Document:

Exhibit 10.3

 

MINE RESISTANT AMBUSH PROTECTED VEHICLE
PROGRAM

AND

MEDIUM MINE PROTECTED VEHICLE PROGRAM

 

TECHNOLOGY

AND LICENSE AGREEMENT

 

IN THIS
TECHNOLOGY AND LICENSE AGREEMENT (“Agreement”), General Dynamics Land
Systems Inc. (“GDLS”), Force Protection, Inc. (“FPI”), and
Force Dynamics LLC (“FDL”) (hereafter collectively “Parties” and
individually “Party”), agree as follows:

 

ARTICLE 1  —  Background
of Agreement

 

1.1                                 FPI
and its Affiliates (as defined below) have designed and developed a wheeled
armored vehicle currently identified as the “Cougar” armored vehicle.

 

1.2                                 FPI
and its Affiliates own or Control (as defined below) Intellectual Property
Rights (as defined below) and Technology (as defined below) directed to the
design, construction, manufacture and use of the Cougar armored vehicle.

 

1.3                                 FPI
and GDLS have agreed to team together to hid for and perform contracts that are
issued pursuant to the Program (as defined below).

 

1.4                                 To
implement their teaming arrangement, FPI and GDLS, pursuant to the Force
Dynamics LC Joint Venture Agreement dated December 15, 2006 (“JV
Agreement”), have formed FDL as a joint venture company to serve as their
contracting entity for the Program.

 

1.5                                 Under
Section 6.13.16 of the JV Agreement, the Parties have entered into this
Agreement and included this Agreement as Exhibit 6 to the JV Agreement.

 

ARTICLE 2  —  Definitions

 

2.1                                 “Affiliate”
means any entity that directly (or indirectly through one or more
intermediaries) controls, is controlled by, or is under common control with a
Party. For purposes of this definition only, the terms “controls,” “controlled,”
and “control” means the direct or indirect ability or power to direct or cause
the direction of the management and policies of any entity or otherwise direct
the affairs of such entity, whether through ownership of equity, voting
securities, or beneficial interest, by contract, or otherwise. For purposes of
this Agreement, no Party is an Affiliate of any other Party.

 

2.2                                 “Background
IP” means (a) 1P and Technology that is owned, used or Controlled by a
Party prior to the Effective Date and (b) IP and ‘Technology that is made
or acquired after the Effective Date by or for a Party independently of the
Program and that is not based on derived from or a modification of another
Party’s Background IP.

 

 

2.3                                 “Control”
and cognates thereof, with respect to IP and Technology, means the ability to
grant rights to a Party in accordance with this Agreement without accounting to
any Third Party,

 

2.4                                 “Effective
Date” means the date of signature of the last Party to sign this Agreement.

 

2.5                                 “Foreground
IP” means IP or Technology made or acquired by or for a Party after the
Effective Date in conjunction with the Program.

 

2.6                                 “FPI
Background IP” means Background IP owned or Controlled by FPI the use or practice
of which is necessary for FDL and GDLS to perform under the Program.

 

2.7                                 “GDLS
Background IP” means Background IP owned or Controlled by GDLS the use or
practice of which is necessary for FDL and FPI to perform under the Program.

 

2.8                                 “Intellectual
Property” or “IP” means patents, copyrights, mask works, and trade secrets,
but specifically excludes trademarks.

 

2.9                                 “Joint
Foreground IP” means Foreground IP that is jointly owned by FPI and GDLS
pursuant to Section 3.5.

 

2.10                           “Program”
means the Mine Resistant Ambush Protected (“MRAP”) Vehicle Program, a United
States joint services program to produce and provide lifecycle support to
address the current threat of improvised explosive devices in the Middle East
as more fully described in solicitation number M67854-07-R-5000 and resulting
contract M67854-07-D-5031 and/or the Medium Mine Protected Vehicle (MMPV) as
described in Solicitation No: W56HZV-07-R-0315. The Program will include any
and all solicitations and RFP’s for MRAP and/or MMPV production and lifecycle
support and/or any follow on work which may be performed, including any program
name change, changed or future program requirements, product evolutions and
technology insertions related to the MRAP or MMPV vehicles whether for U.S. or
international sales, or non-military/commercial sales. For the avoidance of
doubt, the Parties’ participation in the “Program” only includes the use of FPI’s
Cougar 4x4 and 6x6 armored vehicles for the MRAP Cat I and Cat II and MMPV
requirements and does not include any other existing or future contracts or
programs for the Parties’ other vehicles (or vehicle variants). For the further
avoidance of doubt, the Program does not include, for illustration and not
limitation, the JERRV program, the GSTAMIDS program, the 1LAV and Mastiff
programs, the Buffalo and Cheetah vehicles, the Stryker, LAV, and RG-31
vehicles, the MRAP Cat III program and/or the JLTV program.

 

2.11                           “Technical
Data” or “TD” means assembly drawings, specification control drawings,
source control drawings, parts lists, wiring diagrams, parts identification
documentation, equipment design specifications, interface control 

 

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documents, system
diagrams, flow diagrams, test procedures, test specifications, trial reports,
manual, instructional materials, firmware data, software specifications, source
code listings, control commands and other software documentation, and technical
publication source data.

 

2.12                           “Technology”
means:

 

(a)                                  all
inventions, works of authorship, discoveries, ideas, innovations, know-how,
processes, techniques and developments;

 

(b)                                 all
Technical Data;

 

(c)                                  all
other forms of technology and improvements, modifications, derivatives or
changes thereof, whether tangible or intangible, embodied in any form,
including without limitation manufacturing, engineering and other drawings and
manuals, flow charts, schematics, lab journals, notebooks, blue prints,
technical reports (including research and development reports), studies,
special tooling, fixtures and jigs made specifically for a Program, design and
engineering specifications, user documentation, and equipment repair,
maintenance or service records and manuals, whether or not protectable or
protected by patent, copyright, mask work right, trade secret law or otherwise.

 

2.13                           “Third
Party” means any person or entity other than a Party or an Affiliate of a
Party.

 

ARTICLE 3  —  IP
Rights

 

3.1                                 FPI
and its Affiliates will retain ownership or Control of its Background IP to the
extent owned or Controlled by FPI or its Affiliates as of the Effective Date.

