Document:

Exhibit
10.1

PRODUCTION LICENSE AGREEMENT

IRAQI
LIGHT ARMORED VEHICLES

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

Between:

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

-and-

BAE Systems Land & Armaments L.P., a
Delaware limited partnership, acting through its Ground Systems Division, with
its principle office at 1100 Bairs Road, York, PA 17404 (hereinafter referred
to as “BAE”).

RECITALS

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

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

Whereas, FPI
and BAE have agreed to team together to secure a U.S. Government contract (ref
W56HZV-06-D-VB01) for the manufacture and sale of Cougar ILAV Vehicles to the
US Army Tank Armament & Automotive Command (“TACOM”) it being currently
contemplated by the parties that such contract could include up to 1050 ILAV
Vehicles with all options (hereinafter referred to as the “ILAV Contract”); and

Whereas, As
part of such teaming arrangement the parties have agreed that (i) BAE shall act
as the prime contractor under the ILAV contract and FPI shall act as its
subcontractor under a subcontract agreement (the “Subcontract”) pursuant to
which FPI shall manufacture fifty percent (50%) of the vehicles required under
the ILAV Contract (the “Subcontract Vehicles”) except as otherwise agreed to by
the parties, and (ii) that FPI shall grant to BAE a production license to
manufacture up to 1050 ILAV Vehicles under the ILAV Contract on such terms and
conditions as may be acceptable to FPI.

Grant of Production License:

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

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

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

·         To
sell and deliver the ILAV Vehicles to TACOM as required under the ILAV
Contract; and

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

The grant of the
Production License Agreement by FPI shall in no event be construed as a grant
of any other right, title or interest in and to the ILAV Vehicle, the IP, TDP
or the Confidential Information, and BAE shall not use any IP, TDP or
Confidential Information for any purpose other than as provided herein. BAE may
attach limited drawings and specifications to purchase orders it issues to
vendors and suppliers, subject to BAE’s compliance with the protection of FPI’s
information as provided herein, solely for production of the ILAV Vehicles
pursuant to this License Agreement, but BAE shall not otherwise transfer IP,
TDP or Confidential Information or sub-license any of its rights under this
License Agreement (whether to subcontractors or otherwise) without the express
prior written consent of FPI, and shall not assert any right, title or claim to
the IP or the Confidential Information. BAE shall have the right to provide
TACOM with manuals for operation and for maintenance and repair of ILAV
Vehicles and any other deliverable currently required under the ILAV Contract.

Ownership of Rights —
Improvements:

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

BAE shall promptly
disclose to FPI any new or improved designs, specifications, developments,
enhancements or derivatives developed by BAE specifically for the ILAV
Vehicles, relating to or capable of being used in the TDP, the Confidential
Information or the ILAV Vehicles, whether patentable or not, which would make
the vehicles cheaper, more effective, more easily produced, more useful or more
valuable, or would in any other way enhance the TDP, the Confidential Information
or the ILAV Vehicles (the “Improvements”). BAE hereby assigns to FPI all its
right, title and interest in and to all Improvements upon their creation by
BAE, and upon such creation the Improvements shall be deemed to be part of the
IP and the use by BAE of such Improvements shall be deemed to be included in
and covered by this License Agreement.

License Agreement Fee &
Reports:

Except as otherwise
provided herein, in consideration of the License granted pursuant to this
License Agreement by FPI to BAE, BAE shall pay to FPI a fully earned,
non-refundable license fee of $8,027 per vehicle for each ILAV Vehicle
manufactured by BAE under the ILAV Contract (the “License Agreement Fee”). All
payments made hereunder shall be free and clear of all taxes, fees, deductions
or set-offs of whatever kind.

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

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

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Form 250, executed by the
authorized agent or employee of the U.S. Government. BAE shall provide to FPI
no later than the 5th business day following the end of each
calendar month a report setting out the number of ILAV Vehicles manufactured
during the preceding month and the number of ILAV Vehicles accepted during the
preceding month, including their hull numbers or other identifying mark and a
calculation of the amount of the License Agreement Fees payable in respect of
such deliveries. BAE shall include payment of the License Agreement Fees in
respect of such deliveries together with such report.

Without limiting in any
way FPI’s remedies elsewhere contained in this License Agreement, BAE shall pay
FPI interest on all overdue payments due to FPI under this License Agreement at
the rate of two percent (2%) per month. The payment of such interest shall not
replace any of FPI’s other rights under this License Agreement or at law
resulting from BAE’s default by failure to pay any amount due.

