THIRDAMENDMENT TO CREDIT AGREEMENT

 

 

 

 

 

1.    Amendments to Credit Agreement.

 

(a)    The Recitals to the Credit Agreement are deleted and are replaced with the following:

 

 

 

 

“Notes means the Term Note, the Revolving Note, and the RE Term Note.”

 

“Term Facility is defined in Section 2.1(a).”

 

“RE Term Facility is defined in Section 2.1(b).

 

 

RE Term Loan Closing Date means May 29, 2009.

RE Term Loan Committed Amount means $2,100,000.

RE Term Loan Maturity Date means the earlier of (a) May 29, 2014, and (b) the acceleration of maturity of RE Term Loan in accordance with Section 12 of this Agreement.

RE Term Note means a promissory note substantially in the form of Exhibit A-3, executed by Borrower and made payable to Lender in the original principal amount of the RE Term Loan Committed Amount, together with all renewals, extensions, modifications, amendments, supplements, restatements and replacements of, or substitutions for, each such promissory note.

RE Term Principal Amount means, when determined, the outstanding principal balance of the RE Term Note.”

(d)    Section 2.1 of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“2.1           Term Facility and RE Term Facility.

 

(a)           Subject to the terms and conditions of this Agreement, Lender agrees to make a term loan to Borrower in an amount equal to the Term Committed Amount in a single Loan on the Term Loan Closing Date which, when paid or prepaid, may not be reborrowed (the “Term Facility”).

 

(b)           Subject to the terms and conditions of this Agreement, Lender agrees to make a term loan to Borrower in an amount equal to the RE Term Loan Committed Amount in a single Loan on the RE Term Loan Closing Date which, when paid or prepaid, may not be reborrowed (“RE Term Facility”).”

 

“Subject to compliance with Section 5, Borrower may request a Loan under the Revolving Credit Facility, the Term Facility, or the RE Term Facility by submitting a Loan Request to Lender.”

 

(f)    Section 2.5(a) of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“(a)           Subject to Section 2.5(b), Borrower may voluntarily pay or prepay all or any part of the Revolving Principal Amount, the Term Principal Amount, or the RE Term Principal Amount, without premium or penalty, at any time, and while no Cash Management Agreement is in place, subject to the following conditions:

 

 

(g)    Section 2.5(e) of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“(e)           On the date such amounts are received by, or for the account of, Borrower, the following amounts shall be paid to Lender in the form received with any endorsement or assignment and shall be applied first, to the RE Term Principal Amount, and second, to the Term Principal Amount, in each case in accordance with this Section 2.5:  (i) 100% of the Net Proceeds from the issuance of any Subordinated Debt; and (ii) 100% of the Net Proceeds from the Disposition of any asset not permitted by Section 9.9.  The non-cash portion of all Net Proceeds Lender is entitled to receive under this Section 2.5, shall be pledged to Lender concurrently with the applicable Disposition.”

(h)    Section 2.5(f) of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“(f)           Unless otherwise specified in this Agreement, prepayments under this Section 2.5 shall be applied (i) first, to the prepayment of the outstanding RE Term Principal Amount, and shall be applied to the scheduled principal payments in the inverse order of their maturity until the RE Term Principal Amount is paid in full, and (ii) second, to the prepayment of the outstanding Term Principal Amount, and shall be applied to the scheduled principal payments in the inverse order of their maturity until the Term Principal Amount is paid in full.”

(i)    The Credit Agreement is further amended to add the following new Section 2.5(h) in the appropriate alphanumerical order:

 

“(h)           If the RE Term Principal Amount ever exceeds the RE Term Loan Committed Amount, then Borrower shall promptly prepay the RE Term Principal Amount in an amount equal to the excess, together with all accrued and unpaid interest on the principal amount prepaid.”

 

 

(j)    Section 3.1(a) of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“(a)           The Loan under the Term Facility shall be evidenced by the Term Note.  The Loans under the Revolving Credit Facility shall be evidenced by the Revolving Note.  The Loans under the RE Term Facility shall be evidenced by the RE Term Note.”

 

(k)    Section 3.2 of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“3.2           Term Facility and RE Term Facility.

 

(l)    Section 3.5 of the Credit Agreement is amended to renumber subsection (c) thereof as a new subsection (d), and to add the following new subsection (c) in the appropriate alphabetical order:

 

“(c)           The RE Term Principal Amount shall accrue interest at an annual rate equal to the lesser of (i) 6.50% and (ii) the Maximum Rate.”

 

“(d)           Borrower will use the proceeds of the RE Term Facility to finance Borrower’s acquisition of the Properties.”

(n)    Section 8.10(d) of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“(d)           Any Eminent Domain Proceeds arising from the Properties or Insurance Proceeds arising from losses incurred by Borrower shall be applied (i) first, to the RE Term Facility, (ii) second, to the Term Facility, (iii) third, to the Revolving Credit Facility, and (iv) fourth, to Cash Collateralize LC Exposure, with the excess, if any, payable to Borrower.”

 

 

2.    Exhibits and Schedules.

 

 

3.    Conditions.  This Amendment shall be effective once each of the following have been delivered to Lender:

 

 

 

 

 

6.    Miscellaneous.

 

 

[Signatures are on the following page.]

