Document:

Exhibit
10.4

FINAL

12/15/06

 

FORCE DYNAMICS LLC 

JOINT VENTURE AGREEMENT

 

By and between

General Dynamics Land
Systems Inc.

And

Force
Protection, Inc.

 

 

 

 

 

GENERAL DYNAMICS LAND SYSTEMS INC.
& FORCE PROTECTION, INC.

PRIVATE INFORMATION

 

 

Table
of Contents

 

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article I

  	
   

  	
  Definitions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1

  	
   

  	
  Definitions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article II

  	
   

  	
  Establishment and Business of Company

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1

  	
   

  	
  Formation

  	
   

  	
   

  
	
   

  	
   

  	
  2.2

  	
   

  	
  Membership Interests

  	
   

  	
   

  
	
   

  	
   

  	
  2.3

  	
   

  	
  Other Actions

  	
   

  	
   

  
	
   

  	
   

  	
  2.4

  	
   

  	
  Attaining Business Objectives

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article III

  	
   

  	
  Concept of
  Operations

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1

  	
   

  	
  General

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  3.1.1

  	
   

  	
  Equitable Principle

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  3.1.2

  	
   

  	
  Company Preference

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  3.1.3

  	
   

  	
  Commitment

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  3.1.4

  	
   

  	
  Follow-on Proposal Submissions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  3.1.5

  	
   

  	
  International Programs

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.2

  	
   

  	
  Workshare

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  3.2.1

  	
   

  	
  Mutual Intent to Win

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  3.2.2

  	
   

  	
  Initial Workkshare

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  3.2.3

  	
   

  	
  True-Up Process

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.3

  	
   

  	
  Workshare Subcontracts

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  3.3.1

  	
   

  	
  Program Management

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  3.3.2

  	
   

  	
  Matrix Organization

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.4

  	
   

  	
  Responsibility

  	
   

  	
   

  
	
   

  	
   

  	
  3.5

  	
   

  	
  Product Approach

  	
   

  	
   

  
	
   

  	
   

  	
  3.6

  	
   

  	
  Company Operating Plan

  	
   

  	
   

  
	
   

  	
   

  	
  3.7

  	
   

  	
  Delegation of Authority

  	
   

  	
   

  
	
   

  	
   

  	
  3.8

  	
   

  	
  Key Event Timeline

  	
   

  	
   

  
											

 

 1
 

 

	
  Article IV

  	
   

  	
  Representations and Warranties

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.1

  	
   

  	
  FPI Representations and Warranties

  	
   

  	
   

  
	
   

  	
   

  	
  4.2

  	
   

  	
  GDLS Representations and Warranties

  	
   

  	
   

  
	
   

  	
   

  	
  4.3

  	
   

  	
  FPI-GDLS Representation and Warranty

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article V

  	
   

  	
  Dispute Resolution

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.1

  	
   

  	
  Disputes

  	
   

  	
   

  
	
   

  	
   

  	
  5.2

  	
   

  	
  Damages

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article VII

  	
   

  	
  Operating Principles and Procedures

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.1.1

  	
   

  	
  Formation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.1.2

  	
   

  	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.1.3

  	
   

  	
  Duration

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.1.4

  	
   

  	
  Offices

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.1.5

  	
   

  	
  Governing Documents

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.2

  	
   

  	
  Initial Capital Contributions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.2.1

  	
   

  	
  Contributions in Cash

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.2.2

  	
   

  	
  Additional Contributions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.3

  	
   

  	
  Capital Accounts

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.5

  	
   

  	
  Books; Accounting; Tax Elections; Reports

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.5.1

  	
   

  	
  Books and Reports

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.5.2

  	
   

  	
  Reports and Audits

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.5.3

  	
   

  	
  Filing of Returns: Tax Matters Members

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.5.4

  	
   

  	
  Annual Financial Statements

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.5.5

  	
   

  	
  Quarterly Accounting Statements

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.5.6

  	
   

  	
  External Auditors

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.5.7

  	
   

  	
  Internal Audits

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.5.8

  	
   

  	
  Internal Controls

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.5.9

  	
   

  	
  Budgets

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.6

  	
   

  	
  Allocations and Distributions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.1

  	
   

  	
  Normal Allocations

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.2

  	
   

  	
  Section 754 Election

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.3

  	
   

  	
  Allocations for Tax and Book Purposes

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.4

  	
   

  	
  Certain Accounting Matters

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.5

  	
   

  	
  Tax Allocations: Code Section
  704(c)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.6

  	
   

  	
  Qualified Income Offset

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.7

  	
   

  	
  Gross Income Allocation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.8

  	
   

  	
  Partnership Minimum Gain Charge-back

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.9

  	
   

  	
  Partner Nonrecourse Debt Minimum Gain Charge-back

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.10

  	
   

  	
  Limitations on Loss Allocations

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.11

  	
   

  	
  Partner Nonrecourse Deductions

  	
   

  	
   

  

 

 2
 

 

	
  

  	
   

  	
   

  	
   

  	
  6.6.12

  	
   

  	
  Nonrecourse Deductions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.13

  	
   

  	
  Excess Nonrecourse Liabilities

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.14

  	
   

  	
  Ordering Rules

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.15

  	
   

  	
  Curative Allocations

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.16

  	
   

  	
  Distributions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.17

  	
   

  	
  Set-Off

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.6.18

  	
   

  	
  Proceeds of Any Liquidating Transaction

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.7

  	
   

  	
  Membership Interests and Restrictions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.7.1

  	
   

  	
  Membership Interest

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.7.2

  	
   

  	
  Removal; Withdrawal; No Transfer of Interest

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.7.3

  	
   

  	
  Limitations on Disposition of Membership Interests

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.7.4

  	
   

  	
  Admission of Transferee

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.8

  	
   

  	
  Member’s Powers; Meetings

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.8.1

  	
   

  	
  General Powers

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.8.2

  	
   

  	
  The Board

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.8.3

  	
   

  	
  Regular Meetings

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.8.4

  	
   

  	
  Special Meetings

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.8.5

  	
   

  	
  Attendance and Quorum

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.8.6

  	
   

  	
  Written Consent in Lieu of Meeting

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.8.7

  	
   

  	
  Participation in a Meeting by Electronic Means

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.8.8

  	
   

  	
  Compensation of the Board

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.8.9

  	
   

  	
  No Financial Interest

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.8.10

  	
   

  	
  Board Duties

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.8.11

  	
   

  	
  Committees

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.9

  	
   

  	
  Dissolution

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.9.1

  	
   

  	
  In General

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.9.2

  	
   

  	
  Disassociation Option

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.9.3

  	
   

  	
  Additional Put-Call Option

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.9.4

  	
   

  	
  Dissolution upon Disassociation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.9.5

  	
   

  	
  Winding Up

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.9.6

  	
   

  	
  Other Remedies

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.10

  	
   

  	
  Dispute Resolution

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.11

  	
   

  	
  Indemnification

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.11.1

  	
   

  	
  Limitation on Personal Liability

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.11.2

  	
   

  	
  Fiduciary Insurance

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.12

  	
   

  	
  Competition; Fiduciary Duty

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.12.1

  	
   

  	
  Competition

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.12.2

  	
   

  	
  Waiver of Corporate Opportunity

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.12.3

  	
   

  	
  Standard of Care; No Fiduciary Duty

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.13

  	
   

  	
  Miscellaneous Provisions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.1

  	
   

  	
  Amendments

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.2

  	
   

  	
  Terms

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.3

  	
   

  	
  Execution of Instruments

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.4

  	
   

  	
  Confidential / Proprietary Information

  	
   

  	
   

  
										

 

 3
 

 

	
  

  	
   

  	
   

  	
   

  	
  6.13.5

  	
   

  	
  Notice

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.6

  	
   

  	
  Counterparts

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.7

  	
   

  	
  Entire Agreement; Waiver

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.8

  	
   

  	
  Severability

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.9

  	
   

  	
  Successors

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.10

  	
   

  	
  Governing Law

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.11

  	
   

  	
  Independent Contractors; Expenses

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.12

  	
   

  	
  Affiliates

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.13

  	
   

  	
  Survival

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.14

  	
   

  	
  Limited Liability

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.15

  	
   

  	
  Performance and Responsibility

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.13.16

  	
   

  	
  Intellectual Property and Technical Data Rights

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article VII

  	
   

  	
  General

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.1

  	
   

  	
  Contractual Relationship

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.2

  	
   

  	
  Costs and expenses

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.3

  	
   

  	
  Publicity

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7.3.1

  	
   

  	
  Press Release

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7.3.2

  	
   

  	
  Marketing

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.4

  	
   

  	
  No Partnership or Agency

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.5

  	
   

  	
  Further Assurances

  	
   

  	
   

  

 

Exhibits

 

	
  Tab/No.

  	
   

  	
  Section

  	
   

  	
  Document Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  2.1

  	
   

  	
  Certificate of Formation (TBD)

  
	
  3

  	
   

  	
  3.2

  	
   

  	
  Workshare Allocation (TBD)

  
	
  4

  	
   

  	
  6.8.2

  	
   

  	
  Board Members (TBD)

  
	
  5

  	
   

  	
  6.13.4

  	
   

  	
  Confidential/Proprietary Data Agreement - Dated
  November 17, 2006

  
	
  6

  	
   

  	
  6.13.17

  	
   

  	
  Technology and License Agreement (TBD)

  

 

 4

 

MINE RESISTANT
AMBUSH PROTECTED VEHICLE PROGRAM —

FORCE DYNAMICS LLC OPERATING AGREEMENT

This Agreement is entered
into and is effective as of the last date of the signatures below, between
General Dynamics Land Systems Inc. (“GDLS”), and Force Protection, Inc.
(jointly and severally with its wholly owned subsidiary Force Protection
Industries, Inc. hereinafter “FPI”).

The purpose of this
Agreement is to confirm and set forth the terms and conditions under which GDLS
and FPI will work together to win and execute a contract for the anticipated
United States Government Mine Resistant Ambush Protected Vehicle Program,
including any Foreign Military Sales (“FMS”) and direct international sales
that may result therefrom. To accomplish this purpose, the Members shall,
coincident with the execution of this Agreement, enter into the other documents
referred to in this Agreement, and otherwise furnish this joint venture
assistance and enhance its opportunity for future success, all as provided for
in this Agreement.

ARTICLE I 

DEFINITIONS

1.1 Definitions.
The following terms, as used herein, shall have the following meanings whether
used in the singular or plural or whether upper of lower case (some additional
terms are defined within sections to which they pertain):

“Act” means Title 6,
Chapter 18 (Limited Liability Company Act) of the Delaware Code, as amended
from time to time or any successor legislation governing the conduct and
affairs of the Company.

“Adjusted Capital Account
Balance” means, with respect to either Member, the balance in such Member’s
Capital Account after giving effect to the following adjustments:

·                            debits
to such Capital Account of the items described in Section
1.704-l(b)(2)(ii)(d)(4) — (6) of the Treasury Regulations, and

·                            credits
to such Capital Account of such Member’s share of Partnership Minimum Gain or
Partner Nonrecourse Debt Minimum Gain or any amount which such Member would be
required to restore under this Agreement or otherwise.

The foregoing definition
of Adjusted Capital Account Balance is intended to comply with the provisions
of Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations.

“Affiliate” of a Party
means another company or partnership controlled by such Party and

 5
 

 

specifically excludes any
parent Entity of either Party.

“Agreement” means this FD
Operating Agreement by and among GDLS and FPI and those exhibits attached
hereto as amended from time to time in accordance with the terms hereof.

“Available Cash” means:

·                            all
cash and cash equivalents on hand of the Company from any source, less

·                            cash
reasonably reserved by the Company or reasonably anticipated by the Member
Designees to be required (after application of anticipated cash revenues from
any source) for debts and expenses, interest and scheduled principal payments
on any indebtedness, capital expenditures, replacements, taxes or activities in
the business of the Company.

“Background Intellectual
Property” (“BIP”) means any IP or Technical Data (“TD”) owned, used, or
controlled by a Party prior to the date of this Agreement or created by a Party
independent of the Program, and without reference to the other Party’s IP.

“Capital Account” shall
have the meaning set forth in Section 6.4.

“Capital Contributions”
means the total amount of cash and other property contributed to the Company by
the Members.

“Certificate of Formation”
means the Certificate of Formation attached to the Agreement.

