LICENCE AGREEMENT

Exhibit 10.4

LICENCE AGREEMENT

MEMORANDUM OF AGREEMENT ENTERED INTO BETWEEN:

THE CSIR

a statutory council, duly established under Act 46 of
1988, through its Operating Unit of Defence Peace
Safety & Security (DPSS) herein represented by
Andre Nepgen in his capacity as Executive Director
and he being duly authorised thereto

(hereinafter referred to as “the LICENSOR”)

and

FORCE PROTECTION TECHNOLOGIES INC.
(Registration No. Nevada C18478-2002)

a company incorporated under the laws of Nevada
with its principal place of business at 9801 Hwy 78,
Ladson, South Carolina 29456, United States of
America, herein represented by Mr. Gordon
McGilton in his capacity as President and he being
duly authorized thereto

(hereinafter referred to as “the LICENSEE”)

WHEREAS :

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

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

c)                                       the PARTIES negotiated and reached agreement regarding the intellectual property rights to be licensed to the LICENSEE; the EXPLOITATION of the PATENT by the LICENSEE; and the consideration payable by the LICENSEE to the LICENSOR.

NOW WHEREFORE the PARTIES hereby record their agreement as follows:

1.                                        PREAMBLE

The PARTIES confirm the correctness of the preamble to this agreement, which forms an integral part thereof.

2.                                        SCOPE OF THIS AGREEMENT

2.1                                This agreement sets out the terms for the granting of:

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

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

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

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

3.                                       DEFINITIONS AND INTERPRETATION

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

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

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

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

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

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

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

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

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

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

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

3.2                                  In this agreement, unless the context otherwise indicates:

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

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

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

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

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

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

4.                                        SUSPENSIVE CONDITIONS

4.1                                This Agreement is subject to the following suspensive condition:

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

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

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

5.                                        LICENCED RIGHTS

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

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

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

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

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

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

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

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

5.4                                Should the LICENSEE fail to achieve a consistent level of sales as set out in the table below (“the minimum royalty”) through the application of the TECHNOLOGY and fail to pay over to the LICENSOR the balance between actual sales achieved and the specific minimum royalty fee, the LICENSOR shall have the right to, in its sole discretion, convert the exclusive nature of License 2 for a specific country in the TERRITORY as provided for in 5.2.1 to a non-exclusive license, or terminate the license.

5.4.1                       For the first 3 (three) years after the COMMENCEMENT DATE, royalty payments from any one country in the TERRITORY in excess of that country’s minimum royalty payment, may be calculated towards the

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

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

5.6                                  On the termination of this agreement:

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

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

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

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

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

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

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5.8                                If, on termination of this agreement, LICENSEE has PRODUCTS in stock that are the property of LICENSEE or a LICENSEE customer, LICENSEE may sell or deliver, as the case may be, such PRODUCTS in the TERRITORY within 12 (twelve) months after such termination provided LICENSEE pays to LICENSOR applicable royalties under clause 9.3.

6.                                       TITLE TO THE INTELLECTUAL PROPERTY

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