Exhibit
10.3


 


SECOND AMENDMENT TO
FORBEARANCE AGREEMENT


 


This SECOND AMENDMENT TO FORBEARANCE AGREEMENT (this “Amendment”)
is entered into as of June 15, 2009, by and among AMERICAN DEFENSE
SYSTEMS, INC., a Delaware corporation, A. J. PISCITELLI & ASSOCIATES,
INC., a New York corporation, AMERICAN PHYSICAL SECURITY GROUP, LLC, a Delaware
limited liability company (the “Borrowers”) and TD BANK, N.A., a
national banking association, and successor by merger to COMMERCE BANK, N.A
(the “Lender”).


 


RECITALS


 


The Borrowers and the Lender are parties to the Forbearance Agreement
and Amendment to Loan Agreement, dated as of April 27, 2009, as amended by
the Amendment to Forbearance Agreement, dated as of May 27, 2009 (the “Forbearance
Agreement”). Terms defined in the Forbearance Agreement shall have the same
defined meanings when such terms are used herein. The Borrowers have requested
that the Lender agree to extend the Forbearance Period. The Lender has agreed
to do so, subject to the terms of this Amendment. Accordingly, for valuable
consideration, the receipt and sufficiency of which are acknowledged, the
Lender and the Borrowers agree as follows:


 


1.             The definition of Forbearance Period in the
Forbearance Agreement is amended to read as follows:


 


“Forbearance Period” shall mean the period
beginning on the Forbearance Effective Date and ending on the earlier to occur
of: (i) the termination of the Forbearance Period as a result of any
Forbearance Default, and (ii) July 15, 2009.


 


2.             The Revolving
Credit Cap shall continue to be $2,500,000.


 


3.             Except as
specifically amended hereby, all terms, conditions, covenants, representations
and warranties contained in the Forbearance Agreement and the Loan Documents,
and all rights of the Lender and all of the obligations under the Forbearance
Agreement and the Loan Documents, shall remain in full force and effect. Each
of the Borrowers hereby confirms that the Forbearance Agreement and the Loan
Documents are in full force and effect, and that no Borrower has any right of
setoff, recoupment or other offset or any defense, claim or counterclaim with
respect to the Forbearance Agreement or any Loan Document or the Borrowers’
obligations thereunder.


 


4.             The execution,
delivery and effectiveness of this Amendment shall not directly or indirectly: (i) create
any obligation to make any further Loans or to continue to defer any
enforcement action after the occurrence of any Default or Event of Default
(including, without 


 

















 


limitation, any Forbearance Default); (ii) constitute a consent or
waiver of any past, present or future violations of any provisions of the
Forbearance Agreement and the Loan Documents; (iii) amend, modify or
operate as a waiver of any
provision of the Forbearance Agreement or any Loan Document or any right, power
or remedy of the Lender except as expressly set forth herein; or (iv) constitute
a course of dealing or other basis for altering any obligations under the
Forbearance Agreement and the Loan Documents or any other contract or
instrument. Except as expressly set forth herein, the Lender reserves all of
its rights, powers, and remedies under the Forbearance Agreement Loan Documents
and applicable law. All of the provisions of the Forbearance Agreement and the
Loan Documents, including, without limitation, the time of the essence
provisions, are hereby reiterated, and if ever waived previously, are hereby
reinstated.


 


5.             The Borrowers shall
pay to the Lender, on the date of this Amendment, a forbearance extension fee
of $10,000.


 


6.             In addition to, and
not in lieu of, the terms of the Loan Documents relating to the reimbursement
of the Lender fees and expenses, the Borrowers shall reimburse the Lender
promptly on demand for all fees, costs, charges and expenses, including the
fees, costs and expenses of counsel and other expenses (including all fees and
expenses of Hunton & Williams LLP), incurred in connection with this
Amendment.


 


IN  WITNESS WHEREOF,  this Second
Amendment to Forbearance Agreement has been executed by the parties hereto as
of the date first written above.


 


 


	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  AMERICAN DEFENSE SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  A.J. PISCITELLI & ASSOCIATES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  AMERICAN PHYSICAL SECURITY GROUP, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  TD BANK, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Vice President