Document:

Exhibit 10.1

 

AMENDMENT TO FORBEARANCE AGREEMENT AND
AMENDMENT NO. 3 TO LOAN DOCUMENTS

 

THIS
AMENDMENT TO FORBEARANCE AGREEMENT AND AMENDMENT NO. 3 TO LOAN DOCUMENTS (this
“Amendment”), is entered into as of April 9, 2009, by and among GVEC RESOURCE IV INC. (“Agent”), as Agent and as a
Lender, EMRISE CORPORATION,  a
Delaware corporation (“Parent”), and Parent’s Subsidiaries that are
signatories hereto (collectively with Parent, “Borrowers”).

 

W I T N E S S E T H

 

WHEREAS,
Borrowers, Agent and the Lenders named therein are parties to that certain
Credit Agreement, dated as of November 30, 2007, as amended by that
certain Amendment Number 1 to Loan Documents, dated August 20, 2008 (the “First
Amendment”), that certain Amendment Number 2 to Loan Documents, dated February 12,
2009 (the “Second Amendment”), and that certain Forbearance Agreement
and Amendment No. 3 to Loan Documents, dated March 20, 2009 (the “Third
Amendment”) (as further amended, restated, supplemented, or modified from
time to time, the “Credit Agreement”);

 

WHEREAS,
pursuant to Section 7 of the Third Amendment, on or prior to April 10,
2009, the parties to the Credit Agreement agreed to enter into an amendment to
the Credit Agreement to amend the financial covenants set forth in Sections
6.16(a), (b), and (c) of the Credit Agreement;

 

WHEREAS, the
parties to the Credit Agreement wish to obtain additional time to comply with Section 7
of the Third Amendment;

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree to amend the Loan Documents as
follows:

 

1.             DEFINITIONS.  Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the Third
Amendment, as amended hereby.

 

2.             FORBEARANCE
PERIOD.  Agent and Lenders
acknowledge that the Forbearance Period is in effect as of the date hereof and
agree that until the expiration of the Forbearance Period, it will forbear from
exercising their respective default-related rights and remedies against
Borrowers, including, but not limited, accelerating the Obligations or
terminating any Commitments under the Credit Agreement, solely with respect to
the continuation of the Specified Defaults during the Forbearance Period.

 

3.             AMENDMENT
TO THIRD AMENDMENT.  Section 7
of the Third Amendment is hereby amended by deleting the first sentence of Section 7
of the Third Amendment and inserting the following sentence in its place:  “On or prior to April 15, 2009, the
parties to the Credit Agreement shall enter into an amendment to the Credit
Agreement to amend the financial covenants set forth in Sections 6.16(a), (b),
and (c) of the Credit Agreement (the “Fourth Amendment”).”

 

 

4.             CONSTRUCTION.  THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF CALIFORNIA.

 

5.             ENTIRE
AMENDMENT; EFFECT OF AMENDMENT. 
This Amendment, and the terms and provisions hereof, constitutes the
entire agreement among the parties pertaining to the subject matter hereof and
supersedes any and all prior or contemporaneous amendments relating to the
subject matter hereof.  Except as
expressly set forth in this Amendment, the Credit Agreement and other Loan
Documents shall remain unchanged and in full force and effect.  To the extent any terms or provisions of this
Amendment conflict with those of the Credit Agreement or other Loan Documents,
the terms and provisions of this Amendment shall control.  This Amendment is a Loan Document.

 

6.             COUNTERPARTS;
TELEFACSIMILE EXECUTION. 
This Amendment may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and any of
the parties hereto may execute this Amendment by signing any such
counterpart.  Delivery of an executed
counterpart of this Amendment by telefacsimile shall be equally as effective as
delivery of an original executed counterpart of this Amendment.  Any party delivering an executed counterpart
of this Amendment by telefacsimile also shall deliver an original executed
counterpart of this Amendment, but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect
of this Amendment.

 

7.             MISCELLANEOUS.

 

(a)           Upon the effectiveness of this
Amendment, each reference in the Credit Agreement to “this Agreement,” “hereunder,”
“herein,” “hereof” or words of like import referring to the
Credit Agreement shall mean and refer to the Credit Agreement as amended by
this Amendment.

 

(b)           Upon the effectiveness of this
Amendment, each reference in the Loan Documents to the “Credit Agreement,”
“thereunder,” “therein,” “thereof” or words of like import
referring to the Credit Agreement shall mean and refer to the Credit Agreement
as amended by this Amendment.

 

[signatures on next page]

 

2

 

IN WITNESS
WHEREOF, the parties have caused this Amendment to be executed and delivered on
the date first written above.

 

	
  EMRISE CORPORATION

  	
  EMRISE ELECTRONICS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ D. John Donovan

  	
   

  	
  By:

  	
  /s/ D. John Donovan

  
	
  Title:

  	
  Vice President Finance and Administration

  	
   

  	
  Title:

  	
  Secretary and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  CXS LARUS CORPORATION

  	
  RO ASSOCIATES INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ D. John Donovan

  	
   

  	
  By:

  	
  /s/ D. John Donovan

  
	
  Title:

  	
  Secretary and Chief Financial Officer

  	
   

  	
  Title:

  	
  Secretary and Chief Financial Officer

  
	
   

  	
   

  
	
  CUSTOM COMPONENTS, INC.

  	
  ADVANCED CONTROL COMPONENTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ D. John Donovan

  	
   

  	
  By:

  	
  /s/ D. John Donovan

  
	
  Title:

  	
  Treasurer and Secretary

  	
   

  	
  Title:

  	
  Treasurer and Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GVEC RESOURCE IV INC., as Agent and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  [ILLEGIBLE]

  
	
   

  	
  Title:

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  [ILLEGIBLE]

  
	
   

  	
  Title:

  	
  Director

  
							

 

3Exhibit 10.1

 

SEVERANCE
AGREEMENT

 

This SEVERANCE
AGREEMENT (this “Agreement”)
is entered into as of the 7th day of April, 2009 (the “Effective
Date”), by and between Force Protection, Inc., a Nevada
corporation (the “Company”),
and Randy Hutcherson (“Executive”).

 

W I T N E
S S E T H:

 

WHEREAS,
the Board (as defined in Section 1) has determined that it is in
the best interests of the Company and its stockholders to improve upon the
existing severance protections for its key employees and to provide an additional
inducement to secure the Executive’s continued services and, in the event of
any threat or occurrence of, or negotiation or other action that could lead to,
or create the possibility of, a Change in Control (as defined in Section 1)
of the Company, to ensure the Executive’s continued and undivided dedication to
the Executive’s duties when faced with the possibility of Change in Control;
and

 

WHEREAS,
the Board has authorized the Company to enter into this Agreement.

