Document:

Exhibit 10.2

 

FIRST
AMENDMENT TO LOAN AGREEMENT

 

THIS
FIRST AMENDMENT TO LOAN AGREEMENT (this Amendment) dated as of July 12,
2007, is made by and among AMERICAN
DEFENSE SYSTEMS, INC., a Delaware corporation (the “Company”), A. J. PISCITELLI &
ASSOCIATES, INC., a New York corporation (“AJP,” with the Company and
AJP collectively, the “Borrowers”, and individually, a “Borrower”), and
COMMERCE BANK, N.A., a national banking association (the “Bank”).

 

RECITALS

 

The
Borrowers and the Bank are parties to a Loan Agreement dated May 2, 2007
(the “Loan Agreement”).

 

The
Bank and the Borrowers have agreed to amend the Loan Agreement, subject to the
terms and conditions hereof. 
Accordingly, for valuable consideration, the receipt and sufficiency of
which are acknowledged, the parties hereto agree as follows:

 

AGREEMENT

 

SECTION 1.                              Incorporation of Recitals.  The foregoing recitals are incorporated in
and made a part of this Amendment to the same extent and with the same force
and effect as if fully set forth herein. 
All capitalized terms used herein, including the foregoing recitals, and
not otherwise defined shall have the meanings ascribed to such terms in the
Loan Agreement.

 

SECTION 2.                              Amendment to Loan Agreement.  The Loan Agreement is hereby amended as
follows:

 

2.1                               The definition of “Borrowing Base Reductions” in the
Schedule of Defined Terms attached to the Loan Agreement is amended to read as
follows:

 

“Borrowing Base
Reductions” means, at any time, the sum of the following (a) any
outstanding letters of credit issued by the Lender or any Affiliate of the
Lender for the account of any Borrower, (b) any Rate Variance Liability, (c) the
Fixed Asset Costs Reserve, and (c) the sum of the credit limits
established for any credit card issued
by the Lender or any Affiliate of the Lender to any Borrower.

 

2.2                               The remaining terms of the Loan Agreement shall remain in
full force and effect and are ratified and affirmed in all respects.

 

SECTION 3.                              Modification of Loan Documents.  The Borrowers agree
that, effective as of the date of this Amendment that each reference in any
Loan Documents to the Loan Agreement shall be deemed a reference to the Loan
Agreement as amended hereby.

 

SECTION 4.                              Amendment Only; No Novation.  The Borrowers acknowledge and agree that this
Amendment only amends certain terms of the Loan Agreement and is not a
novation, and the Borrowers

 

 

ratify
and confirm the terms and provisions of, and their obligations under, the Loan
Agreement and each other Loan Document in all respects.  The Borrowers acknowledge and agree that
there are no defenses, counterclaims or setoffs against any of their
obligations under the Loan Documents.  In
the event any of the terms on any of the Loan Documents conflict with the terms
of this Amendment, the terms of this Amendment shall control.

 

SECTION 5.                              Representations and Warranties.  Each Borrower
represents and warrants that this Amendment has been duly authorized, executed
and delivered by it in accordance with resolutions adopted by its Board of
Directors. When executed and delivered, the Loan Documents as hereby amended
will be binding obligations of each Borrower, enforceable in accordance with
their terms and will not violate any provisions of law or conflict with, result
in a breach of or constitute a default under the organizational documents,
including Articles of Incorporation and By-Laws, of any Borrower or under any
other agreement to which any Borrower is a party.  All representations and warranties made by
the Borrowers in the Loan Documents are incorporated by reference in this
Amendment and are deemed to have been repeated as of the date of this
Amendment, except that any representation or warranty relating to any financial
statements shall be deemed to be applicable to the financial statements most
recently delivered to the Bank in accordance with the provisions of the Loan
Documents. Each Borrower agrees that nothing in this Amendment shall require
the Bank to grant any further amendments of the Loan Documents.

 

SECTION 6.                              Confirmation of Lien.  Each Borrower hereby acknowledges and agrees
that the Collateral is and shall remain in all respects subject to the lien,
charge and encumbrance of the Loan Agreement and nothing herein contained, and
nothing done pursuant hereto, shall adversely affect or be construed to
adversely affect the lien, charge or encumbrance of, or conveyance effected by
the Loan or the priority thereof over other liens, charges, encumbrances or
conveyances.

 

SECTION 7.                              Severability.  If any clause or provision of this Amendment
is or should ever be held to be illegal, invalid or unenforceable under any
present or future law applicable to the terms hereof, then and in that event,
it is the intention of the parties hereto that the remainder of this Amendment
shall not be affected thereby, and that in lieu of such clause or provision of
this Amendment that is illegal, invalid or unenforceable, such clause or
provision shall be judicially construed and interpreted to be as similar in
substance and content to such illegal, invalid or unenforceable clause or
provision, as the context thereof would reasonable suggest, so as to thereafter
be legal, valid and enforceable.

 

SECTION 8.                              Captions.  The captions herein set forth are for
convenience only and shall not be deemed to define, limit or describe the scope
or intent of this Amendment.

 

SECTION 9.                              Governing Law.  The provisions of this Amendment shall be
construed, interpreted and enforced in accordance with the laws of the
Commonwealth of Virginia as the same may be in effect from time to time.

 

SECTION 10.                        Counterparts.  This Amendment may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an
original.  It shall not be necessary that
the signature of, or

 

2

 

on
behalf of, each party, or that the signatures of the persons required to bind
any party, appear on more than one counterpart.

