Unassociated Document


    WAIVER
AGREEMENT

    
 

    This
Waiver Agreement (the “Agreement”) is made and
entered into, effective as of November 12, 2010 (the “Effective Date”), by and among
American Defense Systems, Inc., a Delaware corporation (the “Company”), and the
stockholders of the Company parties hereto (individually, a “Holder” and collectively, the
“Holders”).  Unless
otherwise specified herein, capitalized terms used and not otherwise defined
herein shall have the meanings assigned to such terms in the Certificate of
Designations (as defined below).

    
 

    RECITALS

    
 

    A.       
    The Company and the Holders are parties to the
Securities Purchase Agreement, dated as of March 7, 2008 (as may be amended,
modified, restated or supplemented from time to time, the “Securities Purchase
Agreement”), pursuant to which the Holders purchased from the Company
shares of the Company’s Series A Convertible Preferred Stock, par value $0.001
per share (the “Series A
Preferred Stock”), the terms of which are set forth in Exhibit A
(Certificate of Designations, Preferences and Rights of Series A Convertible
Preferred Stock) to the Company’s Third Amended and Restated Certificate of
Incorporation, as amended (the “Certificate of
Designations”).

    


    B.          
 Under the Certificate of Designations, if any share of the Series A
Preferred Stock remains outstanding on December 31, 2010 (the “Maturity Date”), the Company
is required to redeem all of the then outstanding shares of the Series A
Preferred Stock on such date (such provision of the Certificate of Designations
is herein referred to as the “Mandatory Redemption
Provision”).

    


    C.           
Pursuant to a Waiver Agreement by and among the parties hereto, dated April 8,
2010 (the “April Waiver
Agreement”), the Holders agreed to extend the Maturity Date to April 1,
2011.

    


    D.        
   Pursuant to a Waiver Agreement by and among the parties
hereto, dated August 13, 2010 (the “August Waiver Agreement”), the
Holders agreed to extend the Maturity Date to July 1, 2011.

    


    E.          
 The Holders are willing to extend the Maturity Date to October 1, 2011, on
the terms and conditions hereinafter provided.

    
 

    TERMS OF
AGREEMENTS

    
 

    In
consideration of the premises and further valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

    


    1.           Extension
of Maturity Date.  As of the Effective Date, notwithstanding
any provision of the Certificate of Designations, any of the other Transaction
Documents (as defined in the Securities Purchase Agreement, the “Transaction Documents”), the
April Waiver Agreement or the August Waiver Agreement to the contrary, the
parties hereto hereby agree to extend the Maturity Date from July 1, 2011 to
October 1, 2011 (the period from December 31, 2010 to October 1, 2011,
inclusive, the “Extension
Period”).

    


    2.           Waiver.            As
of the Effective Date, the Holders hereby agree that, during the Extension
Period: (i) the Holders hereby waive any right to the redemption of the Series A
Preferred Stock under the Mandatory Redemption Provision until the last day of
the Extension Period; (ii) the Company’s failure to comply with the Mandatory
Redemption Provision prior to the last day of the Extension Period shall be
deemed not to be a breach of such provision or the terms and conditions of, or
applicable to, the Series A Preferred Stock; (iii) and the Holders shall and do
hereby waive (A) all rights and remedies that would otherwise be available to
the Holders under the Certificate of Designations or any of the other
Transaction Documents as a result of the Company’s failure to comply with the
Mandatory Redemption Provision during the Extension Period to the extent that
such rights or remedies arise as a result of the existence or continuation of
the Company’s failure to comply with the Mandatory Redemption Provision,
including, without limitation, the remedies available to the Holders pursuant to
Section (4)(a)(ii) of the Certificate of Designations and (B) any Equity
Conditions Failure and any Triggering Event otherwise arising under the
Certificate of Designations as a result of any such failure to comply with the
Mandatory Redemption Provision prior to the last day of the Extension
Period.