BAE will maintain
accurate records of all ILAV Vehicle production and deliveries with respect to
which License Agreement Fees are payable under this section, and will make such
record available to FPI for examination and copying, on reasonable notice,
during normal business hours. BAE will also furnish copies of such records to
FPI upon request. FPI will treat as confidential all and any information
obtained by FPI or its representatives from BAE under this clause and will not
disclose any such information to any third party except as required by law.

In the event that FPI’s
Subcontract is terminated for default after FPI materially fails to perform any
of its obligations under the Subcontract which is capable of being cured and
such failure continues for a period of 10 calendar days after FPI receives
written notice of default, BAE shall pay FPI a fully earned, nonrefundable
license fee of $16,500 for each of the Subcontract Vehicles that would have
been produced by FPI under the Subcontract but manufactured by BAE under the
ILAV Contract (“Additional License Fee”). The License Agreement Fee and any
Additional License Fee shall be payable in respect of all ILAV Vehicles
delivered by BAE under the ILAV Contract whether or not the Subcontract is in
effect.

Effective Date and Duration

This License Agreement
shall be effective as from the date of signing by both parties (and provided
that the Subcontract has been signed by both parties) and shall remain in
effect until the earliest of (i) completion of all the work under the ILAV
Contract (contract W56HZV-06-D-VB01) (ii) termination of this agreement by FPI
in the event of default by BAE as provided hereunder, or (iii) termination of
the Subcontract for convenience.

Representations & Warranties:

FPI shall use its best
efforts to provide BAE with accurate TDP and Confidential Information relating
to the ILAV Vehicles but makes no warranty regarding the accuracy of such TDP
or Confidential Information or the ability of BAE to manufacture the ILAV
Vehicles based on such information, and FPI shall have no liability to BAE with
respect to the TDP or Confidential Information or the ILAV Vehicles or the use
thereof.

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

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

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

EXCEPT AS PROVIDED
HEREIN, THE LICENSE IS PROVIDED WITHOUT ANY WARRANTY OF ANY KING. IN NO EVENT
WILL FPI BE LIABLE FOR ANY DAMAGES, INCLUDING ANY LOST PROFITS OR OTHER
INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OF THE IP, TDP
AND/OR THE CONFIDENTIAL INFORMATION, OR ARISING OUT OF THE PRODUCTION OF THE
ILAV VEHICLES, EVEN IF BAE HAS ADVISED FPI OF THE POSSIBILITY OF SUCH DAMAGES.

Protection of FPI’s Information:

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

BAE shall protect and
keep secret any and all Confidential Information and FPI’s Company Information
which it acquires, and shall not at any time whether during the currency of
this License Agreement or after its expiration or termination without the prior
written consent of FPI disclose, divulge, make known, or in any way
communicate, to any person in any part of the world, or permit or allow any of
its employees or agents to disclose, divulge, make known or in any way
communicate to any person in any part of the world, the Confidential
Information or FPI’s Company Information, other than to BAE’s own employees,
suppliers, subcontractors or consultants who need to know or use  such information for the limited purpose of
enabling BAE to exercise its rights or perform its obligations under this
License Agreement.

The foregoing shall not
apply in the event that the Confidential Information or FPI’s Company
Information (i) was in the public domain at the time of disclosure or
thereafter enters the public domain through no breach of this or any other
Agreement by BAE; (ii) was, at the time of receipt, otherwise known to BAE
without restrictions as to use or disclosure; (iii) becomes known to BAE from a
source other than FPI without breach of this or any other Agreement by BAE;
(iv) is developed independently by BAE and without the reliance upon
Confidential Information or FPI’s Company Information disclosed hereunder, or
(v) is disclosed with the written approval of FPI.

BAE acknowledges that the
Confidential Information and FPI’s Company Information is and will be disclosed
to it on the express condition that it be used only for the limited and
specific purpose of BAE exercising its rights and performing its obligations
under this License Agreement and BAE will not otherwise use or attempt to use
any of the Confidential Information or FPI’s Company Information for its own
advantage or gain directly or indirectly. BAE shall not use or attempt to use
any of the Confidential Information or FPI’s Company Information in any manner
which may cause or be calculated to cause injury or loss (including injury or
loss of or to, goodwill, customer confidence, commercial relationships or
intellectual property rights) to FPI or any company related to FPI. BAE shall
not copy the Confidential Information or FPI’s Company Information or allow it
to be copied in whole or in part except as required under this agreement,
without the prior written consent of FPI.

