FIRST AMENDMENT TO CREDIT AGREEMENT DATED AS OF DECEMBER 21, 2007 AMONG DEEP DOWN, INC., AS BORROWER, PROSPECT CAPITAL CORPORATION, AS AGENT, AND PROSPECT CAPITAL CORPORATION, AS LENDER
EXHIBIT
4.1
FIRST
AMENDMENT
TO
DATED
AS OF
DECEMBER 21,
2007
AMONG
AS
BORROWER,
PROSPECT
CAPITAL CORPORATION,
AS
AGENT,
AND
PROSPECT
CAPITAL CORPORATION,
AS
LENDER
FIRST
AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT to
Credit Agreement (this "First Amendment")
dated as of December 21, 2007 and effective as of the First Amendment Effective
Date (as defined below), is entered into by and among Deep Down, Inc., a Nevada
corporation, as borrower (the "Borrower"),
each of the lenders that is a signatory hereto (the "Lenders")
and Prospect Capital Corporation, a Maryland corporation, as agent for the
Lenders (the "Agent").
RECITALS
A. The
Borrower, the Agent and the Lenders are parties to that certain Credit
Agreement
dated as of August 6, 2007 (the "Credit
Agreement"), pursuant to which the Lenders have made certain loans and
extensions of credit available to and on behalf of the Borrower under a
multi-year credit facility.
B. The
Borrower desires to enter into that certain Agreement and Plan of Merger (the
"Mako
Agreement and Plan of Merger") by and between Borrower, Mako
Technologies, LLC, a Nevada limited liability company and a wholly-owned
subsidiary of Borrower ("Merger
Sub"), Mako Technologies, Inc., a Louisiana corporation ("Mako"), and the
owners of 100% of the issued and outstanding shares of capital stock of Mako,
pursuant to which Mako will merge with and into the Merger Sub (the "Mako
Acquisition").
C. The Borrower
has requested and the Agent and the Lenders have agreed to amend the
Credit Agreement to, among other things, increase the Total Commitment (as
defined in the Credit Agreement) thereunder from $6,500,000 to $13,000,000,
provided that any Loans made to the Borrower from the increased Total Commitment
shall be made concurrently with and used solely for the Mako Acquisition
including paying legal costs and
expenses and costs and expenses under the Credit Agreement associated
therewith.
AGREEMENT
NOW
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, the parties hereto amend the Credit Agreement and agree as
follows:
1. Defined
Terms. All
capitalized terms used in this First Amendment and not otherwise
defined
herein shall have the meanings ascribed to such terms in the Credit
Agreement. Unless otherwise indicated, all section references in this First
Amendment refer to sections of the Credit Agreement.
2. Amendments
to Credit Agreement. The
Credit Agreement is hereby amended as follows:
a. The following
terms, as defined in Section 1.01 of the Credit Agreement, are hereby
amended and restated in their entirety to read as follows:
"Agreement"
means this Credit Agreement, as amended by the First Amendment, and includes all
amendments, modifications and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to the Agreement as the same may be in effect
at the time such reference becomes operative.
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"Loans"
means any loan made by a Lender to the Borrower pursuant to Article
II hereof.
"Total
Commitment" means the sum of the amounts of the Lenders' Commitments,
which sum equals the Initial Commitments plus
the Mako Commitment plus
any additional Commitments as the same may be increased pursuant to Section
2.04(b).
"Transactions"
means the transactions contemplated by the Transaction Documents to occur on the
Effective Date and the First Amendment Effective Date, including the making of
the Loans pursuant to this Agreement
b. Section
1.01 of the Credit Agreement is hereby further amended by adding thereto
the
following new definitions, in their appropriate alphabetical order, to read in
their entirety as follows:
"First
Amendment" means that certain First Amendment to Credit Agreement dated
December 21, 2007, among the Borrower, the Agent and the
Lenders.
"First
Amendment Effective Date" has the meaning assigned to such term in the
First Amendment.
"Mako"
means Mako Technologies, Inc., a Louisiana corporation.
