Looking for an agreement? Search from over 1 million agreements now.

Forbearance Agreement And Amendment To Loan Agreement

This is an actual contract by American Defense Systems.
Browse the agreement preview below and buy the entire agreement for $35
Search This Document
FORBEARANCE AGREEMENT AND
AMENDMENT TO LOAN AGREEMENT



This FORBEARANCE AGREEMENT AND AMENDMENT TO LOAN AGREEMENT (this " Agreement ") is entered into as of April 27, 2009, by and among 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 "), AMERICAN PHYSICAL SECURITY GROUP, LLC, a Delaware limited liability company ("APS92, and together with the Original Borrowers, the " Borrowers ") and TD BANK, N.A., a national banking association, and successor by merger to COMMERCE BANK, N.A (the " Lender ").



RECITALS



A. The Original Borrowers and the Lender are parties to that certain 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 "), and assumed pursuant to the Assumption Agreement, dated as of January 28, 2008, by APS, pursuant to which, among other things, the Lender agreed, subject to the terms and conditions set forth in the Loan Agreement, to make certain loans and other financial accommodations to Borrowers.



B. As of the date hereof, the Events of Default specified in the April 1, 2009 letter from the Lender to the Borrowers have occurred and are continuing (collectively, the " Specified Defaults ").



C. The Borrowers have requested that during the Forbearance Period (as defined in Section 1 below), the Lender agree (i) to forbear from exercising certain of its default-related rights and remedies against the Borrowers with respect to the Specified Defaults, and (ii) that the Lender will continue to make Advances and other financial accommodations to the Borrower during the Forbearance Period, as set forth in the Loan Documents, each notwithstanding the existence of the Specified Defaults and subject to the terms and conditions set forth herein. During the Forbearance Period, the Borrowers (with the assistance of its advisors) will propose and work towards effectuating a refinancing of the Obligations (the " Refinancing ").



D. Subject to the terms and conditions set forth herein, (i) the Lender has agreed to (a) forbear from exercising certain of its default-related rights and remedies against the Borrowers with respect to the Specified Defaults during the Forbearance Period, and (b) amend the Loan Agreement as set forth in Section 3 below and (ii) the Lender has agreed to continue making Advances during the Forbearance Period.



NOW, THEREFORE, in consideration of the foregoing, the terms, covenants and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:



1






SECTION 1. Additional Definitions . As used herein, the following terms shall have the respective meanings set forth below:



" Claims " shall mean claims, actions, causes of action, suits, debts, accounts, interests, liens, promises, warranties, damages and consequential damages, demands, agreements, bonds, bills, specialties, covenants, controversies, variances, trespasses, judgments, executions, costs, expenses or any other claims whatsoever (including, without limitation, crossclaims, counterclaims, rights of set-off and recoupment).



" Forbearance Default " shall mean (i) the occurrence of any Event of Default other than the Specified Defaults; (ii) the failure of any Borrower to timely comply with any term, condition, or covenant set forth in this Agreement; (iii) the failure of any representation or warranty made by any Borrower under or in connection with this Agreement to be true and complete as of the date when made, or any other breach of any such representation or warranty; or (iv) any occurrence, event or change in facts or circumstances occurring on or after the Forbearance Effective Date that would have a material adverse effect on any Borrower, or its financial condition, business, prospects or assets.



" Forbearance Effective Date " shall mean the date on which all of the conditions precedent set forth in Section 20 hereof have been met (or waived) as determined by the Lender in its sole discretion.



" 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) June 15, 2009.



" Releases " shall mean the Lender and its affiliates, subsidiaries, shareholders and "controlling persons" (within the meaning of the federal securities laws), and their respective successors and assigns and each and all of the officers, directors, employees, agents, attorneys and other representatives of each of the foregoing in their capacities as such.



" Releasors " shall mean each Borrower, its agents, representatives, officers, directors, advisors, employees, subsidiaries, affiliates, successors and assigns.



" Revolving Credit Cap " shall mean at any time during the Forbearance Period, (a) from the Forbearance Effective Date until May 15, 2009, $2,000,000, and (b) as of May 15, 2009, and at all times thereafter, $1,000,000.



Unless otherwise defined above or elsewhere in this Agreement, capitalized terms used herein shall have the meanings ascribed to them in the Loan Agreement.



SECTION 2. Confirmation by Borrower of Obligations and Specified Defaults .



(a) The Borrowers acknowledge and agree that as of the date of this Agreement, the aggregate principal balance of the outstanding Obligations under the Loan Documents is not less than $1,497,460 and that the respective principal balances of the various Loans as of such date were not less than the following:



2






Term Loan: $ 64,027
Revolving Credit (including the Letter of Credit Amount): $ 1,433,433
TOTAL: $ 1,497,460




The foregoing amounts do not include interest, fees, expenses and other amounts that are chargeable or otherwise reimbursable under the Loan Documents. All of the obligations, including those set forth above, are valid and outstanding, and the Borrowers have no rights of offset, defenses, claims or counterclaims with respect to any of the obligations under the Loan Documents.



(b) Each Borrower acknowledges and agrees that (i) each of the Specified Defaults constitutes an Event of Default that has occurred and is continuing, and (ii) except for the Specified Defaults, no other Events of Default have occurred and are continuing as of the date hereof, or are expected to occur during the Forbearance Period.



SECTION 3. Amendments to Loan Agreement Effective as of the Forbearance Effective Date, the following terms of the Loan Agreement shall be amended as follows.



(a) Amendments to Section 1.1 .



(i) The definition of " Applicable Margin " is hereby deleted in its entirety and replaced with the following:



" Applicable Margin means 6.00%."