“Code” means the Internal
Revenue Code of 1986, as amended from time to time and any successor Federal
law, and to the extent applicable, any Treasury Regulations promulgated there
under.

“Company” means Force
Dynamics LLC (“FD”) a limited liability company governed by this Agreement, and
formed by the Members as reflected on the Certificate of Formation.

“Control” (and
derivatives thereof) means the power (whether by contract or otherwise) to
exercise a controlling influence over the management or policies of an Entity,
unless such power is solely the result of an official position with such
Entity. Any Person which beneficially owns, either directly or through one or
more controlled Entities, more than 50% of the voting equity capital of an
Entity shall be presumed to control such Entity.

“Disposition” means the
sale, lease or other means (including any merger or consolidation, tender or
exchange offer, open market or private transaction or joint venture or other
collaborative venture) by which a Person ceases to maintain Control of a
business.

“Entity” means any
general partnership, limited partnership, corporation, association, cooperative,
joint stock company, trust, limited liability company, business trust, joint
venture,

 6
 

 

unincorporated
organization or governmental entity (or any department, agency or political
subdivision thereof).

“Fair Market Value”
means, in reference to the Company or a Membership Interest, the fair market
value of the Company or such Membership Interest, determined in accordance with
Section 6.9.2. In reference to property or assets other than the Company, “Fair
Market Value” means the fair market value of the property or assets as
reasonably agreed to between the Members in arms length negotiations.

“Fiscal Year” means the
fiscal year of the Company and shall be the same as its taxable year, which
shall be the year ending December 31 unless otherwise required by the Code or
determined by the Members. Each Fiscal Year shall commence on the day
immediately following the last day of the immediately preceding Fiscal Year.

“FPI” means Force
Protection, Inc., a publicly traded company incorporated in Nevada with offices
at 9801 Highway 78, Ladson, South Carolina USA 29456, jointly and severally
with its wholly owned operating subsidiary Force Protection Industries, Inc. a
Nevada corporation.

“FPI Proposal” means the
bid proposal prepared by FPI (with the assistance of GDLS) in response to the
MRAP Solicitation (M67854-07-R-5000), to include without limitation FPI’s
Technical, Survivability, Production and Business proposals for the Category I
and Category II requirements such Solicitation.

“Foreground Intellectual
Property” (“FIP”) means any IP or TD created by either Party or by both Parties
under the Program which is neither based on nor derived from BIP.

“GAAP” mean United States
generally accepted accounting principles consistently applied as in effect from
time to time.

“GDLS” means General
Dynamics Land Systems Inc., a Delaware corporation with offices at 38500 Mound
Road, Sterling Heights, Michigan, USA 48310-3200.

“Hart-Scott-Rodino Act”
means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and the regulations
there under, or any successor thereto, as amended from time to time.

“Including” means
including, but not limited to, including without limitation and all like
phrases.

“Intellectual Property” (“IP”)
means any new invention or useful art, process, methodology, technique,
machines, manufacture or composition of matter or any new and useful
improvement of any art, process, methodology, technique, machine, manufacture
or composition of matter, any improvements or modifications of the foregoing,
as well as any works of authorship and trade secrets, whether or not patented
or subject to protection under patent, copyright or trade secret laws.

 7
 

 

“ILAV” means the Iraqi
Light Armored Vehicle program.

“JERRV” means
pre-existing USMC contracts for the procurement of the FPI Cougar before
December 18th,
2006

“JLTV” means the U.S.
Government Joint Light Tactical Vehicle program.

“Lifecycle Support” means
system technical support, field service, logistics support, spare parts,
training, publications and similar support activities.

“Member” means GDLS
and/or FPI in their ownership capacity with the Company.

“Member Designee” means
an individual appointed by a Member to represent such Member’s Membership
Interests. Neither Member shall designate an individual to be a Designee who is
not a member, manager, director, Board member or employee of such Member, or of
an Affiliate of such Member, without the written consent of the other Member.

“Membership Interest”
means the membership interest, as defined in the Act, of a Member that
represents the Member’s participation in the Company, including such Member’s
share of the Profits and Losses of the Company and right to receive
distributions from the Company’s assets, and right to vote and exercise such
other management rights as are provided in the Act or this Agreement.

“Membership Percentage”
means the unit percentage equal to the quotient obtained by dividing (i) the
number of Membership Interests held by a Member by (ii) the total number of
Membership Interests held by all Members.

“Party” means GDLS or
FPI, and in the plural both of them.

“Person” means an
individual or Entity, and the heirs, executors, administrators, legal
representatives, successors and assigns of such Person where the context so
permits.

“Prime Rate” means the
rate of interest per annum equal to the prime rate publicly announced by
Citibank, N.A. as its prime rate (or similar base rate) in effect at its
principal office.

·                            “Profit”
and “Loss” means, for tax purposes for each Fiscal Year, or other period, an
amount equal to the Company taxable income or loss for such year or period,
determined in accordance with Section 703(a) of the Code; provided, however,
that for this purpose, all items of income, gain, loss or deduction required to
be stated separately pursuant to Section 703(a)(l).

“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

 8
 

 

number M67854-07-R-5000.
The Program will include any and all solicitations and RFP’s for MRAP
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
vehicles whether for U.S. or international sales, or non-military/commercial
sales. For the avoidance of doubt, the “Program” only includes the use of FPI’s
Cougar 4x4 and 6x6 armored vehicles for the MRAP Cat I and Cat II requirements
and does not include any other existing or future contracts or programs for the
Parties’ other vehicles (or vehicle variants) to include by way of illustration
and not limitation, the JERRV program, the GSTAMIDS program, the ILAV 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.

“Program Role” means the
rights and obligations of a Party, including for this purpose, an Affiliate
thereof, pursuant to the subcontracts referenced in Article III of this
Agreement, and as more particularly set out in the Business Plan and Program
Proposal to be completed by the Company’s Member Designees

“Proportional Amount”
means, in connection with a Capital Contribution pursuant to Section 6.2 (each
a “Capital Call”), that amount of capital contributed by a Member (the “Contributing
Member”), other than the Member having the lowest Proportional Percentage in
response to such Capital Call (the “Lowest Contributing Member”), which bears
the same proportion to the Capital Contribution required of the Contributing
Member in response to such Capital Call as the actual Capital Contribution of
the Lowest Contributing Member in response to such Capital Call bears to the
Capital Contribution required of such Lowest Contributing Member in response to
such Capital Call.

“Proportional Percentage”
means, in connection with a Capital Contribution pursuant to Section 6.2.1 or
6.2.2, the percentage (not more than 100%) that the actual Capital Contribution
made by a Member bears to the Capital Contribution required of such Member in
response to such Capital Call.

“Tax Matters Member”
shall have the meaning set forth in Section 6.5.3.

“Technical Data” (“TD”)
means assembly drawings, specification control drawings, source control
drawings, parts lists, wiring diagrams, procurement data, parts identification
documentation, equipment design specifications, interface control documents,
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 owned or used by either Party. For the avoidance of doubt the Parties
hereby agree that FPI shall at all times retain ownership of the TD for the
MRAP vehicle, and shall retain exclusive design authority over the MRAP
vehicles.

“Term” shall mean the
period of the Company’s duration as determined in accordance with Section
6.1.3.

 9
 

 

“Third Party” means any
Person or Entity not a Party to this Agreement but shall not include Affiliate
as defined herein.

“Treasury Regulations”
means the Federal income tax regulations, including any final or temporary
regulations, promulgated under the Code, as such Treasury Regulations may be
amended from time to time (it being understood that all references herein to
specific sections of the Treasury Regulations shall be deemed also to refer to
any corresponding provisions of succeeding Treasury Regulations).

“Workshare” shall have
the meaning set forth in Section 3.2.

ARTICLE II 

ESTABLISHMENT AND BUSINESS OF COMPANY

2.1 Formation. The
Company will be formed by the Members or their Affiliates as a limited
liability company under the Act by the filing of a Certificate of Formation
(Exhibit 2) in such form as the Parties may mutually agree on or before January
31, 2007 (or such other date as may be agreed between the Parties).

2.2 Membership
Interests. The initial Membership Interests in the Company are 50% for GDLS
and 50% for FPI.

2.3 Other Actions.
The Parties will provide such other information, take such actions and execute
such documents as may reasonably be required to carry out the purpose of this
Agreement and shall perform and permit to be performed each respective Program
Role.

2.4 Attaining Business
Objectives. The business objective of the Company shall be to win the
Program and to perform any development, production and lifecycle support for
the Program in accordance with FPI’s Proposal. In order to attain this
objective, the Company shall promptly implement its business plan and develop
operating plans setting forth how such objective will be achieved.

ARTICLE III 

CONCEPT OF OPERATIONS

3.1. General. It
is the intent of the Parties to combine their respective strengths to market
and promote FPI’s COUGAR vehicles for the Cat I and Cat II requirements of the
MRAP Program. The Parties will make available to the Company their respective
resources so that the Company may undertake to develop, manufacture, produce
and sustain any vehicles awarded under the MRAP program, in accordance with the
plan set forth in FPI’s Proposal. Understanding the complexity of the MRAP Program,
the Company will form a FPI-GDLS Team MRAP Program Management Office that will
be the Parties’ exclusive interface with the Customer’s Program

 10
 

 

Management Organization,
and which will have operating responsibility over the execution of the MRAP Program.
Each Party will provide personnel to the Program Office according to the plan
developed and agreed by the Board. Other than those programs identified above
in the definition of “Program”, the Parties agree that the Company will pursue
any and all future vehicle programs related to, or arising out of, the current
MRAP program.

3.1.1. Equitable Principle. The Company shall operate on the
principle of equitable division of burden and benefit as between the Parties.
This means that the Parties are expected to contribute resources equally to the
venture, to share equally the costs and responsibilities associated with the
performance of the Program and to share equally the resulting benefits.

3.1.2 Company Preference. Whenever practicable, the Company will
act as the prime contractor for Program Work, and the Parties shall act as the
exclusive subcontractors; provided however that the Company and the Parties
will give effect to the production plan set forth in FPI’s Proposal consistent
with the undertaking of this agreement. Future sub-tier supplier involvement
will be mutually agreed upon by the Parties and described in Exhibit 3 per
Section 3.2.

3.1.3 Commitment The Parties will not make any bids, enter contracts,
or perform any work for any mine protected vehicle business opportunities that
fall within the Program, unless mutually agreed upon by the Parties in writing.
Provided, however, the Parties recognize and agree that GDLS-C, a GDLS
affiliate, may submit the RG-31 for the Program and other solicitations.

3.1.4 Follow-On Proposal Submissions. The Company will submit
any future proposals to the U. S. Government with respect to the follow-on
requirements for the Program.

3.1.5 International Programs The Company will submit any future
proposals related to all derivative International programs (including FMS). The
Parties will mutually agree on specific International pursuits that will be
undertaken and how the business development activity will be funded. The
Parties acknowledge that GDLS-C may pursue International Programs with the
RG-31 per their existing marketing agreement.

3.2. Workshare.
The Parties agree that the Workshare split based upon revenues, shall be 50%
for GDLS and 50% for FPI. This 50%/50% revenue balance shall be for all phases
of the Program including, but not limited to LRIP (“low rate initial production”),
production phases, and Life Cycle Service and Support (regardless of any
changes to the Program name or phases).

 11
 

 

3.2.1. Mutual Intent to
Win The Parties affirm that this Joint Venture Agreement is based on a
mutual intent to join forces to win the MRAP Program. In the interest of the
Joint Venture, the Parties agree to focus on each Party’s strengths in the
initial Workshare allocation (Exhibit 3) to maximize the competitive advantage of
the bid submission. The Parties acknowledge the potential that the initial
Workshare may not be 50%/50% immediately.

3.2.2 Initial Workshare The Parties
commit to the development of a draft Workshare allocation by January 10th, 2007. A finalization of the initial Workshare allocation will be
approved by the Board no later than Feb 28th,
2007. If the initial Workshare is not allocated 50%/50%, the Parties agree that
within six months of contract award to develop a plan to adjust the follow-on
Workshare beginning in areas that will optimize the competitiveness of the
enterprise and the financial return of the Parties. Implementation of the
adjusted Workshare will occur according to section 3.2.3 (True-Up Process).

