  	
  9801 Highway 78, #3

  
	
   

  	
  Ladson, SC 29456

  
	
   

  	
  Fax: (843) 553-3832

  
	
   

  	
   

  
	
  With a copy by telecopier only to:

  	
  Amy Trombly, Esq.

  
	
   

  	
  Trombly Business Law

  
	
   

  	
  1320 Centre Street, Suite 202

  
	
   

  	
  Newton Center, MA 02459

  
	
   

  	
  Fax: (617) 243-0066

  
	
   

  	
   

  
	
  To Lenders:

  	
  To the addresses and
  telecopier numbers set forth on Schedule A

  
	
   

  	
   

  
	
  To the Collateral Agent:

  	
  Barbara R. Mittman, Esq.

  
	
   

  	
  Grushko & Mittman, P.C.

  
	
   

  	
  551 Fifth Avenue, Suite 1601

  
	
   

  	
  New York, NY 10176

  
	
   

  	
  Fax: (212) 697-3575

  
	
   

  	
   

  
	
  With a copy to:

  	
  Grushko & Mittman, P.C.

  
	
   

  	
  551 Fifth Avenue, Suite 1601

  
	
   

  	
  New York, New York 10176

  
	
   

  	
  Fax: (212) 697-3575

  



 


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Any
party may change its address by written notice in accordance with this
paragraph.


 


4.4                                 Term; Binding Effect.  This
Guaranty shall (a) remain in full force and effect until payment and
satisfaction in full of all of the Obligations; (b) be binding upon
Guarantor and its successors and permitted assigns; and (c) inure to the
benefit of the Lenders and their respective successors and assigns.  All the rights and benefits granted by
Guarantor to the Collateral Agent and Lenders hereunder and other agreements
and documents delivered in connection therewith are deemed granted to both the
Collateral Agent and Lenders.  Upon the
payment in full of the Obligations, (i) this Guaranty shall terminate and (ii) the
Lenders will, upon Guarantor’s request and at Guarantor’s expense, execute and
deliver to Guarantor such documents as Guarantor shall reasonably request to
evidence such termination, all without any representation, warranty or recourse
whatsoever.


 


4.5                                 Captions.  The captions of Paragraphs,
Articles and Sections in this Guaranty have been included for convenience of
reference only, and shall not define or limit the provisions hereof and have no
legal or other significance whatsoever.


 


4.6                                 Governing Law; Venue; Severability.  This
Guaranty shall be governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflicts or choice of
law.  Any legal action or proceeding
against Guarantor with respect to this Guaranty may be brought in the courts of
the State of New York or of the United States for the Southern District of New
York, and, by execution and delivery of this Guaranty, Guarantor hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts.  Guarantor hereby irrevocably waives any
objection which they may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Guaranty brought in the aforesaid courts and hereby further irrevocably waives
and agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient
forum.  If any provision of this
Guaranty, or the application thereof to any person or circumstance, is held
invalid, such invalidity shall not affect any other provisions which can be
given effect without the invalid provision or application, and to this end the
provisions hereof shall be severable and the remaining, valid provisions shall
remain of full force and effect.


 


4.7                                 Satisfaction of Obligations.  For
all purposes of this Guaranty, the payment in full of the Obligations shall be
conclusively deemed to have occurred when either the Obligations have been
indefeasibly paid in cash or all outstanding Notes have been converted to
common stock pursuant to the terms of the Notes and the Subscription
Agreements.


 


4.8                                 Counterparts/Execution.  This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument.  This Agreement
may be executed by facsimile signature and delivered by facsimile transmission.


 


IN WITNESS WHEREOF, the undersigned have executed and delivered this Guaranty, as of the
date first written above.


 


“GUARANTOR”


FORCE PROTECTION INDUSTRIES, INC.


a Nevada corporation


 


 


	
  By:

  	
  /s/ Ted McQuinn

  	
   

  
	
  Name: Ted McQuinn

  
	
   

  
	
  Its: President

  



 


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APPROVED BY “LENDERS”:


 


 


	
  /s/ Wayne H. Coleson

  	
   

  	
  /s/ S. Michael Rudolph

  	
   

  
	
  LONGVIEW EQUITY FUND, L.P.

  	
  LONGVIEW FUND, L.P.

  



 


 


This Guaranty Agreement may be signed by facsimile signature
and


delivered by confirmed facsimile transmission.


 


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SCHEDULE A
TO GUARANTY


 


 


	
  LENDER

  	
   

  	
  PURCHASE PRICE

  	
   

  
	
  LONGVIEW EQUITY FUND, LP

  600 Montgomery Street, 44th Floor

  San Francisco, CA 94111
Fax: (415) 981-5301

  	
   

  	
  $1,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  LONGVIEW FUND, LP

  600 Montgomery Street, 44th Floor

  San Francisco, CA 94111
Fax: (415) 981-5301

  	
   

  	
  $6,500,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  $7,500,000.00

  	
   

  



 


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