 

NOW,
THEREFORE, for and in consideration of the promises
and the mutual covenants and agreements herein contained, the Company and the
Executive hereby agree as follows:

 

1.             Definitions.  As used in this Agreement, the following
terms shall have the respective meanings set forth below:

 

(a)           “Board” means the Board of Directors
of the Company.

 

(b)           “Cause” means (i) the Executive’s
material breach of the Executive’s duties and responsibilities (other than as a
result of the Executive’s Disability) which is (x) demonstrably willful
and deliberate on the Executive’s part, (y) committed in bad faith or
without reasonable belief that such breach is in the best interests of the
Company and (z) not remedied within ten (10) days after receipt of
written notice from the Company specifying such breach; (ii) the Executive’s
indictment for, conviction of, or plea of nolo contendere
to, a felony; or (iii) the Executive’s gross negligence or any act of
theft, fraud, misappropriation, malfeasance or dishonesty by the Executive in
connection with the performance of the Executive’s duties to the Company which
is demonstrably willful and deliberate on the Executive’s part.

 

Cause shall not exist unless
and until the Company has delivered to the Executive a copy of a resolution
duly adopted by a majority of the entire Board at any duly called meeting of
the Board (after reasonable notice to the Executive and an opportunity for the
Executive, together with counsel, to be heard before the Board), finding that
in the good faith opinion of the Board an event set forth in clauses (i), (ii) or
(iii) has occurred and specifying the particulars thereof in detail.

 

The Company must notify the
Executive of any event constituting Cause (in accordance with the provisions of
Section 14(b)) within ninety (90) days following the Board’s
(excluding, if applicable, the Executive) knowledge of its existence or such
event shall not constitute Cause under this Agreement.

 

 

(c)           “Change in Control” means the
occurrence of any one of the following events:

 

(i)            any “person”
(as such term is defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 (the “Exchange Act”)
and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is
or becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 35% or more of the combined voting power of the Company’s then
outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”); provided, however,
that the event described in this paragraph (i) shall not be deemed to be a
Change in Control by virtue of any of the following acquisitions: (A) by
the Company or any Subsidiary; (B) by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any Subsidiary; (C) by
any underwriter temporarily holding securities pursuant to an offering of such
securities; (D) pursuant to a Non-Control Transaction (as defined in
paragraph (iii) below); or (E) a transaction (other than one
described in paragraph (iii) below) in which Company Voting Securities are
acquired from the Company, if a majority of the incumbent Board (as defined in
paragraph (ii) below) approves a resolution providing expressly that the
acquisition pursuant to this clause (E) does not constitute a Change in
Control under this paragraph (i);

 

(ii)           individuals
who, on February 29, 2008, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to February 29,
2008, whose election or nomination for election was approved by a vote of at
least two-thirds of the directors comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection to such
nomination) shall be considered a member of the Incumbent Board; provided, however,
that no individual initially elected or nominated as a director of the Company
as a result of an actual or threatened election contest with respect to
directors or any other actual or threatened solicitation of proxies or consents
by or on behalf of any person other than the Board shall be deemed to be a
member of the Incumbent Board;

 

(iii)          the
consummation of a merger, consolidation, share exchange or similar form of
corporate transaction involving the Company or any of its Subsidiaries that
requires the approval of the Company’s stockholders (whether for such
transaction or the issuance of securities in the transaction or otherwise) (a “Reorganization”), unless
immediately following such Reorganization: (A) more than 60% of the total
voting power of (x) the corporation resulting from such Reorganization
(the “Surviving Company”), or (y) if
applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of 95% of the voting securities eligible to elect
directors of the Surviving Company (the “Parent Company”),
is represented by Company Voting Securities that were outstanding immediately
prior to such Reorganization (or, if applicable, is represented by shares into
which such Company Voting Securities were converted pursuant to such
Reorganization), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company 

 

2

 

Voting Securities
among holders thereof immediately prior to the Reorganization; (B) no
person (other than any employee benefit plan (or related trust) sponsored or
maintained by the Surviving Company or the Parent Company) is or becomes the
beneficial owner, directly or indirectly, of 35% or more of the total voting
power of the outstanding voting securities eligible to elect directors of the
Parent Company (or, if there is no Parent Company, the Surviving Company); and (C) at
least a majority of the members of the board of directors of the Parent Company
(or, if there is no Parent Company, the Surviving Company) following the
consummation of the Reorganization were members of the Incumbent Board at the
time of the Board’s approval of the execution of the initial agreement
providing for such Reorganization (any Reorganization which satisfies all of
the criteria specified in (A), (B) and (C) above shall be deemed to
be a “Non-Control Transaction”);

 

(iv)          the
stockholders of the Company approve a plan of complete liquidation or
dissolution; or

 

(v)           the
consummation of a sale (or series of sales) of all or substantially all of the
assets of the Company and its Subsidiaries to an entity that is not an
affiliate of the Company.

 

Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur solely because any person acquires
beneficial ownership of 35% or more of the Company Voting Securities as a
result of the acquisition of Company Voting Securities by the Company which
reduces the number of Company Voting Securities outstanding; provided, that, if
after such acquisition by the Company such person becomes the beneficial owner
of additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control shall then occur.

 

(d)           “Change in Control Termination Period”
means the period of time beginning with a Change in Control and ending two (2) years
following such Change in Control.

 

(e)           “Date of Termination” means (i) the
effective date on which the Executive’s employment with the Company terminates,
as specified in a prior written notice by the Company or the Executive, as the
case may be, to the other, delivered pursuant to Section 14, or (ii) if
the Executive’s employment with the Company terminates by reason of death, the
date of death of the Executive.

 

(f)            “Disability” means the Executive’s
incapacity due to physical or mental illness, as evidenced by a written
statement from a licensed physician acceptable to the Company or by the
insurance company which insures the Company’s long-term disability plan in
which the Executive is eligible to participate which confirms the Executive’s
inability to perform due to such physical or mental illness.

 

(g)           “Good Reason” means, without the
Executive’s express written consent, the occurrence of any of the following
events following a Change in Control:

 

3

 

(i)            (A) any
change in the authority, duties or responsibilities that is inconsistent in any
material and adverse respect with the Executive’s authority, position(s),
duties, responsibilities or status with the Company immediately prior to such
Change in Control (including any material and adverse diminution of such duties
or responsibilities) or (B) a material and adverse change in the Executive’s
reporting responsibilities, titles or offices with the Company as in effect
immediately prior to such Change in Control;

 

(ii)           a
material reduction by the Company in the Executive’s rate of annual base salary
or annual target bonus opportunity (including any material and adverse change
in the formula for such annual bonus target) as in effect immediately prior to
such Change in Control or as the same may be increased from time to time
thereafter;

 

(iii)          any
requirement of the Company that the Executive be based anywhere more than fifty
(50) miles from the place of business where the Executive is located at the
time of the Change in Control;

 

(iv)          the
failure of the Company to continue in effect any employee benefit plan or
compensation plan in which the Executive is participating immediately prior to
such Change in Control and which is material to the Executive’s overall
compensation, unless the Executive is permitted to participate in other plans
providing the Executive with benefits or compensation which are not materially
less, or the taking of any action by the Company which would materially and
adversely affect the Executive’s participation in or materially and adversely
reduce the Executive’s benefits under any such plan; or

 

(v)           a
material breach by the Company of this Agreement or any other material
agreement in effect between the Executive and the Company.