3.2.3. True-Up Process With respect to
the 50%/50% Workshare split and revenue balance, the Members agree to annual
audits by an independent Third Party and disclosure to GLDS and FPI of only the
percentage Workshare split comparison. For reason of practicality, “True-up” to
the agreed upon 50%/50% Workshare allocation shall occur on an annual basis or
as mutually agreed upon by the Members. In any event the adjusted Workshare to
achieve the cumulative 50%/50% allocation will occur no later than the award of
any follow-on delivery orders.

3.3
Workshare Subcontracts. The JV will not employ any persons directly.
Except as otherwise provided in FPI’s Proposal, the Company will subcontract
the appropriate portions of the work of the Program (“Workshare”) to GDLS and
FPI in accordance with their respective Program Roles. The Parties agree that
their Program Roles, and Workshare, will generally be allocated along
conventional business process disciplines including:

3.3.1
Program Management: Led by the Program Manager (PM) who is appointed by
the Board, in cooperation with a Deputy PM (DPM), who has overall
responsibility for the execution of the program. The PM’s main effort will be
to (i) Pursue and Win New Business, (ii) to Execute and Manage current
contracts, and to (iii) Defend and Sustain the ongoing life of the program. All
other process leads assigned by the Parties to the Program will report to the
PM. They will maintain a secondary reporting relationship to their functional
leaders in their parent organizations. The role of the PM includes responsibility
for:

	
  (i)

  	
   

  	
  Overall program
  management and coordination

  
	
  (ii)

  	
   

  	
  Program Planning & Scheduling

  
	
  (iii)

  	
   

  	
  Oversight of production, to include:

  
	
   

  	
   

  	
  a.  Purchasing & Supply Chain
  management

  
	
   

  	
   

  	
  b.  Capsule Fabrication

  
	
   

  	
   

  	
  c.  Automotive Integration

  

 

 12
 

 

	
  

  	
   

  	
  d.  Final Assembly

  
	
  (ii)

  	
   

  	
  Financial Performance

  
	
  (iii)

  	
   

  	
  Delivery Schedule

  
	
  (iv)

  	
   

  	
  Testing & Vehicle Performance

  
	
  (v)

  	
   

  	
  Customer Requirements

  
	
  (vi)

  	
   

  	
  Keeping the Program Sold

  

3.3.2. Matrix Organization:
Subcontracts from the Company to the Parties will form a matrix organization in
support of the PM. The Parties envision a Matrix Organization consisting of the
following processes and support functions:

	
  (i)

  	
   

  	
  Engineering, Design & Development including
  Configuration Management and Quality;

  
	
  (ii)

  	
   

  	
  Production, Delivery and Support to include
  Integrated Logistics Support;

  
	
  (iii)

  	
   

  	
  Supply Chain Management to include material
  requirements planning, purchasing, supplier spares management, and major subcontracts
  managements

  
	
  (iv)

  	
   

  	
  Finance to include compliance, accounting, risk
  management, tax, audit, and Information Technologies

  
	
  (vi)

  	
   

  	
  Human Resources & Administration to include HR
  and workplace policies;

  
	
  (vii)

  	
   

  	
  Communications to include all internal employee
  communications, Public Relations, and Government Relations

  
	
  (viii)

  	
   

  	
  Legal & Contracts to include proposal
  development, contract review, contract negotiation, and other legal matters.

  

3.4 Responsibility.
Each Party shall carry out and shall be wholly and exclusively responsible for
the timely and proper performance of any Workshare allocated to it or its
Affiliates by the Company. Each Party shall exert commercially reasonable
efforts to expand the Program consistent with each Party’s customary approach
to such activity.

3.5
Product Approach. The Parties intend to offer the proven family of
COUGAR vehicles in 4x4 and 6x6 configurations for the CATERGORY 1 and CATEGORY
2 requirements respectively.

3.6
Company Operating Plan. The agenda of the initial meeting of the Board
of Directors will include the approval of the designated Program Manager’s
proposed Operating Plan (Goals, Objectives, Workshare, Budget) for the Company.
The Program Manager will subsequently provide an Operating Plan review to the
Board on a quarterly basis. Each year, the Board will approve an Annual
Operating plan at the fourth quarter (Q4) meeting.

3.7
Delegation of Authority. The agenda of the initial meeting of the Board
of Directors will include the approval of any Delegations of Authority (DoA)
the Board may choose to authorize for the Company leadership team. The Company
DoA will be in compliance with both Parties’ respective DoAs

 

 13

 

3.8 Key Events
Timeline

A. U.S. Government released an RFP on November 9,
2006. Current RFP states for a minimum of two (2) Category I and two (2)
Category II Vehicles for this contract and a maximum of 1,500 — Category I and
2,600 — Category II vehicles.

B. MoU signed on Dec 5th ,
2006

C. The RFP response due date is December 18, 2006.

D. Joint Venture Document and joint Bid cover letter
signed Dec 18th , 2006

E. Joint Venture Established no later than January 18th, 2007

F. Initial Board Meeting convened no later than
January 31st, 2007

G. The Initial order of two sample vehicles (per
category) is expected in Ql 2007. Customer is expected to subject sample
vehicle to rigorous test and evaluation process in advance of main contract
award.

H. Main contract award is expected to be received in
April 2007.

I. Initial Deliveries will occur within sixty days of
Contract Award.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

4.1 FPI
Representations and Warranties. FPI represents and warrants that:

A.                     It is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has the requisite power and authority: (i) to
own, lease and operate its properties and assets, to conduct its business as
now conducted, (ii) to enter into, execute, and deliver this Agreement and the
other agreements to which FPI is a party, the execution and delivery of which
are contemplated hereby, (iii) and to perform its obligations under this
Agreement and the other agreements to which FPI is a party. FPI is duly
qualified to transact business and is in good standing, if applicable, in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on its business, condition, results of operations, assets or liabilities
(a “Material Adverse Effect”).

B.                       It has full
power and authority to execute and to fulfill all of its obligations set forth
in this Agreement and this Agreement constitutes a valid and binding agreement
of FPI in accordance with its terms. No consent or approval of members or any
public authority is required as a condition to the validity or enforceability
against FPI of this Agreement or any other document or instrument referred to
herein.

C.                       There is no
provision in the certificate of organization or operating agreement of FPI or
in the corresponding documents of any Affiliate, and no provision of any
existing mortgage, indenture, contract, financing statement, or agreement
binding

 14
 

 

on FPI or any Affiliate,
that would conflict with or in any way prevent the execution, delivery, or
carrying out of the terms of this Agreement including any other document
referred to herein.

D.                      FPI has
employed no finder, broker, sales agent or other similar intermediary in
connection with the negotiation of this Agreement or any of the transactions
contemplated hereby.

E.                        All
corporate action on the part of FPI, its officers, directors and stockholders
necessary for the authorization, execution and delivery of this Agreement and
the other agreements to which FPI is a party, the execution and delivery of
which are contemplated in this Agreement, the performance of all obligations of
FPI hereunder and thereunder has been taken, and this Agreement and the other
agreements to which FPI is a party, the execution and delivery of which are contemplated
in this Agreement, constitute valid and legally binding obligations of FPI,
enforceable in accordance with its and their terms.

4.2
GDLS Representations and Warranties. GDLS represents and warrants that:

A.                     It is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
corporate authority: (i) to own, lease and operate its properties and assets,
(ii) to conduct its business as now conducted, to enter into, execute, and
deliver this Agreement and the other agreements to which GDLS is a party, the
execution and delivery of which are contemplated hereby, (iii) and to perform
its obligations under this Agreement and the other agreements to which GDLS is
a party, GDLS is duly qualified to transact business and is in good standing,
if applicable, in each jurisdiction in which the failure to so qualify would
have a Material Adverse Effect.

B.                       It has full
power and authority to execute and to fulfill all of its obligations set forth
in this Agreement and this Agreement constitutes a valid and binding agreement
of GDLS in accordance with its terms. No consent or approval of stockholders or
of any public authority is required as a condition to the validity or enforceability
against GDLS of this Agreement or any other document or instrument referred to
herein.

C.                       There is no
provision in the charter or by-laws of GDLS or corresponding documents of any
Affiliate and no provision of any existing mortgage, indenture, contract,
financing statement or agreement binding on GDLS or any Affiliate, that would
conflict with or in any way prevent the execution, delivery or carrying out of
the terms of this Agreement or any other document referred to herein.

D.                      GDLS has
employed no finder, broker, sales agent or other similar intermediary in

 15
 

 

connection with the
negotiation of this Agreement or any of the transactions contemplated hereby.

E.                        All
corporate action on the part of GDLS, its officers, directors and stockholders
necessary for the authorization, execution and delivery of this Agreement and
the other agreements to which GDLS is a party, the execution and delivery of
which are contemplated in this Agreement, the performance of all obligations of
GDLS hereunder and thereunder has been taken, and this Agreement and the other
agreements to which GDLS is a party, the execution and delivery of which are
contemplated in this Agreement, constitute valid and legally binding
obligations of GDLS, enforceable in accordance with its and their term.

4.3
FPI-GDLS Representation and Warranty. Each Party has the sole and
exclusive right to all IP, Background IP, and TD that it will contribute to the
Program.

ARTICLE V

DISPUTE RESOLUTION

5.1
Disputes. All claims, disputes, controversies, or other matters in
question arising out of, connected with, or relating to this Agreement that
cannot be resolved by the Parties through face-to-face negotiations as detailed
in Section 6.10, will be settled by binding arbitration before three
arbitrators, one arbitrator to be selected by each Party and the third to be
selected by the two so appointed. The arbitration shall be conducted in
accordance with the Commercial Rules of the American Arbitration Association
then in effect. All arbitration proceedings will be held in New York City, N.Y.
The Parties may take discovery of evidence as allowed by the arbitrators, and
subject to the arbitrators’ determination regarding its admission and use. The
administrative costs of any arbitration or litigation will be borne equally by
the Parties pending the arbitrator’s award. The arbitrators shall be bound by
the express provisions set forth in this Agreement and shall not modify any
terms of this Agreement or make any award of damages in excess of the amounts
set forth in this Agreement or grant any relief not expressly set forth in this
Agreement. The determinations of the arbitrators shall be final and, except as
provided by law, shall not be subject to judicial review. Any court of
competent jurisdiction may enforce any award or determination rendered by the
arbitrators.

5.2
Damages. Notwithstanding any provision of this Agreement to the
contrary, neither Party will be entitled in connection with any breach or
violation of this Agreement to recover from the other or any Affiliate thereof
any punitive, exemplary or other special damages or any indirect, incidental or
consequential damages, including damages relating to loss of profit, business
opportunity, business reputation or business interruption. Each Party, as a material
inducement to the other Party to enter into and perform its obligations under
this Agreement, hereby expressly waives its right to assert any claim relating
to such damages and agrees not to seek to recover such damages in connection
with any claim, action, suit or proceeding relating to this Agreement. The
foregoing will not limit the right of either Party to indemnification in

 16
 

 

accordance with the
provisions of this Agreement, including any other agreement referred to herein,
with respect to all components of any claim, award or judgment against such
Party by any unaffiliated third Party.

ARTICLE VI 

OPERATING PRINCIPLES AND PROCEDURES

6.1 Organization

6.1.1 Formation.
The Company will be organized as a limited liability company under the Act by
the filing of the Certificate of Formation with the State of Delaware. Pursuant
to Treasury Regulation 301.7701-3, the Company, an eligible entity with at
least two members, will not file an election, but will instead default under
paragraph (b) of such Treasury Regulations to be classified as a partnership
for Federal income tax purposes.

6.1.2 Name. The
name of the Company is (FORCE DYNAMICS LLC). The Company may also conduct
business under one or more assumed names approved by the Members. The Company
may not use any names, trade names, service marks or logos of either Member or
any of their respective Affiliates without the prior written consent of such
Member.

6.1.3 Duration.
The period of the Company’s duration shall be perpetual, subject to being
dissolved and wound up in accordance with the Act or this Agreement.

6.1.4 Offices.

(a)                    The Company’s
principal office shall be at a location TBD by the JV Board.

(b)                   The Company’s
registered agent in the State of Delaware for the service of process is as
identified in the written appointment of agent filed in the office of the
Secretary of State of Delaware contemporaneously with the filing of the
Certificate of Formation of the Company. The Members may from time to time
mutually agree to change the registered agent, and any such change shall be
reflected in appropriate filings with the Secretary of State of Delaware.

