Document:

Exhibit 10.1

 

SECURED
NOTE

 

	
  Note
  Principal: $2,500,000

  	
   

  	
  Original
  Issue Date: November 18, 2005

  
	
   

  	
   

  	
  Reissue
  Date: As of February 18, 2006

  

 

FOR
VALUE RECEIVED, FORCE PROTECTION, INC., (hereinafter called “Borrower”), hereby
promises to pay to FORT ASHFORD FUNDS, LLC, 19200 Von Karman, Suite 600,
Irvine, CA 92612, Fax: (949) 315-3800 (the “Holder”) or order, without demand,
the sum of Two Million Five Hundred Thousand Dollars ($2,500,000), with simple
interest, on March 20, 2006 (the “Maturity Date”).

 

The
following terms shall apply to this Note:

 

ARTICLE I

 

GENERAL PROVISIONS

 

1.1                                 Payment Grace Period. The Borrower shall have a three (3) business
day grace period to pay any monetary amounts due under this Note.

 

1.2                                 Repayment. The Principal of this Note and all sums due in connection herewith
shall be due and payable in full on the Maturity Date. This Note may be repaid
at any time without penalty.

 

1.3                                 Interest Rate. Simple interest payable on the outstanding
Principal of this this Note shall accrue from and after the Maturity Date,
accelerated or otherwise, at the annual rate of twenty-four percent (24%), the
principal and remaining accrued but unpaid interest shall be due and payable.

 

ARTICLE II

 

EVENT OF DEFAULT

 

The
occurrence of any of the following events of default (“Event of Default”)
shall, at the option of the Holder hereof, make all sums of principal and
interest then remaining unpaid hereon and all other amounts payable hereunder
immediately due and payable, upon demand, without presentment, or grace period,
all of which hereby are expressly waived, except as set forth below:

 

2.1                                 Failure to Pay Principal or Interest. The Borrower fails to pay any installment of
principal, interest or other sum due under this Note when due and such failure
continues for a period of three (3) business days after the due date. The three
(3) business day period described in this Section 2.1 is the same three (3)
business day period described in Section 1.1 hereof.

 

2.2                                 Breach of Covenant. The Borrower breaches any material covenant
or other term or condition of the Security Agreement entered into in connection
with this Note or this Note in any material respect and such breach, if subject
to cure, continues for a period of three (3) business days after written notice
to the Borrower from the Holder.

 

2.3                                 Breach of Representations and Warranties. Any material representation or warranty of
the Borrower made herein as of the date hereof or any statement or certificate
given in writing pursuant hereto or in connection herewith shall be false or
misleading in any material respect as of the date made and such breach has a
material adverse effect upon the Lender’s rights under the Transaction
Documents.

 

2.4                                 Receiver or Trustee. The Borrower shall make an assignment for
the benefit of creditors, or apply for or consent to the appointment of a
receiver or trustee for Borrower for a substantial part of Borrower’s property
or business; or such receiver or trustee shall be involuntarily appointed and
not dismissed within forty-five days.

 

2.5                                 Judgments. Any money judgment, writ or similar final process shall be entered or
filed against Borrower or any of Borrower’s property or other assets for more
than $100,000, and shall remain unpaid, unvacated, unbonded or unstayed for a
period of forty-five (45) days.

 

2.6                                 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or
other proceedings or relief under any bankruptcy law or any law, or the
issuance of any notice in relation to such event, for the relief of debtors shall
be instituted by or against the Borrower.

 

2.7                                 Cross Default. A default by the Borrower of a material
term, covenant, warranty or undertaking of any other agreement to which the
Borrower and Holder are parties, or the occurrence of a material

 

 

event of default under any such other
agreement which, if capable of cure, is not cured within three (3) business
days after written notice to the Borrower from the Holder.

 

2.8                                 Non-Payment. A payment default by the Borrower under any one or more obligations in
an aggregate monetary amount in excess of $100,000 for more than twenty days
after the due date, unless the Borrower is contesting the validity of such
obligation in good faith and has segregated funds equal to the amount demanded.