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    3.           Agreements
of the Company.   The Company
hereby (a) agrees that except as expressly provided in Sections 1 and 2 hereof,
nothing in this Agreement shall constitute a waiver by the Holders of any
Triggering Event or Equity Condition Failure which may be continuing on the date
hereof or may occur after the date hereof and (b) affirms that the Company's
obligation to comply with the Mandatory Redemption Provision arises upon the
last day of the Extension Period, with respect to all then outstanding shares of
the Series A Preferred Stock.  Except as provided herein, each Holder
reserves the right, in its discretion, to exercise any or all rights or remedies
under the Certificate of Designation, the other Transaction Documents,
applicable law and otherwise as a result of any Triggering Event or Equity
Condition Failure that may be continuing on the date hereof or any Triggering
Event that may occur after the date hereof, and each Holder has not waived any
of such rights or remedies.  Except as expressly provided in this
Agreement, no delay on the Holder’s part in exercising such rights or remedies,
should be construed as a waiver of any such rights or remedies.  Upon
the last day of the Extension Period, the agreement of the Holders to waive any
of its remedies and rights pursuant to Section 2 hereof shall automatically and
without further action terminate and be of no force and effect, it being
understood and agreed that the effect of such termination will be to permit the
Holders to seek to exercise any and all of its rights and remedies at any time
and from time to time thereafter, including, without limitation, the right to
require redemption of all or any portion of Series A Preferred Stock and
exercise any other rights and remedies set forth in the Certificate of
Designation, the other Transaction Documents, applicable law or otherwise, in
each case, without any notice, passage of time or forbearance of any
kind.

    
 

    4.           Miscellaneous.

    


    (a)           Governing Law; Jurisdiction;
Jury Trial.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of Delaware, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Delaware.  Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in Wilmington, Delaware, for the adjudication of any dispute
under or in connection with this Agreement or the other documents or agreements
contemplated hereby (including the Securities Purchase Agreement and the
documents and agreements executed in connection therewith, notwithstanding any
provision therein to the contrary) or with any transaction contemplated hereby
or thereby or discussed herein or therein, 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. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

     

    (b)           Counterparts.  This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature and a signature delivered electronically
(including by delivery via electronic mail of a signature page in “pdf” format)
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile or electronic signature.

     

    (c)           Headings.  The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.

     

    (d)           Severability.  If
any provision of this Agreement is prohibited by law or otherwise determined to
be invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties.  The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable provision(s).

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    (e)           Entire Agreement;
Amendments.  This Agreement and the other Transaction Documents
supersede all other prior oral or written agreements between or among the
Holders, the Company, their affiliates and Persons acting on their behalf with
respect to the matters discussed herein, and this Agreement, the other
Transaction Documents and the instruments referenced herein and therein contain
the entire understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein or therein,
neither the Company nor any Holder makes any representation, warranty, covenant
or undertaking with respect to such matters.  No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the Required Holders, and any amendment to this Agreement made in
conformity with the provisions of this Section 4(e) shall be binding on all
Holders and holders of Securities (as such term is defined in the Securities
Purchase Agreement), as applicable.  No provision hereof may be waived
other than by an instrument in writing signed by the party against whom
enforcement is sought.  No such amendment shall be effective to the
extent that it applies to less than all of the holders of the applicable
Securities then outstanding.

     

    (f)           Notices.  Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered:  (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the sending
party); or (iii) one Business Day after deposit with an overnight courier
service, in each case properly addressed to the party to receive the
same.  The addresses and facsimile numbers for such communications
shall be:

     

    If to the
Company:

    American
Defense Systems, Inc.

    230 Duffy
Avenue

    Hicksville,
NY 11801

    
      	
            	
              Telephone:

            	
              (516)
      390-5300

            


    

    
      	
            	
              Facsimile:

            	
              (516)
      390-5308

            


    

    
      	
            	
              Attention:

            	
              Chief
      Financial Officer

            


    

    With a
copy (for informational purposes only) to:

     

    DLA Piper
LLP (US)

    500
Eighth Street, NW

    Washington,
DC 20004

    
      	
            	
              Telephone:

            	
              (202)799-4208

            


    

    
      	
            	
              Facsimile:

            	
              (202)799-5208

            


    

    
      	
            	
              Attention:

            	
              Jeffrey
      R. Houle, Esq.

