Document:

Exhibit 10.1

 

CONSENT AND AGREEMENT

OF

SERIES A CONVERTIBLE PREFERRED STOCKHOLDERS

 

AMERICAN DEFENSE SYSTEMS, INC.

 

May 23, 2008

 

Reference is made to (i) that
certain Securities Purchase Agreement, dated March 7, 2008 (“Purchase Agreement”), by and among American Defense Systems, Inc.
(the “Company”) and West Coast Opportunity
Fund, LLC, Centaur Value Fund, LP and United Centaur Master Fund (collectively,
the “Holders”), pursuant to which the
Holders acquired shares of the Company’s Series A Convertible Preferred
Stock (“Preferred Shares”) and related warrants
(“Warrants”), and (ii) that certain
Certificate of Designations, Preferences and Rights of such Preferred Shares (“Certificate of Designations”).

 

The Company has applied (the
“Application”) to list its common stock
(“Common Stock”) on the American Stock
Exchange (“Amex”).  In order to comply with the rules of the
Amex, including, without limitation, Sections 101, 122 and 713 of the Amex
Company Guide, and for the Application to be approved, it is necessary, among
other things, that this Consent and Agreement be agreed to by the Holders.

 

The undersigned, being the
holders of the outstanding Preferred Shares of the Company, hereby consent and
agree as follows:

 

1.                                       Minimum
Conversion Price Regarding Voting. Notwithstanding any
contrary or inconsistent provision in the Certificate of Designations or
Purchase Agreement other than the limits regarding the Maximum Percentage as
set forth (and defined) in the Certificate of Designations, for the purpose
only of determining the number of votes each Preferred Share shall be entitled
to vote pursuant to the Certificate of Designations, the Conversion Price (as
defined in the Certificate of Designations) on the record date for the taking
of any vote (or, if no such record date is established, at the date such vote
is taken or any written consent of stockholders is solicited) shall not in any
case be deemed less than an amount equal to $2.00 (as adjusted for any stock
splits, stock dividends, recapitalizations, combinations, reverse stock splits
or other similar events after the Subscription Date (as defined in the
Certificate of Designations)).

 

2.                                       Limitations on
Certain Conversions. Notwithstanding any contrary or inconsistent
provision of the Certificate of Designations or Purchase Agreement, in no event
shall (i) any Preferred Share be converted into shares of Common Stock
pursuant to the Certificate of Designations, (ii) any Dividend Share (as
defined in the Certificate of Designations) be issued pursuant to the Certificate
of Designations, or (iii) any Warrant Share be issued upon exercise of the
Warrants, if such conversion, issuance or exercise would cause the Company to
have issued in the aggregate more than 7,858,358 shares of Common Stock (as
adjusted for any stock splits, stock dividends, recapitalizations,
combinations, reverse stock splits or other similar events after the
Subscription Date) (which amount equals approximately 19.99% of the total
shares of Common Stock outstanding on the initial closing date under the
Purchase Agreement) (the “Exchange Cap”),
without approval of the holders of the Common Stock or the agreement, 

 

 