 

3.2                                 GDLS
and its Affiliates will retain ownership or Control of its Background IP to the
extent owned or Controlled by GDLS or its Affiliates as of the Effective Date.
FDL, FP and GDLS understand and agree that there are license fees due for each
MRAP vehicle by FPI to others in the amount of $2,250 per vehicle and this
amount will be paid through FPI but will be paid monthly by GDLS to FP for each
vehicle that GDLS produces under the Program. The license fee shall become due
on the last calendar day of each month in which a vehicle is sold, as evidenced
by a DD Form 250 and payable by the 20th calendar day thereafter. On the
10th calendar day of each month, GDLS shall provide to FPI a list of all
vehicles manufactured by GDLS during the preceding month. FPI shall have the
right to terminate this Agreement upon ten (10) days written notice in the
event GDLS fails to pay the required license fee due hereunder.

 

3.3                                 FPI
hereby grants to FDL and GDLS a non-exclusive, license, without the right to
sublicense, under the FPI Background IP solely for use in performance of the
Program.

 

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3.4                                 GDLS
hereby grants to FDL and FPI a non-exclusive, royalty-free license, without the
right to sublicense, under the GDLS Background IP solely for use in performance
of the Program.

 

3.5                                 All
Foreground IP solely made or acquired by FPI or its employees, agents or
contractors will be solely owned by FPI. 
All Foreground IP solely made or acquired by GDLS or its employees,
agents or contractors will be solely owned by GDLS. All Foreground IP jointly
made or acquired by FPI and GDLS or their respective employees, agents or
contractors will be jointly owned by FPI and GDLS. All Foreground IP solely or
jointly made or acquired by FDL or its employees, agents or contractors will be
jointly owned by FPI and GDLS, and FDL hereby assigns to FPI and GDLS jointly
all right, title and interest in and to such Foreground IP and all rights
therein.

 

3.6                                 The
Party solely owning Foreground IP, in its sole discretion and at its sole
expense, will exercise commercially reasonable efforts to obtain and maintain
appropriate intellectual property protection for such Foreground IP (“IP
Rights”).

 

3.7                                 The
Parties shall mutually agree upon whether to file patent applications
protecting Joint Foreground IP, and shall mutually agree upon which party shall
be primarily responsible for preparing, filing, and prosecuting any such
applications. FPI and GDLS will share equally all costs incurred in obtaining
and maintaining such patents, provided, however, that either Party may elect by
written notice to the other Party not to share such costs for a particular
patent or patent application, in which event the other Party may abandon such
patent or patent application or may elect to continue to prosecute and maintain
such patent or patent application. The Party electing not to share costs will
assign its interest in any such patent or patent application, provided however
that the Party electing not to share costs will receive a fully-paid up,
royalty-free license under such patents to make, have made, sell, offer for
sale and import products utilizing such patent or patent application.

 

3.8                                 To
the extent the law of a country requires one joint owner to give permission to
other joint owners to exploit a Joint Foreground IP, including any patents
protecting such Joint Foreground IP, FPI and GDLS hereby grant each other
permission to fully exploit any Foreground IP and related patents without
accounting to the other.

 

3.9                                 FPI
hereby grants to FDL and GDLS a nonexclusive, royalty-free license, without the
right to sublicense, under any Foreground IP and associated IP Rights solely
owned by FPI to the extent necessary for FDL and GDLS to perform under the
Program.

 

3.10                           GDLS
hereby grants to FPI and FDL a nonexclusive, royalty-free license, without the
right to sublicense, under any Foreground IP and associated IP Rights solely
owned by GDLS to the extent necessary for FDL and FPI to perform under the
Program.

 

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3.11                           FPI
hereby covenants not to enforce any FPI Background Rights against activities of
GDLS or FDL authorized pursuant to Section 3.3.

 

3.12                           GDLS
hereby covenants not to enforce any COLS Background Rights against activities
of FPI or FDL authorized pursuant to Section 3.4.

 

3.13                           Nothing
in this Agreement is intended to grant or grants to any Party any right or
license under any IP or Technology owned or Controlled by a Party except to the
extent expressly granted herein for performance under the Program.

 

ARTICLE 4  —  Technology

 

4.1                                 Each
of FPI and GDLS will use commercially reasonable efforts to deliver to the
other Party all Technical Data that in the opinion of the Party possessing the
Technical Data is reasonably necessary for the Parties to perform their
respective obligations under the Program and the JV Agreement.

 

4.2                                 FPI,
FDL and GDLS warrant to each other that all technical data will be complete and
accurate as available and used in each of their facilities FPI, GDLS, and FDL
warrant to each other that the technical data is sufficient to design or
manufacture products based on such information.

 

4.3                                 The
transfer to a Party of any physical item that embodies any Technical Data
Controlled by the transferring Party will not be, and will not be construed to
be, (a) a sale, lease, offer to sell or lease or other transfer of title
or ownership to the receiving Party of such Technical Data or any part thereof,
or (b) a license to the receiving Party (except as expressly provided in
this Agreement) under such Technical Data.

 

ARTICLE 5  —  Confidential
Information

 

5.1                                 All
confidential and/or proprietary information exchanged or disclosed between the
Parties shall be governed by the terms of Exhibit 5 of the JV Agreement
and any amendments to Exhibit 5.

 

ARTICLE 6  —  Term
and Termination

 

6.1                                 The
term of this Agreement will commence on the Effective Date and will end on the
later of the completion or complete termination of the Program or the Force
Dynamics Joint Venture, which ever comes later.

 

6.2                                 Either
Party may terminate this Agreement on the liquidation, bankruptcy or insolvency
of another Party or the appointment of a receiver or trustee for the property
of another Party, or if another Party makes an assignment for the benefit of
creditors, whether any of the aforesaid events are the outcome of a voluntary
act or otherwise. In the event a Party files for bankruptcy and the debtor or
trustee rejects this Agreement, the other Party may elect to retain its rights
under this Agreement upon appropriate written notification to the trustee. All
rights and 

 

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licenses granted
hereunder or pursuant to this Agreement are, for all purposes of Section 365(n)
of Title 11 of the United States Bankruptcy Code (“Title 11”), licenses of
rights to “intellectual property” as defined in Title 11.