 

 

 

The Amendment is executed as of the date set out in the preamble to this Amendment.

 

 

BORROWER: DEEP DOWN, INC., a Nevada corporation By:      /s/ Eugene L. Butler                                            Eugene L. Butler Chief Financial Officer LENDER: WHITNEY NATIONAL BANK, a national banking association By:      /s/ Paul W. Cole                                                   Paul W. Cole Vice President

 

 

 

 

As an inducement to Lender to execute, and in consideration of Lender’s execution of, this Amendment, each of the undersigned hereby consents to this Amendment and agrees that this Amendment shall in no way release, diminish, impair, reduce or otherwise adversely affect the obligations and liabilities of the undersigned under the Guaranty executed by the undersigned in connection with the Credit Agreement, or under any Loan Documents, agreements, documents or instruments executed by the undersigned to create liens, security interests or charges to secure any of the Obligation (as defined in the Credit Agreement), all of which are in full force and effect.  Each of the undersigned further represents and warrants to Lender that (a) the representations and warranties in each Loan Document to which it is a party are true and correct in all material respects on and as of the date of this Amendment as though made on the date of this Amendment (except to the extent that such representations and warranties speak to a specific date), (b) it is in full compliance with all covenants and agreements contained in each Loan Document to which it is a party, and (c) no Default or Potential Default has occurred and is continuing.  Each Guarantor hereby releases Lender from any liability for actions or omissions in connection with the Loan Documents prior to the date of this Amendment.  This Consent and Agreement shall be binding upon the undersigned, their successors and permitted assigns, and shall inure to the benefit of Lender, and its successors and assigns.

 

 

GUARANTORS:   ELECTROWAVE USA, INC., a Nevada corporation FLOTATION TECHNOLOGIES, INC., a Maine corporation MAKO TECHNOLOGIES, LLC, a Nevada limited liability company DEEP DOWN INC., a Delaware corporation By:      /s/ Eugene L. Butler                                                                        Eugene L. Butler Chief Financial Officer of each of the foregoing companies

 

 

 

SCHEDULE 1.1   SCHEDULE 1.2 SCHEDULE 3.2 SCHEDULE 5 SCHEDULE 7.2 SCHEDULE 7.5 SCHEDULE 7.12 SCHEDULE 7.14 SCHEDULE 7.16 SCHEDULE 9.13    EXHIBIT A-1 EXHIBIT A-2 EXHIBIT A-3 EXHIBIT B EXHIBIT C EXHIBIT D EXHIBIT E EXHIBIT F EXHIBIT G

Parties, Addresses, and Wiring Information Existing Debt and Liens Amortization Schedule Conditions Precedent Subsidiaries Litigation Place of Business Transactions with Affiliates Material Agreements Subordinated Debt that May be Prepaid Term Note Revolving Note RE Term Note Guaranty (Corporate Guarantors) Loan Request Borrowing Base and No Default Certificate Compliance Certificate Security Agreement Pledge Agreement

 

 

 

 

 

 

1.           Subordinated Debenture with Charter Capital Holdings, LP for $500,000.00 with interest at six percent (6%) per annum payable on March 31, 2011.

 

2.           Lease Agreement with A-K-S-L 49 Beltway 8, L.P. for office space located at 8827 W. Sam Houston Parkway N., Suite 100, Houston, Texas 77040.

 

 

 

 

 

$ __________

Houston, Texas May [___], 2009

                                           

 

FOR VALUE RECEIVED, DEEP DOWN, INC., a Nevada corporation (“Borrower”), hereby promises to pay to the order of WHITNEY NATIONAL BANK, a national banking association (“Lender”), on or before the RE Term Loan Maturity Date, the principal amount of $________ or so much thereof as may then be outstanding under this note, together with interest, as described below.

 

This note has been executed and delivered under, and is subject to the terms of, the Credit Agreement dated November 11, 2008 (as amended by that certain First Amendment to Credit Agreement dated as of December 18, 2008, that certain Second Amendment to Credit Agreement dated as of February 13, 2009, that certain Third Amendment to Credit Agreement dated as of the date hereof, and as further amended, supplemented or restated, the “Credit Agreement”), between Borrower and Lender, and is the “RE Term Note” referred to in the Credit Agreement.  Unless defined in this note, or the context requires otherwise, capitalized terms used in this note have the meanings given to such terms in the Credit Agreement.  Reference is made to the Credit Agreement for provisions affecting this note regarding applicable interest rates, principal and interest payment dates, final maturity, voluntary and mandatory prepayments, acceleration of maturity, exercise of rights, payment of attorneys’ fees, court costs and other costs of collection, certain waivers by Borrower and others now or hereafter obligated for payment of any sums due under this note, and security for the payment of this note.  This note is a Loan Document and, therefore, is subject to the applicable provisions of Section 13 of the Credit Agreement, all of which applicable provisions are incorporated into this note by reference as if set forth in this note verbatim.

 

Specific reference is made to Section 3.8 of the Credit Agreement for usury savings provisions.

 

 

This note must be construed — and its performance enforced — under Texas law.

EXECUTED as of the date first written above.