            


    

    


    If to a
Holder, to its address and facsimile number set forth on the Schedule of Buyers
attached to the Securities Purchase Agreement, with copies to such Holder's
representatives as set forth on such Schedule of Buyers,

     

    with a
copy (for informational purposes only) to:

     

    Reicker,
Pfau, Pyle & McRoy LLP

    1421
State Street, Suite B

    Santa
Barbara, CA 93101

    
      	
            	
              Telephone:

            	
              (805)
      966-2440

            


    

    
      	
            	
              Facsimile:

            	
              (805)
      966-3320

            


    

    
      	
            	
              Attention:

            	
              Michael
      E. Pfau, Esq.

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    or to
such other address and/or facsimile number and/or to the attention of such other
Person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such
change.  Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

     

    (g)          Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, including
any purchasers of shares of the Series A Preferred Stock.  The Company
shall not assign this Agreement or any rights or obligations hereunder without
the prior written consent of the Required Holders.  No Holder shall
assign or otherwise transfer any shares of Series A Preferred Stock without the
written agreement of the assignee or transferee of such stock to be bound by
this Agreement in all respects as a Holder hereunder.

     

    (h)          No Third Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.

     

    (i)          
Further
Assurances.  Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, to vote all of
such Holder’s capital stock of the Company in favor of any amendments to the
Company’s certificate of incorporation and Certificate of Designations to change
the Maturity Date to October 1, 2011.

     

    (j)           No Strict
Construction.  The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any
party.

     

    (k)          Independent Nature of
Holders’ Obligations and Rights.  The obligations of each
Holder under this Agreement are several and not joint with the obligations of
any other Holder, and no Holder shall be responsible in any way for the
performance of the obligations of any other Holder under this
Agreement.  Nothing contained herein, and no action taken by any
Holder pursuant hereto, shall be deemed to constitute the Holders as, and the
Company acknowledges that the Holders do not so constitute, a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Holders are in any way acting in concert or as a group, and
the Company will not assert any such claim with respect to such obligations or
the transactions contemplated by this Agreement and the Company acknowledges
that the Holders are not acting in concert or as a group with respect to such
obligations or the transactions contemplated hereby.  The Company
acknowledges and each Holder confirms that it has independently participated in
the negotiation of the transaction contemplated hereby with the advice of its
own counsel and advisors.  Each Holder shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement, and it shall not be necessary for any
other Holder to be joined as an additional party in any proceeding for such
purpose.

     

    IN WITNESS WHEREOF, each
Holder and the Company have caused their respective signature page to this
Waiver Agreement to be duly executed as of the date first written
above.

     

    
      
        
          	
                  COMPANY:

                
	 
      
	
                  AMERICAN
      DEFENSE SYSTEMS, INC.

                
	 
      
	
                  By:

                	
                     

                
	 
      	
                  Name:
      Gary Sidorsky

                
	 
      	
                  Title:
      Chief Financial Officer

                


        

      

    

     

    [Signature
Page to Waiver Agreement]

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    IN WITNESS WHEREOF, each
Holder and the Company have caused their respective signature page to this
Waiver Agreement to be duly executed as of the date first written
above.

     

    
      
        
          	 
      	
                  HOLDERS:

                
	 
      	 
      
	 
      	
                  WEST
      COAST OPPORTUNITY FUND, LLC

                
	 
      	 
      
	 
      	
                  By:

                	
                  ________________________, its Managing
      Member

                
	 
      	 
      
	 
      	 
      	
                  By:

                
	 
      	 
      	
                  Name:

                
	 
      	 
      	
                  Title:

                


        

      

    

     

    [Signature
Page to Waiver Agreement]

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    IN WITNESS WHEREOF, each
Holder and the Company have caused their respective signature page to this
Waiver Agreement to be duly executed as of the date first written
above.

     

    
      
        	 
      	
                HOLDERS:

              
	 
      	 
      
	 
      	
                CENTAUR
      VALUE FUND, LP

              
	 
      	 
      
	 
      	
                By:

              	
                   

              
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              


      

    

    
 

    [Signature
Page to Waiver Agreement]