waiver of consent of the
Amex with respect to such stockholder approval. Any then outstanding Preferred
Shares and Warrant Shares or fraction thereof that cannot be converted or
exercised, as applicable, as a result of the preceding sentence shall remain
outstanding in accordance with, and subject to, the Certificate of
Designations, the Warrants and Purchase Agreement, other than the right of
conversion or exercise as applicable, until such stockholder approval or Amex
consent is obtained.   Until such
approval or waiver is obtained, no Holder shall be issued, upon exercise or
conversion, as applicable, of any Warrants or Preferred Shares, shares of
Common Stock in an amount greater than the product of the Exchange Cap
multiplied by a fraction, the numerator of which is the aggregate stated value
amount of the number of Preferred Shares issued to such Holder pursuant to the
Securities Purchase Agreement on the Closing Date and the denominator of which
is the aggregate stated value of all the Preferred Shares issued to the Holders
pursuant to the Securities Purchase Agreement on the Closing Date (with respect
to each holder, the “Exchange Cap Allocation”).  In the event that any Holder shall sell or
otherwise transfer any of such Holder’s Warrants or Preferred Shares, the
transferee shall be allocated a pro rata portion of such Holder’s Exchange Cap
Allocation, and the restrictions of the prior sentence shall apply to such
transferee with respect to the portion of the Exchange Cap Allocation allocated
to such transferee.  In the event that
any Holder of Preferred Shares shall convert or exercise all of such Holder’s
Preferred Shares and Warrants, as applicable, into a number of shares of Common
Stock which, in the aggregate, is less than such Holder’s Exchange Cap
Allocation, then the difference between such Holder’s Exchange Cap Allocation
and the number of shares of Common Stock actually issued to such Holder shall
be allocated to the respective Exchange Cap Allocations of the remaining
Holders of Preferred Shares and Warrants on a pro rata basis in proportion to
the shares of Common Stock underlying the Preferred Shares and Warrants then
held by each such Holder.

 

3.                                       Listing.  Notwithstanding any contrary or inconsistent
provision of the Certificate of Designations or Purchase Agreement, including,
without limitation, Section 4(f) (Listing) of the Purchase Agreement,
the Holders agree that the extent to which the Company is required to secure or
maintain the listing of the Conversion Shares, Warrant Shares, Dividend Shares
and other Listed Securities (each term as defined in the Purchase Agreement)
shall be subject to any limitations imposed, or otherwise required, by the Amex
pursuant to the Amex Company Guide or their discretionary authority.

 

4.                                       Stockholder
Approval.  The Company
shall provide each stockholder entitled to vote at a special or annual meeting
of stockholders of the Company (the “Stockholder
Meeting”), which shall be promptly called and held not later than December 31,
2008 (the “Stockholder Meeting Deadline”),
a proxy statement, substantially in the form which has been previously reviewed
by Schulte Roth & Zabel LLP, at the expense of the Company, not to
exceed $10,000 (which review shall be completed within five (5) Business
Days (as defined in the Purchase Agreement) of such counsel’s receipt of the
proxy statement and such review requirement shall be waived if such counsel has
not completed its review within such five (5) Business Day period),
soliciting each such stockholder’s affirmative vote at the Stockholder Meeting
for approval of resolutions providing for the Company’s issuance of all of the
Securities (as defined in the Purchase Agreement) as described in the
Transaction Documents (as defined in the Purchase Agreement) in accordance with
applicable law and the rules and regulations of Amex (such affirmative
approval being referred to herein as the “Stockholder
Approval”), and the Company shall use its reasonable best efforts to
solicit its stockholders’ approval of such 

 

2

 

resolutions  and to cause the board of directors of the
Company to recommend to the stockholders that they approve such
resolutions.  The Company shall be
obligated to use its reasonable best efforts to obtain the Stockholder Approval
by the Stockholder Meeting Deadline.  If,
despite the Company’s reasonable best efforts the Stockholder Approval is not
obtained on or prior to the Stockholder Meeting Deadline, the Company shall
cause an additional Stockholder Meeting to be held every six (6) months
thereafter until such Stockholder Approval is obtained or the Preferred Shares
are no longer outstanding.

 

5.                                       Equity
Conditions.  The parties
hereby agree that unless and until the Stockholder Approval is obtained, the
Equity Conditions (as defined in Certificate of Designations) shall not have
been satisfied.

 

6.                                       Financial
Covenants and Operating Results.

 

(a)                                  For purposes of this Section 6, the following
definitions shall apply.

 

(i)                                     “Affiliate” means, with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person.  For purposes of this definition, “control” of
a Person means the power, directly or indirectly, to direct or cause the
direction of the management and policies of such Person whether through holding
beneficial ownership interests in such other Person, by contract or
otherwise.  Notwithstanding anything
herein to the contrary, in no event shall any holder of Preferred Stock be
considered an “Affiliate” of the Company hereunder.