 

6.3                                 If
a Party fails to perform any material term of this Agreement, then a Party may
give written notice of breach to the breaching Party. If the breach identified
in the notice is not cured by the breaching Party within sixty (60) days after
receipt of the notice of breach, this Agreement may be immediately terminated
by either other Party upon written notice to the breaching Party.

 

6.4                                 In
the event performance by a Party is excused pursuant to Section 11.3 for a
continuous period of nine (9) months, any other Party will have the option
of terminating this Agreement upon ninety (90) days written notice to the
excused Party.

 

6.5                                 In
the event of termination of this Agreement pursuant to Section 6.3 for
breach by FDL, FDL will have the right to complete all contracts in the Program
under which FDL is obligated on the date of termination provided FDL complied
with the JV Agreement and this Agreement with respect to such sales.

 

6.6                                 Upon
termination of this Agreement, all licenses to Foreground IP, Background IP,
and all related IP Rights therein shall immediately terminate, and each Party,
upon termination of this Agreement will discontinue use of the other Parties
Background IP, solely-owned Foreground IP, and IP Rights.

 

6.7                                 The
following provisions will survive termination of this Agreement: Articles 3, 5,
7, 8, and 9.

 

6.8                                 The
right of either Party to terminate under the provisions of this Article 6
will not be an exclusive remedy, and either Party will be entitled, if the
circumstances warrant, alternatively or cumulatively, to damages for breach of
this Agreement, to an order requiring performance of the obligations of this
Agreement, or to any other legally available remedy. Termination of this
Agreement will not release either Party from any obligation or liability which
may have accrued prior to or at the time of termination.

 

ARTICLE 7  —  Indemnification

 

7.1                                 GDLS
will indemnify and hold harmless FDL and FPI, its Affiliates and their
respective directors, officers, employees and agents (“FPI Indemnitees”)
from and against all losses, liabilities, damages and expenses, including
reasonable attorneys’ fees and costs (collectively, “Liabilities”),
incurred as a result of any claims, demands, actions or other proceedings by
any Third Party to the extent resulting from: (a) the material breach of
any representation, warranty or covenant by GDLS under this Agreement; or (b) the
negligence or willful misconduct of GDLS. The obligation to indemnify pursuant
to Section 7.1(a) will expire five (5) years after expiration or
termination of this Agreement.

 

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7.2                                 FPI
will indemnify and hold harmless FDL and GDLS, its Affiliates and their
respective directors, officers, employees and agents (“GDLS Indemnitees”).
(For purposes of this Article 7 —, the term “Indemnitee” may refer to any
or all of FDI, the FPI Indemnitees and the GDLS Indemnitees, as the context may
indicate) from and against all Liabilities, incurred as a result of any claims,
demands, actions or other proceedings by any Third Party to the extent
resulting from: (a) the material breach of any representation, warranty or
covenant by FPI under this Agreement; or (b) the negligence or willful
misconduct of FPI. The obligation to indemnify pursuant to Section 7.2(a) will
expire five (5) years after expiration or termination of this Party’s
Joint Venture Agreement or any resultant contract, subcontracts, purchase
orders or other agreements, whichever is later.

 

7.3                                 FDL
will indemnify and hold harmless the GDLS Indemnitees and the FPI Indemnitees
from and against all Liabilities, incurred as a result of any claims, demands,
actions or other proceedings by any Third Party to the extent resulting from: (a) the
material breach of any representation, warranty or covenant by FDL under this
Agreement; or (b) the negligence or willful misconduct of FDL. The
obligation to indemnify pursuant to Section 7.3 will expire five (5) years
after expiration or termination of this Agreement.

 

7.4                                 If
a Party or Indemnitee intends to claim indemnification under this Article 7.4,
it will promptly notify the indemnifying Party (the “Indemnitor”) in
writing of any claim, demand, action or other proceeding for which the
Indemnitee intends to claim such indemnification, and the Indemnitor may
participate in, and, to the extent the Indemnitor so desires, assume the
defense of such claim, demand, action or proceeding with counsel mutually
satisfactory to the Parties; provided, however, that an
Indemnitee will have the right to retain its own counsel, with the fees and
expenses to be paid by the Indemnitor, if representation of such Indemnitee by
the counsel retained by the Indemnitor would be inappropriate due to actual or
potential differing interests between the Indemnitee and any other Party
represented by such counsel in such proceeding. The obligations of this Article 7.4
will not apply to amounts paid in settlement of any claim, demand, action or
other proceeding if such settlement is effected without the consent of the
Indemnitor, which consent will not be unreasonably withheld or delayed. The
failure to deliver written notice to the Indemnitor within a reasonable time
after the commencement of any such action, if prejudicial to its ability to
defend such action, will relieve the Indemnitor of any obligation to the
Indemnitee under this Article 7.4. The Indemnitee will reasonably
cooperate with the Indemnitor and its legal representatives in the
investigation of any claim, demand, action or other proceeding covered by this Article 7.4.

 

7.5                                 Notwithstanding
anything to the contrary in Articles 7.1-7.4 above, FPI and GDLS shall each
indemnify and hold harmless the other Party from and against all Liabilities
incurred as a result of any claim, demand, action or other proceeding brought
by a Third Party alleging that the indemnified Party’s use of the other Party’s
Background IP or solely-owned Foreground IF infringes the Third Party’s patent,
trademark, copyright, trade secret, or other proprietary 

 

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rights, provided,
however, such third party indemnity obligation shalt not apply if the
indemnified Party has substantially or materially modified the other Party’s
Background IP or solely-owned Foreground IP. The process for seeking
indemnification for such IP related claims, demands, actions or other proceedings
shall be as set forth above in Article 7.4.

 

ARTICLE 8  —  Infringement

 

8.1                                 Each
Party shall notify the others immediately of any actual, suspected or
anticipated infringement of the IP used in performance of the Program or any
misappropriation of the Confidential Information of which it becomes aware.