"Mako
Acquisition" has the meaning assigned such term in the First
Amendment.
"Mako
Acquisition Documents" means, collectively, the Mako Agreement
and Plan of Merger and all schedules, exhibits and annexes thereto and all side
letters and agreements affecting the terms thereof or entered into in connection
therewith.
"Mako
Agreement and Plan of Merger" has the meaning assigned such term in the
First Amendment.
"Mako
Commitment" means as to any Lender, the obligation of such Lender, if
any, to make a Loan to the Borrower in a principal amount not to exceed the
amount set forth opposite such Lender's name in Schedule
1.01(A) hereto, as the same may be increased pursuant to Section
2.040) and terminated or reduced from time to time in accordance with the
terms of this Agreement. The aggregate amount of the Mako Commitment available
on the First Amendment Effective Date is $6,000,000.
c. Clause
(a) of Section 2.01 of the Credit Agreement is hereby amended and
restated
in its entirety to read as follows:
"(a)
Subject to the terms and conditions and relying upon the representations
and warranties set forth herein and in the other Loan Documents,
each Lender severally agrees (i) to make a Loan to the Borrower
on the Eflective Date in an amount not to exceed the Commitment.
of such Lender, (ii) to make a Loan to the Borrower on the
First
Amendment Effective Date in an amount not to exceed the Mako Commitment of such
Lender and (iii) to permit the Borrower to issue PIK Notes to such lender based
on its Pro Rata Share of the Total Commitment (but in any case not to exceed the
PIK Note Cap)."
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d. Section 2.02
of the Credit Agreement is hereby amended and restated in its entirety
to read as follows:
"(a) The
Borrower shall give the Agent prior telephonic notice of its intention to
receive the Loans to be made hereunder confirmed in writing not later than 12:00
noon (New York City time) at least one Business Day prior to each of (i) the
anticipated Effective Date and (ii) the First Amendment Effective Date (each, a
"Notice
of Borrowing"). The Notice of Borrowing given to the Agent prior to the
anticipated Effective Date shall specify (A) the aggregate principal amount of
the Loans to be made by the Lenders to the Borrower on the Effective Date, which
shall be $6,000,000, and (B) the proposed borrowing date. The Notice of
Borrowing given to the Agent prior to the anticipated First Amendment Effective
Date shall specify (1)
the aggregate principal amount of the Loans to be made by the Lenders to
the Borrower on the First Amendment Effective Date, which shall be $6,000,000,
and (2) the proposed borrowing date. The Agent and the Lenders may act without
liability upon the basis of written, telecopied or telephonic notice believed by
the Agent in good faith to be from the Borrower (or from any Authorized Officer
thereof designated in writing purportedly from the Borrower to the Agent). The
Borrower hereby waives the right to dispute the Agent's record of the tei ins of
any such telephonic Notice of Borrowing. The Agent and each Lender shall be
entitled to rely conclusively on any Authorized Officer's authority to request
the Loans on behalf of the Borrower until the Agent receives written notice to
the contrary. The Agent and the Lenders shall have no duty to verify the
authenticity of the signature appearing on any written Notice of
Borrowing.
(b) Each
Notice of Borrowing pursuant to this Section
2.02 shall be irrevocable
and the Borrower shall be bound to make a borrowing in accordance
therewith.
(c) Subject
to Section
2.02(d), all Loans under this Agreement shall be made by the
Lenders simultaneously and proportionately to their Pro Rata Shares of the Total
Commitment, it being understood that no Lender shall be responsible for any
default by any other Lender in that other Lender's obligations to make a Loan
requested hereunder, nor shall the Commitment of any Lender be increased
or decreased as a result of the default by any other Lender in that other
Lender's obligation to make a Loan requested hereunder, and each Lender shall be
obligated to make the Loan required to be made by it by the terms of this
Agreement regardless of the failure by any other Lender.