 

ARTICLE III

 

SECURITY INTEREST

 

3.                                       Security Interest/Waiver of Automatic Stay. This Note is secured by a security interest
granted to the Collateral Agent for the benefit of the Holder pursuant to a
Security Agreement, as delivered by Borrower to Holder. The Borrower acknowledges
and agrees that should a proceeding under any bankruptcy or insolvency law be
commenced by or against the Borrower, or if any of the Collateral (as defined
in the Security Agreement) should become the subject of any bankruptcy or
insolvency proceeding, then the Holder should be entitled to, among other
relief to which the Holder may be entitled under the Transaction Documents and
any other agreement to which the Borrower and Holder are parties (collectively,
“Loan Documents”) and/or applicable law, an order from the court granting
immediate relief from the automatic stay pursuant to 11 U.S.C. Section 362 to
permit the Holder to exercise all of its rights and remedies pursuant to the
Loan Documents and/or applicable law. THE BORROWER EXPRESSLY WAIVES THE BENEFIT
OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE, THE
BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362
NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE
(INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT,
CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER TO ENFORCE
ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW. The
Borrower hereby consents to any motion for relief from stay that may be filed
by the Holder in any bankruptcy or insolvency proceeding initiated by or
against the Borrower and, further, agrees not to file any opposition to any
motion for relief from stay filed by the Holder. The Borrower represents,
acknowledges and agrees that this provision is a specific and material aspect
of the Loan Documents, and that the Holder would not agree to the terms of the
Loan Documents if this waiver were not a part of this Note. The Borrower
further represents, acknowledges and agrees that this waiver is knowingly,
intelligently and voluntarily made, that neither the Holder nor any person
acting on behalf of the Holder has made any representations to induce this
waiver, that the Borrower has been represented (or has had the opportunity to
he represented) in the signing of this Note and the Loan Documents and in the
making of this waiver by independent legal counsel selected by the Borrower and
that the Borrower has discussed this waiver with counsel.

 

ARTICLE IV

 

MISCELLANEOUS

 

4.1                                 Failure or Indulgence Not Waiver. No failure or delay on the part of Holder
hereof in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other right, power or privilege. All rights and remedies existing hereunder are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.

 

4.2                                 Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to
be given hereunder shall be deemed effective (a) upon hand delivery or delivery
by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered on a
business day during normal business hours where such notice is to be received),
or the first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: (i) if to the Borrower to: Force Protection, Inc.,
9801 Highway 78, #3, Ladson, SC 29456, telecopier: (843) 553-3832 with a copy
by telecopier only to: Amy Trombly, Esq., Trombly Business Law, 1320 Centre
Street, Suite 202, Newton Center, MA 02459, Fax: (617) 243-0066, and (ii) if to
the Holder, to the name, address and telecopy number set forth on the front
page of this Note, with a copy by telecopier only to Grushko & Mittman,
P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176, telecopier
number: (212) 697-3575.

 

4.3                                 Amendment Provision. The term “Note” and all reference thereto,
as used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented.

 

4.4                                 Assignability. This Note shall be binding upon the Borrower
and its successors and assigns, and shall inure to the benefit of the Holder
and its successors and assigns.

 

4.5                                 Cost of Collection. If default is made in the payment of this
Note, Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys’ fees.

 

 

4.6                                 Governing Law. This Note shall be governed by and construed
in accordance with the laws of the State of New York. Any action brought by
either party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York situated in New York County. Both
parties and the individual signing this Agreement on behalf of the Borrower
agree to submit to the jurisdiction of such courts. The prevailing party shall
be entitled to recover from the other party its reasonable attorney’s fees and
costs.

 

4.7                                 Maximum Payments. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate
of interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.

 

4.8                                 Redemption. This Note may not be redeemed or called without the consent of the
Holder except as described in Section 1.2.

 

IN WITNESS WHEREOF, Borrower has caused this Note to be signed
in its name by an authorized officer and reissued as of the 18th day
of February, 2006.