 

8.2                                 The
Party owning or Controlling the potentially infringed IP or misappropriated
Confidential Information may in its absolute discretion determine whether or
not to take legal or other action against any Third Party for an actual or
threatened or suspected infringement of the IP or misappropriation of the
Confidential Information, and if the owning or Controlling Party elects to take
legal or other action, such Party:

 

(a)                                  shall
bear all costs of the action;

 

(b)                                 shall
have sole control over the form and conduct of such action;

 

(c)                                  may
settle, compromise or discontinue the action as it thinks fit;

 

(d)                                 shall
be entitled to any award of costs and/or damages made in relation to such
action; and

 

(e)                                  shall
indemnify the other Parties against any costs or damages for which either of
them may become liable as a result of the proceedings, provided that neither
such other Parties has authorized or contributed to the acts giving rise to the
liability.

 

Each other Party will give the owning or Controlling Party, at the
owning or Controlling Party’s expense, all information and assistance
reasonably requested by the owning or Controlling Party to assist it to
initiate, litigate, settle or compromise any proceedings in respect of any such
infringement or misappropriation.

 

8.3                                 Either
FPI or GDLS may initiate an action for enforcement of a Joint IP Right. The
Party initiating the action will bear all costs and control the form and
conduct of the action. The other owner of such Joint IP Right will cooperate in
enforcing any Joint IP Right, including, to the extent necessary to permit an
enforcement action to proceed, joining in such action as a party and will not
subvert the initiating Party’s action by granting the accused entity a license
under the asserted Joint IP Rights. The Party initiating the action may recover
all costs from any recovery and the balance will be shared equally with the
other Party.

 

8

 

ARTICLE 9  —  Representations
and Warranties

 

9.1                                 Each
Party hereby represents and warrants to the other Parties that it has full
authority and power to enter into this Agreement and to grant the rights,
covenants and licenses specified herein, that it has secured any and all
necessary approvals, permits or consents deemed necessary or advisable for the
consummation of the transactions contemplated hereby, that it is not a party to
and will not become a party to any agreement with another that is inconsistent
with this Agreement, and that upon execution by the Party this Agreement will
immediately be a valid and binding obligation of the Party, enforceable in
accordance with its terms.

 

9.2                                 Nothing
in this Agreement will be construed as:

 

(a)                                  a
warranty or representation that anything made, used, sold, or otherwise
disposed of pursuant to this Agreement or the JV Agreement is or will be free
from infringement of patents or other intangible rights of third parties; or

 

(b)                                 except
as expressly provided herein, a requirement that either Party will file any
patent application, secure any patent, or maintain any patent in force; or

 

(c)                                  an
obligation on either Party to bring or prosecute actions or suits against third
parties for infringement of any patent; or

 

(d)                                 an
obligation to furnish any Technical Data except as specifically provided
herein; or

 

(e)                                  granting
any right to either Party to use in any way the name of, or any trademark of,
the other Party;

 

(f)                                    granting
by implication, estoppel, or otherwise, any license or right under patents,
trade secrets, know how, copyrights, or other intangible rights of either Party
other than as expressly provided herein.

 

9.3                                 EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY EXPRESSLY DISCLAIMS ANY
WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR. PURPOSE, AND
NON-INFRINGEMENT. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY,
NEITHER GDLS NOR FPI NOR FDL WILL BE RESPONSIBLE FOR SPECIAL, INDIRECT,
INCIDENTAL, CONSEQUENTIAL OR OTHER SIMILAR DAMAGES (INCLUDING LOST PROFITS)
THAT ANY OTHER PARTY MAY INCUR OR EXPERIENCE IN CONNECTION WITH THIS
AGREEMENT, HOWEVER CAUSED AND UNDER WHATEVER THEORY OF LIABILITY, 

 

9

 

EVEN IF SUCH PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

ARTICLE 10  —  Restriction
on Disclosure

 

10.1                           Each
Party acknowledges that the Program contemplates production of a defense article and
that Background IP and Foreground IP may be subject to applicable Federal
export and import regulations, including but not limited to, the U.S. Arms
Export Control Act, as amended (22 U.S.C. §§ 2751-2799), the International
Traffic in Arms Regulations, as amended (22 C.F.R. Part 120 et seq.), the
Export Administration Act, as amended, (50 U.S.C. §§ 2401-2420), the U.S.
Export Administration Regulations, as amended (15 C.F.R. § 730 et seq.)
and the requirements of the National Industrial Security Program Operating
Manual (“NISPOM”). No Party (and its Affiliates, subcontractors, vendors and
suppliers) shall export, disclose, furnish or otherwise provide any Background
IP, Foreground IP or technical information or services relating to the Program
to any foreign person or entity, whether within the U.S. or abroad, without
obtaining in advance (if required) appropriate U.S. government export
authorization.

 

ARTICLE 11  —  Miscellaneous

 

11.1                           This
Agreement constitutes the entire understanding between the Parties with respect
to the subject matter hereof and supersedes and replaces all prior agreements,
understandings, writings and discussions between the Parties relating to said
subject matter.

 

11.2                           This
Agreement may be amended only by a written instrument executed by officers of
the Parties. The failure of either Party at any time or times to require
performance of any provision thereof will in no manner affect its rights at a
later time to enforce the same. No waiver by either Party of any condition or
term in any one or more instance will be construed as a further or continuing
waiver of such condition or term or any other condition or term.

 

11.3                           Any
delay in or failure of performance by either Party under this Agreement will
not be considered a breach of this Agreement if and to the extent caused by
occurrences beyond the reasonable control of the Party affected, including but
not limited to acts of God; acts, regulations, or laws of any government;
strike, or other considered acts of workers; fires; floods; explosions; riots;
wars; rebellion; and sabotage; and any rime for performance hereunder will be
extended by the actual time of delay caused by such occurrence.

 

11.4                           All
requests and notices required or permitted to be given to the Parties hereto
will be given in writing, will expressly reference the section(s) of this
Agreement to which they pertain, and will be delivered to the other Party,
effective on receipt, at the appropriate address as set forth below or to such
other addresses as may be designated in writing by the Parties from time to
time during the term of this Agreement.

 

10

 

If to FPI:

 

Force
Protection Inc.

