Unassociated Document


    FIRST AMENDMENT
TO

     

    ACCOUNTS RECEIVABLE PURCHASE
AGREEMENT

    


     

    THIS FIRST AMENDMENT TO ACCOUNTS
RECEIVABLE PURCHASE AGREEMENT, dated as of October 20, 2009 (this “Amendment”), between
Republic Capital Access, LLC, a Delaware limited liability company (“RCA”), and
American Defense Systems, Inc, a Delaware corporation (“ADSI”). Capitalized
terms used in this Amendment and not otherwise defined herein shall have the
meanings given to such terms in the Agreement (as defined below).

     

    W I T N E S S E T
H:

     

    WHEREAS,
ADSI and RCA (collectively the “Parties”) entered
into an Accounts Receivable Purchase Agreement (the “Agreement”), dated
the 23rd day of July 2009;

    


    WHEREAS,
the Parties wish to amend certain terms of the Agreement; and

    


    WHEREAS,
in furtherance of the foregoing, the Parties desire to enter into this Amendment
to amend the Agreement, as hereinafter set forth.

     

    NOW,
THEREFORE, in consideration of the foregoing, of the mutual promises herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
legally and equitably to be bound, hereby agree as follows:

    


    SECTION
1. AMENDMENT TO THE AGREEMENT

    


    Effective as of the date hereof, the
Agreement is amended as follows:

     

    
      	
               
      

            	
              1.1

            	
              The
      definition of “Availability Period” in Section 1.1 of the Agreement is
      amended and restated in its entirety as
follows:

            


    

     

    ““Availability Period”
shall mean the period from and including the date hereof to October 15, 2010;
provided, however, that if the
term of this Agreement is extended in accordance with Section 10.10 hereof,
the Availability Period will be extended as determined by Buyer in its sole
discretion.”

     

    
      	
               
      

            	
              1.2

            	
              Subsection
      (d) of the definition of “Eligible Contractor” in Section 1.1 of the
      Agreement is amended and restated in its entirety as
    follows:

            


    

     

    “(d) has
been deemed to be “responsible” in accordance with the FAR and to have been
determined by the Account Debtor to be satisfactory after reviewing the United
States Government Contractor Performance Assessment Reporting System, or has
otherwise been determined to be satisfactory by the Account
Debtor.”

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
               
      

            	
              1.3

            	
              The
      definition of “Eligible Receivable” in Section 1.1 of the Agreement is
      amended and restated in its entirety as
follows:

            


    

     

    ““Eligible Receivable”
A bona fide receivable arising from an invoice that has been sent to and
approved for payment by an Account Debtor (to the extent required by Buyer)
pursuant to a contract between an Account Debtor, as obligor, and Seller, and
all Related Security thereof: (a) that is either (i) a “Service Contract” (as
defined in FAR 37.101) between Seller and the Account Debtor, provided, however, that an
Eligible Receivable shall not be deemed to arise from a construction contract,
or (ii) a contract between Seller and the Account Debtor for the delivery of
products, provided that the
delivery of such products can be verified by Buyer; (b) that has been purchased
by the Buyer from the Seller in accordance with this Agreement; (c) that has
been executed by an authorized officer of the Seller who has verified that
adequate funds are available and no appropriations approval is required for the
Seller to enter into the contract; (d) that satisfies all of the criteria of any
due diligence review conducted by Buyer, RCA, CBH or the Underwriter; (e) that
is denominated and payable only in U.S. dollars by electronic funds transfer and
only in the United States and no later than the later of (i) sixty (60) days
from the Account Debtor’s receipt of the invoice and (ii) sixty (60) days after
the Account Debtor has accepted the supplies delivered or the services performed
to which the invoice relates; (f) that all payments with respect thereto have
been validly directed to be made directly to the Segregated Account and, in the
event that the Government is the Account Debtor, such payments have been validly
assigned to Buyer pursuant to the Assignment of Claims Act, and all payments
with respect thereto have been validly directed to be made directly to the
Segregated Account; (g) with respect to which, immediately following the
transfer of such Eligible Receivable to Buyer as contemplated by this Agreement,
the Borrower shall have good title to such Eligible Receivable, free and clear
of any Liens; (h) the sale and assignment of which by Seller to Buyer does not
contravene or conflict with any applicable laws or contractual obligation or
other restriction, limitation or encumbrance, and do not require any consent
that has not been obtained; (i) the contracts, documents, instruments and other
items with respect to which (i) contain customary and enforceable provisions
such that the rights and remedies of the holder thereof are adequate for the
practical realization against any related collateral or purchased assets of the
benefits of the security or ownership thereof and (ii) do not contain any
confidentiality (or any other) provisions that would restrict the ability of
Buyer to exercise its powers,  rights and remedies under this
Agreement; (j) as to which the right to receive payments thereunder is an
“account” or a “payment intangible”, within the meaning of the UCC; (k) which
arises under contracts, documents, instruments and other items that (i) have
been duly authorized, are in full force and effect and constitute the legal,
valid and binding obligations of the related Account Debtor and Seller,
enforceable against such Account Debtor and Seller in accordance with their
terms (except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally and the effects
of general principles of equity) and (ii) are not subject to any dispute, claim,
defense, offset or counterclaim; (l) as to which no portion of the Related
Security has been released (in whole or in part) from any Lien or security
interest therein granted by the related Account Debtor to the Seller; (m) which,
together with the contracts, documents, instruments and other items related
thereto, do not contravene in any material respect any Applicable Laws; (n)
which arises under contracts, documents, instruments and other items, none of
the parties to which have done or failed to do anything that would or might
permit any other party thereto (other than the Borrower in exercising its rights
or remedies thereunder) to terminate any such contracts, documents, instruments
and other items or to suspend or reduce any payments or obligations due or to
become due thereunder at any time after it becomes an Eligible Receivable; and
(o) which at no point in time has failed to meet each of the criteria to
constitute an Eligible Receivable set forth in subsections (a) through (m)
above. Notwithstanding anything in this definition to the contrary, the first
three (3) invoices or the last invoice with respect to any contract shall not be
deemed an “Eligible Receivable” unless (i) any such receivable is submitted and
validated through a web-based system such as “Wide Area Workflow” (WAWF) or (ii)
KBC, in its sole discretion, (1) satisfied with the verbal confirmation that KBC
has received from an appropriate government official that any such receivable is
proper and will be submitted for payment or (2) is satisfied with the validation
of such receivable through some other means.”

     

    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              1.4

            	
              Under
      section 3.5 of the Agreement (Discount Factor), the Discount Factor Rate
      is amended to be: .4075%.

            


    

     

    
      	
               
      

            	
              1.5

            	
              Section
      7.1.8 of the Agreement (Assignment of Claims Act) is amended and restated
      in its entirety as follows:

            


    

     

    “Assignment of Claims
Act.  In the event the Government is the Account Debtor, prior
to each sale of Purchased Receivables hereunder, all steps shall have been taken
necessary or appropriate under the Assignment of Claims Act to insure that (i)
each Purchased Receivable being sold has been validly assigned to Buyer, or
Buyer’s designee, as bona fide financing institution(s), (ii) Seller has validly
assigned such Purchased Receivables to Buyer, or Buyer’s designee, and (ii) all
payments and Collections with respect to such Purchased Receivables have been
validly directed to be made directly to the Segregated Account.”

     

    SECTION
2. REPRESENTATIONS AND WARRANTIES

     

    In order
to induce RCA to enter into this Amendment, ADSI hereby represents and warrants
to RCA as of the date hereof as follows:

     

    
      	
               
      

            	
              2.1

            	
              ADSI
      has the power and authority and legal right to execute and deliver this
      Amendment and to perform and observe the terms of this
      Amendment.  The execution, delivery and performance of this
      Amendment by ADSI have been duly authorized by ADSI by all necessary
      action and ADSI has duly executed and delivered this
      Amendment.

            


    

     

    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              2.2

            	
              This
      Amendment constitutes the legal, valid and binding obligation of ADSI,
      enforceable in accordance with its terms, except as enforceability may be
      limited by bankruptcy, insolvency, reorganization, moratorium or other
      similar laws now or hereafter in effect relating to creditors’ rights
      generally and by general equitable principles (whether enforcement is
      sought by proceedings in equity or at
law).

            


    

     

    
      	
               
      

            	
              2.3

            	
              No
      Event of Default has occurred and is continuing under the Agreement, both
      before and immediately after giving effect to this
    Amendment.

            


    

     

    
      	
               
      

            	
              2.4

            	
              Since
      June 30, 2009, no event or events have occurred which have had or could
      reasonably be expected to have, individually or in the aggregate, a
      Material Adverse Effect under the
Agreement.

            


    

     

    SECTION
3. MISCELLANEOUS

     

    
      	
               
      

            	
              3.1

            	
              From
      and after the Amendment Effective Date, all references to the Agreement
      shall, unless otherwise specifically provided, be references to the
      Agreement as amended by this Amendment and as the same may be amended,
      supplemented or otherwise modified from time to
  time.

            


    

     

    
      	
               
      

            	
              3.2

            	
              ADSI
      hereby ratifies and reaffirms all of its obligations, contingent or
      otherwise, under the Agreement. ADSI hereby acknowledges that, except as
      expressly modified herein, the Agreement remains in full force and effect
      and is hereby ratified and
reaffirmed.

            


    

     

    
      	
               
      

            	
              3.3

            	
              This
      Amendment may be executed by the Parties on any number of separate
      counterparts (including by facsimile or other electronic transmission),
      and all of said counterparts taken together shall be deemed to constitute
      one and

            


    

     

    
      	
               
      

            	
              3.4

            	
              THIS
      AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
      AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
      ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
      PRINCIPLES OF CONFLICTS OF LAW THEREOF WHICH WOULD REQUIRE THE APPLICATION
      OF THE LAW OF ANY OTHER
JURISDICTION.

            


    

     

    
      	
               
      

            	
              3.5

            	
              If
      any one or more of the covenants, agreements, provisions or terms of this
      Amendment shall for any reason whatsoever be held invalid, then such
      covenants, agreements, provisions or terms shall be deemed severable from
      the remaining covenants, agreements, provisions or terms of this Amendment
      and shall in no way affect the validity or enforceability of the other
      provisions of this Amendment or rights of any party hereto; provided, that
      in case any provision in or obligation under this Amendment should be
      invalid, illegal or unenforceable in any jurisdiction, the validity,
      legality and enforceability of the remaining provisions or obligations, or
      of such provision or obligation in any other jurisdiction, shall not in
      any way be affected or impaired thereby.  The parties hereto
      shall endeavor in good-faith negotiations to replace the invalid, illegal
      or unenforceable provisions with valid provisions the economic effect of
      which comes as close as possible to that of the invalid, illegal or
      unenforceable provisions.

            


    

     

    
      
         


      

      
        4

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              3.6

            	
              Section
      headings used herein are for convenience of reference only, are not part
      of this Amendment and are not to affect the construction of, or to be
      taken into consideration in interpreting, this
  Amendment.

            


    

     

     

     

    [Signatures
appear on the following page.]

     


    
      
         


      

      
        5

        
          

        

      

      
         


      

    


    IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be executed by their duly
authorized officers as of the date first above written.

     

     

    
      	 
      	
              REPUBLIC
      CAPITAL ACCESS, LLC

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	/s/
      Edward J. Stucky	 
      
	 
      	
              Name:

            	Edward
      J. Stucky	 
      
	 
      	
              Title:

            	President
      & CEO	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              AMERICAN
      DEFENSE SYSTEMS, INC.

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	/s/
      Connie Chu	 
      
	 
      	
              Name:

            	Connie
      Chu	 
      
	 
      	
              Title:

            	Controller	 
      


    

     

    
      
         


      

      
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