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

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

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

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

·         informs FPI in writing, with as much advance
notice as possible, of the proposed disclosure, giving full details of the
circumstances of the proposed disclosure and of the relevant information to be
disclosed;

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

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

·         exercises
its best efforts to obtain reliable assurances that confidential treatment will
be accorded to the Confidential Information.

The obligations hereunder
relating to the treatment of the Confidential Information and FPI’s Company
Information shall survive the termination of this agreement for a period of
three years.

Protection of BAE’s Information:

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

FPI shall protect and
keep secret any and all BAE’s proprietary and/or confidential information and
BAE’s Company Information which it acquires, and shall not at any time whether
during the currency of this License Agreement or after its expiration or
termination without the prior written consent of BAE disclose, divulge, make
known, or in any way communicate, to any person in any part of the world, or
permit or allow any of its employees or agents to disclose, divulge, make known
or in any way communicate to any person in any part of the world, the BAE’s
proprietary and/or confidential information or BAE’s Company Information, other
that to FPI’s own employees, suppliers, subcontractors or consultants who need
to know or use such information for the limited purpose of enabling FPI to
exercise its rights or perform its obligations under this License Agreement.

The forgoing shall not
apply in the event that the Confidential Information or BAE’s Company
Information (i) was in the public domain at the time of disclosure or
thereafter enters the public domain through no breach of this or any other
Agreement by FPI; (ii) was, at the time of receipt, otherwise known to FPI
without restrictions as to use or disclosure; (iii) becomes known to FPI from a
source other than BAE without breach of this or any other Agreement by FPI;
(iv) is developed independently by FPI and without the reliance upon BAE’s
proprietary and/or confidential information or BAE’s Company Information
disclosed hereunder, or (v) is disclosed with the written approval of BAE.

FPI acknowledges that the
BAE’s proprietary and/or confidential information and BAE’s Company Information
is and will be disclosed to it on the express condition that it be used only
for the limited and specific purpose of FPI exercising its rights and
performing its obligations under this License Agreement and FPI will not
otherwise use or attempt to use any of the BAE’s proprietary and/or
confidential information or BAE’s Company Information for its own advantage or
gain directly or indirectly. FPI shall not use or attempt to use any of the BAE’s
proprietary and/or confidential information or BAE’s Company Information in any
manner which may cause or be calculated to cause injury or loss (including
injury or loss of or to, goodwill, customer confidence, commercial
relationships or intellectual property rights) to BAE or any company related to
BAE. FPI shall not copy the BAE’s proprietary and/or confidential information
or BAE’s Company Information or allow it to be copied in whole or in party
except as required under this agreement, without the prior written consent of
BAE.

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

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

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

·         Informs BAE in writing, with as much advance
notice as possible, of the proposed disclosure, giving full details of the
circumstances of the proposed disclosure and of the relevant information to be
disclosed;

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

·         Furnishes only that portion of the BAE’s
proprietary and/or confidential information or BAE’s Company Information which
it is advised by written opinion of its legal counsel is legally required to be
disclosed; and

·         Exercises
its best efforts to obtain reliable assurances that confidential treatment will
be accorded to the BAE’s proprietary and/or confidential information.

The obligations hereunder
relating to the treatment of the BAE’s proprietary and/or confidential
information and BAE’s Company Information shall survive the termination of this
agreement for a period of three years.

Infringements & Exclusions:

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

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

·         shall bear all costs of the action;

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

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

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

·         shall
indemnify BAE against any costs or damages for which BAE may become liable as a
result of the proceedings provided that BAE has not authorized or contributed
to the acts giving rise to the liability.

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BAE will give FPI all
authority, information and assistance requested by FPI to assist it to
initiate, litigate, settle or compromise any proceedings by FPI in respect of
any such infringement or misuse.

Default by BAE:

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

Post Termination-Expiration:

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

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

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

·         immediately stop manufacturing the ILAV
Vehicles;

·         immediately deliver to FPI an inventory
listing all ILAV Vehicles manufactured pursuant to the terms of this License
Agreement by BAE but as yet undelivered; and

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

Restriction on Disclosure:

BAE acknowledges that the
ILAV Vehicle is a defense article subject to applicable Federal export and
import regulations, including but not limited to, the U.S. Arms Export Control
Act, as amended (22 U.S.C. §§ 2751-2799), the International Traffic in Arms
Regulations, as amended (22 C.F.R. Part 120 et seq.), the Export Administration
Act, as amended (50 U.S.C. §§ 2401-2420), the U.S. Export Administration
Regulations, as amended (15 C.F.R. § 730 et seq.) and the requirements of the
National Industrial Security Program Operating Manual (“NISPOM”). BAE (and its
subcontractors, vendors and suppliers) shall not export, disclose, furnish or
otherwise provide any technical information or services relating to the ILAV to
any foreign person or entity, whether within the U.S. or abroad, without
obtaining in advance FPI’s prior approval and (if required) appropriate U.S.
Government export authorization.