9801 Highway 78

Ladson, South Carolina 29456

Attn: John F. Wall III

Vice President Legal Affairs

 

If to GDLS:

 

General
Dynamics Land Systems Inc.

 

38500 Mound
Road

Sterling Heights, Michigan 48310 

Attn: J.L. Farina Percy

 

Director
Ground Combat Systems (GCS) Contracts

 

If to FDL:

 

Force Dynamics
LLC 

9801 Highway 78

Ladson, South Carolina 29456

Attn: Raymond W. Pollard,

Chairman of the Board

Cc: Mark C. Roualet

Vice Chairman of the Board

 

11.5                           This
Agreement will not be assignable by either Party without the other Party’s
prior written consent which consent will not be unreasonably withheld, except
that a Party may assign this Agreement to its Affiliate or to a successor in
connection with the merger, consolidation, or sale of all or substantially all
of its assets or that portion of its business pertaining to the subject matter
of this Agreement, with prompt written notice to other Party.

 

11.6                           This
Agreement will be governed by and construed and interpreted in accordance with
the laws of the State of Delaware, without giving effect to conflict of laws.

 

11.7                           Except
to the extent necessary under applicable laws, the parties agree that press
releases or other publicity relating to the substance of the matters contained
herein will be made in accordance with the Paragraph 7.3.1 of the Parties Joint
Venture Agreement.

 

11.8                           If any
provision(s) of this Agreement are or become invalid, or are ruled illegal by
any court of competent jurisdiction, or are deemed unenforceable under then
current applicable law from time to time in effect during the term hereof, it
is the intention of the parties that the remainder of this Agreement will not
be affected thereby. It is further the intention of the Parties that in lieu of
each such provision 

 

11

 

which is invalid,
illegal, or unenforceable, there be substituted or added as part of this
Agreement, a provision which will be as similar as possible in economic and
business objectives as intended by the parties to such invalid, illegal, or
unenforceable provision, but which will be valid, legal, and enforceable.

 

11.9                           Each
Party agrees that after the delivery of this Agreement it will execute such
further documents and do such further acts and things as the other Party may
reasonably request in order to carry out the terms of this Agreement.

 

11.10                     The article numbers
and article headings contained herein are for reference purposes only and
will not in any way affect the meaning of this Agreement.

 

12

 

This Agreement may be executed in any number of counterparts, each of
which will be an original, but all of which together will contribute one instrument.

 

IN WITNESS WHEREOF, the Parties have caused this Agreement, in
triplicate originals, to be executed by their respective and duly authorized
officers on the dates written below.

 

 

	
  Force Protection Inc.

  	
   

  	
  General Dynamics Land Systems Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ D.T Walsh

  	
   

  	
  By:

  	
  /s/ J.L. Farina Percy

  
	
   

  	
  (signature)

  	
   

  	
   

  	
  (signature)

  
	
  NAME: D.T. Walsh

  	
   

  	
  NAME: J.L. Farina Percy

  
	
  TITLE: Vice President Program Management

  	
  TITLE: Director GDLS Contracts

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  2 April 2007

  	
   

  	
  Date:

  	
  3 April 2007

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Force Dynamics LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ R.W. Pollard

  	
   

  	
   

  
	
   

  	
  (signature)

  	
   

  	
   

  
	
  NAME: R.W. Pollard

  	
   

  	
   

  
	
  TITLE: Chairman of the Board

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  2 April 2007

  	
   

  	
   

  
								

 

13Exhibit 10.4

 

LICENCE AGREEMENT

 

MEMORANDUM OF AGREEMENT ENTERED INTO BETWEEN:

 

THE CSIR

 

a statutory council, duly established under Act 46 of

1988, through its Operating Unit of Defence Peace

Safety & Security (DPSS) herein represented by

Andre Nepgen in his capacity as Executive Director

and 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 Nevada

with its principal place of business at 9801 Hwy 78,

Ladson, South Carolina 29456, United States of

America, herein represented by Mr. Gordon

McGilton in his capacity as President and he being

duly authorized thereto

 

(hereinafter referred to as “the LICENSEE”)

 

WHEREAS:

 

a)                                      the LICENSOR has
developed technology for the protection of wheeled and tracked vehicles against
landmines and improvised explosive devices (“IED’s”) (herein referred to as “the
TECHNOLOGY”), which specifically means the invention forming the subject matter
of the PATENT, and which is under the control of the LICENSOR at the
COMMENCEMENT DATE of this agreement;

 

b)                                     the LICENSEE is
desirous of obtaining a licence from the LICENSOR to perform internal
research and development (which rights extend to tests and assessment of the
potential market for products utilizing the TECHNOLOGY at PROOF OF CONCEPT
stage) and after PROOF OF CONCEPT to EXPLOIT the PATENT in the TERRITORY;

 

c)                                      the PARTIES
negotiated and reached agreement regarding the intellectual property rights to
be 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                               This
agreement sets out the terms for the granting of:

 

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

 

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

 

2.2                                The
PARTIES enter into this agreement as independent contractors and nothing herein
contained shall be interpreted as establishing a partnership or joint venture
between the PARTIES.

 

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

 

3.                                      DEFINITIONS AND INTERPRETATION

 

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

 

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

 

3.1.2                      “EXPLOIT” shall mean the
manufacture, marketing, sale, offer for sale, use and import of the PRODUCTS in
commercial quantities through the application of the TECHNOLOGY by the
LICENSEE, and “EXPLOITATION” and “EXPLOITING” shall have corresponding
meanings;

 

2

 

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

 

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

 

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

 

3.1.6                      “PROOF OF CONCEPT” shall mean
test piece manufacture of part of a wheel and/or a complete wheel, the
testing of such test pieces, and/or the quantification or demonstration of the
level of protection provided to demonstrate the principle of operation of the
TECHNOLOGY, but does not include optimization of a prototype or the
determination of the limits of protection performance;

 

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

 

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

 

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

 

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

 

3.2                                 In
this agreement, unless the context otherwise indicates:

 

3.2.1                       the headings to clauses of this
agreement are inserted for reference purposes only and shall in no way govern
or affect the interpretation thereof;

 

3

 

3.2.2                      any annexures to this agreement form an
integral part hereof and words and expressions defined in this agreement
shall, unless the context otherwise requires, bear the same meaning in such
schedules;

 

3.2.3                      unless the context clearly
indicates a contrary intention, words importing the singular shall include the
plural and vice versa;

 

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

 

3.2.5                      where the day on or by which
anything is to be done is not a business day, it shall be done on or by the
first day thereafter;

 

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

 

4.                                       SUSPENSIVE CONDITIONS

 

4.1                               This
Agreement is subject to the following suspensive condition:

 

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

 

4.1.2                      The suspensive condition is
established for the benefit of the LICENSOR, and no waiver of the suspensive condition
or any part thereof shall be binding, unless similarly reduced to writing
and signed by the PARTIES.