 

Any event described in this Section 1(g) which
occurs prior to a Change in Control, but was at the request of a third party
who had indicated an intention or taken steps reasonably calculated to effect a
Change in Control and who effectuates a Change in Control, shall constitute
Good Reason following a Change in Control for purposes of this Agreement
(treating the date of such event as the date of the Change in Control)
notwithstanding that it occurred prior to the Change in Control. For purposes
of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive; provided, however, that an isolated, insubstantial and
inadvertent action taken in good faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive shall not
constitute Good Reason. The Executive must provide notice of termination of
employment (in accordance with the provisions of Section 14(b))
within ninety (90) days of the initial existence of an event constituting Good
Reason (including any such event which occurs prior to a Change in Control
pursuant to the first sentence of this paragraph) or such event shall not
constitute Good Reason under this Agreement. The Company shall have thirty (30)
days following its receipt of a notice of termination of employment from the
Executive to remedy the condition the Executive claimed to provide a basis for
such termination in the notice of termination.

 

4

 

(h)           “Nonqualifying Termination” means a
termination of the Executive’s employment (i) by the Company for Cause, (ii) by
the Executive for any reason other than (x) for Good Reason during the
Change in Control Termination Period or (y) for any reason during the
Window Period, (iii) as a result of the Executive’s death, or (iv) by
the Company due to the Executive’s absence from the Executive’s duties with the
Company on a full-time basis for at least one hundred thirty (130) business
days during any consecutive twelve month period as a result of the Executive’s
Disability.

 

(i)            “Subsidiary” means any corporation
or other entity in which the Company has a direct or indirect ownership
interest of 50% or more of the total combined voting power of the then
outstanding securities or interests of such corporation or other entity
entitled to vote generally in the election of directors or in which the Company
has the right to receive 50% or more of the distribution of profits or 50% of
the assets on liquidation or dissolution.

 

(j)            “Window Period” means the thirty
(30) day period immediately following the six (6) month anniversary of a
Change in Control.

 

2.             Obligations of the Executive.  The Executive agrees that if a Change in
Control shall occur, the Executive shall not voluntarily leave the employ of
the Company without Good Reason until ninety (90) days following such Change in
Control.

 

3.             Severance Payments.  Except as otherwise provided in Section 4
and subject to Section 6 and Section 19, if the Executive’s
employment with the Company is terminated other than by reason of a
Nonqualifying Termination, then the Company shall pay or provide the Executive
(or the Executive’s beneficiary or estate) with the following payments or
benefits:

 

(a)           a
lump-sum cash amount within thirty (30) days following the Date of Termination
equal to the sum of: (i) the Executive’s base salary through the Date of
Termination, and any accrued vacation, in each case to the extent not
theretofore paid; (ii) any unpaid bonus accrued with respect to the fiscal
year ending on or preceding the Date of Termination; and (iii) subject to
presentment of appropriate documentation, any unreimbursed expenses incurred
through the Date of Termination in accordance with Company policy (collectively,
the “Accrued Amounts”);

 

(b)           a
lump-sum cash amount within the calendar year next following the calendar year
during which the Date of Termination occurs equal to the product of (i) the
annual bonus the Executive would have been paid for the calendar year during
which the Date of Termination occurs based on the achievement of actual
performance goals and (ii) a fraction, the numerator of which the number
days in the fiscal year in which the Date of Termination occurs through the
Date of Termination and the denominator of which is three hundred sixty-five
(365) (the “Pro-Rata Bonus”);

 

(c)           a
lump-sum cash amount on the 55th day following the Date of Termination equal to
one times the sum of (A) the Executive’s annual base salary and (B) the
greatest of (1) the Executive’s target bonus for the fiscal year in which
the Executive’s Date of Termination occurs and (2) the average of the
actual bonuses earned by the Executive in respect of the two (2) 

 

5

 

preceding fiscal years of the Company immediately
preceding the fiscal year in which the Date of Termination occurs;

 

(d)           subject
to (A) the Executive’s timely election of continuation coverage under the
Consolidated Budget Omnibus Reconciliation Act of 1985, as amended (“COBRA”), (B) the Executive’s
continued co-payment of the employee portion of any contribution or premium at
the same level and cost to the Executive as if the Executive were an employee
of the Company (excluding, for purposes of calculating cost, an employee’s
ability to pay premiums with pre-tax dollars) and (C) the Executive’s
continued eligibility for COBRA continuation coverage, the Company will pay for
a period of up to twelve (12) months following the Date of Termination the
portion of the Executive’s COBRA premium equivalent to what the Company would
have paid if the Executive were an employee of the Company. Notwithstanding the
foregoing, in the event the Executive fails to pay any required contribution or
premium or becomes employed with another employer and becomes eligible to
receive substantially similar or improved medical, dental or vision benefits
from such employer (whether or not the Executive accepts such benefits), the
Company’s obligations under this Section 3(d) shall immediately
cease, except that the Company’s obligation to continue to make available
continuation coverage under COBRA at the full COBRA rates shall be determined
in accordance with COBRA. The Executive will notify the Company of the
Executive’s eligibility for medical, dental or vision benefits from a
subsequent employer within thirty (30) days of such eligibility; and

 

(e)           with
respect to outstanding equity awards held by the Executive as of the Date of
Termination, all stock options and stock appreciation rights that would become
vested and exercisable if the Executive had continued to be employed with the
Company during the twelve (12) month period commencing on the Date of
Termination shall vest and become exercisable and the restrictions on all
restricted stock awards, restricted stock units and other equity or incentive
awards that would have lapsed if the Executive had continued to be employed
with the Company during the twelve (12) month period commencing on the Date of
Termination shall lapse and such awards shall become immediately payable;
provided, however, that if any such award is subject to Section 409A (as
defined in Section 19, below), the provisions of this Section 3(e) will
not result in the immediate payment of such award if such payment would result
in the imposition of tax, interest and/or penalties upon the Executive under Section 409A,
in which case such payment shall be made at the earliest time such payment can
be made without resulting in the imposition of tax, interest and/or penalties upon
the Executive under Section 409A; and

 

(f)            all
other payments, benefits or fringe benefits to which the Executive shall be
entitled under the terms of any applicable compensation arrangement or benefit,
equity or fringe benefit plan or program or grant (the “Other
Benefits”).