Miscellaneous:

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

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

Assignment.  Either party may transfer and assign its
rights and obligations under this License Agreement to any entity which
succeeds to its business and assets by acquisition, merger or consolidation or
which purchases the business and all or substantially all of the assets of the
transferor. Except as so provided, neither party may transfer or assign any of
its rights and obligations under this License Agreement without the written
consent of the other party.

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

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

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

Survival of License
Agreement. All representations, warranties, covenants, and
agreements contained herein shall bind BAE and its successors and assigns, and
shall inure to the benefit of FPI and its successors and assigns.

Waivers.  Rights and remedies of FPI hereunder are
cumulative, and the exercise or partial exercise of any right or remedy shall
not preclude the exercise of any other right or remedy. No failure to exercise
and no delay in exercising any power or right under this License Agreement
shall operate as a waiver thereof.

IN WITNESS
WHEREOF, the parties hereto have caused this instrument to be duly executed as
of the date first above written. The parties agree that this License Agreement
may be signed in counter-part copies and that facsimile copies of such
counterparts shall be binding upon the parties to the same extent as the
originals.

 8
 

 

 

	
  FORCE PROTECTION INDUSTRIES, INC.

  
	
   

  
	
  By:

  	
    /s/ Raymond Pollard

  	
   

  
	
  Name: Raymond Pollard

  
	
  Title: Chief Operating Officer

  
	
   

  
	
  Date:

  	
  July 24, 2006

  	
   

  
	
   

  
	
   

  
	
  BAE SYSTEMS LAND & ARMAMENTS L.P.

  
	
  Ground Systems Division

  
	
   

  
	
  By:

  	
  /s/ S. Rajagopal

  	
   

  
	
  Name: S. Rajagopal

  
	
  Title: V.P. and General Manager

  
	
   

  
	
  Date:

  	
  July 24, 2006

  	
   

  
							

 

 9Exhibit 10.2

 

Logistic
Support Agreement

This Agreement (“Agreement”)
dated as of the 13 day of June, 2006, between Force Protection Industries, Inc.
(“FPI”), and   BAE Systems Land & Armaments, L.P. acting through
its Ground Systems Division (“GSD”).

WHEREAS, GSD has entered
into contract with the Government for Iraqi Light Armoured Vehicles (“ILAV”)
identified as W56HZV-06-D-VB01 (“Prime Contract”); and

WHEREAS, GSD has entered
into a subcontract with FPI for services, including the furnishing of all Contractor
logistic support under the Prime Contract (“Subcontract”); and

WHEREAS, the parties
desire to further define their relationship for the provision of contractor
logistic support under the Subcontract and for future contractor logistic
support for the ILAV’s since FPI is the owner of the ILAV design and is
experienced in providing these services.

NOW, THEREFORE, in
accordance with the premises and mutual covenants contained herein, the parties
agree as follows:

1.                                       Definition

(a)                                Contractor
logistics support shall mean vehicle maintenance to cover routine and non                                                                        routine
maintenance through depot level support; train the trainee “operator/driver’
and maintenance training to an “intermediate” or direct support level;
provision of spare and repair parts; and manuals (“CLS”).

(b)                               Future
contracts shall mean any arrangement that GSD or its affiliates enters into
during the five (5) year period immediately after Prime Contract completion for
the provision of any CLS for the ILAV (Future Contracts)

2.                                       Obligation
of the Parties

(a)                                  GSD
shall award to FPI under the subcontract all CLS orders it receives under the
Prime Contract for the current ILAV’s and any ILAVS ordered under any options.
GSD shall provide FPI with all information on, and access to, the BAE vehicles
at its facility or the facilities of others to enable FPI to complete its CLS
work under the Subcontract.

(b)                                 GSD
shall forward to FPI any requests it receives for Future Contracts for CLS, in
order for FPI to act as the prime if allowed by the potential customer. In the
event that the potential customer does not allow FPI to be the prime by virtue
of GSD’s role as prime contractor under Contract W56HZV-06-D-VB01, then the
parties shall proceed as provided herein and GSD shall award the CLS to FPI under
a new contract, which terms will be consistent the any orders it receives for
CLS under any Future Contracts and the Subcontract at prices mutually agreed to
by the parties.