 

4.1.3                      Should the suspensive conditions
not be fulfilled within the specified time period, or any mutually agreed
written extension thereof, this agreement shall be null and void ab initio, and no obligations shall lie reciprocally between
the PARTIES, save for the LICENSEE being required to immediately return all
matter relating to the TECHNOLOGY and the intellectual property of the
LICENSOR, which may have been delivered to LICENSEE by LICENSOR.

 

5.                                       LICENCED RIGHTS

 

5.1                               The
LICENSOR hereby grants to the LICENSEE License 1 as provided for in clause
2.1.1.

 

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

 

4

 

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

 

5.2.2                        a
non-exclusive licence to EXPLOIT the PATENT in the RSA

 

subject to the
terms and conditions as set out in this agreement.

 

5.3                               The
license allows for the manufacturing and sale of PRODUCTS in any country
forming part of the TERRITORY, save for the RSA where any PRODUCTS sold
must also be at least manufactured in part, or assembled, in the RSA. Export by
or for LICENSEE of PRODUCTS from a country in the TERRITORY to a country
outside the TERRITORY shall be subject to the prior written approval of
LICENSOR and such approval shall only be denied in the event that:

 

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

 

5.3.2                      Statutory or regulatory restriction
on defence-related technology supply to the specific country outside the
TERRITORY prevents such exports.

 

5.4                               Should
the LICENSEE fail to achieve a consistent level of sales as set out in the
table below (“the minimum royalty”) through the application of the TECHNOLOGY
and fail to pay over to the LICENSOR the balance between actual sales achieved
and the specific minimum royalty fee, the LICENSOR shall have the right to, in
its sole discretion, convert the exclusive nature of License 2 for a specific country
in the TERRITORY as provided for in 5.2.1 to a non-exclusive license, or
terminate 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) years
after the COMMENCEMENT DATE, royalty payments from any one country in the
TERRITORY in excess of that country’s minimum royalty payment, may be
calculated towards the 

 

5

 

minimum royalty
payment of any other country in the TERRITORY where the minimum royalty payment
has not been attained in that ROYALTY YEAR. Thereafter, each country’s minimum
royalty must be attained from sales in that country in order to maintain
exclusivity of this licence.

 

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

 

5.6                                 On
the termination of this agreement:

 

(i)                                   The
LICENSEE must do all things reasonably required by the LICENSOR to protect its
rights, titles and interests in the PATENT and other intellectual property
owned by LICENSOR;

 

(ii)                                All
improvements made to the TECHNOLOGY by either PARTY and which form the
subject of any claim in a patent or patent application anywhere in the world
that is dependent on the PATENT, and/or any investments made by LICENSOR in the
course thereof, will remain the property of the LICENSOR and the LICENSEE may make
no claim in respect of them;

 

(iii)                             or at any time before such
termination at the request of the LICENSOR, the LICENSEE must promptly return
to the LICENSOR:

 

(a)                                  all
specifications, samples, drawing, films, pamphlets, catalogues, advertising
material and other materials, documents and papers of any nature sent to the LICENSEE
by the LICENSOR relating to the TECHNOLOGY or the business of the LICENSOR
(other than correspondence between the PARTIES) which the LICENSEE may have
in its possession or under its control; and

 

(b)                                 a
copy of separate books of account and records relating to the licence kept in
accordance with clause 11 suitable for the purpose of LICENSOR keeping record
of the parties and countries whom PRODUCTS were sold to. For the avoidance of
doubt it is specifically recorded that this provision 5.6 (iii) (b) does
not include the original records and books of the LICENSEE but pertains to
copies of records required to be kept for regulatory and statutory purposes.

 

5.7                               Within
30 days after the date on which termination of this agreement takes effect, the
LICENSEE must, at its own cost, promptly return to the LICENSOR or otherwise
dispose of as the LICENSOR instructs, those of the PRODUCTS and specifications
and any parts which the LICENSEE may have in its possession or under its
control and which are the property of the LICENSOR.

 

6

 

5.8                               If,
on termination of this agreement, LICENSEE has PRODUCTS in stock that are the
property 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 applicable
royalties under clause 9.3.

 

6.                                      TITLE TO THE INTELLECTUAL PROPERTY

 

6.1                               The
LICENSEE acknowledges that all right, title and interest in and to the PATENT
vests in the LICENSOR and that it has no claim of any nature in and to the
PATENT or any other intellectual property owned by LICENSOR. The LICENSEE shall
not at any time during or after termination or cancellation of this agreement
dispute the validity or enforceability of such rights or of the PATENT, or
cause to be done any act contesting or in any way impairing or tending to
impair any part of that right, title and interest in the PATENT and shall
not counsel or assist any other person to do so.

 

6.1.1                      LICENSOR will have first right of
refusal to patent an improvements made by LICENSEE to the TECHNOLOGY at its own
cost, in those countries forming part of the TERRITORY where LICENSEE has
EXPLOITATION rights. LICENSOR shall grant LICENSEE an exclusive royalty-free
licence under such patents in all countries in the TERRITORY except RSA and a
non-exclusive, royalty-free licence in RSA on condition that LICENSEE
contributes 50% (fifty per cent) of the bona fide patenting expenses in each such
country where a royalty-free licence is granted. In the event that LICENSOR
elects not to apply for or to maintain patents in the TERRITORY on improvements
made by LICENSEE, then LICENSEE may apply for, own and maintain such
patents.