 

4.             Change in Control Severance Payments.  If a Change in Control occurs and the
Executive’s employment with the Company is terminated (x) other than by
reason of a Nonqualifying Termination (1) during the Change in Control
Termination Period or (2) prior to the Change in Control Termination
Period and the Executive reasonably demonstrates that such termination was at
the request of a third party who had indicated an intention or taken steps
reasonably calculated to effect such Change in Control and who effectuates such
Change in Control (or such termination was otherwise in anticipation of such
Change in Control) or (y) by 

 

6

 

the Executive for any reason during the Window Period,
then, subject to Section 6 and Section 19 the Company
shall pay or provide the Executive (or the Executive’s beneficiary or estate)
with the following payments or benefits:

 

(a)           a
lump-sum cash amount within thirty (30) days following the Date of Termination
(or, if later, the date of the Change in Control) equal to the sum of the
Accrued Amounts;

 

(b)           a
lump-sum cash amount within the calendar year next following the calendar year
during which the Date of Termination occurs equal to the Pro-Rata Bonus;

 

(c)           a
lump-sum cash amount on the 55th day following the Date of Termination (or, if
later, the date of the Change in Control) equal to one and one-half times the
sum of: (A) the Executive’s highest rate of annual base salary during the
12-month period prior to the Date of Termination; and (B) the greatest of (1) the
Executive’s target bonus for the fiscal year in which the Executive’s Date of
Termination occurs, (2) the Executive’s target bonus for the fiscal year
in which the Change in Control occurs and (3) the average of the actual
bonuses earned by the Executive in respect of the two (2) preceding fiscal
years of the Company immediately preceding the fiscal year in which the Change
in Control occurs;

 

(d)           COBRA
continuation coverage pursuant to Section 3(d), except that the
Company will pay the portion of the Executive’s COBRA premium equivalent to
what the Company would have paid if the Executive were an employee of the
Company for a period of up to eighteen (18) months following the Date of
Termination instead of for up to twelve (12) months;

 

(e)           with
respect to outstanding equity awards held by the Executive as of the Date of
Termination, all stock options and stock appreciation rights shall vest and
become exercisable and the restrictions on all restricted stock awards,
restricted stock units and other equity or incentive awards shall lapse and
such awards shall become immediately payable; provided, however, that if any
such award is subject to Section 409A (as defined in Section 19,
below), the provisions of this Section 3(e) will not result in
the immediate payment of such award if such payment would result in the
imposition of tax, interest and/or penalties upon the Executive under Section 409A,
in which case such payment shall be made at the earliest time such payment can
be made without resulting in the imposition of tax, interest and/or penalties
upon the Executive under Section 409A; and

 

(f)            the
Other Benefits.

 

Notwithstanding anything herein to the
contrary, if the Executive becomes entitled to, and receives, payments and
benefits pursuant to Section 3 and thereafter becomes entitled to
payments and benefits pursuant to this Section 4, payments under
this Section 4 shall be promptly paid following the Change in
Control (and in no event later than the March 15th of the calendar year
following the calendar year in which the Change in Control occurs) and such
payments and benefits shall be reduced by any amounts received pursuant to Section 3.
In addition, the Executive’s right to receive the lump sum cash payment
pursuant to Sections 3(c) or 

 

7

 

4(c) shall
terminate on March 15th of the calendar year following the calendar year
in which the Window Period commenced, and no such amount shall be payable thereafter.

 

5.             Payments Upon Non-Qualifying Termination of
Employment.  If the
Executive’s employment with the Company shall terminate by reason of a
Nonqualifying Termination, then the Company shall pay to the Executive (or the
Executive’s beneficiary or estate) within thirty (30) days following the Date
of Termination, a lump-sum cash amount equal to the Accrued Amounts (other than
the amount described in Section 3(a)(ii) if the Executive is
terminated by the Company for Cause) and provide the Other Benefits.

 

6.             Release Required; Resignations.  Any amounts payable pursuant to this
Agreement (other than Accrued Amounts and Other Benefits) shall only be payable
if the Executive executes and delivers to the Company (and does not revoke) a
general release of claims in a form substantially in the form of Exhibit A
attached hereto, and such release becomes irrevocable within fifty-five (55)
days following the Executive’s Date of Termination.

 

7.             Certain Additional Payments by the Company.  (a) Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any payment,
award, benefit or distribution (or any acceleration of any payment, award,
benefit or distribution) by the Company (or any of its affiliated entities) or
any entity which effectuates a Change in Control (or any of its affiliated
entities) to or for the benefit of the Executive (whether pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 7) (a “Payment”)
would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the “Code”), or
any interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise
Tax”), then the Company shall pay the Executive an additional
payment (a “Gross-Up Payment”) in an
amount such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes) including, without
limitation, any income and employment taxes (and any interest and penalties
imposed with respect thereto) and any Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to (i) pay federal income
taxes at the highest marginal rates of federal income taxation for the calendar
year in which the Gross-Up Payment is to be made, and (ii) pay applicable
state and local income taxes at the highest marginal rate of taxation for the
calendar year in which the Gross-Up Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from deduction of
such state and local taxes.

 

(b)           Subject
to the provisions of Section 7(a), all determinations required to
be made under this Section 7, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determinations, shall be made by the public
accounting firm that is retained by the Company as of the date immediately
prior to the Change in Control (the “Accounting Firm”)
which shall provide detailed supporting calculations both to the Company and
the Executive within fifteen (15) business days of the receipt of notice from
the Company or the Executive that there has 

 

8

 

been a Payment, or such earlier time as is requested
by the Company (collectively, the “Determination”).
Notwithstanding the foregoing, in the event (i) the Board shall determine
prior to the Change in Control that the Accounting Firm is precluded from
performing such services under applicable auditor independence rules, (ii) the
Audit Committee of the Board determines that it does not want the Accounting
Firm to perform such services because of auditor independence concerns or (iii) the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change in Control, the Board shall appoint another
nationally recognized public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company and the Company shall enter into any agreement
requested by the Accounting Firm in connection with the performance of the
services hereunder. The Gross-Up Payment under this Section 7 with
respect to any Payments shall be made no later than thirty (30) days following
such Payment and, in no event, later than the calendar year next following the
calendar year in which the Executive remits the taxes to which such Gross-Up
Payment relates. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall furnish the Executive with a written opinion
to such effect, and to the effect that failure to report the Excise Tax, if
any, on the Executive’s applicable federal income tax return will not result in
the imposition of a negligence or similar penalty. The Determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code
at the time of the Determination, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made (“Underpayment”) or Gross-Up Payments
are made by the Company which should not have been made (“Overpayment”),
consistent with the calculations required to be made hereunder. In the event
that the Executive thereafter is required to make payment of any additional
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid
by the Company to or for the benefit of the Executive. In the event the amount
of the Gross-Up Payment exceeds the amount necessary to reimburse the Executive
for the Executive’s Excise Tax, the Accounting Firm shall determine the amount
of the Overpayment that has been made and any such Overpayment (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code)
shall be promptly paid by the Executive to or for the benefit of the Company.
The Executive shall cooperate, to the extent the Executive’s expenses are
reimbursed by the Company, with any reasonable requests by the Company in
connection with any contests or disputes with the Internal Revenue Service in
connection with the Excise Tax.