 

(ii)                                  “Consolidated EBITDA” means, with respect to the Company for
any period, the Consolidated Net Income of the Company and its Subsidiaries for
such period, plus (i) without duplication, the sum of the
following amounts of the Company and its Subsidiaries for such period and to
the extent deducted in determining Consolidated Net Income of the Company for
such period:  (A) Consolidated Net
Interest Expense, (B) income tax expense, (C) depreciation expense,
and (D) amortization expense.

 

(iii)                               “Consolidated Net Income” means, with respect to the Company
for any period, the net income (loss) of the Company and its Subsidiaries for
such period, determined on a consolidated basis and in accordance with GAAP,
but excluding from the determination of Consolidated Net Income (without
duplication) (a) any extraordinary or non recurring gains or losses or
gains or losses from Dispositions, (b) restructuring charges, (c) any
tax refunds, net operating losses or other net tax benefits, (d) effects
of discontinued operations and (e) interest income (including interest paid-in-kind).

 

(iv)                              “Consolidated Net Interest Expense” means, with respect to
any Person for any period, gross interest expense of the Company and its
Subsidiaries for such period determined on a consolidated basis and in
accordance with GAAP (including, without limitation, interest expense paid to
Affiliates of the Company), less (i) the sum of (A) interest
income for such period and (B) gains for such period on Hedging Agreements
(to the extent not included in interest income above and to the extent not
deducted in the calculation of gross interest expense), plus (ii) the
sum of (A) losses for such period on Hedging Agreements (to the extent not
included in gross interest expense) and (B) the upfront costs or fees for
such period associated with 

 

3

 

Hedging Agreements (to the extent not
included in gross interest expense), in each case, determined on a consolidated
basis and in accordance with GAAP.

 

(v)                                 “Fiscal Year” means the Company’s fiscal year that ends on December 31,
or such other fiscal year adopted by the Company for the financial reporting
purposes in accordance with GAAP.

 

(vi)                              “Hedging Agreement” means any interest rate, foreign
currency, commodity or equity swap, collar, cap, floor or forward rate
agreement, or other agreement or arrangement designed to protect against
fluctuations in interest rates or currency, commodity or equity values
(including, without limitation, any option with respect to any of the foregoing
and any combination of the foregoing agreements or arrangements), and any
confirmation executed in connection with any such agreement or arrangement.

 

(viii)                        “Revenues” means the amount set forth in the
line item entitled “Total Net Revenues” in the Company’s publicly available
consolidated financial statements, as prepared in accordance with GAAP.

 

(b)                                 Financial Covenants.  For the Fiscal Year ended December 31,
2008, the Company shall achieve (a) Revenues equal to or exceeding
$50,000,000 for such period and (b) Consolidated EBITDA equal to or
exceeding $13,500,000 for such period (the “Financial
Covenants”).  For purposes of
determining whether Revenues and EBITDA satisfy the foregoing Financial
Covenants, the financial impact of any acquisitions (whether stock or asset
transactions), mergers, business combinations, tender or exchange offers or
similar transactions consummated by the Company and its Subsidiaries after the
Effective Date shall not be included.

 

(c)                                  Operating Results Announcement.  No later than February 15,
2009 (the “Operating Results Announcement
Deadline”), the Company shall publicly disclose and disseminate (the
date of such disclosure, the “Operating
Results Announcement Date”) its operating results (the “Operating Results”) for the Fiscal Year
ended December 31, 2008.  The
announcement of the Operating Results shall state (A) the amount of the
Consolidated EBITDA and Revenues for Fiscal Year ended December 31, 2008
and (B) whether the Company has achieved the Financial Covenants;
provided, however, that in the event that the Company shall not have announced
the Operating Results for the Fiscal Year ended December 31, 2008 by the
Operating Results Announcement Deadline, the Company shall be deemed to have
failed to achieve the Financial Covenants. 
On the Operating Results Announcement Date, the Company shall also
provide to the Holders a certification, executed on behalf of the Company by
the Chief Financial Officer of the Company, certifying that the Company has
either achieved or failed to achieve each Financial Covenant.