 

 

	
   

  	
  FORCE
  PROTECTION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gordon McGilton

  	
   

  
	
   

  	
   

  
	
   

  	
  Gordon McGilton

  	
   

  
	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  WITNESS:Exhibit 10.2
 

MODIFICATION AND ASSIGNMENT
AGREEMENT

 

This Modification and Assignment Agreement (“Agreement”)
dated as of February 13, 2006 is entered into by and among Force
Protection, Inc., a Nevada corporation (the “Company”) and the subscribers
identified on Schedule A attached hereto (each a “Subscriber” and
collectively “Subscribers”).

 

WHEREAS, the Company and the Subscribers are parties
to Subscription Agreements dated as of November 18, 2005 (“Subscription
Agreement”) relating to promissory notes (“Notes”) in the amounts set forth on Schedule A
attached hereto;

 

WHEREAS, contemporaneously with the effectiveness of
this Agreement, Fort Ashford Funds, LLC, has become a Subscriber pursuant to an
Assignment agreement of even date herewith; and

 

WHEREAS, the Company has requested that the Maturity
Dates of the Notes be extended to April 20, 2006.

 

NOW THEREFORE, in consideration of the mutual
covenants and other agreements contained in this Agreement, the Company and the
Subscribers hereby agree as follows:

 

1.                                       All the capitalized terms employed herein
shall have the meanings attributed to them in the Subscription Agreement and
the documents and agreements delivered therewith.

 

2.                                       For the benefit of the Subscribers hereto, the
Company hereby renews all of the representations, warranties, covenants
undertakings and indemnifications contained in the Transaction Documents, as if
such representations were made by the Company as of this date.

 

3.                                       The Maturity Date in connection with
$6,250,000 of the aggregate Principal amount of the Notes as set forth on Schedule A
hereto (“Extended Amount”) is extended until April 20, 2006 (“Extension”)
on the terms and conditions described in this Agreement.

 

4.                                       The First Extension will be effective if all
of the following conditions are satisfied:

 

(a)                                  Upon the execution of this Agreement, the
Company pays to each Subscriber, a non-refundable payment equal to four percent
(4%) of each Subscriber’s Extended Amount representing the interest due for the
period of the Extension.

 

(b)                                 Upon the execution of this Agreement, the
Company pays to Longview Fund L.P. the sum of $75,833 representing such
Subscriber’s portion of the Restructuring Fee.

 

(c)                                  Upon the execution of this Agreement, the
Company pays to Longview Equity Fund L.P. the sum of $11,677 representing such
Subscriber’s portion of the Restructuring Fee

 

(d)                                 Upon the execution of this Agreement, the
Company pays to Fort Ashford Funds LLC the sum of $50,000 representing a
portion of the Restructuring Fee.

 

(e)                                  The Company pays to Longview Fund, L.P., and
Longview Equity Fund, L.P. on February 18, 2006, the balance of the
Principal amount of their Notes that is not being extended described on Schedule A
hereto as “Payoff Amount”.

 

(f)                                    An Event of Default does not occur.

 

5.                                       Timely performance by the Company is of the
essence hereunder.

 

6.                                       All other terms and conditions of the
Transaction Documents, including any damages or interest which have or may
accrue shall remain in full force and effect and payable.

 

7.                                       Each of the undersigned states that he has
read the foregoing Agreement and understands and agrees to it.

 

8.                                       This Agreement may be executed and delivered
by telecopier.

 

 

	
   

  	
   

  	
  FORCE PROTECTION, INC.

  
	
   

  	
   

  	
  the “Company”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gordon McGilton

  	
   

  
	
   

  	
   

  	
  Gordon McGilton

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ S. Michael Rudolph

  	
   

  	
  /s/ Wayne H. Coleson

  	
   

  
	
  LONGVIEW FUND, L.P.

  	
   

  	
  LONGVIEW EQUITY FUND, L.P

  
	
   

  	
   

  	
   

  
	
  S. Michael Rudolph

  	
   

  	
  Wayne H. Coleson

  
	
  Investment Advisor

  	
   

  	
  Investment Advisor

  
	
   

  	
   

  	
   

  
	
  /s/ Frank Kavanaugh

  	
   

  	
   

  
	
  FORT ASHFORD FUNDS, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	Frank Kavanaugh
	
   

  	
   

  
	
  Principal

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