 

(c)           Nothing
in this Section 7 is intended to violate the Sarbanes-Oxley Act and
to the extent that any advance hereunder would do so, such obligation shall be
modified so as to make the advance a nonrefundable payment to the Executive.

 

8.             Restrictive Covenants.

 

(a)           Non-Compete.  While employed by the Company and during the
twelve (12) month period after the Date of Termination (the “Restricted Period”), the Executive
shall not directly or indirectly (without the prior written consent of the
Company):

 

9

 

(i)                                     hold
a 5% or greater equity (including stock options whether or not exercisable),
voting or profit participation interest in a Competitive Enterprise, or

 

(ii)                                  associate
(including as an officer, employee, partner, consultant, agent or advisor) with
a Competitive Enterprise and in connection with the Executive’s association
engage, or directly or indirectly manage or supervise personnel engaged, in any
activity:

 

(A)                              that is substantially
related to any activity that the Executive was engaged in with the Company or
any of its affiliated entities during the twelve (12) months prior to the Date
of Termination (excluding as a director),

 

(B)                                that is substantially
related to any activity for which the Executive had direct or indirect
managerial or supervisory responsibility with the Company or any of its
affiliated entities during the twelve (12) months prior to the Date of
Termination, or

 

(C)                                that calls for the
application of specialized knowledge or skills substantially related to those
used by the Executive in the Executive’s activities with the Company or any of
its affiliated entities during the twelve (12) months prior to the Date of
Termination.

 

For purposes of this Agreement, “Competitive Enterprise”
means any business enterprise anywhere worldwide that either (A) engages
in the manufacture and sale of blast- and ballistic- protected wheeled vehicles
for the US or foreign militaries or (B) holds a 5% or greater equity,
voting or profit participation interest in any enterprise that engages in such
a competitive activity.

 

(b)                                 Non-Solicit.  During the Restricted Period, the Executive
shall not, in any manner, directly or indirectly (without the prior written
consent of the Company): (i) Solicit any Client to transact business with
a Competitive Enterprise or to reduce or refrain from doing any business with
the Company or any of its affiliated entities, (ii) transact business with
any Client that would cause the Executive to be engaged in a Competitive
Enterprise, (iii) interfere with or damage any relationship between the
Company or any of its affiliated entities and a Client or (iv) Solicit
anyone who is then an employee of the Company or any of its affiliated entities
to resign from the Company or affiliated entity or to apply for or accept
employment with any other business or enterprise.

 

(c)                                  For
purposes of this Agreement, a “Client”
means any client or prospective client of the Company or any of its affiliated
entities to whom the Executive provided services, or for whom the Executive
transacted business, or whose identity became known to the Executive in
connection with the Executive’s relationship with or employment with the
Company, and “Solicit” means any direct or
indirect communication of any kind, regardless of who initiates it, that in any
way invites, advises, encourages or requests any person to take or refrain from
taking any action.

 

10

 

(d)                                 Confidential Information.  The Executive hereby acknowledges that, as an
employee of the Company, the Executive will have access to confidential
information of a special and unique nature and value relating to the Company
and its strategic plan and financial operations. The Executive further
recognizes and acknowledges that all such confidential information is the
exclusive property of the Company, is material and confidential, and is
critical to the successful conduct of the business of the Company. Accordingly,
the Executive hereby covenants and agrees not to, at any time, directly or
indirectly, divulge, reveal or communicate any such confidential information to
any person, firm, corporation or entity whatsoever, or use any such
confidential information for the Executive’s own benefit or for the benefit of
others. Notwithstanding the foregoing, the Executive shall be authorized to
disclose confidential information (i) as may be required by law or legal
process after providing the Company with prior written notice and an
opportunity to respond to such disclosure (unless such notice is prohibited by
law), (ii) in any criminal proceeding against the Executive after
providing the Company with prior written notice and an opportunity to seek
protection for such confidential information, and (iii) with the prior
written consent of the Company.

 

(e)                                  Return of Company Property.  On the Date of Termination (or at any time
prior thereto at the Company’s request), the Executive shall return all
property (both tangible and intellectual) belonging to the Company or any of
its affiliated entities (including, but not limited to, files, monthly
management financial booklets, projections, forecasts, balance sheets, income
statements, audited financial statements, total cost development budgets,
actual or prospective purchaser or customer lists, written proposals and studies,
plans, drawings, specifications, reports to creditors, books, accounts, reports
to directors, minutes, resolutions, certificates, bank account numbers,
passwords, rolodexes, identification cards, credit cards, computers, fax
machines, cellular or other telephones, Blackberries, beepers, PDA’s, keys,
card access keys to any building of the Company or any of its affiliated
entities, deeds, contracts, office equipment and supplies, records, computer
disks and any other documents or things received or acquired in connection with
the Executive’s employment with the Company) without retaining any copies or
extracts thereof.

 

(f)                                    Nondisparagement.  The Executive agrees not to make negative
comments or otherwise disparage the Company or any of its affiliated entities
or its or their officers, directors, employees, shareholders, agents or
products, in any manner likely to be harmful to them or their business,
business reputation or personal reputation.

 

(g)                                 Cooperation.  Upon the receipt of reasonable notice from the
Company (including outside counsel), the Executive agrees that while employed
by the Company and thereafter, the Executive will respond and provide
information with regard to matters in which the Executive has knowledge as a
result of the Executive’s employment with the Company, and will provide
reasonable assistance to the Company, its affiliated entities and their
respective representatives in defense of any claims that may be made against
the Company or any of its affiliated entities, and will assist the Company and
its affiliated entities in the prosecution of any claims that may be made by
the Company or any of its affiliated entities, to the extent that such claims
may relate to the period of the Executive’s employment with the Company. The
Executive agrees to promptly inform the Company if the Executive becomes aware
of any lawsuits involving such claims that may be filed or threatened against
the Company or any of its

 

11

 

affiliated entities. The Executive also agrees to
promptly inform the Company (to the extent that the Executive is legally
permitted to do so) if the Executive is asked to assist in any investigation of
the Company or any of its affiliated entities (or their actions), regardless of
whether a lawsuit or other proceeding has then been filed against the Company
or any of its affiliated entities with respect to such investigation, and shall
not do so unless legally required.