 

7.                                       Transaction
Documents.  The parties
hereby agree that this Consent and Agreement shall be deemed to be a
Transaction Document (as defined in the Securities Purchase Agreement).  For the avoidance of doubt, any covenant
herein which is breached shall be deemed a Triggering Event under Section 3(a)(vii) the
Certificate of Designations for which there shall be no cure period.

 

4

 

8.                                       Dilutive
Issuances.  The Company
shall not, in any manner, enter into or effect any Dilutive Issuance (as
defined in the Certificate of Designations) until the Stockholder Approval is
obtained.

 

9.                                       Effective Time.  This Consent and Agreement shall be effective
upon the delivery to each of the Holders of a Voting Agreement in the form of Exhibit A
attached hereto duly executed by the Company and each of Anthony Piscitelli,
Gary Sidorsky and Curtis Taufman (the “Voting Agreements”)
(the date of such delivery, the “Effective Date”).  Prior to obtaining the Stockholder Approval,
the Company shall not amend, waive or modify any provision of any of the Voting
Agreements.

 

10.                                 Disclosure.  On or before 8:30 a.m., New York City
time, on  the first (1st)
Business Day following the Effective Date, the Company shall file a Current
Report on Form 8-K describing the terms of this Consent and Agreement and
attaching a copy of the form of this Consent and Agreement.

 

11.                                 Expenses.  The Company shall pay the reasonable legal
fees and expenses of Schulte Roth & Zabel LLP, incurred by the Holders
in connection with the negotiation of this Consent and Agreement and the Voting
Agreements.

 

12.                                 Transferees.  Notwithstanding any contrary of inconsistent
provision of the Certificate of Designations or Purchase Agreement, the
transfer of any Preferred Shares shall be subject to the transferee’s written
agreement to be bound by the terms of this Consent and Agreement as a Holder.

 

This Consent and Agreement (i) may
be executed and delivered in counterparts and by PDF or facsimile, and (ii) shall
be governed by the laws of the State of Delaware (without giving effect to
principles of conflicts of laws).

 

[Signatures
follow]

 

5

 

IN
WITNESS WHEREOF, the undersigned have executed this Consent and Agreement as of
the date first set forth above.

 

 

	
  WEST COAST OPPORTUNITY
  FUND, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CENTAUR VALUE FUND, LP

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  UNITED CENTAUR MASTER FUND

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ACCEPTED AND AGREED:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AMERICAN DEFENSE SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

6Exhibit 10.2

 

EXHIBIT A

 

VOTING
AGREEMENT

 

VOTING AGREEMENT, dated as
of May 23, 2008 (this “Agreement”), by
and among American Defense Systems, Inc., a Delaware corporation (the “Company”), and the stockholder listed on the signature page hereto
under the heading “Stockholder”
(the “Stockholder”).

 

WHEREAS, the Company and certain investors (each, an
“Investor”, and collectively, the “Investors”) have entered into a Securities Purchase
Agreement, dated as March 7, 2008 (the “Securities
Purchase Agreement”), pursuant to which, among other things, the
Company has agreed to issue and sell to the Investors and the Investors have
agreed to purchase, (i) shares of the Company’s Series A Convertible
Preferred Stock (“Preferred Shares”),
which Preferred Shares are convertible into shares of the common stock, par
value $0.001 per share (the “Common Stock”);
and (ii) warrants which are exercisable to
purchase shares of Common Stock.