6.1.5 Governing
Documents. The Certificate of Formation and this Agreement as it may be
amended from time to time shall, subject to the provisions of the Act, govern
the affairs and conduct of the Company’s business.

6.2 Initial Capital
Contributions. The Parties do not expect the requirement for any initial
Capital Contribution to the Company, with the exception of the minimum amount
that might be required by law in the formation of the Company.

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6.2.1 Contributions in
Cash. No contributions shall be made that consist of property or services,
other than cash.

6.2.2 Loans. A
Member may make a loan or loans to the Company only with the written consent of
the other Member; provided, however, that absent written agreement to the
contrary no Member or Member Affiliate shall be obligated to make any loan to
the Company. Loans by Members to the Company shall not be considered Capital
Contributions and the balance of such Member’s Capital Account shall not be
increased by any amount so loaned. No repayment of principal or interest on any
such loan with respect to advances made pursuant to this Section 6.2.3 shall
affect the balance of such Member’s Capital Account. The amount of any such
loans shall be a debt of the Company to such Member and shall be payable or
collectible only out of the Company assets and shall bear interest at least
equal to the Prime Rate in effect at the time of making of such loan.

6.3 Capital Accounts.
Company shall maintain a separate capital account (a “Capital Account”) for
each Member in accordance with Section l.704-l(b)(2)(iv) of the Treasury
Regulations. Subject to the following:

(a)                    Each Member’s
Capital Account shall be increased by the amount of cash and the Fair Market
Value of the property actually or deemed contributed to the Company, such
Member’s allocable share of any Profits and other items of income or gain
allocated pursuant to Section 6.6 (other than Subsection 6.6.5) of the Company
and the amount of any of the Company’s liabilities that are assumed by such
Member.

(b)                   Each Member’s
Capital Account shall be decreased by the amount of cash and the Fair Market
Value of the property actually distributed to such Member by the Company, such
Member’s allocable share of any Losses and other items of deduction, loss or
expense allocated pursuant to Section 6.6 (other than Subsection 6.6.5) and the
amount of any liabilities of such Member that are assumed by the Company.

(c)                    No interest
shall be paid by the Company on Capital Contributions or on balances in Capital
Accounts.

(d)                   A Member shall
not be entitled to withdraw any part of its Capital Account or to receive any
distributions from the Company except as provide herein; nor shall a Member be
entitled to make any loan or Capital Contribution to the Company other than as
expressly provided herein.

(e)                    Except as
required by the Act, no Member shall have any liability for the return of the
Capital Contribution of any other Member.

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6.5 Books; Accounting;
Tax Elections; Reports.

6.5.1 Books and
Records. The Tax Matters Member shall keep, or cause to be kept, complete
and accurate books and records of account to the Company. The books of the
Company (other than books required to maintain Capital Accounts) shall be kept
on the accrual basis of accounting, and otherwise in accordance with GAAP, and
shall at all times be maintained or made available at the principal business
office of the Company. At all times the Company shall maintain its principal
business office a current list of the name and address of each Member, a copy
of the Certificate of Formation, including any amendments thereto, copies of
this Agreement and all amendments hereto, and all other records required to be
maintained pursuant to the Act. The Company shall also maintain at all times,
at its principal business office, copies of the Company’s Federal, state and
local income tax returns and reports if any and all financial statements of
Company for all years; provided, however, the Company shall not be required to
maintain copies of income tax returns and reports, if any, and any financial
statements of the Company for any year for which each Member has notified the
Company in writing that such Member’s tax year has been closed.

6.5.2 Reports and
Audits. Promptly upon request, the Company shall, at the cost and expense
of the Company, furnish, or cause to be furnished, to each Member Such
information relating to the financial condition, operations of Company or any
other aspect of the Company or its business as either Member may from time to
time reasonably request. Each Member shall have the right, at all reasonable
times and upon reasonable notice during normal business hours, to audit,
examine and make copies of or extracts from the books of account of the Company
or any other Company record for any purpose reasonably related to such Member’s
interest as a Member of the Company. Such audit right may be exercised through
any designated agent or employee of such requesting Member. The Company and the
Member conducting the review shall each bear their own cost of involvement in
the review.

6.5.3 Tax Matters
Member. Pursuant to Section 6231(a)(7) of the Code, or subsequent similar
provision, until changed by a resolution of the Members or Member Designees, GDLS
is hereby designated as the Tax Matters Member. The Tax Matters member shall
take such action as may be necessary to cause the other Member to become a “notice
partner” within the meaning of Section 6231(a)(8) of the Code.

6.5.4 Annual Financial
Statements. As soon as practicable following the end of each Fiscal Year
(and in any event not later than 90 days after the end of such Fiscal Year),
the Company shall prepare and deliver to each Member a balance sheet of the Company
as of the end of such Fiscal Year and the related statements of operations,
changes in Members’ equity and cash flow of the Company for such Fiscal Year,
together with appropriate notes to such financial statements, all of which
shall be prepared in accordance with GAAP and audited and certified by the
Company’s Independent Accountants. At the same time, the Company shall deliver
(at its sole expense) to each Member a report indicating such Member’s share of
all items of income, gain, loss, deduction and credit of the Company for such
Fiscal Year and any other financial information related to the Company which is
requested by either Member for Federal, state, local

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or foreign income or
franchise tax purposes.

6.5.5 Quarterly
Accounting Statements. As soon as practicable following the end of each
calendar quarter (and in any event not later than 45 days after the end of such
quarter), the Company shall prepare and deliver to each Member a balance sheet
of the Company as of the end of such quarter and the related statements of
operations, changes in Members’ equity and cash flow for such quarter and for
the Fiscal Year to date and such other reports as may be reasonably requested.

6.5.6 External
Auditors. The Company’s Independent Accountants shall be appointed by the
Members. Such Independent Accountants of the Company shall be a nationally
recognized certified public accounting firm. The Company’s books and records of
account shall be audited at least annually, at the expense of the Company, by
the Company’s Independent Accountants, who shall, as a result of their review,
render their opinion that the financial statements present fairly, in all
material respects, the financial position of the Company in conformity with
GAAP.

6.5.7 Internal Audits.
Internal audits may be conducted by either Member, or its nationally recognized
certified public accounting firm, at its own expense.

6.5.8 Internal
Controls. The Company shall take appropriate action to adopt an adequate
system of internal controls consistent with the principles of this Section. An
adequate system of internal controls shall be a process within the Company
designed to provide reasonable assurance regarding the achievement of the
following primary objectives:

(a)       Reliability and integrity of information

(b)       Compliance
with policies, plans, procedures, laws and regulations

(c)       The
safeguarding of assets

(d)       The
economical and efficient use of resources

(e)       The
accomplishment of established objectives and goals for operations or programs.

6.5.9 Budgets. The
Company shall cause yearly operating and capital budgets to be prepared and
presented for approval to the Members at least 30 days prior to the beginning
of the year to which such budgets relate. Such budgets shall include a business
plan for the budget year. (Such agreed upon budget and business plan for any
given year shall be a “Budget”).

6.6 Allocations and
Distributions.

6.6.1 Normal
Allocations. Except as otherwise provided by this Article 5, the Profit and
Loss of the Company for each Fiscal Year (or portion thereof) shall be
determined as of the end of each Fiscal Year (or portion thereof). All Profit
and Loss of the Company shall be allocated among the Members pro rata in
accordance with the Members’ respective Membership Interests.

6.6.2 Section 754
Election. At the request of both Members, the Company shall elect,

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pursuant to Section 754
of the Code, to adjust the basis of the Company property as permitted and
provided in Sections 734 and 743 of the Code.

6.6.3 Allocations for
Tax and Book Purposes. Except as otherwise provided herein, any allocation
to a Member for a Fiscal Year or other period of a portion of the Profit or
Loss, or of a specially allocated item, shall be determined to be an allocation
to that Member of the same proportionate part of each item of income, gain,
loss, deduction or credit, as the case may be, as is earned, realized or
available by or to the Company for Federal tax purposes.

6.6.4 Certain
Accounting Matters. For purposes of determining Profit, Loss or any other
items allocable to any period, such items shall be determined on a daily,
monthly or other basis, as determined by the Member Designees using any
permissible method under Section 706 of the Code and the Treasury Regulations
promulgated thereunder.

6.6.5 Distributions
(Other Than Proceeds of Any Liquidating Transaction). Subject to the Act,
and except as set forth in Section 6.6.18 or otherwise agreed by the Members,
Available Cash shall be applied and distributed to the Members from time to
time at the Member’s election and in accordance with their Membership Interests
at the time of distribution.

6.6.6 Set-Off. The
Company shall make distributions without regard to any claims that the Company
or either Member may have against any other Member or any Affiliate of a
Member.

6.6.7 Proceeds of Any
Liquidating Transaction. Upon the occurrence of any transaction involving
the Disposition of all or substantially all of the assets of the Company (a “Liquidating
Transaction”), all Available Cash resulting there from (or from any other
source during the period of winding up the Company) shall be applied (i) first,
to the payment of, or to the making of reasonable provisions for payment of,
any debts or liabilities of the Company to creditors; and (ii) second, to the
Members in proportion to and to the extent of the positive Capital Accounts
after giving effect to any other distributions provided for in this Agreement
and all Capital Account Adjustments for the taxable year in which the
liquidation occurs. All payments under this Section 6.6.7 shall be made soon as
reasonably practicable and in any event by the end of the Fiscal Year in which
such Liquidating Transaction occurs or, if later, within 90 days after the date
of such Liquidating Transaction.

6.7 Membership Interests
and Restrictions

6.7.1. Membership
Interest. All Membership Interests in the Company shall be of the same
class and group. In the event of an increase or decrease in a Member’s
Membership Interest pursuant to this Agreement, the Member’s Company Interest
shall be adjusted accordingly.

6.7.2. Removal;
Withdrawal; No Transfer of Interest.

(a)                     A Member may
not be removed as a Member of the Company other than as expressly provided
herein or in the Act.

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(b)                    A Member may
not withdraw from the Company without the written consent of the other Member,
unless otherwise provided in this Agreement.

(c)                     Except as
expressly provided in Section 6.7.3, a Member’s Membership Interest in the
Company shall not be transferred without the written consent of the other
Member.

(d)                    Except as
expressly provided in Section 6.7.4, any permitted transfer of a Member’s
Membership Interest shall not entitle the transferee to be admitted to the
Company as a Member.

6.7.3. Limitations on
Disposition of Membership Interests.

(a)                     Generally.
Except as expressly set forth in Article 6, neither Member shall, without
written consent of the other Member, sell, assign, transfer, or otherwise
dispose of its Membership Interest (or any part thereof). The giving or
withholding of consent to any such disposition shall be entirely within the
discretion of the Member requested to give such consent; provided, however,
that, subject to Section 6.7.3(c) below, such consent shall not be unreasonably
withheld following reasonable opportunity to review the management and
financial capability of a new Party introduced for good and necessary business
reason. Any attempted disposition other than as permitted by the terms of this
Agreement shall be void and of no effect. Any permitted transferee of a Membership
Interest pursuant to this Agreement must, simultaneously with its acquisition
of the Membership Interest, execute an addendum to this Agreement, setting
forth its agreement to be bound by the terms of this Agreement, and assuming
all obligations of its assignor with respect to the acquired Membership
Interest, on terms reasonably satisfactory to the other Member.

(b)                    Transfers
to an Affiliate. Each Member shall be entitled to transfer all, but not
less than all, of its Membership Interest ( a “Transferee Interest”) to an
Affiliate (which, for purposes of this Section 6.7.3(b) only shall include any
parent Entity) of such Member, provided that contemporaneously with the
transfer of such interest, the Affiliate to which such Transferee Interest is
transferred shall join in an execute with the Members a written addendum to
this Agreement pursuant to which such Affiliate agrees to be bound by all the
terms and provisions of this Agreement and to perform and discharge the
obligations and liabilities which are attributable to the Transferee Interest.
No such

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transfer to an Affiliate hereunder shall relieve the
transferring Member of its obligations and liabilities under this Agreement
without the express written consent of the non-transferring Member. Notwithstanding
anything to the contrary contained in this Section 6.7.3, no transfer of a
Transferee Interest to an Affiliate may take place without the consent of the
other Member if such transfer would result in the termination of the Company
within the meaning of Section 708 of the Code.