 

(h)                                 Survival.  The obligations contained in this Section 8
shall survive the termination of the Executive’s employment with the Company
and shall be fully enforceable thereafter.

 

(i)                                     Validity.  The terms and provisions of this Section 8
are intended to be separate and divisible provisions and if, for any reason,
any one or more of them is held to be invalid or unenforceable, neither the
validity nor the enforceability of any other provision of this Agreement shall
thereby be affected. The parties hereto acknowledge that the potential
restrictions on the Executive’s future employment imposed by this Section 8
are reasonable in both duration and geographic scope and in all other respects.
If for any reason any court of competent jurisdiction shall find any provisions
of this Section 8 unreasonable in duration or geographic scope or
otherwise, the Executive and the Company agree that the restrictions and
prohibitions contained herein shall be effective to the fullest extent allowed
under applicable law in such jurisdiction.

 

(j)                                     Tolling.  In the event of any violation of the
provisions of this Section 8 on or after the Date of Termination,
the Executive acknowledges and agrees that the post-termination restrictions
contained in this Section 8 shall be extended by a period of time
equal to the period of such violation, it being the intention of the parties
hereto that the running of the applicable post-termination restriction period
shall be tolled during any period of such violation.

 

9.                                       Withholding Taxes.  The Company may withhold from all payments
due to the Executive (or the Executive’s beneficiary or estate) hereunder all
taxes which, by applicable federal, state, local or other law or regulation,
the Company is required to withhold therefrom.

 

10.                                 Reimbursement of Expenses.

 

(a)                                  If
any contest or dispute shall arise under this Agreement involving the
termination of the Executive’s employment with the Company (including the
covenants contained in Section 8) or involving the failure or
refusal of the Company to perform fully in accordance with the terms hereof (a “Dispute”) and the Executive
prevails on the material issues in such Dispute, the Company shall, upon
presentment of appropriate documentation (which submission shall be made within
forty-five (45) days after the resolution of such Dispute), promptly pay or
reimburse the Executive, for all reasonable legal fees and expenses (including
costs of the arbitrators) incurred by the Executive in connection with such
Dispute.

 

(b)                                 Notwithstanding
the provisions of Section 10(a), the Company shall, on a quarterly
basis, upon presentment of appropriate documentation (which submission shall be
made within forty-five (45) days after the end of such quarter), reimburse the
Executive for all legal fees and expenses (including costs of the arbitrators),
if any, incurred by the Executive in

 

12

 

connection with a Dispute arising on or after a Change
in Control (or otherwise related to a Change in Control), except that the
Executive shall reimburse the Company (to the extent permitted under applicable
law) for the fees and expenses advanced (i) in the event the Executive’s
claims are determined to have been advanced by the Executive in bad faith or
were frivolous, or (ii) to the extent that such legal fees and expenses
are determined to be unreasonable.

 

11.                                 Termination of Agreement.  This Agreement shall be effective on the
Effective Date and shall terminate one year after the date of any written
notification from the Company to the Executive terminating this Agreement; provided,
however, that if a Change in Control occurs while this Agreement is
still operative, any written notification to the Executive terminating this
Agreement (including any written notification given prior to such Change in
Control), shall not be effective prior to the end of the Change in Control
Termination Period; and provided, further, that this Agreement
shall continue in effect following any termination that is not a Nonqualifying
Termination which occurs prior to such termination with respect to all rights
and obligations accruing as a result of such termination.

 

12.                                 Scope of Agreement.  Nothing in this Agreement shall be deemed to
alter the “at-will” nature of the Executive’s employment or entitle the
Executive to continued employment with the Company.

 

13.                                 Successors; Binding Agreement.

 

(a)                                  This
Agreement shall not be terminated by any Reorganization. In the event of any
Reorganization, the provisions of this Agreement shall be binding upon the
surviving or resulting corporation or the person or entity to which such assets
are transferred.

 

(b)                                 The
Company agrees that concurrently with any Reorganization that does not
constitute a Non-Control Transaction, it will cause any successor or transferee
unconditionally to assume, by written instrument delivered to the Executive (or
the Executive’s beneficiary or estate), all of the obligations of the Company
hereunder. Failure of the Company to obtain such assumption prior to the
effectiveness of any such Reorganization, shall be a material breach of this
Agreement and shall constitute Good Reason hereunder and shall entitle the
Executive to compensation and other benefits from the Company in the same
amount and on the same terms as the Executive would be entitled hereunder if
the Executive’s employment were terminated following a Change in Control other
than by reason of a Nonqualifying Termination. For purposes of implementing the
foregoing, the date on which any such Reorganization becomes effective shall be
deemed the date Good Reason occurs, and shall be the Date of Termination, if
requested by the Executive.

 

(c)                                  This
Agreement is personal to the Executive and without the prior written consent of
the Company shall not be assignable by the Executive. This Agreement shall
inure to the benefit of, and be enforceable by, the Executive’s personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while any
amounts would be payable to the Executive hereunder had the Executive continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the

 

13

 

terms of this Agreement to such person or persons
appointed in writing by the Executive to receive such amounts or, if no person
is so appointed, to the Executive’s estate.

 

14.                                 Notices.  (a) For purposes of this Agreement, all
notices and other communications required or permitted hereunder (each, a “Notice”) shall be in writing and
shall be sent by either party by personal delivery, e-mail, fax (with a Notice
contemporaneously given by another method specified in this Section 14),
recognized overnight commercial courier or United States mail (certified and
return receipt requested, postage prepaid) and shall be deemed to have been
duly given when delivered or five (5) days after deposit in the United
States mail, addressed as follows:

 

	
  If to the
  Company:

  	
   

  	
  Force
  Protection, Inc.

  
	
   

  	
   

  	
  9801 Highway
  78, Building No. 1

  
	
   

  	
   

  	
  Ladson,
  South Carolina 29456-3802

  
	
   

  	
   

  	
  Attention: General
  Counsel

  
	
   

  	
   

  	
  Facsimile:
  (843) 553.1311

  
	
   

  	
   

  	
   

  
	
  If to the
  Executive:

  	
   

  	
  To the
  Executive’s last address (or to the last facsimile number) shown on the
  records of the Company

  

 

or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt (or refusal
of receipt).

 

(b)                                 A
written notice of the Executive’s Date of Termination by the Company or the
Executive, as the case may be, to the other, shall (i) indicate the
specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s employment under
the provision so indicated and (iii) specify the termination date (which
date shall be not less than thirty (30) nor more than sixty (60) days after the
giving of such notice or, if later, the date of the Change in Control if the
Executive gives notice of an event described in Section 1(g) which
occurs prior to a Change in Control).