 

WHEREAS, as of the date hereof, the Stockholder owns
the number of shares of Common Stock as set forth on Appendix A hereto; and

 

WHEREAS, as a condition to
the willingness of the Investors to enter into that certain Consent and
Agreement of Series A Convertible Preferred Stockholders, dated as of May 23,
2008 (the “Consent and Agreement”), the
Investors have required that the Stockholder agree, and in order to induce the
Investors to enter into the Consent and Agreement, the Stockholder has agreed,
to enter into this Agreement with respect to all the Common Stock now owned and
which may hereafter be acquired by the Stockholder and any other securities, if
any, which the Stockholder is currently entitled to vote, or after the date
hereof, becomes entitled to vote, at any meeting of stockholders of the Company
(the “Other Securities”).

 

NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants and agreements
contained herein, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:

 

ARTICLE I

 

VOTING AGREEMENT OF THE STOCKHOLDER

 

SECTION 1.01.      Voting Agreement. Subject to the
last sentence of this Section 1.01, the Stockholder hereby agrees that at
any meeting of the stockholders of the Company, however called, and in any
action by written consent of the Company’s stockholders, the Stockholder shall
vote the Common Stock and the Other Securities: 
(a) in favor of the Stockholder Approval (as defined in the Consent
and Agreement) as described in Section 4 of the Consent and Agreement; and
(b) against any proposal or any other corporate action or agreement that
would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of the Company under the Consent and Agreement or
which could result in any of the conditions to the Company’s obligations under
the Consent and Agreement not being fulfilled. The Stockholder acknowledges
receipt and review of a copy of the Securities Purchase Agreement, the Consent
and Agreement and the other Transaction Documents (as 

 

 

defined
in the Securities Purchase Agreement). The obligations of the Stockholder under
this Section 1.01 shall terminate immediately following the occurrence of
the Stockholder Approval.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER

 

The
Stockholder hereby represents and warrants to each of the Investors as follows:

 

SECTION 2.01.      Authority Relative to This Agreement.
The Stockholder has all necessary power and authority to execute and deliver
this Agreement, to perform his or its obligations hereunder and to consummate
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Stockholder and constitutes a legal, valid and binding
obligation of the Stockholder, enforceable against the Stockholder in
accordance with its terms, except (a) as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or similar laws now or hereafter in effect relating to,
or affecting generally the enforcement of creditors’ and other obligees’
rights, (b) where the remedy of specific performance or other forms of
equitable relief may be subject to certain equitable defenses and principles
and to the discretion of the court before which the proceeding may be brought,
and (c) where rights to indemnity and contribution thereunder may be
limited by applicable law and public policy.

 

SECTION 2.02.      No Conflict. (a)  The
execution and delivery of this Agreement by the Stockholder does not, and the
performance of this Agreement by the Stockholder shall not, (i) conflict with
or violate any federal, state or local law, statute, ordinance, rule,
regulation, order, judgment or decree applicable to any Stockholder or by which
the Common Stock or the Other Securities owned by the Stockholder are bound or
affected or (ii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the Common Stock or the Other Securities owned by the Stockholder pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Stockholder is
a party or by which the Stockholder or the Common Stock or Other Securities
owned by the Stockholder are bound.

 

(b)           The execution and delivery of this Agreement by the
Stockholder does not, and the performance of this Agreement by the Stockholder
shall not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental entity by the Stockholder.

 

SECTION 2.03.      Title to the Stock. As of the date
hereof, the Stockholder is the owner of the number of shares of Common Stock
set forth opposite its name on Appendix A attached hereto, entitled to
vote, without restriction, on all matters brought before holders of capital
stock of the Company, which Common Stock represent on the date hereof the
percentage of the outstanding stock and voting power of the Company set forth
on such Appendix. Such Common Stock are all the securities of the Company
owned, either of record or beneficially, by 

 

2

 

the
Stockholder. Such Common Stock are owned free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Stockholder’s voting rights, charges and other
encumbrances of any nature whatsoever, except for transfer restriction under
federal or applicable state securities or blue sky law and that certain lock-up
letter agreement (“Lock-Up Agreement”)
with the Company dated March 7, 2008. No Stockholder has appointed or
granted any proxy, which appointment or grant is still effective, with respect
to the Common Stock or Other Securities owned by the Stockholder.