(c) Sales to Third Parties.

i.                            Except
for transfers of a Membership Interest to an Affiliate pursuant to Section
6.7.3(b), if at any time either GDLS or FPI or any transferee of a Membership
Interest pursuant to Section 6.7.3(b) (the “Initiating Party”) intends to
dispose of all (but not less than all) of is Membership Interest whether alone
or as part of a larger transaction (the “Offered Interest”) then the Initiating
Party shall give a notice (“the Offer Notice”) to the other Member (the “Non-Initiating
Party”), offering to sell the Offered Interest to the Non-Initiating Party,
which notice shall set forth the proposed price (which shall be payable all in
cash), the name and identity of the proposed purchaser, and all material terms
and conditions. The Non-Initiating Party shall then have 90 days in which to
notify the Initiating Party that it (i) desires to purchase the Offered
Interest at the price set forth in the Offer Notice and on terms and conditions
the same as those set forth in the Offer Notice (an “Acceptance Notice”), or
(ii) does not desire to purchase the Offered Interest (a “Refusal Notice”) and
whether or not consent to the transfer is given or provided in Section
6.7.3(a).

ii.                         If the
Non-Initiating Party gives an Acceptance Notice in accordance with subparagraph
(i) above, on the 180th day after the Offer Notice or on such other
date as the Parties agree upon the Non-Initiating Party shall purchase from the
Initiating Party and the Initiating Party shall sell to the Non-Initiating
Party at the price and on the terms and conditions set forth in the Offer
Notice the Offered Interest. The Non-Initiating Party may designate one or more
Affiliates to purchase all or any part of the Offered Interest, provided that each
such designee shall comply with the applicable terms of this Section 6.7.3 with
respect to such purchase and that the entire Membership Interest to be sold
must be purchased by the Non-Initiating Party or its designees.

 

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iii.                      If the
Non-Initiating Party delivers a Refusal Notice, or fails to deliver an
Acceptance Notice or Refusal Notice, in accordance with subparagraph (i) above,
the Initiating Party may sell all, but not less than all, of its Membership
Interest to a third person if: (w) such sales is on the terms and conditions,
including the price, at least as favorable to the Initiating Party as those set
forth in the Offer Notice; (x) an agreement of sale is executed and delivered
and the sale closed within 180 days after the later of the receipt of the
Refusal Notice and the end of the 90 day period referred to in subparagraph (i)
above; (y) the purchaser agrees in writing to be subject to the terms and
conditions of this Agreement and such transfer is permissible under any
contract awarded to the Company in respect of the Program; and (z) the
Initiating Party and proposed purchaser comply with subparagraph (d) below, and
if not, the Membership Interest shall again the subject to the right of first
offer.

iv.                                   If
either Member becomes obligated to sell its Membership Interest pursuant to the
provisions of subparagraph (ii) of this Section 6.7.3(c) (a “Seller”), such
Membership Interest shall be sold as set forth in this subparagraph (iv). The
closing of this sale shall be held at the Company’s headquarters (or such other
place as to which the Parties may agree) on the date provided by subparagraph
(ii) of this Section 6.7.3(c). At such closing, the Seller shall convey and
assign to the purchaser or purchasers, free and clear of all liens, claims and
encumbrances, the Membership Interest to be sold and shall execute and deliver
to the purchaser or purchasers all documents which may be required to give
effect to the disposition and acquisition of such interest, and the purchaser
or purchasers shall pay to the Seller, in immediately available funds, the
purchase price determined as provided by subparagraph (ii) for the interest
being sold. The obligation of the Seller to sell and the obligation of the
purchaser or purchasers to purchase at such closing such interest shall be
subject to the following conditions: No preliminary or permanent injunctions or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental regulatory or administrative agency or commission shall be in
effect which would prohibit such conveyance (provided that the Parties shall
use good faith efforts to avoid the issuance of, and, if issued, to cause the
lifting of, any such order, decree or ruling); any applicable waiting period
under the Hart-Scott-Rodino Act or any other applicable law shall have expired
and any other applicable law shall have expired and any other applicable
governmental approvals and

 24
 

 

clearances necessary to
permit such sales shall have been obtained; each purchaser shall have received
a representation and warranty in form and substance reasonably satisfactory to
it that the Seller has good and marketable title to the interest being
conveyed, free and clear of all liens, claims and encumbrances, and has full
right, power and authority to effect such conveyance; and there shall have been
no materials adverse change (or changes which in the aggregate are materially
adverse) in the Company’s business, assets or liabilities occurring after the
date the Offer Notice was given, as the ease may be (provided that the
purchaser(s) may waive either of the last two conditions).

v.                        Upon the
closing of a sale to the Non-Initiating Party hereunder, the Initiating Party
and its Affiliates shall covenant not to (x) solicit any employees of the
Company, or (y) take any action that can reasonably be expected to interfere
with the Company’s or the Members’ relationships with its customers, for a five
year period after the completion of the transaction. Notwithstanding the foregoing,
Section 6.7.3(c)(v)(x) above shall not prohibit the Initiating Party or its
Affiliates from (x) acquiring a business or group of businesses in a
transaction where such competitive business or group of businesses is not the
primary purpose of such acquisition and constitutes less than 10% of the annual
sales volume of the acquired business or group of businesses as a whole based
on the preceding fiscal year, or (y) acquiring shares of stock, partnership or
other equity interests in any entity as investments in such Initiating Party’s
or its Affiliates’ pension funds or funds of any other employee benefit plan,
provided that such interests are acquired and held for investment purposes
only.

(d)                      Compliance
with Laws. Either Member proposing to make a transfer of its Membership
Interest pursuant to this Section 6.7.3 and the proposed transferee shall
obtain (at their sole cost and expense, but with all reasonable cooperation
from the Company) any waivers, consents or approvals from any third person (including
any U. S. or other governmental authority) which may be necessary in connection
with the proposed transfer and the admission of the proposed transferee as a
Member, if applicable. The other Member may require that the transferor Member
and the proposed transferee provide opinions of counsel or other reasonable
assurances to the Company that the transfer (i) does not violate any law
applicable to the Company, the transferor Member or the proposed transferee,
including the Securities Act of 1933, as amended, (ii) will not cause the
Company to become subject to regulation of any governmental authority to which
it is not then subject, and (iii) will not cause violation of any of the
Company’s material agreements.

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6.7.4. Admission of
Transferee. A transferee of the Membership Interest of a Member shall be
admitted to the Company in the place and stead of such Member only with the
express written consent of the other Member(s), in addition to satisfying the
other requirements of this Agreement.

6.8 Member’s Powers;
Meetings.

6.8.1 General Powers.

(a)                     The property,
affairs, and business of the Company shall be managed by the Members. In
addition to the powers and authority expressly conferred on it by this
Agreement, the Members may exercise all such powers of the Company, and do all
such lawful acts and things as are permitted by the Act, the Certificate of
Formation and the Agreement. The Members hereby delegate all power and
authority to manage the business and affairs of the Company to the Member
Designees as a group, or as provided hereunder (including Section 6.8.6).
Except as otherwise provided by the Act, other applicable law or the
Certificate of Formation, all policies and other matters to be determined by
the Members shall be determined by a majority vote of the Member Designees
present at a meeting at which a quorum is present. The Member Designees are
representatives of the Members and are not “managers” of the Company within the
meaning of the Act.

(b)                    In addition to
other matters coming before them, the Member Designees shall consider and take
appropriate action in connection with the following matters (the “Important
Matters”): (i) a change in the Company’s name or the adoption of an assumed
name under which to conduct the Company’s business, (ii) the approval and
adoption of any annual or longer term business plan including the annual
capital and operating budgets contained therein and strategic plans and plans
regarding technologies, or any deviations from such plans once approved, (iii)
any determination of “Available Cash”, (iv) changing the nature of the Company’s
business, or expanding or reducing the scope of the Company’s operations, (v)
any transaction (including amendments) between the Company, on the one hand,
and GDLS or FPI, on the other hand, or their respective Affiliates, other than
arms’ length transactions in the ordinary course of business, (vi) amending the
Certificate of Formation, (vii) issuance of additional Membership Interests,
and the consideration therefore, or the raising of funds in any manner which
would dilute the Membership Interest of cither Member, (viii) other than as
provided in this Agreement or specified in a business plan adopted by the
Member Designees, the creation of any debt or debt obligation of the Company or
the creation of any mortgage, lien, pledge or other encumbrance on Company’s
assets, (ix) the granting of any licenses or other lights regarding important
intangible assets by the Company, (x) the

 26
 

merger, sale or disposition of all or a substantial part
of the assets of Company, . (xi) amending or waiving the terms of this
Agreement or any documents referred to in the Agreement, (xii) any call upon
the Members to contribute additional capital in respect of their existing
Membership Interests which is not included in a Budget, (xiii) any change in
the Company’s fiscal year or change in the Company’s accounting practices and
procedures (including internal accounting standards), (xiv) entering into any
significant contract other than contracts that are entered into the ordinary
course of business, and contracts reflected in the Budget, (xv) authorization
of the issuance, sale or purchase of any interest in any other business
venture, (xvi) casting of the Company’s vote as a shareholder, member or other
owner, in any other business entity or association, (xvii) Member distributions
not expressly permitted pursuant to the terms of this Agreement, (xviii) any
advance to suppliers or to any person other than business expenses undertaken
in ordinary course, (xix) other than as specified in a business plan adopted by
the Member Designers, any capital expenditure, (xx) designation of a Chief
Executive Board member, a Chief Financial Board member and a Secretary, and
(xxi) investments in any Entity.

6.8.2 The Board. Within
30 days of the execution of this agreement, GDLS shall appoint three Member
Designees and FPI shall appoint three Member Designees (collectively referred
to as the “Board”) to represent such Member’s Membership Interest (including
authority to execute documents on behalf of the Company in accordance with the
terms of this Agreement). Member Designees on the Board shall serve until such
time as the Member appointing them selects a successor. The initial Board shall
be the individuals named on Exhibit 4. Neither Member shall designate a person
to be a Board member who is not a member, manager, director, Board member or
employee of such Member or of an Affiliate of such Member without the consent
of the other Member. Among such Board members, there shall be a Chairman,
Vice-Chairman, Secretary, and Treasurer. Initially, FPI shall appoint from
among its Member Designees one person to be Chairman and GDLS shall appoint
from among its Member Designees one person to be Vice-Chairman. Subsequently
the Member designating these positions may change but at all times the Member
designating the Treasurer shall be different from the Member designating the
Chairman. There may be such other management and administrative personnel as
determined and appointed by the Board members from time to time. A Board member
may hold more than one office. Decisions of the Board shall be made by majority
vote. Each Member shall be entitled to vote on all Company matters, and each
member shall have one vote. The Chairman shall not have a tie-breaking vote.

6.8.3 Regular Meetings.
The Board shall meet in such place as the Board shall determine, at least
quarterly. Written notice of the time, place, and purposes of each regular
meeting of the Board shall be given by the Secretary and shall be served
personally, or by fax, or first class mail, or electronic mail on each Board
member not less than 14 nor more than 60 days before the meeting. Such notice
shall be directed to each Board member at the address set forth in the notice
provision of this Agreement or such other address as the Member has
communicated to the Secretary pursuant to this Agreement.

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6.8.4 Special,
Meetings. A special meeting may be called by any Board member upon 3
business days written or electronic notice to each Board member at his or her
last address provided, which notice may be waived by such Board member. Special
meeting notices shall state the purposes of the proposed meeting.

6.8.5 Attendance and
Quorum. If a Board member is unable to attend a Board meeting, the Member
appointing such Board member shall have the right, at its option, to appoint an
alternate Board member who will replace, for all purposes, the absent Board
member at such meeting. A quorum for the transaction of business at any
properly called Board’ meeting shall be four Board members, which must include
two GDLS Designees and two FPI Designees, and except as otherwise required by
this Agreement and the Act, any action or decision taken or made at a duly held
meeting shall be the act of the Members.

6.8.6 Written Consent
in Lieu of Meeting. Any action which may be taken at any Board meeting may
be taken without a meeting, without prior notice, and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by all
of the Board members.

6.8.7 Participation in
a Meeting by Electronic Means. A Board member may participate in a meeting
by means of telephone or video conference or similar communications equipment
by means of which all persons participating in the meeting can hear and address
each other. Participation in a meeting pursuant to this section shall,
constitute presence in person at such meeting.