 

15.                                 Full Settlement; No Mitigation.  The Company’s obligation to make any payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall be in lieu of and in full settlement of all other severance or
similar payments to the Executive under any other severance or employment
agreement between the Executive and the Company, any severance plan of the
Company and any statutory entitlement (including notice of termination,
termination pay and/or severance pay). The Company’s obligations hereunder
shall not be affected by any set-off, counterclaim, recoupment, defense or
other claim, right or action which the Company may have against the Executive
or others. In no event shall the Executive be obligated to seek other
employment or take other action by way of mitigation of the amounts payable to
the Executive under any of the provisions of this Agreement and, except as
provided in Section 3(d), such amounts shall not be reduced whether
or not the Executive obtains other employment.

 

14

 

16.                                 Employment with Subsidiaries.  Employment with the Company for purposes of
this Agreement shall include employment with any Subsidiary or affiliate
entity.

 

17.                                 GOVERNING LAW; VALIDITY.  THE INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF SOUTH CAROLINA WITHOUT
REGARD TO THE PRINCIPLE OF CONFLICTS OF LAWS. THE INVALIDITY OR
UNENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT SHALL NOT AFFECT THE
VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS AGREEMENT, WHICH
OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.

 

18.                                 Disputes.

 

(a)                                  Mandatory Arbitration.  Subject to the provisions of this Section 18,
any Dispute will be finally settled by arbitration in Charleston, South
Carolina administered by the American Arbitration Association (the “AAA”) under its Commercial
Arbitration Rules then in effect. However, the AAA’s Commercial
Arbitration Rules will be modified in the following ways: (i) the
decision must not be a compromise but must be the adoption of the submission by
one of the parties; (ii) the dispute shall be decided by a panel of three (3) arbitrators,
one appointed by each of the parties and the third appointed by the other two (2) arbitrators
or, if the arbitrators do not agree, appointed by the AAA; (iii) each
arbitrator will agree to treat as confidential evidence and other information
presented to them; (iv) there will be no authority to award punitive
damages (and the Executive and the Company agree not to request any such
award); (v) the optional Rules for Emergency Measures of Protections
will apply; (vi) there will be no authority to amend or modify the terms
of this Agreement except as provided in Section 21 (and the
Executive and the Company agree not to request any such amendment or
modification); and (vii) a decision must be rendered within ten (10) business
days of the parties’ closing statements or submission of post-hearing briefs.

 

(b)                                 Injunctions and Enforcement of Arbitration Awards.  The Executive or the Company may bring an
action or special proceeding in a state or federal court of competent
jurisdiction sitting in Charleston, South Carolina to enforce any arbitration
award under Section 18(a). Also, the Company may bring such an
action or proceeding, in addition to its rights under Section 18(a) and
whether or not an arbitration proceeding has been or is ever initiated, to
temporarily, preliminarily or permanently enforce any part of Section 8.
The Executive agrees that (i) violating any part of Section 8
would cause damage to the Company that cannot be measured or repaired and that
the Company’s remedies at law for a breach or threatened breach of any of the
provisions of Section 8 would be inadequate, (ii) the Company
therefore is entitled to an injunction, restraining order or other equitable
relief restraining any actual or threatened violation of Section 8
in addition to any remedies at law, (iii) no bond will need to be posted
for the Company to receive such an injunction, order or other relief and (iv) no
proof will be required that monetary damages for violations of Section 8
would be difficult to calculate and that remedies at law would be inadequate.
In addition, in the event of a violation by the Executive of Section 8,
any severance payments or benefits being paid to the Executive pursuant

 

15

 

to this Agreement or otherwise shall immediately cease
and any severance previously paid to the Executive shall be immediately repaid
to the Company.

 

(c)                                  Jurisdiction and Choice of Forum.
The Executive and the Company irrevocably submit to the exclusive jurisdiction
of any state or federal court located in Charleston, South Carolina over any
Dispute that is not otherwise arbitrated or resolved according to Section 18(a) This
includes any action or proceeding to compel arbitration or to enforce an
arbitration award. Both the Executive and the Company (i) acknowledge that
the forum stated in this Section 18(c). has a reasonable relation
to this Agreement and to the relationship between the Executive and the Company
and that the submission to the forum will apply even if the forum chooses to
apply non-forum law, (ii) waive, to the extent permitted by law, any
objection to personal jurisdiction or to the laying of venue of any action or
proceeding covered by this Section 18(c) in the forum stated
in this Section 18(c), (iii) agree not to commence any such
action or proceeding in any forum other than the forum stated in this Section 18(c) and
(iv) agree that, to the extent permitted by law, a final and
non-appealable judgment in any such action or proceeding in any such court will
be conclusive and binding on the Executive and the Company. However, nothing in
this Agreement precludes the Executive or the Company from bringing any action
or proceeding in any court for the purpose of enforcing the provisions of Section 18(a) and
this Section 18(c).

 

19.                                 Section 409A of the Code.  The parties agree that this Agreement is
intended to comply with the requirements of Section 409A of the Code and
the regulations and other guidance promulgated thereunder (“Section 409A”) or an exemption
from Section 409A. Notwithstanding anything in this Agreement to the
contrary, if the Executive is a “specified employee” (as described in Section 409A)
on the Date of Termination, any amount to which the Executive would otherwise
be entitled during the first six months following a separation of service that
constitutes nonqualified deferred compensation within the meaning of Section 409A
and that is therefore not exempt from Section 409A as involuntary
separation pay or a short-term deferral will be accumulated and paid in a
single lump sum cash payment (without interest) on the earlier of (i) the
first business day of the seventh month following the date of such “separation
from service” (as defined under Section 409A) or (ii) the date of the
Executive’s death, and any remaining payments and benefits due under this
Agreement shall be paid or provided in accordance with the normal payment dates
specified for them herein. For purposes of this Agreement, each amount to be paid
or benefit to be provided hereunder shall be construed as a separate identified
payment for purposes of Section 409A. Any payment or benefit due upon a
termination of the Executive’s employment that represents a “deferral of
compensation” within the meaning of Section 409A shall be paid or provided
to the Executive only upon a “separation from service” as defined in Treas.
Reg. § 1.409A-1(h).

 

20.                                 Counterparts.  This Agreement may be executed (including by
facsimile transmission confirmed promptly thereafter by actual delivery of
executed counterparts) in counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one and the same
instrument.

 

21.                                 Miscellaneous.  No provision of this Agreement may be
modified or waived unless such modification or waiver is agreed to in writing
and signed by the Executive and by a duly authorized officer of the Company. No
waiver by either party hereto at any time of any

 

16

 

breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or any prior or subsequent time. Failure by the
Executive or the Company to insist upon strict compliance with any provision of
this Agreement or to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason or the Company to terminate employment for
Cause, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement. This Agreement together with all
exhibits hereto sets forth the entire agreement of the parties hereto in
respect of the subject matter contained herein. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. Except as otherwise specifically provided for herein,
the rights of, and benefits payable to, the Executive or the Executive’s estate
or beneficiaries pursuant to this Agreement are in addition to any rights of,
or benefits payable to, the Executive or the Executive’s estate or
beneficiaries under any other employee benefit plan or compensation program of
the Company.