 

ARTICLE III

 

COVENANTS

 

SECTION 3.01.      No Disposition or Encumbrance of Stock.
The Stockholder hereby covenants and agrees that he will comply with the terms
and conditions of his Lock-Up Agreement.

 

SECTION 3.02.      Company Cooperation. The Company
agrees that at any time in which any Stockholder Approval is required pursuant
to Section 4 of the Consent and Agreement, it will use its reasonable best
efforts to cause holders of Common Stock or Other Securities representing the
percentage of outstanding capital stock required to vote in favor of the
transactions contemplated by the Securities Purchase Agreement in order for the
Company to comply with its obligations under Section 4 of the Consent and
Agreement to so vote in favor of such transactions.

 

ARTICLE IV

 

MISCELLANEOUS

 

SECTION 4.01.      Further Assurances. Each
Stockholder will execute and deliver such further documents and instruments and
take all further action as may be reasonably necessary in order to give effect
to the voting agreement and other covenants of the Stockholder contemplated
hereby.

 

SECTION 4.02.      Specific Performance. The parties
hereto agree that irreparable damage would occur in the event any provision of
this Agreement was not performed in accordance with the terms hereof and that
any Investor (without being joined by any other Investor) shall be entitled to
specific performance of the terms hereof, in addition to any other remedy at
law or in equity. Any Investor shall be entitled to its reasonable attorneys’
fees in any action brought to enforce this Agreement in which it is the
prevailing party.

 

SECTION 4.03.      Entire Agreement. This Agreement
constitutes the entire agreement among the Company and the Stockholder (other
than the Securities Purchase Agreement, the Consent and Agreement and the other
Transaction Documents) with respect to the subject matter hereof and supersedes
all prior agreements and understandings, both written and oral, among the
Company and the Stockholder with respect to the subject matter hereof.

 

3

 

SECTION 4.04.      Amendment. The provisions of this
Agreement may not be amended or waived, nor may this Agreement be terminated by
the Company other than pursuant to the provisions of Section 4.07.

 

SECTION 4.05.      Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law, or public policy, all other conditions and provisions
of this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of this Agreement is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the terms of this Agreement remain as
originally contemplated to the fullest extent possible.

 

SECTION 4.06.      Governing Law. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New York.
The parties hereby agree that all actions or proceedings arising directly or
indirectly from or in connection with this Agreement shall be litigated only in
the Supreme Court of the State of New York or the United States District Court for
the Southern District of New York located in New York County, New York. The
parties consent to the jurisdiction and venue of the foregoing courts and
consent that any process or notice of motion or other application to any of
said courts or a judge thereof may be served inside or outside the State of New
York or the Southern District of New York by registered mail, return receipt
requested, directed to the party being served at its address set forth on the
signature ages to this Agreement (and service so made shall be deemed complete
three (3) days after the same has been posted as aforesaid) or by
personal service or in such other manner as may be permissible under the rules of
said courts. Each of the Company and each Stockholder irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such suit, action, or proceeding brought
in such a court and any claim that suit, action, or proceeding has been brought
in an inconvenient forum. 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.

 

SECTION 4.07.      Termination. This Agreement shall
terminate immediately following the occurrence of the Stockholder Approval.

 

[Signature Page Follows]

 

4

 

IN
WITNESS WHEREOF, each of Stockholder and the Company has duly executed this
Agreement.

 

	
   

  	
  THE COMPANY:

  
	
   

  	
   

  
	
   

  	
  AMERICAN DEFENSE SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
  Dated: May       , 2008

  	
   

  

 

 

	
   

  	
  STOCKHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated: May       , 2008

  	
   

  
	
   

  	
  Address:

  

 

 

APPENDIX A

 

	
  Stockholder

  	
   

  	
  Common Stock

  Owned

  	
   

  	
  Percentage of Common

  Stock Outstanding

  	
   

  	
  Voting Percentage

  of Common Stock

  Outstanding

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