 

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

 

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

 

6.2.1                      Such modifications of the
TECHNOLOGY will not remove any obligations or benefits of the LICENSOR and
LICENSEE in terms of this agreement.

 

6.2.2                      The LICENSEE will provide the
LICENSOR 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 of
this agreement, delivered to the LICENSEE one current copy of the PATENT
LICENSEE acknowledges that it is fully acquainted with the TECHNOLOGY and the
PATENT and need no further information or assistance from LICENSOR to be able
to EXPLOIT the PATENT.

 

8.                                      OBLIGATIONS ON LICENSEE

 

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

 

9.                                      ROYALTIES AND MARKET REPORTS

 

9.1                               In
consideration for the rights granted to it in terms of License 1, the LICENSEE
shall invest capital and resources equal to a minimum of US$500,000.00 (five
hundred thousand United States dollars) to test and develop the TECHNOLOGY,
calculated from 1 January 2005, the PARTIES hereby recording that the
LICENSEE has prior to the COMMENCEMENT DATE invested in development and
research in the technical field covered by the TECHNOLOGY, which the LICENSOR
shall receive the benefit of.

 

9.2                               In
consideration for the rights granted to it in terms of License 2 as per clause
5.2.1, the LICENSEE shall pay the LICENSOR a once-off exclusivity fee in the
amount of US$200,000.00 (two hundred thousand United States dollars), which
amount shall be paid in accordance with clause 9.2.1 as of date of first SALES
achieved provided that the full amount is paid on or before the third
anniversary of the COMMENCEMENT DATE of this agreement or the date of
termination of this agreement, whichever comes soonest, whether any SALES have
been achieved or not.

 

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

 

9.3                                 As
from the date on which any SALES of the PRODUCTS are achieved, the LICENSEE
shall further pay the LICENSOR a royalty equivalent to:

 

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

 

8

 

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

 

The aforesaid royalty
shall 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 deduct
from such royalty payments a pro rata portion of:

 

•                                         Bona fide
trade or quantity discounts that are standard in the industry and that are
given with respect to such SALES, and

 

•                                         Sales, tariff,
import, export or excise duties or taxes imposed on such SALES and paid by
LICENSEE 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 terminated
for any reason during a ROYALTY YEAR then, for the purpose of this clause, the
date of termination will be regarded the end of that ROYALTY YEAR.

 

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

 

9.5                               The
LICENSEE shall within 30 (thirty) days after the end of each ROYALTY YEAR
provide the LICENSOR with a statement of all sales of the PRODUCT for that
ROYALTY YEAR, together with the LICENSEE’s payment in respect of royalties due
to the LICENSOR. Such a statement shall include the number of PRODUCTS
manufactured and the number sold for each month during the year and an
enumeration of any deductions from the royalty.

 

9.6                               Within
60 (sixty) days of the end of the LICENSEE’s financial year, the LICENSEE shall
deliver to the LICENSOR an audited statement in respect of all sales of the
PRODUCTS for the previous ROYALTY YEAR. Such audited statement shall be
accompanied by payment to the LICENSOR of any shortfall in respect of royalties
due to the LICENSOR. Any overpayment in respect of royalties shall be deducted
from the royalties due to the LICENSOR for the next ROYALTY YEAR.

 

10.                                 LIABILITY FOR INTEREST ON LATE PAYMENTS

 

10.1                           All
amounts which the LICENSEE is required to pay to the LICENSOR in terms of this
Agreement and which are not paid on due date shall bear interest at the 

 

9

 

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

 

10.2                          The
said interest shall be calculated and compounded monthly in advance from the
due date to date of payment.

 

10.3                          The
LICENSOR’s rights to charge interest on outstanding amounts shall not detract
from any other rights that the LICENSOR may have in terms of this
agreement.

 

11.                                ACCOUNTING RECORDS

 

11.1                         The
LICENSEE shall keep full, true and accurate books of account and records in
accordance with generally accepted accounting practice containing all
particulars that may be necessary for the purpose showing the amount of
royalties payable to the LICENSOR in terms of this agreement. Such books of
account and records shall be kept at the premises where the LICENSEE’s business
is carried on.

 

11.2                         The
LICENSEE shall permit the LICENSOR at any time during business hours, but not
more frequently than once in each ROYALTY YEAR, to have a representative of the
LICENSOR’s selection, provided than he/she is a qualified chartered accountant
or lawyer and is reasonably acceptable to LICENSEE, examine all of the
aforementioned books of account and records (including information stored in
computer readable form) and to take copies of all such documents, books and
records to determine whether all appropriate accounting of royalties hereunder
and payments thereof have been made. The representative shall retain all
information examined or copied in confidence and shall disclose to LICENSOR
only the accuracy of the payments made under this Agreement. The examination may only
consider books and records for transactions that occurred three years or less
before the date of such examination.

 

11.3                         The
records and documentation required by this clause 11 must be kept by the
LICENSEE for 3 years from the termination of this agreement. LICENSOR may conduct
one examination under clause 11.2 within 90 (ninety) days after termination of
this agreement.

 

12.                                WARRANTIES BY THE LICENSOR

 

12.1                           The
LICENSOR warrants and represents that:

 

12.1.1                it is free to grant the licence
conferred by this agreement;

 

12.1.2                that it is the owner of the PATENT but
does not warrant the validity and/or merchantability thereof to produce or
market the PRODUCTS, nor that the PRODUCTS will obtain any regulatory approval
that may be required, the LICENSOR hereby expressly excluding any other
warranties, whether implied or by law.

 

10

 

13.                                CONFIDENTIALITY

 

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

 

13.2                         The
LICENSEE shall use the information imparted to it for the EXPLOITATION of the
TECHNOLOGY pursuant to this agreement and for no other purposes.

 

13.3                         If
LICENSEE uses any proprietary technology or know-how of any third party other
than that licensed to the LICENSEE by this agreement in the manufacture of the
PRODUCTS without the prior written consent of the LICENSOR, which consent shall
not be unreasonably withheld, the use of such third party technology and
know-how shall not have any effect on the royalties payable to the LICENSOR in
terms of Clause 9 above.