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(d)
$2,500,000 of the Loans made to the Borrower by the Lenders on the First
Amendment
Effective Date (such
amount, the "Second
Installment of the
Merger Consideration")
shall be funded directly into the Debt Service Reserve Account. The Second
Installment of the Merger Consideration shall remain in the Debt Service Reserve
Account from and after the First Amendment Effective Date until such time as the
Second Installment of the Merger Consideration is due and payable in accordance
with the terms of the Mako Agreement and Plan of Merger at which time the
Borrower may withdraw the Second Installment of the Merger Consideration from
the Debt Service Reserve Account provided that the Second Installment of the
Merger Consideration shall be used by the Borrower solely for the purpose of
making the final payment of the Merger Consideration (as such term is defined in
the Mako Agreement and Plan of Merger); provided, however, that (i) no Event of
Default has occurred and is continuing and no Event of Default is reasonably
foreseeable by the Agent in its sole judgment, (ii) the Agent has determined, in
its sole judgment, that, no event or development shall have occurred since
December 31, 2007 which could have a Material Adverse Effect and (iii) no Cash
Sweep Trigger has occurred."
e. Clause
(a) of Section 2.03 of the Credit Agreement is hereby amended by
replacing
the dollar amount "$75,000" in the second line thereof with the dollar amount
"$250,000".
f. Clause
(1) of Section 2.03 of the Credit Agreement is hereby amended and
restated
in its entirety to read as follows:
"On each
Monthly Date after a Cash Sweep Trigger has occurred (each such date being a
"Disbursement
Date"), the Borrower shall repay principal (through Agent charging the
Operating Account) in an amount equal to 50% of Free Cash Flow, provided,
however, that in no case shall such prepayment reduce the cash and cash
equivalents (per GAAP) of Borrower on hand as of the date of such payment to
less than $300,000.00."
g. Clause
(b) of Section 2.03 of the Credit Agreement is hereby amended by deleting
the
dollar amount "$500,000" set forth in the proviso thereto and replacing it with
the dollar amount "$1,000,000".
h. Section
2.05(c) of the Credit Agreement is hereby amended by re-numbering
existing
clause (iii) as clause (iv) and by adding a new clause (iii) as
follows:
"(iii) No
later than April 15, 2008, the Borrower shall prepay an amount equal
to
the
difference between (A) the Loans advanced on the First Amendment
Effective Date
minus (B)
the sum of the Merger Consideration (as such tem' is defined in the Mako
Agreement and Plan of Merger) paid by the Borrower pursuant to Section 2.02 of
the Mako Agreement and Plan of Merger."
i. Section 7M4 of
the Credit Agreement is hereby amended and restated in its entirety
to read as follows:
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"Loans,
Advances, Investments, Etc. Make or commit or agree to make any loan,
advance guarantee of obligations, other extension of credit or capital
contributions to, or hold or
invest in or commit or agree to hold or invest in, or purchase or otherwise
acquire or commit or agree to purchase or otherwise acquire any shares of the
Capital Stock, bonds, notes, debentures or other securities of, or make or
commit or agree to make any other investment in, any other Person, purchase or
own any futures contract or otherwise become liable for the purchase or sale of
currency or other commodities at a future date in the nature of a futures
contract, or provide goods and services to any Person except for such goods and
services provided in the ordinary course of business and in accordance with
Section
7.13, or permit any of its Subsidiaries to do any of the foregoing,
except for: (a) investments existing on the date hereof, as set forth on Schedule
7.04 hereto, but not any increase in the amount thereof as set forth in
such Schedule or any other modification of the terms thereof, (b) Permitted
Investments, (c) advances to employees of up to $5,000 in the aggregate per
employee, (d) investments made by the Borrower in or to the Guarantors, (e)
investments made by any Subsidiary in or to the Borrower or any Guarantor, (f)
investments made by the Borrower or any Subsidiary in or to any foreign
Subsidiary in an aggregate amount at any one time outstanding not to exceed
$50,000, and (g) the investments, acquisitions and related transactions
contemplated by the Mako Agreement and Plan of Merger on the Effective Time (as
such term is defined in the Mako Agreement and Plan of Merger)."
j. A new Section
6.24 of the Credit Agreement is added to follow after Section
6.23 to read as follows:
"Section
6.24. Within five (5) Business Days of the First Amendment Effective
Date, the Agent shall receive evidence satisfactory to it that any deposit or
operating accounts owned by Mako or any Affiliate have been closed or made
subject to a DACA in favor of the Agent. At all times thereafter, all deposits
or operating accounts of Mako or an Affiliate shall be subject to a DACA in
favor of Agent."
k. Section 8.01
of the Credit Agreement is hereby amended and restated in its
entirety to read as tbllows:
"Debt/EBITDA.
