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
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