6.8.8 Compensation of
the Board. The Board members shall receive no compensation from the Company
for their services as Board members but may receive reimbursement of expenses
according to policies established by the Members. Nothing in this provision
shall preclude a Board member from serving the Company in some other capacity
and receiving compensation for such other service.

6.8.9 No Financial
Interest. Board members shall have no financial interest in the Company’s
profits or losses by virtue of their positions on the Board.

6.8.10 Board Duties

(a) Appointment and
Term of Office; Removal

The Board members shall
be appointed by the Members. Each Board member shall serve until his or her
successor has been duly appointed and qualified or until his or her earlier
death, resignation or removal. Any Board member may resign at any time by
giving written notice to the Member which appointed such Board member and the
Secretary, so that a  successor
may be appointed by such Member. Any Board member may be removed at any time
with or without cause, with a successor being appointed by the Member that
initially appointed such Board member.

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(b) Duties of Board members

(i)                        The
Chairman shall perform such duties as may be designated by the Members,
including, if present, presiding at all Board meetings.

(ii)                     The
Vice-Chairman shall assume the Chairman’s duties in the Chairman’s absence or disability.

(iii)                  The Treasurer
shall in general perform all duties incident to the office of Treasurer,
including responsibility for all funds and securities of the Company, as well
as all financial reporting and internal accounting controls.

(iv)                 The Secretary
shall in general perform all duties incident to the office of Secretary,
including to give, or cause to be given notice of all Board meetings, prepare
minutes of each meeting, including all actions taken, and promptly distribute
such minutes or proceedings to all Board members.

(v)                    All other
Board members shall have duties as determined by the Board.

(c) Delegation.
At their first meeting after the date of this Agreement, the Board will approve
a Delegation of Authority setting forth those matters and transactions which
may be undertaken by Board members and other Member Designees.

6.8.11 Program
Management Team The Board shall appoint a Program Manager, which shall
include be at a minimum a Director appointed by GDLS, and Deputy Program
Manager which shall be appointed by FPI. The Program Management Team shall work
closely with one another regularly, including with respect to attainment of the
business plan, significant contract commitments by or on behalf of the Company,
and appointment of such management personnel as it from time to time deems
necessary and appropriate to perform the activities and operations of the
Company, and it may take such actions as are authorized by the Board. A report
of status and significant actions taken by the Program Management Team shall be
made at the next following meeting of the Board.

(a) Other
Committees. The Board may in their discretion, by resolution adopted at any
meeting, create such committees as they may deem advisable. Each such committee
shall consist of at least one GDLS appointed Member Designee and at least one
FPI appointed Member Designee, and shall have and may exercise such powers, and
shall perform such duties, as may be delegated by the Board. All significant
action by any such committee shall be reported to the Board at their next
following meeting. The Board may, if they so elect, review and modify any
action taken by any such committee. The Board shall have the power at any time
to remove any

 29
 

member of any such
committee, with or without cause, and to fill vacancies in and to dissolve any
such committee.

6.9 Dissolution.

6.9.1 In General.
The Company shall dissolve and its affairs shall be wound up on the first to
occur of the following: (a) at any time, or upon the happening of any event,
specified in the Act, the Certificate of Formation or this Agreement or an
agreement calling for such dissolution and winding up; (b) by the Members
acting by unanimous vote; (c) the Government cancels the Program; (d) failure
of the U. S. Government to award a contract to the Company for the Program
within three (3) years of the effective date of the Agreement, unless this
period is extended by the unanimous agreement of the Members; (e) completion of
all the work required to be performed under, and settlement of all disputes and
expiration of all warranties arising in connection with, all contracts awarded
to the Company for the Program, and resolution or appropriate provision for all
other Company obligations, in the event the Company has been awarded work on the
Program; or (f) upon a Liquidating Transaction as defined in 6.6.7 or following
any twelve (12) months period of inactivity.

6.9.2 Disassociation
Option. Subject to any legal requirements to the contrary, GDLS hereby
grants to FPI and FPI hereby grants to GDLS, (a) an option to acquire all its
Membership Interest (referred to herein, together with the option described in
Section 6.9.3, as the “Disassociation  Option”),
for the Fair Market Value as of the date of the notice described below, or (b)
an option  to
dissolve the Company in accordance with the principles in Section 6.9.4, either
such option to be exercisable by the nondefaulting Member by written notice of
exercise given at any time during a period of 90 days after the nondefaulting
Party gives written notice that any of the following events of default shall
have occurred with respect to the other Member: (i) institution by a Member of
proceedings for relief as a debtor under laws for the relief of debtors or by
filing a petition in bankruptcy, (ii) entering into any arrangement,
assignment, reorganization or composition with creditors or for the benefit of
creditors, (iii) a general suspension of payments to creditors, (iv) filing by
a Member of a petition for appointment of a receiver, liquidator, or trustee
for substantially all of its business or properties, (v) filing of a petition
or other documents for winding up or dissolution by the Member, (vi) attempts
by a Member to transfer or sell its Membership Interest in the Company in
violation of the provisions of this Agreement, or (vii) the material breach by
a Member or its Affiliates of the provisions of this Agreement. In the event
that any of the foregoing events of default occur, the defaulting Member may
cure its default within the 90-days notice period set forth herein. Upon the
cure of such default within such period, the notice of election to exercise the
Disassociation Option shall be deemed withdrawn by the nondefaulting Member.

The phrase “Fair Market
Value” refers to the fair market value of the Company determined as follows:

i.                           Representatives
of the defaulting and the nondefaulting Members shall negotiate in good faith
for a period of 30 days to determine the fair market

 30
 

value of the Company for
purposes hereof. If such representatives cannot agree on the fair market value
within such 30 day period, then each Member shall choose one appraiser, each of
whom shall determine the Fair Market Value of the Company. Each appraiser shall
be a nationally recognized firm expert in valuation and shall be independent of
all Members.

ii.                          If the
higher of the two values determined by the appraisers referred to in clause (i)
is no more than 20% greater than the lower value, then Fair Market Value shall
be the mean average of such two values.

iii.                       If the
higher of the two values determined by the appraisers referred to in clause (i)
is more than 20% greater than the lower value, then the Members shall pick a
third appraiser within 30 days and such third appraiser shall determine the
Fair Market Value of the Company.

iv.                      If the value
determined by such third appraiser is within the range of the first two values,
then the fair market value of the Company as determined by such third appraiser
shall be the Fair Market Value of the Company.

v.                         If the
values determined by such third appraiser are outside of the range of the first
two values, then the Fair Market Value of the Company shall be the median of
the three values.

vi.                      The
above-described determination of Fair Market Value will be final and binding on
the Members. The Fair Market Value of a Member’s interest shall be determined
in accord with the Membership Interest.

6.9.3 Additional
Put-Call Option.

(a)                     In the event
of a material breach of this Agreement as described in clause (vii) of Section
6.9.2, then the non-breaching Party shall further have the right (referred to
herein, together with the option described in Section 6.9.2, as the “Disassociation
Option”) to either (i) require the breaching Party to purchase all of the
non-breaching Party’s Membership Interest at a price equal to the Fair Market
Value of such Membership Interest (the “Put Option”), or (ii) require the
breaching Party to sell to the non-breaching Party all of the breaching Party’s
Membership Interest at a price equal to the Fair Market Value of such
Membership Interest (the “Call Option”). The non-breaching Party may exercise
the Put Option or the Call Option by giving written notice of such exercise to
the breaching Party within the 90 days period set forth in Section 6.9.2, subject
to the breaching Party’s right to cure as further set forth in Section 6.9.2.
Fair Market Value of the Membership Interest to be sold and purchased will be
determined as provided in Section 6.9.2. The closing of the sale and purchase
pursuant to

 31
 

the Put Option or the Call Option, as the case may be,
shall take place, as promptly as practicable following exercise of the option,
at such time and place as may be decided by the non-breaching Member.

(b)                    In the event
of exercise of any Disassociation Option, (i) the Membership Interest of the
selling Party shall be transferred and assigned to the purchaser free and clear
of any security interests or other liens or encumbrances, and (ii) each Party
shall execute and deliver to the other such instruments as the other may
reasonably request in connection with the consummation of the sale and
purchase.

6.9.4 Dissolution upon
Disassociation. Upon the occurrence of any event enumerated in Section
6.9.1, the Company shall dissolve, unless, within 90 days thereafter, the
Disassociation Option is exercised.

6.9.5 Winding Up.
Upon dissolution, the Company shall cease carrying on its business and affairs
and shall proceed to the orderly liquidation of the Company’s assets and
termination of the Company, and the proceeds of such sale or other disposition
of assets, together with other available proceeds, shall be applied proceeds
and shall be distributed as described in Section 6.6.7 if applicable.

6.9.6 Other Remedies.
Nothing in this Article 6 shall limit either Member’s right to enforce any
provision of this Agreement by an action at law or equity, nor shall an
election to dissolve the Company pursuant to this Article 6 relieve either
Member of any liability for any prior or subsequent breach of this Agreement or
another document referred to herein.

6.10 Dispute
Resolution. The Parties shall attempt to resolve all disputes in good faith
in a reasonable time and manner. A dispute not resolved shall be referred in
writing to any Board member for resolution via a Special Board Meeting. In the
event the Board fails to resolve the dispute within 10 days of such meeting,
either Party may commence arbitration in accordance with Article 5 herein.

6.11 Indemnification.
The Company shall defend, indemnify and hold harmless either Member, and any of
their respective Member Designees, directors, offices, employees, shareholders,
heirs and personal representatives, and may defend, indemnify and hold harmless
any Company agent, who is made or threatened to be made a Party to any suit or
proceeding (whether civil, administrative, criminal or investigative), by
reason of the fact that such person is or was a Member, Member Designee, Board
member or employee of the Company or serves or served any other enterprise at
the request of the Company as a director, manager, Board member, employee,
fiduciary or member (an “Indemnified Person”) to the fullest extent permitted
by law. Such indemnity shall include any loss, expense (including attorneys’
and experts’ fees and costs), damage or injury suffered or sustained by an
Indemnified Person by reason of any acts, omissions or alleged acts or
omissions of the Indemnified Person on or reasonably believed to be on behalf
of or not opposed to the Company or in, or reasonably believed to be in,
furtherance of the

 32
 

interest of the Company
or not opposed to the Company’s interest; provided that the acts, omissions or
alleged acts or omissions were not (i) performed or omitted fraudulently, in
bad faith or in self-dealing to the detriment of the Company, (ii) in knowing
violation of law, or (iii) in willful breach of this Agreement or a document
referred to in this Agreement. Any such indemnification shall only be from the
assets of the Company.

The Company shall not be
required to indemnify a person in connection with a proceeding initiated by
such person against the Company if the proceeding was not authorized by the
Members. The ultimate determination of entitlement to indemnification of any
Indemnified Person shall be made by the Members in such manner as the Members
may determine. The payment of any expenses in advance of the final disposition
of the proceedings shall be made only upon receipt of an undertaking by the
Indemnified Person to repay all amounts advanced if it should be ultimately
determined that the Indemnified Person is not entitled to be indemnified under
this Article 10 or otherwise.

Any and all indemnity
obligations of the Company with respect to any Indemnified Person shall survive
any termination of this Agreement.

6.11.1 Limitations on
Personal Liability. No Member Designee or Board member shall be personally
liable to the Company or its Members for monetary damages for breach of
fiduciary duty as a Member Designee or Board member except for liability for
acts or omissions not in good faith or which involve intentional misconduct or,
a knowing violation of law. Nothing herein shall limit or otherwise affect the
obligation or right of the Company to indemnify any other individual to the
full extent permitted by law.

6.11.2 Fiduciary
Insurance. The Members may, to the full extent permitted by law, authorize
an appropriate Board member or Board members to purchase and maintain at the
Company’s expense insurance (i) to indemnify the Company for any obligations
which it incurs as a result of the indemnification of Member Designees and
Board members under the provisions of this Section 6.11.2, and (ii) to
indemnify Members, Member Designees and Board members in instances in which
they may not otherwise be indemnified by the Company under the provisions of
this Section 6.11.2.

6.11.3 Mutual
Provision. Each Party will indemnify and hold harmless the
other Party and the Company for any breech of their representations and
warranties.