The Borrower will not, at any time on or after December 31, 2007, permit the
ratio of outstanding Total Debt to Consolidated EB1TDA, as of the last day of
each fiscal quarter, to be greater than the ratio set forth below for the
applicable period:
|
Each
fiscal quarter ending:
|
Ratio
|
|
|
12/31/07
until 6/30/08
|
3.50
: 1.00
|
|
|
09/30/08
to 6/30/09
|
3.00
: 1.00
|
|
|
09/30/09
and thereafter
|
2.50
: 1.00
|
Provided,
that (i) for the purposes of determining the ratio described above for the
fiscal quarters ending 12/31/07, 3/31/08 and 6/30/08, Consolidated EBITDA will
be annualized
by multiplying Consolidated EBITDA for the applicable period by 4 and (ii) for
the purposes of determining the ratio described above, amounts in the Debt
Service Reserve Account that are proceeds of any Loans made pursuant to this
Agreement will be excluded from the calculation of Total Debt."
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1. Each Schedule
to the Credit Agreement is hereby replaced in its entirety by the corresponding
Schedule to the Credit Agreement attached as Annex A hereto.
Each reference in the Credit Agreement to a Schedule replaced by this
Section 2(k) or its contents "as of the Effective Date", "in effect on the
Effective Date" or "as of the date of this Agreement" is hereby amended to be a
reference to such Schedule or its contents "as of the First Amendment Effective
Date".
3. Conditions.
The obligations of the Lenders to make the Loans under the Credit Agreement
with respect to the First Amendment shall not become effective until the date on
which
each of the following conditions is satisfied (the "First
Amendment Effective Date"):
a. The Agent
shall have received from the Lenders required by the Credit Agreement
and the Borrower executed counterparts (in such number as may be requested by
the Agent) of (i) this First Amendment and all schedules, exhibits and annexes
to the foregoing, (ii) that certain Reaffirmation of Security Instruments dated
December 21, 2007, executed by each Loan Party, (iii) Merger Sub and each of its
subsidiaries shall have executed a joinder to the Guaranty and Collateral
Agreement, in faun and substance satisfactory to the Agent, and (iv) the Agent
shall have received a mortgage with respect to all
real property acquired in connection with the Mako Acquisition, if
applicable.
b. The
following transactions shall have been consummated, in each case on terms
and
conditions satisfactory to the Lenders:
(i) the Mako
Acquisition;
(ii) the Agent
shall have received a certificate, executed by an Authorized Officer,
certifying that the Mako Acquisition is being consummated simultaneously with
the closing of the First Amendment in accordance with the terms and conditions
of the Mako Acquisition as set forth in the Mako Acquisition Documents, without
amendment modification or waiver
thereof without the prior written consent of the Lenders;
(iii) The Mako
Agreement and Plan of Merger shall have been filed and recorded with each of the
Secretary of State of Louisiana and the Secretary of State of Nevada
and the
Mako Agreement and Plan of Merger shall have an effective date concurrent with
the First
Amendment Effective Date; and
(iv) The Agent
shall have received the certificates representing the shares of
Capital
Stock pledged pursuant to the Guaranty and Collateral Agreement (including those
shares of Capital Stock received in connection with the Mako Acquisition and of
the Merger Sub), together with an undated stock power for each such certificate
executed in blank by a duly authorized officer of the pledgor
thereof.