 

14.                                INFRINGEMENT

 

14.1                         If
during the currency in force of this agreement any infringement or illegal use
of the TECHNOLOGY or the PATENT in the TERRITORY by any third party should come
to the attention of the LICENSEE, then and in such event the LICENSEE shall
notify the LICENSOR of such infringement or illegal use.

 

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

 

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

 

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

 

11

 

14.5                         The
LICENSEE shall be entitled to any damages awarded in or license income derived
from proceedings instituted in terms of Clause 14.4.

 

15.                                CESSION AND ASSIGNMENT

 

The rights and obligations of the LICENSEE are personal and may not
be ceded, assigned, let or otherwise disposed of in any manner whatsoever
without the prior written consent of the LICENSOR, provided, however, that
LICENSEE may assign this agreement and the rights granted herein, subject
to South African regulatory approval and approval by the LICENSOR which
approval shall not unreasonably be withheld or delayed, to a third party who
acquires substantially all of LICENSEE’S assets associated with practice under
this agreement.

 

16.                                SUBLICENSING OR SUBCONTRACTING

 

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

 

17.                                INDEMNITY AND LIABILITY

 

17.1                         The
LICENSEE shall indemnify the LICENSOR against all claims of whatsoever nature
and provide guarantees to LICENSOR to that effect, which may be made
against it arising out of the EXPLOITATION by LICENSEE of the PATENT or the
TECHNOLOGY or the manufacture, sale or use of PRODUCTS.

 

17.2                         Any
claims for damages that may be instituted by LICENSEE against the LICENSOR
in terms of this agreement, shall be limited to an amount equal to the actual
amount of direct damages, or the aggregate amount of all payments made to the
LICENSOR under the terms of this agreement, whichever is the least. This
maximum liability shall be an aggregate liability for all claims howsoever
arising, whether by contract, in delict or otherwise. Neither PARTY shall be
liable to the other for any consequential or indirect damages arising from this
agreement.

 

18.                                FORCE MAJEURE

 

18.1                         A
PARTY is not liable for a failure to perform any of its obligations under
this agreement insofar as it proves:

 

18.1.1                that the failure was due to an
impediment beyond its control;

 

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

 

12

 

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

 

18.2                           An
impediment 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, civil
war, civil violence, riots and revolution, acts of piracy, acts of sabotage;

 

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

 

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

 

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

 

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

 

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

 

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

 

19.                                DISPUTE RESOLUTION AND GOVERNING LAW

 

19.1                         In
the event of any dispute arising between the PARTIES as a result of this
agreement, the dispute will be referred to the executive management of the
respective PARTIES to attempt to resolve the dispute. The executive management
of the PARTIES have the option to agree on mutually acceptable mediation or
arbitration proceedings, failing which the dispute will be subject to Clause
19.2 below.

 

19.2                         This
agreement shall be governed by and interpreted in accordance with the laws of
the Republic of South Africa and any dispute arising therefrom shall be
adjudicated by a competent high court in South Africa to which exclusive
jurisdiction the PARTIES hereby agree (unless otherwise agreed to between the
PARTIES at the time).

 

13

 

19.3                         The
provisions of this Clause 19 shall survive termination of this agreement.

 

20.                                CANCELLATION

 

20.1                         Should
a PARTY be in breach of any of the terms or conditions hereof and fail to
remedy 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 institute
proceedings immediately for enforcement of the terms of this agreement, or
alternatively and without further notice to declare this agreement cancelled;
all of which may be done without prejudice to any claim the aggrieved
PARTY may have for damages arising from breach of contract or any other
cause.

 

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

 

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

 

20.2.2                 a final and unappeasable judgement
against 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 defaulting
PARTY;

 

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

 

20.3                         Any
termination of this agreement shall not absolve the PARTIES from the obligation
to observe the confidentiality measures and other restraints as set out herein.

 

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

 

21.                                WHOLE AGREEMENT

 

21.1                         This
document constitutes the whole of the agreement (to the exclusion of all else)
between the PARTIES relating to the subject matter hereof, and also supersedes
all previous agreements pertaining to the same subject matter, whether written
or otherwise, between the PARTIES.

 

21.2                         No
amendment, alteration, addition, variation or consensual cancellation of this
document will be valid unless in writing and signed by the PARTIES.

 

14

 

22.                                WAIVER

 

22.1                         No
waiver of any of the terms or conditions of this agreement will be binding for
any purpose unless expressed in writing and signed by the PARTY giving the same
and any such waiver will be effective only in the specific instance and for the
purpose given.

 

22.2                         No
failure 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 partial
exercise of any right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.

 

23.                                DOMICILIUM AND NOTICES

 

The PARTIES hereby choose domicilium citandi et
executandi for all purposes in terms hereof as follows:

 

The CSIR,

The Executive Director:

Defence, Peace, Safety & Security, 

Meiring Naude Road,

Scientia,

Pretoria, 0002

 

FORCE
PROTECTION TECHNOLOGIES INC, 
 The President 

Force Protection Technologies Inc

9801 Highway 78 

Ladson 

South Carolina 29456

 

23.1                         Either
PARTY shall be entitled to change its domicilium citandi et
executandi by giving written notice thereof to the other, provided
that such change shall not take effect until receipt by the other PARTY of such
notice.

 

23.2                         All
notices to be given by hand by the PARTIES to each other in terms hereof shall
be given to the aforesaid addresses by delivery thereto, or if by posting by
prepaid registered mail, or by telefax to the following addresses:

 

The CSIR 
 P O Box 395 

Pretoria

0001 

Fax No. :+ 27 12 841-3803

 

15

 

FORCE
PROTECTION TECHNOLOGIES INC  

VP: Legal Affairs

9801 Highway 78 

Ladson 

SC 29456 

United States of America 

Fax No. :  (+1) 843 553-1311

 

24.                                 NOTICES

 

24.1                         All
notices in terms of this agreement shall be in writing addressed to the chosen
address 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 numbers
as set out in Clause 23 above (or to any replacement number), provided that
proof of delivery can be provided.

 

24.2                         Posted
and couriered notices shall be deemed to have been received on the 5th
business day following posting.

 

25.                                SEVERABILITY

 

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

 

26.                                COSTS

 

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

 

Signed at Pretoria  on this 6th
day 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

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