 

SECTION 11.                        Expenses.  The Borrowers shall pay all out-of-pocket
expenses (including reasonable attorneys’ fees) incurred by the Bank in
connection with the preparation of this Amendment and the and the transactions
contemplated by this Amendment.

 

[Signatures on
Next Page]

 

3

 

IN WITNESS WHEREOF, the
Borrowers and the Bank have caused this Amendment to be signed by their
respective duly authorized representatives all as of the day and year first
above written.

 

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  AMERICAN
  DEFENSE SYSTEMS, INC.

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  A. J. PISCITELLI & ASSOCIATES, INC.

  
	
   

  	
  a New York corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK:

  
	
   

  	
   

  
	
   

  	
  COMMERCE
  BANK, N.A.,

  
	
   

  	
  a national banking
  association

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:Exhibit
10.3

 

ASSUMPTION
AGREEMENT

 

THIS
ASSUMPTION AGREEMENT (as the same may be amended, modified or supplemented from
time to time, this “Assumption”), dated as of January 28, 2008, made by AMERICAN PHYSICAL SECURITY GROUP, LLC, a
Delaware limited liability company (the “New Subsidiary”), in favor of
the Lender (as defined below), recites and provides:

 

R
E C I T A L S

 

Pursuant
to the terms of a Loan Agreement, dated as of May 2, 2007, as amended by
the First Amendment to Loan Agreement, dated as of July 12, 2007 (as
further amended, modified or supplemented from time to time, the “Loan
Agreement”), between American
Defense Systems, Inc., a Delaware corporation (the “Company”), A.
J. Piscitelli & Associates, Inc., a New York corporation (“AJP”,
and together with the Company, the “Original Borrowers”), and Commerce
Bank, N.A., a national banking association (the “Lender”), the Lender
agreed to extend credit to the Original Borrowers.  Capitalized terms defined in the Loan
Agreement shall have the same defined meanings when such terms are used and not
defined in this Assumption.

 

Pursuant
to the terms and conditions of the Asset Purchase Agreement, of even date
herewith, by and between the Company, the New Subsidiary, American Anti Ram, Inc.,
a Virginia corporation (“AAR”) and the Owners (as therein defined, and
as the collective owners of all of the issued and outstanding capital stock of
AAR), the New Subsidiary acquired all of the assets of AAR.  The Original Borrowers and the New
Subsidiary, together with the other Subsidiaries of the Original Borrowers, are
engaged in business on a consolidated and integrated basis, and their
integrated operations include applying for and making use of credit on a joint
basis.  Accordingly, the Original
Borrowers have requested that the New Subsidiary become a Borrower under the
Loan Agreement and the other Loan Documents. 
The Lender has agreed to accept the New Subsidiary as a Borrower
thereunder, and the New Subsidiary has agreed to assume the Obligations.  Accordingly, the New Subsidiary agrees as
follows:

 

1.             The New Subsidiary (a) assumes
and agrees to be jointly and severally liable with each other Borrower for all
of the Obligations now existing or hereafter arising, including, without
limitation, the Obligations arising out of the Loan Agreement, the Term Note,
the Revolving Credit Note and the other Loan Documents, and (b) agrees to
be jointly and severally bound by all of the terms, covenants and conditions of
the Loan Agreement, the Term Note, the Revolving Credit Note and the other Loan
Documents, and hereby assumes all of the Obligations of the Borrowers
thereunder and agrees to be jointly and severally liable therefor.

 

2.             The New Subsidiary represents that
all items of equipment and inventory of the New Subsidiary are located at the
places specified in Schedule 1 hereto.  During the five years immediately preceding
the date of this Agreement, neither the New Subsidiary nor any predecessor of
the New Subsidiary has used any corporate or fictitious name other than its
current corporate name.  The New
Subsidiary has no trade names.  The chief
executive office and mailing address of the New Subsidiary is 541 Eastpark
Court, Sandston, Virginia  23150.  The New Subsidiary’s exact legal name is that
indicated on the signature pages hereof. 
The New Subsidiary is an organization of the type, and is organized in
the jurisdiction set forth herein.  The
signature page hereof accurately sets forth the New Subsidiary’s
organizational 

 

 

identification
number or accurately states that it has none. 
All of the representations and warranties set forth in the Loan
Agreement are incorporated by reference in this Assumption, and shall be deemed
to have been made and given by the New Subsidiary as of the date hereof as
though such representations and warranties were applicable to it.

 

4.             The New Subsidiary also agrees to
execute, deliver and, if applicable, record, such additional instruments,
documents and agreements as the Lender may reasonably require for the purpose
of effecting the assumption described herein.

 

IN
WITNESS WHEREOF, the New Subsidiary has caused this Assumption to be executed
by its duly authorized representative as of the day and year first written
above.

 

 

	
   

  	
  NEW SUBSIDIARY:

  
	
   

  	
   

  
	
   

  	
  AMERICAN PHYSICAL SECURITY
  GROUP, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Organizational Number:

  	
  4491581

  
				

 

2

 

SCHEDULE 1

 

EQUIPMENT AND
INVENTORY LOCATIONS

 

Locations of Equipment:

 

New Subsidiary:

 

541 Eastpark Court

Sandston, Virginia  23150

 

Locations of Inventory:

 

New Subsidiary:

 

541 Eastpark Court

Sandston, Virginia  23150

 

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