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c. The Agent
and the applicable Lenders shall have received all fees and other
amounts
due and payable in connection with this First Amendment on or prior to the First
Amendment Effective Date.
d. The Agent
shall have received (i) a favorable written opinion (addressed to the
Agent and
the Lenders and dated the First Amendment Effective Date) of counsel for the
Borrower, in form and substance satisfactory to the Agent (ii) each legal
opinion delivered in connection with the Mako Acquisition, accompanied by a
reliance letter in favor of the Lenders and (iii) such legal opinions as Agent
requests regarding the effectiveness of the Mako Acquisition. Each such legal
opinion shall cover such other matters incident to the transactions contemplated
by this First Amendment as the Agent may require.
e. No
Default or Event of Default shall have occurred and be continuing, before and
after
giving effect to the terms of this First Amendment.
f. There
shall not exist any action, suit, investigation, litigation or proceeding or
other
legal or regulatory developments, pending or threatened in any court or before
any arbitrator or Governmental Authority that, in the reasonable opinion of the
Agent, singly or in the aggregate, materially impairs any of the transactions
contemplated by the Loan Documents, or that could have a Material Adverse
Effect.
g. Each Loan
Party shall have obtained all authorizations, approvals or other actions
by, and
submitted all notices to or filings with, any Governmental Authority and shall
have obtained all consents of other Persons, in each case that are necessary or
advisable in connection with the transactions contemplated by the Loan Documents
and the Mako Acquisition Documents and each of the foregoing shall be in full
force and effect and in form and substance reasonably satisfactory to the Agent.
All applicable waiting periods shall have expired without any action being taken
or threatened by any competent authority which would restrain, prevent or
otherwise impose adverse conditions on the transactions contemplated by the Loan
Documents or the Mako Acquisition Documents or the financing thereof and no
action, request for stay, petition for review or rehearing, reconsideration, or
appeal with respect to any of the foregoing shall be pending, and the time for
any applicable agency to take action to set aside its consent on its own motion
shall have expired.
h. The Agent
shall have completed its business, legal and collateral due diligence
with
respect to the Borrower, each Person that is a party to any Mako Acquisition
Document and each other Loan Party, the results of which shall be acceptable to
the Agent, in its sole and absolute discretion.
i. All
proceedings in connection with the making of the Loans and the other
transactions
contemplated by this First Amendment, the other Loan Documents and the Mako
Acquisition Documents, and all documents incidental hereto and thereto, shall be
satisfactory to the Agent and its counsel, in their sole discretion, and the
Agent and such counsel shall have received all such information and such
counterpart originals or certified or other copies of such documents as the
Agent or such counsel may reasonably request.
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j. The Agent
shall have received UCC lien searches, listing all effective financing
statements
which name as debtor any Loan Party or any Person that is a party to any Mako
Acquisition Document or any of their respective Subsidiaries and which arc filed
in the offices where any Loan Party or any such Person is organized, together
with copies of such financing statements, none of which, except as otherwise
agreed in writing by the Agent and except for Liens to be terminated on the
First Amendment Effective Date, shall cover any of the Collateral or any of the
property to be acquired in connection with the Mako Acquisition Documents and
the results of searches for any tax Lien and judgment Lien filed against such
Person or its property, which results, except as otherwise agreed to in writing
by the Agent, shall not show any such Liens.
k. The Agent
shall have received satisfactory written evidence that prior to or
concurrent
with the Effective Time (as defined in the Mako Agreement and Plan of Merger),
all Indebtedness of Mako and its subsidiaries shall be paid in fill and
extinguished.
1. The Agent
shall have received a copy of the resolutions of each Loan Party, certified
as of the First Amendment Effective Date by an Authorized Officer thereof,
authorizing (A) the borrowings hereunder and the transactions contemplated by
the Loan Documents to which such Loan Party is or will be a party and the other
Transactions, and (B) the execution, delivery and performance by such Loan Party
of each Loan Document and each Mako Acquisition Document to which such Loan
Party is or will be a party and the execution and delivery of the other
documents to be delivered by such Person in connection herewith and
therewith.