3.                                       Proposal
and Marketing Activity

During the term of this Agreement, the parties will work together to
jointly prepare proposals for Future Contracts whenever the customer does not
allow FPI to be the prime by virtue of GSD’s role as the prime contractor under
Contract W56HZV-06-D-VB01, per paragraph 2(b), above, and will cooperate as
required in marketing efforts during and after submission of said proposals.
All proposals will be prepared in the English language and, whenever necessary,
translated into a foreign language by GSD before being submitted
to potential customers. GSD shall keep FPI informed of all of its marketing
activities regarding any proposal submitted or intended to be submitted.

 1
 

 

Subject to prior mutual consent, which consent shall not be
unreasonably withheld, the parties may make public to customers and other third
parties the nature of their relationship under this Agreement.

4.                                       Termination

Except for the obligations of Section 6, 8, 9 and 10 of this Agreement,
which shall survive the expiration or early termination hereof, this Agreement
will terminate five (5) years after the completion of the Prime Contract.

5.                                       Expenses

Except for compensation which may be paid to the parties by customers
pursuant to the Prime Contract, Subcontract or any Future Contract, each party
shall bear all of its own expenses incurred in connection with this Agreement.

6.                                       Negation
of the Formation of a Business Organization

This Agreement shall not constitute, create, or in any way be
interpreted to create a joint venture, partnership, or formal business
organization of any kind between the parties.

7.                                       Assignment

Neither party may assign nor transfer its interest herein without the
prior consent of the other party, provided, however, that either party may
assign this agreement without the consent of the other party to any successor
by way of merger, consolidation or the acquisition of substantially all of its
business assets.

8.                                       Disclosure
and Protection Information

The parties shall
comply with the confidentiality provisions of the subcontract.

9.                                       Export
Controls

Whensoever, under paragraph 2(b), GSD is the prime
contractor for CLS, GSD shall be responsible for securing all export licenses
and other authorizations required in order for FPI to perform its obligations
under the subcontract.

10.                                 Special
U.S. Law

The parties agree to comply fully with the U.S. Foreign Corrupt
Practices Act and warrant that they are, and will remain, in full compliance
with all applicable laws and regulations of any and all countries related to
the performance of services for the project hereunder. Furthermore, the parties
warrant, covenant and agree that, in the performance of this Agreement and in
connection with the sale of products and services covered by this Agreement the
parties have not and will not in the future, directly or indirectly, offer,
pay, promise to pay or authorize the payment of any money or offer, give,
promise to give, or authorize the giving of anything of value to:

any government official or any political party or official thereof, or
any candidate for political office; or

any other person while knowing or having reason to know that all or a
portion of such money or thing of value will be offered, given or promised
directly or indirectly, to any such official, to any such political party of
official thereof, or to any candidate for political office;

for the purpose
of:

influencing any action or decision of such official, party or official
thereof, or candidate in his or its official capacity, including a decision to
fail to perform his or its official functions, or inducing such official, party
or official thereof, or candidate to use his or its influence with any
government

 2
 

 

or instrumentality thereof to effect or influence any act or decision
of such government or instrumentality, in order to assist the parties in
obtaining or retaining business for or with or directing business to any
person.

11.                                 Agreement

This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof, and may not be modified, altered or
amended, nor may any provision hereof or right hereunder be waived, except by
an instrument in writing signed by the party against which such modification,
alteration, amendment or waiver is sought to be enforced. This Agreement shall
be governed by, and construed in accordance with, the laws of New York. All
notices, demands and other communications hereunder shall be in writing in the
English language and delivered to the parties at their respective principal
executive offices.

12.                                 Disputes
 —  The parties shall follow the disputes
provisions of the Subcontract.

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above written.

Force Protection Industries, INC.

 

	
  By:

  	
    /s/ Raymond Pollard

  	
   

  
	
        Raymond Pollard

  	
   

  
	
        Chief Operating Officer

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  July 13, 2006

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  BAE Systems Land
  & Armaments L.P. Ground Systems Division

  	
   

  
	
   

  	
   

  
	
    /s/ Kenneth Mettler

  	
   

  
	
   

  	
   

  
	
  By Kenneth
  Mettler

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  July 13, 2006

  	
   

  
									

 

 3

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