(ii) The definition of " Borrowing Base " in Section 1.1 is hereby deleted in its entirety and replaced with the following:



"Borrowing Base" means, at the time in question, (a) the sum of the following, without duplication (1) 50% of amounts due with respect to Eligible Government Receivables, plus (2) 50% of amounts due with respect to Eligible Commercial Receivables, minus (b) any applicable Borrowing Base Reductions. The Borrowing Base shall be adjusted on a weekly basis to reflect all billings and collections."



SECTION 4. Forbearance; Forbearance Default Rights and Remedies .



(a) Effective on the Forbearance Effective Date, the Lender agrees that until the expiration or termination of the Forbearance Period, it will forbear from exercising its default-related rights and remedies against any Borrower or the Collateral solely with respect to the Specified Defaults, including acceleration and foreclosure; provided , however , that (i) the Lender shall have no obligation to make any Advance if, after giving effect thereto, the aggregate principal amount of the Advances plus outstanding letters of credit issued by the Lender for the account of any Borrower would exceed the Revolving Credit Cap, and the Borrowers shall pay any such excess on demand of the Lender; (ii) each Borrower shall comply with all limitations, restrictions or prohibitions that would otherwise be effective or applicable



3






under the Loan Documents during the continuance of any Event of Default, including, without limitation, any limitations, restrictions or prohibitions against payments by any Borrower; (iii) nothing herein shall restrict, impair or otherwise affect the Lender92s rights and remedies under any agreements containing subordination provisions in favor of any or all of the Lender (including, without limitation, any rights or remedies available to the Lender as a result of the occurrence or continuation of any Specified Default) or amend or modify any provision thereof, except to the extent that the exercise of any such rights or remedies is inconsistent with the terms and conditions of the forbearance granted herein; and (iv) nothing herein shall restrict, impair or otherwise affect the Lender92s right to file, record, publish or deliver a notice of default or document of similar effect under any state foreclosure law upon the expiration or termination of the Forbearance Period. Any Forbearance Default shall constitute an immediate Event of Default under this Agreement and the Loan Documents without the requirement of any demand, presentment, protest, or notice of any kind to any Borrower (all of which each Borrower waives).



(b) Upon the occurrence of a Forbearance Default or the expiration of the Forbearance Period, the agreement of the Lender hereunder to forbear from exercising its default-related rights and remedies shall immediately terminate without the requirement of any demand, presentment, protest, or notice of any kind to any Borrower (all of which each Borrower waives). Each of the Borrowers agrees that the Lender may at any time thereafter proceed to exercise any and all of its rights and remedies under the Loan Documents or applicable law, including, without limitation, its rights and remedies with respect to the Specified Defaults. Without limiting the generality of the foregoing, upon the occurrence of a Forbearance Default or the expiration of the Forbearance Period, the Lender may, in its sole discretion and without the requirement of any demand, presentment, protest, or notice of any kind to any Borrower (all of which each Borrower waives): (i) suspend or terminate any commitment to provide Advances, Letters of Credit or other extensions of credit under any Loan Document; (ii) commence any legal or other action to collect any or all of the obligations under the Loan Documents from any Borrower; (iii) foreclose or otherwise realize on any or all of the Collateral; (iv) set off or apply to the payment of any or all of the obligations under the Loan Documents any property belonging to any Borrower that is held by the Lender; and (v) take any other enforcement action or otherwise exercise any or all rights and remedies provided for by any Loan Document or applicable law, all of which rights and remedies are fully reserved by the Lender.



(c) Any agreement by the Lender to extend the Forbearance Period or to waive a Forbearance Default must be set forth in writing and signed by a duly authorized signatory of the Lender. The Lender is not obligated to extend the Forbearance Period or waive a Forbearance Default, and may decide to do so (or not do so) in its sole discretion. Each of the Borrowers acknowledges that the Lender has not made any assurances concerning any extension of the Forbearance Period or waiver of any Forbearance Defaults.



(d) The parties hereto agree that the running of all statutes of limitation or doctrine of laches applicable to all claims or causes of action that the Lender may be entitled to take or bring in order to enforce its rights and remedies against any Borrower is, to the fullest extent permitted by law, tolled and suspended during the Forbearance Period.



(e) Each of the Borrowers acknowledges and agrees that any Advance or other financial accommodation which the Lender makes on or after the Forbearance Effective



4






Date has been made by such party in reliance upon, and is consideration for, among other things, the general releases and indemnities contained in Section 6 hereof and the other covenants, agreements, representations and warranties of the Borrowers hereunder.



SECTION 5. Supplemental Terms, Conditions and Covenants During the Forbearance Period .



The parties hereto hereby agree to comply with the following terms, conditions and covenants during the Forbearance Period, in each case notwithstanding any provision to the contrary set forth in any Loan Document:



(a) Restricted Payments . During the Forbearance Period, no Borrower shall make any Restricted Payment, other than a stock dividend payable in common stock of the Company and approved by the Lender in its sole discretion.



(b) Refinancing . During the Forbearance Period, the Borrowers shall use their best efforts to obtain a Refinancing. The senior management of the Borrower shall actively participate in such meeting or conference calls with the Lender as the Lender shall require for the purpose of providing updates with respect to the operations, business affairs and financial condition of Borrower and progress reports with respect to the Refinancing.



(c) Delivery of Information. The Borrowers agree that:



(i) within 20 days after the end of each calendar month, the Borrowers deliver to the Lender unaudited consolidated and consolidating financial statements of the Company and its Subsidiaries, comprised of consolidated and consolidating balance sheets and income statements, for the period then ended, prepared in accordance with GAAP, except that the Company shall not be required to re-value the Company92s Series A Convertible Preferred Stock and related warrants; and



(ii) not la
-- End of Preview --
Home| About Us| FAQ| Subscription | Contact Us |