 

22.                                 Section Headings.  The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.

 

IN WITNESS
WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer of the Company and the Executive has
executed this Agreement on the Effective Date.

 

FORCE PROTECTION, INC.

 

	
  By:

  	
  /s/ Lenna
  Ruth Macdonald

  	
   

  
	
   

  	
  Name: Lenna
  Ruth Macdonald

  	
   

  
	
   

  	
  Title: Chief
  Strategy Officer, General Counsel and Corporate Secretary

  

 

“EXECUTIVE”

 

	
  /s/ Randy
  Hutcherson

  	
   

  
	
  Name: Randy
  Hutcherson

  	
   

  

 

17

 

Exhibit A

 

Form of
General Release

 

This General Release, dated as
of the [·]
day of [·] 20[·], is delivered by
[·] (the “Executive”) to and for the benefit
of the Released Parties (as defined below). The Executive acknowledges that
this General Release is being executed in accordance with Section 6 of the
Severance Agreement dated [·],
200[·] (the “Severance Agreement”).

 

1.                                       General Release.  (a) The Executive, for himself and for
the Executive’s heirs, dependents, assigns, agents, executors, administrators,
trustees and legal representatives (collectively, the “Releasors”)
hereby forever releases, waives and discharges the Released Parties (as defined
below) from each and every claim, demand, cause of action, fee, liability or right
of any sort (based upon legal or equitable theory, whether contractual,
common-law, statutory, federal, state, local or otherwise), known or unknown,
which Releasors ever had, now have, or hereafter may have against the Released
Parties by reason of any actual or alleged act, omission, transaction,
practice, policy, procedure, conduct, occurrence, or other matter from the
beginning of the world up to and including the Effective Date (as defined
below), including, without limitation, those in connection with, or in any way
related to or arising out of, the Executive’s employment or termination of
employment or any other agreement, understanding, relationship, arrangement,
act, omission or occurrence, with the Released Parties.

 

(b)                                 Without
limiting the generality of the previous paragraph, this General Release is
intended to and shall release the Released Parties from any and all claims,
whether known or unknown, which Releasors ever had, now have, or may hereafter
have against the Released Parties including, but not limited to: (1) any
claim of discrimination or retaliation under the Age Discrimination in
Employment Act, Title VII of the Civil Rights Act, the Americans with
Disabilities Act, the Fair Labor Standards Act, the Employee Retirement Income
Security Act of 1974, as amended (excluding claims for accrued, vested benefits
under any employee benefit or pension plan of the Released Parties subject to
the terms and conditions of such plan and applicable law) and the Family and
Medical Leave Act; (2) any claim under the South Carolina Human Affairs
Law and the South Carolina Wage Payment Statute; (3) any other claim
(whether based on federal, state or local law or ordinance, statutory or
decisional) relating to or arising out of the Executive’s employment, the terms
and conditions of such employment, the termination of such employment and/or
any of the events relating directly or indirectly to or surrounding the
termination of such employment, including, but not limited to, breach of
contract (express or implied), tort, wrongful discharge, detrimental reliance,
defamation, emotional distress or compensatory or punitive damages; and (4) any
claim for attorney’s fees, costs, disbursements and the like.

 

(c)                                  The
foregoing release does not in any way affect: (1) the Executive’s rights
of indemnification to which the Executive was entitled immediately prior to the
Date of Termination (as defined in the Severance Agreement); and (2) the
right of the Executive to take whatever steps may be necessary to enforce the
terms of the Severance Agreement.

 

(d)                                 For
purposes of this General Release, the “Released Parties”
means Force Protection, Inc. (the “Company”),
all current and former parents, subsidiaries, related

 

 

companies, partnerships, joint ventures and employee
benefit programs (and the trustees, administrators, fiduciaries and insurers of
such programs), and, with respect to each of them, their predecessors and
successors, and, with respect to each such entity, all of its past, present,
and future employees, officers, directors, members, stockholders, owners,
representatives, assigns, attorneys, agents, insurers, and any other person
acting by, through, under or in concert with any of the persons or entities
listed in this paragraph, and their successors (whether acting as agents for
such entities or in their individual capacities).

 

2.                                       No Existing Suit.  The Executive represents and warrants that,
as of the Effective Date of this General Release, the Executive has not filed
or commenced any suit, claim, charge, complaint, action, arbitration, or legal
proceeding of any kind against the Company or its subsidiaries or affiliates.
The Executive acknowledges that this General Release does not prohibit the
Executive from filing a charge of discrimination with the Equal Employment
Opportunity Commission.

 

3.                                       Knowing and Voluntary Waiver.  By signing this General Release, the
Executive expressly acknowledges and agrees that: (a) the Executive has
carefully read it and fully understands what it means; (b) the Executive
has discussed this General Release with an attorney of the Executive’s choosing
before signing it; (c) the Executive has been given at least twenty-one
(21) calendar days to consider this General Release; (d) the Executive has
agreed to this General Release knowingly and voluntarily and was not subjected
to any undue influence or duress; (e) the consideration provided the
Executive under Severance Agreement is sufficient to support the releases
provided by the Executive under this General Release; (f) the Executive
may revoke the Executive’s execution of this General Release within seven (7) days
after the Executive signs it by sending written notice of revocation as set
forth below; and (g) on the eighth day after the Executive executes this
General Release (the “Effective Date”),
this General Release becomes effective and enforceable, provided that the
Executive does not revoke this Agreement during the revocation period. Any
revocation of the Executive’s execution of this General Release must be
submitted, in writing, to Force Protection, Inc. 9801 Highway 78, Building
No. 1, Ladson, South Carolina 29456-3802, to the attention of the
Co-General Counsel, stating “I hereby revoke my execution of the General
Release.” The revocation must be personally delivered to the General Counsel or
mailed to the General Counsel and postmarked within seven (7) days of the
Executive’s execution of this General Release. If the last day of the
revocation period is a Saturday, Sunday or legal holiday, then the revocation
period will be extended to the following day which is not a Saturday, Sunday or
legal holiday. The Executive agrees that if the Executive does not execute this
General Release or, in the event of revocation, the Executive will not be
entitled to receive any of the payments or benefits under the Severance
Agreement (other than the Accrued Amounts and the Other Benefits). The
Executive must execute this General Release on or before [·], 20[·].

 

This General Release is final
and binding and may not be changed or modified.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [                                                    ]

  

 

A-2

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