February 2, 2006

The Allied Defense Group, Inc.
8000 Towers Crescent Drive, Suite 260
Vienna, Virginia 22182
Attn: Robert Dowski, Chief Financial Officer

      Re: Loan and Security Agreement dated as of May 28, 2004 (as amended from
time to time, the “Loan” agreement) by and among The Allied Defense Group, Inc.,
a Delaware corporation (“Company”), News/Sports Microwave Rental, Inc., a
California corporation, Titan Dynamics Systems, Inc., a Texas corporation,
SeaSpace Corporation, a California corporation, MECAR USA, Inc., a Delaware
corporation, Allied Research Corporation Limited, a company formed under the
laws of England and Wales, Energa Corporation, a Maryland corporation, ARC
Europe, S.A., a Belgium company, and Global Microwave Systems, Inc., a
California corporation, as borrowers (individually, a “Borrower” and
collectively, “Borrowers”), and Patriot Capital Funding LLC I, a Delaware
limited liability company, successor in interest to Wilton Funding, LLC, a
Delaware limited liability company, as lender (“Lender”)

Ladies and Gentlemen:

As you are aware, Borrowers are currently in default and a Matured Default
exists under the Loan Agreement and the other Financing Agreements due to
(i) the failure of Company to satisfy the Collateral Requirement set forth in
Section 1.9 of the Deposit Account Security Agreement, and (ii) the failure of
Borrowers to keep and observe other covenants, conditions, promises or
agreements contained in the Financing Agreements. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to such terms in the
Loan Agreement.

Commencing on the date hereof, any and all amounts due under the Note or under
any other Financing Agreement, whether for principal, interest, fees, expenses
or otherwise, shall bear interest at a rate per annum equal to the Default Rate,
which accrued interest shall be payable for the immediately preceding one month
period by the issuance of additional promissory notes in a form approved by
lender in the aggregate principal amount equal to the amount of interest
calculated at the Default Rate.

By execution and delivery of this letter, Lender is not waiving the Matured
Defaults. Lender reserves the right to enforce all provisions contained in the
Financing Agreements. Furthermore, Lender’s actions in executing and delivering
this letter shall not be construed as a waiver or relinquishment, or estoppel to
assert, any of Lender’s rights under the Financing Agreements or applicable law
and are without prejudice to Lender’s right to pursue any and all remedies
available to it. Nothing contained in this letter shall be deemed to be or
construed to be a release or waiver by Lender of Borrowers, and nothing
contained herein shall in any manner or form impair the validity of any lien or
security interest granted pursuant to the Financing Agreements. This letter does
not constitute a discharge or novation of any Financing Agreement, and such
documents shall continue in full force and effect and shall be fully binding
upon all parties thereto.

Very Truly Yours,

PATRIOT CAPITAL FUNDING LLC I,
A Delaware limited liability company

By:      
Name:      
Title: