Exhibit 10.3


 


Lock-Up Agreement


 


May     , 2009


 


American
Defense Systems, Inc.


230 Duffy Avenue, Unit C

Hicksville, NY 11801


 


Re:  American
Defense Systems, Inc.— Lock-Up Agreement


 


Dear
Sirs:


 


This Lock-Up
Agreement is being delivered to you in connection with the Settlement
Agreement, Waiver and Amendment (the “Agreement”),
dated as of May 22, 2009 by and among American Defense Systems, Inc.,
a Delaware corporation (the “Company”), and
the holders (the “Holders”) of
the convertible preferred stock of the Company designated as Series A
Convertible Preferred Stock (the “Series A Preferred
Stock”), which shares of Series A Preferred Stock are
convertible into shares of common stock of the Company, par value $0.001 per
share (the “Common Stock”).  Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
Agreement.


 


In order to induce the Holders to enter into the Agreement, the
undersigned agrees that, commencing on the Effective Date and ending on
date on which no shares of Series A Preferred Stock are outstanding (the “Lock-Up
Period”), the
undersigned will not (i) sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any
option to purchase, make any short sale or otherwise dispose of or agree to dispose of, directly or
indirectly, any shares of Common Stock, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position within
the meaning of Section 16 of the Securities Exchange Act of 1934, as
amended and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder with respect to any shares of Common Stock
owned directly by the undersigned (including holding as a custodian) or with
respect to which the undersigned has beneficial ownership within the rules and
regulations of the Securities and Exchange Commission as of the Effective Date (collectively, the “Undersigned’s
Shares”) or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Undersigned’s Shares, whether any such transaction is to be settled by delivery of such
securities, in cash or otherwise.  The
foregoing sentence shall not apply to the exercise of options or warrants or
the conversion of a security; provided, however, that the undersigned agrees
that the foregoing sentence shall apply to any securities issued by the Company
to the undersigned upon such an exercise or conversion.


 


The foregoing
restriction is expressly agreed to preclude the undersigned or any affiliate of
the undersigned from engaging in any hedging or other transaction which is
designed to or which reasonably could be expected to lead to or result in a
sale or disposition of the Undersigned’s Shares even if the Undersigned’s
Shares would be disposed of by someone other than the undersigned.  Such prohibited hedging or other transactions
would include, without limitation, any short sale or any purchase, sale or
grant of any right (including, without limitation, any put or call 


 

















 


option) with respect to
any of the Undersigned’s Shares or with respect to any security that includes,
relates to, or derives any significant part of its value from the Undersigned’s
Shares.


 


Notwithstanding
the foregoing, the undersigned may transfer the Undersigned’s Shares (i) as
a bona fide gift or gifts, provided that
the donee or donees thereof agree to be bound in writing by the restrictions
set forth herein, (ii) to any trust for the direct or indirect benefit of
the undersigned or the immediate family of the undersigned, provided that the
trustee of the trust agrees to be bound in writing by the restrictions set
forth herein, and provided further that any such transfer shall not involve a
disposition for value or (iii) in transactions relating to shares of
Common Stock hereafter acquired by the undersigned in open market
transactions.  For purposes of this
Lock-Up Agreement, “immediate family” shall mean any relationship by blood,
marriage or adoption, not more remote than first cousin.  In addition, notwithstanding the foregoing,
the undersigned may, during the Lock-Up Period, establish a trading plan
pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as
amended (and/or modify an existing trading plan), provided that no sales or
other transfers in excess of that otherwise permitted hereunder occur under
such plan during the Lock-Up Period.  The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar against the transfer of the
Undersigned’s Shares except in compliance with the foregoing restrictions.


 


The undersigned
understands and agrees that this Lock-Up Agreement is irrevocable and shall be
binding upon the undersigned’s heirs, legal representatives, successors, and
assigns.


 


This Lock-Up
Agreement may be executed in two counterparts, each of which shall be deemed an
original but both of which shall be considered one and the same instrument.


 


This Lock-Up
Agreement will be governed by and construed in accordance with the laws of the
State of Delaware, without giving effect to any choice of law or conflicting
provision or rule (whether of the State of Delaware, or any other
jurisdiction) that would cause the laws of any jurisdiction other than the
State of Delaware to be applied.  In
furtherance of the foregoing, the internal laws of the State of Delaware will
control the interpretation and construction of this Lock-Up Agreement, even if under
such jurisdiction’s choice of law or conflict of law analysis, the substantive
law of some other jurisdiction would ordinarily apply.  Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of Wilmington, Delaware, for the adjudication
of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper.


 


By its
acknowledgement hereof, the Company agrees, for the benefit of the Holders,
that it shall not, without the prior written consent of the holders of a
majority of the outstanding shares of Series A Preferred Stock, amend or
waive any provision of this Lock-Up Agreement except to extend the term of the
Lock-Up Period.


 


[Signature Page Follows]


 


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  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exact Name of
  Stockholder

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  



 


Agreed to and
Acknowledged:


 


AMERICAN
DEFENSE SYSTEMS, INC.


 


 


	
  By:

  	
   

  	
   

  
	
   

  	
  Name: Gary Sidorsky

  	
   

  
	
   

  	
  Title: Chief Financial
  Officer

  	
   

  



 


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