6.11.4 Each Party
shall defend, indemnify and hold harmless the other Party and
the Company for any loss, expense (including attorneys’ and experts’ fees and
costs), damage or injury suffered or sustained by such Party or Company arising
out of or related to a claim that any product or service provided by the
indemnifying Party under the Program infringes the patent, trademark, trade
secret, copyright or other intellectual property rights of any third Party,
provided that the indemnified Party or Company notifies the indemnifying Party
promptly in writing of any such claim, and that the indemnifying Party may use
counsel of its choosing and has sole conduct of the defense of such claim.

 

 33

 

6.12 Competition:
Fiduciary Duty.

6.12.1 Competition.
Except as specifically stated to the contrary, nothing in this Agreement shall
prevent the Company from competing with the Members or any of their Affiliates
or other Members or any of their Affiliates from competing with the Company or
the other Members or any of their Affiliates.

6.12.2 Waiver of
Corporate Opportunity. Except as expressly stated herein (including Section
3.1.1), no Member or any Affiliate shall be under any fiduciary or other
obligation to the Company or the other Members or their respective Affiliates
so as to prevent or impede a Member or any Affiliate from participating in and
enjoying the benefits of any business which such Member or any Affiliate is
permitted to engage in. Such legal doctrines as corporate opportunity, business
opportunity or partnership duties sometimes applied to person having fiduciary
obligations shall not apply with respect to any participation by a Member,
Member Designee or Affiliate thereof in any business activity or endeavor
permitted under the provisions of this Agreement.

6.12.3 Standard of
Care: No Fiduciary Duty.

(a) Either Member or Member Designee, in the
performance of such Member’s or Designee’s duties, shall be fully protected in
relying in good faith on information, opinions, reports or statements,
including financial statements, books of account any other financial data, if
prepared or presented by: (i) one or more Board members or employees of the
Company, whom the Member or Designee believes to be reliable and competent in
the matters presented, or (ii) legal counsel, certified public accountants, or
other persons as to matters which the Member or Designee believes to be within
such person’s professional or expert competence.

(b) Each Member Designee shall represent the interest
of the Member which appointed such Designee and shall have no fiduciary duty or
responsibility to the Company or the other Member in his or her capacity as
such Designee, provided that the foregoing shall in no way eliminate or limit
the liability of any Designee to the Company for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law.

(c) Subject to Section 6.8.1(b)(v), the Members (and
Affiliates of, and persons who are otherwise related to, a Member) shall have
the right to contract and otherwise deal with the Company with respect to the
sale, purchase or lease of real and/or personal property, the rendition of
services, the lending of money and for other purposes in arms length
transactions, and to receive the purchase price, costs, fees, commissions,
interest, compensation and other forms of consideration in connection
therewith, without being subject to claims for self-dealing.

(d) In principle, and without modification to the
provisions of this Agreement or any

 34
 

document referred to herein, all contractual or other
commercial dealings between the Company and each of the Members and their
respective Affiliates shall be negotiated on a commercial, arms’ length basis.
Subject to the terms of this Agreement and any documents referred to herein,
the Company shall not be required to purchase services or components from
either Member, but may seek quotes for the supply of services or components in
normal course.

6.13 Miscellaneous
Provisions.

6.13.1 Amendments.
This Agreement may only be amended by a written amendment approved and executed
by each of the Members.

6.13.2 Terms.
Nouns and pronouns will be deemed to refer to the masculine, feminine, neuter,
singular and plural, as the identity of the person or persons, firm or
corporation may in the context require.

6.13.3 Execution of
Instruments. All agreements, consents, deeds, contracts, proxies,
covenants, bonds, checks, drafts, bills of exchange, notes, acceptances and
endorsement, and all evidences of indebtedness and other documents, instruments
or writings of any nature whatsoever, shall be signed by such Board members,
agents or employees of the Company, or any one of them, and in such manner, as
from time to time may be determined (either generally or in specific instances)
by the Members or by such Board member or Board members or agents to whom the
Members may delegate the power so to determine.

6.13.4 Proprietary
Information. Each of the Parties shall comply with Exhibit 5, the Mutual
Proprietary Information Agreement, and shall in any event take all necessary
steps to assure that any Proprietary Information as defined in Exhibit 5,
including FIP developed under this Agreement, is protected from disclosure to
Third Parties or unauthorized use by the other Party. Except as otherwise
provided herein and if required by a Party’s internal operating procedures,
Proprietary Information may be shared with an Affiliate subject to Section
6.13.12. In any conflict between the terms of this Agreement and the terms of
the Mutual Proprietary Information Agreement, the terms of the latter shall
govern.

6.13.5 Notice. Any
notice, Financial reports, other reports and other communication to a Member
required or permitted hereunder shall be made in writing in the English
language and shall be delivered in person, or sent by first-class mail and
facsimile, or electronic mail addressed to the address of such Member set forth
below or to such other address as such Members shall have communicated in
writing to the other. Any such notice shall be considered to have been given
upon receipt by the intended recipient.

Notices or communication
to FPI shall be sent to:

 35
 

Force Protection, Inc.

9801 Highway 78

Ladson, South Carolina 29456

Attention: Chief Operating Officer

Fax No: (843) 553-3832

Notices or communications
to GDLS shall be sent to:

General Dynamics Land Systems Inc.

38500 Mound Road

Sterling Heights, Michigan USA 48310-3200

Attention: Julie Percy, Director of Contracts, Ground Combat Systems

Fax No. 586-825-5199

Email: percyj@gdls.com

6.13.6 Counterparts.
This Agreement may be executed in any number of counterparts. Each of such
counterparts shall be deemed to be an original, and all such counterparts shall
together constitute but one instrument.

6.13.7 Entire
Agreement; Waiver. This Agreement and the other documents referred to
herein, constitute the entire agreement among the Parties and contain all of
the agreements among the Parties with respect to the subject matter hereof and
supersede all prior agreements and negotiations between the Parties, concerning
the subject matter herein. Failure by a Member to enforce any term or condition
of this Agreement, or to exercise any right hereunder, shall not be construed
as thereafter waiving such term, condition or right; and in no event shall any
course of dealing, custom or usage of trade modify, alter or supplement any
term of this Agreement.

6.13.8 Severability.
The invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions hereof, and this Agreement
shall be construed in all respects as if such invalid or unenforceable
provisions were omitted.

6.13.9 Successors.
Subject to the provisions of this Agreement relating to transferability, this Agreement
shall be binding upon and inure to the benefit of the Parties to this
Agreement, their successors and permitted assigns.

6.13.10 Governing Law.
This Agreement shall be governed by the laws of the State of Delaware, without
reference to its conflicts of law provisions.

6.13.11 Independent
Contractors; Expenses. This Agreement does not constitute either Party, the
partner, agent or legal representative of the other Party, excepting only to
the extent that the Company is classified as a partnership for U. S. Federal
income tax purposes and the Members are treated as “partners” for such tax
purposes. Each Party is an independent contractor,

 36
 

responsible for its own
expenses, including attorneys’ and other professional fees incurred in
connection with the transactions contemplated by this Agreement. Neither Party
is authorized to create any obligation on behalf of the other Party.

6.13.12 Affiliates.
Each Party shall cause each of its affiliates to comply with any condition
required to be complied with by such Affiliate and to fulfill any obligation
required to be fulfilled by it, pursuant to this Agreement.

6.13.13 Survival.
The provisions of Article 5, and Sections 6.5.3, 6.9.5, 6.9.6, 6.11, 6.12, and
6.13.4 of this Agreement shall survive any termination of this Agreement or the
dissolution of the Company.

6.13.14 Limited
Liability. Except as otherwise provided by the Act or this Agreement, the
debts, obligations and liabilities of the Company, whether arising in contract,
tort or otherwise, shall be solely the debts, obligations and liabilities of
the Company, and the Members shall not be obligated personally for any such
debt, obligation or liability of the Company solely by reason of being a member
of the Company. The Members shall not be required to lend any funds to the
Company. Each of the Members shall only be liable to make payment of its
respective contributions as and when due hereunder and other payments as
expressly provided in this Agreement. If and to the extent a Member’s
contribution shall be fully paid, such Member shall not, except as required by
the express provisions of the Act regarding repayment of sums wrongfully
distributed to Members, be required to make any further contributions.

6.13.16 Intellectual
Property (IP), Background Intellectual Property (BIP), Foreground Intellectual
Property (FIP) and Technical Data (TD) Rights. Other than as
expressly set forth below, no rights in a Party’s BIP are licensed,
transferred, or granted by this Agreement and each Party hereby reserves all rights
in its BIP, including any improvements or derivative works based on such BIP,
Concerning any FIP created by either Party without contribution or input from
the other, under or in connection with the Program and without reference to the
other Party’s BIP, the creating Party shall own same exclusively. With respect
to any FIP created jointly by the Parties, without reference to either Party’s
BIP, under or in connection with the Program, the Parties shall own same
jointly and each shall be permitted to use such FIP to carry out its
obligations with respect to the Program and thereafter for its own purposes
subject to any restrictions referenced herein or agreed upon by the Parties in
writing. To the extent that jointly created FIP or TD is created using, based
upon or derived from BIP, the Parties shall establish a process to deal with
the appropriate use of such FIP or TD by either Party outside the Program.
Neither Party will exploit such jointly created FIP or TD without the prior
written consent of the other Party or unless the Parties conclude a written
agreement with respect to such exploitation.

6.13.17 Technology
License. The Parties agree to conclude no later than January 31st, 2007, a detailed technology
and license agreement (Exhibit 6) between the Parties and the Company covering
the rights and responsibilities related to intellectual property.

 37
 

ARTICLE VII

GENERAL

7.1 Contractual
Relationship. In principle, and without modification to the provisions of
this Agreement, including any other documents referred to in this Agreement,
all contractual or other commercial dealings between Company and each of the
Parties and their respective Affiliates shall be negotiated on a commercial,
arm’s-length basis.

7.2 Costs and Expenses.

A.                     Each Party
shall bear all of its costs and expenses which may arise out of the preparation
of this Agreement and the documents contemplated by this Agreement with the
exception of fees associated with creation of the Company which shall be
reimbursed by the Company.

B.                       All costs
and expenses in connection with operating the Company will be borne by each
Party in accordance with this Agreement.

7.3 Publicity.

7.3.1 Press Release.
The Parties will consult with each other before issuing any press releases or
otherwise making any public statements with respect to this Agreement or the
transactions contemplated hereby and shall not issue any press release or make
any public statement or permit to the Company to do same without mutual
consent, except as may be required by law and then only with such prior
consultation.

7.3.2 Marketing.
The Company will conduct marketing activities (trade show exhibits,
advertising, print and video) in support of the Program as mutually agreed by
the Members. The marketing plan for the Program will be developed and
implemented by the Company in coordination with the Members’ business
development, communications, marketing and sales staffs.

7.3.3. Government
Relations GDLS shall have the lead with respect to planning, coordination
and execution of all federal political lobbying campaigns, including lobbying
activities, lobbying contacts and the associated costs of lobbying on behalf of
the Company. GD Corporation, the parent of GDLS, will be responsible for
reporting lobbying activities and contacts with covered federal officials to
the U.S. Congress on a semiannual basis as defined in the Lobbying Disclosure
Act of 1995, PL-104-65.

(a)                    For the
purposes of the Program, FPI agrees to conduct only those federal political
lobbying activities as agreed to by the Board.

(b)                   For the
purposes of the Program, no employee of either Party, or their affiliates, will
be authorized to attempt to influence an officer or employee of any federal
agency, a Member of Congress, an officer or employee of Congress, or an employee
of a Member

 38
 

of Congress in connection with any federal contract.

(c)                    Federal
Political Government Relations Campaign Plans will be briefed back to the Board
of the Company.

(d)                   GDLS recognizes
that FPI may be involve in the activities described in Section 7.3.3.

7.4 Further Assurances.
Each Party will use commercially reasonable efforts to cause the Company to act
in the manner contemplated by the provisions of this Agreement.

 39
 

In Witness Whereof, the Parties hereto have executed this
document intending to be bound by the obligations set forth herein. The Parties
hereby agree that this Agreement may be executed in one or more counterpart
copies and that such counterpart copies may be exchanged by facsimile.
Facsimile signatures shall have the same force and effect as original
signatures.

 

	
  Force Protection, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Gordon
  McGilton

  	
   

  	
   

  
	
  Name: Gordon
  McGilton

  	
   

  	
   

  
	
  Chief Executive
  Officer

  	
   

  	
   

  
	
  December 15,
  2006

  	
   

  	
   

  
					

 

	
  General Dynamics Land Systems Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ David K. Heebner

  	
   

  	
   

  	
   

  
	
  Name: David
  K. Heebner

  	
   

  	
   

  	
   

  	
   

  
	
  President, GDLS

  	
   

  	
   

  	
   

  	
   

  
	
  December 15,
  2006

  	
   

  	
   

  	
   

  	
   

  
							

 

 

 40

AMENDMENT
ONE

To Force* Dynamics, LLC Joint Venture Agreement

This Amendment One is
made this 28th day of March 2007, whose forming members are Force Protection
Inc. (“FPI”), General Dynamics Land Systems Inc. (“GDLS):

I.

FPI and GDLS entered into
the Force Dynamics, LLC Joint Ventura Agreement dated 15 December 2007, which “Agreement”
is the subject of this Amendment One.

II.

In consideration of the
mutual covenants contained herein, and other good and valuable consideration
the Parties agree that the Agreement shall be, and is amended in part as
follows:

1.                         In any
and all places in the Agreement where there is reference to the “Mine Resistant
Ambush Protected Vehicle Program” or “MRAP”, it shall now read as also
referencing the “Medium Mine Protected Vehicle” or “MMPV”.

2.                         Add to
the definitions section the following. “MMPV” means the US Government Medium
Mine Protected Vehicle Program.

3                          Replace
in its entirety the definition of “Program” with the following, “Program” man
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-O7-R-5000 and/or the Medium Mine
Protected Vehicle Program (“MMPV) as more fully described in solicitation
number W56HZV-O7-R-O315. 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 and/or MMPV vehicles whether for US or international sales,
or non-military/commercial sales. For the avoidance of doubt, the “Program”
only includes the use of FPI s Cougar 4x4 and 6x6 armored vehicles for the MRAP
Cat I and Cat II and the MRAP CAT n for MMPV requirements and does not include
any other existing or future contracts or programs for the Parties’ other
vehicles (or vehicle variants) to include by way of illustration and not
limitation, the JERRV program, the ILAV and Mastiff program, the Buffalo and
Cheetah vehicles, the Striker, LAV, and RG-31 vehicles, the MRAP Cat III
program and/or the JLTV program.

4.                         Paragraph
3.1. Is replaced in its entirety with the following: “General It is the
intent of the Parties to combine their respective strengths to market and
promote FPI’s COUGAR vehicles for the Cat I and Cat II requirements of the MRAP
Program and the MMPV Program. The Parties will make available to the Company
their respective resources so that the Company may undertake to develop,
manufacture, produce and sustain any vehicles awarded under the

 

MRAP program, in accordance with the plan set forth in
FPTs Proposal and MMPV in accordance with the plan set forth in the proposal to
be submitted by this JV. Understanding the complexity of the MRAP Program and
MMPV Program, the Company will form a FPI-GDLS Team MRAP Program Management
Office that will be the Parties’ exclusive interface with the Customer’s
Program Management Organization, and which will have operating responsibility
over the execution of the MRAP and MMPV Programs. Each Party will provide
personnel to the Program Office according to the plan developed and agreed by
the Board. Other than those programs identified above in the definition of “Program”,
the Parties agree that the Company will pursue any and all future vehicle
programs related to, or arising out of the current MRAP or MMPV programs.

5.                         Paragraph
3.2.1 is replaced in its entirety with the following, “3.2.1. Mutual Intent
to Win The Parties affirm that this Joint Venture Agreement is based on a
mutual intent to join forces to win the MRAP and MMPV Programs. In the interest
of the Joint Venture, the Parties agree to focus on each Party’s strengths in
the MRAP Workshare allocation (Exhibit 3) to maximize the competitive advantage
of the bid submission. The MMPV Workshare allocation shall be as indicated in
Exhibit 3. The Parties acknowledge the potential that the initial MRAP
Workshare may not be 50%/50% immediately.”

6.                         Paragraph
3.5 Product Approach is replaced in its entirety with the following: “The
Parties intend to offer for the MRAP Program the proven family of COUGAR
vehicles in 4x4 and 6x6 configurations for the CATERGORY 1 and CATEGORY 2
requirements respectively. The Parties intend to offer the COUGAR vehicles in
6X6 configuration for the MMPV Program.

7.                         Paragraph
3.8 is modified to add the following: MMPV Key Events Timeline:

A.                      US
Government Release of RFP on 3 April 2007

B                           RFP
response due date is 2 May 2007

C.                        Main
Contract Award is expected to be received in July 2007

D.                       Initial
Deliveries of test articles will occur within 120 days after Contract Award.

III

The balance of the
provisions of said Joint Venture Agreement remain in full force and effect,
unaltered and unchanged by this subsequent Amendment 1, except where the terms
thereof conflict herewith, in which event this instrument shall control.

 

	
  Force Protection, Inc.

  	
   

  	
  General Dynamics Land Systems Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Raymond W. Pollard

  	
   

  	
  By:

  	
   

  	
  /s/ J.L. Farina Percy

  
	
   

  	
   

  	
  Raymond W. Pollard

  	
   

  	
   

  	
   

  	
  J.L. Farina Percy

  
	
  Title:

  	
   

  	
  Chief Operating Officer

  	
   

  	
  Title:

  	
   

  	
  Director Ground Combat Contracts

  

 

 

AMENDMENT
TWO

To Force Dynamics, LLC Joint Venture Agreement

This Amendment Two is
made this 29th day  of
March 2007, whose forming members are Force Protection Inc. (“FPI”), General
Dynamics Land Systems Inc. (“GDLS).

I.

FPI and GDLS entered into
the Force Dynamics, LLC Joint Venture Agreement dated 15 December 2007, which “Agreement”
is the subject of this Amendment Two.

II.

In consideration of the
mutual covenants contained herein, and other good and valuable consideration
the Parties agree that the Agreement shall be, and is amended in part as
follows:

1.                         The
Force Dynamics Board of Directors in its regular meeting held on 23 January
2007 unanimously agreed that Paragraph 6.5.6 of the Joint Venture Agreement
having to do with the use of outside auditors is not required.

2.                         The
substance of paragraph 6.5.6 of the Joint Venture Agreement is deleted in to
entirety and the paragraph is marked as “Reserved”.

III.

The balance of the
provisions of said Joint Venture Agreement remain in full force and effect,
unaltered and unchanged by this subsequent Amendment Two, except where the
terms thereof conflict herewith, in which event this instrument shall control.

 

	
  Force Protection, Inc.

  	
   

  	
  General Dynamics Land Systems Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Raymond W. Pollard

  	
   

  	
  By:

  	
   

  	
  /s/ J.L. Farina Percy

  
	
   

  	
   

  	
  Raymond W. Pollard

  	
   

  	
   

  	
   

  	
  J.L. Farina Percy

  
	
  Title:

  	
   

  	
  Chief Operating Officer

  	
   

  	
  Title:

  	
   

  	
  Director Ground Combat ContractsExhibit
10.5

	
  AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT

  	
   

  	
  1. CONTRACT ID
  CODE

  J

  	
   

  	
   

  	
   

  	
  PAGE OF PAGES

  1       |       32

  
	
   

  
	
  2. AMENDMENT/MODIFICAITON NO.
                 02

  	
   

  	
  3. EFFECTIVE DATE

  17-Apr-2007

  	
   

  	
  4. REQUISITION/PURCHASE REQ. NO.

  SEE SCHEDULE

  	
   

  	
  5. PROJECT NO. (If applicable)

  
	
   

  
	
  6. ISSUED BY

  

  MARCORSYSCOM

  2200 LESTER STREET

  QUANTICO VA 22134-5010

  	
   

  	
  CODE   M67854

  	
   

  	
  7. ADMINISTERED BY (If other than Item 6)

  DCMA ATLANTA

  ATTN: KAREN BRENNER, 2300 LAKE PARK DRIVE

  SUITE 300

  SMYNRA GA 30080

  	
   

  	
  CODE

  	
   

  	
  S1103A

  
	
   

  
	
  8. NAME AND ADDRESS OF CONTRACTOR (No., Street, County, State and ZIP Code)

  FORCE PROTECTION INDUSTRIES, INC

  DAMON WALSH

  9801 HIGHWAY 78, #1

  LADSON SC 29456

  	
   

  	
  o

   

  o

   

  x

  	
   

  	
  9A. AMENDMENT OF SOLICIATION NO.

   

  9B. DATED (SEE ITEM 11)

   

  10A. MODIFICATION OF CONTRACT/ORDER NO.

  M67854-07-D-5031-0002

  
	
  

  CODE

  	
   

  	
  

  1EFH8

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  

  FACILITY CODE

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  x

  	
   

  	
  10B. DATED (SEE
  ITEM 13)

  14-Feb-2007

  
	
   

  
	
  11.
  THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

  
	
   

  
	
  o

  	
  The above numbered solicitation is amended as set
  forth in Item 14. The hour and date specified for receipt of Offers

  	
   

  	
  o

  	
   

  	
  is extended,

  	
   

  	
  o

  	
   

  	
  is not extended.

  	
   

  	
   

  
	
   

  
	
   

  	
  Offers must acknowledge receipt of this amendment
  prior to the hour and date specified in the solicitation or as amended, by
  one of the following methods:

  (a) By completing Items 8 and 15, and returning
             copies of the
  amendment; (b) By acknowledging receipt of this amendment on each copy of the
  offer submitted; or (c) By separate letter or telegram which includes a
  reference to the solicitation and amendment numbers. FAILURE OF YOUR
  ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF
  OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR
  OFFER. If by virtue of this amendment your desire to change an offer already
  submitted, such change may be made by telegram or letter, provided each
  telegram or letter makes reference to the solicitation and this amendment,
  and is received prior to the opening hour and date specified.

  
	
   

  
	
  12.  ACCOUNTING AND APPROPIRATION DATA (If required)

  See Schedule

  
	
   

  
	
  13.
  THIS ITEM ONLY APPLIES TO MODIFICATION OF CONTRACTS/ORDERS

  IT MODIFIES THE CONTRACT/ORDER NO. AS
  DESCRIBED IN ITEM 14.

  
	
   

  
	
  o   A.   THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE
  IN THE CONTRACT ORDER NO. IN ITEM 10A.

  
	
  o   B.   THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE
  ADMINISTRATIVE CHANGES (such as
  changes in paying office, appropriation date, etc. ) SET FORTH IN ITEM
  14, PURSUANT TO THE AUTHORITY OF FAR 43.103(B).

  
	
  x  C.   THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO
  AUTHORITY OF: 

  FAR 43.103(a) Bilateral Agreement

  
	
  o   D.   OTHER (Specify type of
  modification and authority)

  
	
  E.
  IMPORTANT:   Contractor   o is not,   x is required to sign this document and
  return 1 copies to the issuing office.

  
	
   

  
	
  14.  DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings,
  including solicitation/contract subject matter where feasible.)

  Modification Control Number: ediez071468

  The
  purpose of this modification is to purchase sustainment and support CLINs for
  the vehicles ordered on Delivery Order 0002.

  Except as provided herein, all terms and conditions
  of the document referenced in Item 9A or 10A, as heretofore changed, remains
  unchanged and in full force and effect.

  
	
   

  
	
  15A. NAME AND TITLE OF SIGNER (Type or print)

  Otis Byrd

  	
   

  	
   

  	
   

  	
  16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)

  Lynn Frazier

  
	
   

  
	
  15B. CONTRACTOR/OFFEROR

  	
   

  	
  15C. DATE SIGNED

  	
   

  	
  16B. UNITED STATES OF AMERICA

  	
   

  	
  16C. DATE SIGNED

  
	
  /s/ Otis Byrd

  	
   

  	
  April 17, 2007

  	
   

  	
  /s/ Lynn Frazier

  	
   

  	
  17 Apr 07

  
	
  (Signature of person authorized to sign)

  	
   

  	
   

  	
   

  	
  (Signature of Contracting Officer)

  	
   

  	
   

  
	
   

  
	
  EXCEPTION TO SF 30

  	
   

  	
  30-105-04

  	
   

  	
  STANDARD FORM 30 (REV. 10-83)

  
	
  APPROVED BY OIRM 11-84

  	
   

  	
   

  	
   

  	
  Prescribed by GSA 

  
	
   

  	
   

  	
   

  	
   

  	
  FAR (48 CFR) 53.243

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