m. The Agent
shall have received a certificate of an Authorized Officer of each Loan
Party,
certifying the names and true signatures of the representatives of such Loan
Party authorized to sign each Loan Document to which such Loan Party is or will
be a party and the other documents to be executed and delivered by such Loan
Party in connection herewith and therewith, and authorized to provide the Notice
of Borrowing and all other notices under this First Amendment and the other Loan
Documents, together with evidence of the incumbency of such authorized
officers.
n. The Agent
shall have received a certificate of the appropriate official(s) of the
state of
organization and each state of foreign qualification of each Loan Party and of
each Person that is a party to any Mako Acquisition Document and each of their
subsidiaries, certifying as of a recent date as to the subsistence in good
standing of, and the payment of taxes by, such Loan Party in such
states.
o. The Agent shall have
received a copy of the articles of incorporation, charter and
by-laws,
limited liability company agreement, operating agreement, agreement of limited
partnership or other organizational document of each Loan Party, Mako and of
Merger Sub, together with all amendments thereto, certified as of the First
Amendment Effective Date by an Authorized Officer of such Loan
Party.
p. The Agent
shall have received a certificate of an Authorized Officer of the Borrower,
certifying as to the matters set forth in subsection (b) of this Section
3.
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q. The Agent
shall have received a copy of the unaudited pro form consolidated
balance
sheet of the Borrower and its consolidated Subsidiaries as at November 30, 2007
(including the notes thereto) (the "Pro
Forma Balance Sheet"), prepared giving effect (as if such events had
occurred on such date) to (i) the consummation of the Mako Acquisition and (ii)
the payment of fees and expenses in connection with the foregoing, and (ii)
unaudited interim consolidated financial statements of Borrower and its
consolidated subsidiaries for each fiscal month and quarter ended after the date
of the latest applicable fmancial statements delivered pursuant to the Credit
Agreement as to which such financial statements are available, and such
financial statements shall not, in the judgment of the Lenders, reflect any
material adverse change in the consolidated financial condition of the Borrower
and its consolidated subsidiaries, since the most recently delivered financial
statements.
r. The Agent
shall have received a certificate of an Authorized Officer of the
Borrower,
certifying that (i) the Borrower and each Loan Party, both before and after
giving effect to the Transactions, is Solvent and (ii) as of the First Amendment
Effective Date, all liabilities of the Loan Parties are current.
s. The Agent
shall have received evidence of the insurance coverage required by
Section
5.19, including, without limitation, insurance assigned to the Borrower
pursuant to the terms of the Guaranty and Collateral Agreement and such other
insurance coverage with respect to the business and operations of the Loan
Parties as the Agent may reasonably request, in each case, where requested by
the Agent, with such endorsements as to the named insureds or loss payees
thereunder as the Agent may request and providing that such policy may be
terminated or canceled (by the insurer or the insured thereunder) only upon 30
days' prior written notice to the Agent and each such named insured or loss
payee, together with evidence of the payment of all premiums due in respect
thereof for such period as the Agent may request.
t. The Agent
shall have received a landlord waiver, in form and substance satisfactory
to the Agent, executed by each landlord with respect to each of the Leases
acquired in connection with the Mako Acquisition, set forth on Annex B hereto;
provided that in the event the Borrower, despite its commercially reasonable
efforts to do so, is unable to deliver to the Agent on the First Amendment
Effective Date one or more of the landlord waivers required to be delivered
under this Section 4(u), the Borrower shall deliver such landlord waiver or
waivers to the Agent within twenty-one (21) days after the First Amendment
Effective Date.
u. The
Agent shall have received copies of the Material Contracts of each Loan
Party as
in effect on the First Amendment Effective Date (to the extent the same have not
previously been delivered to Agent), certified as true and correct copies
thereof by an Authorized Officer
of each Loan Party, together with a certificate of an Authorized Officer of each
Loan Party stating that such agreements have been duly assigned to such
Loan Party, as applicable, remain in full force and effect and that none of the
Loan Parties has breached or defaulted in any of its
obligations under such agreements.
v. The Agent
shall have received each document (including any Uniform
Commercial
Code financing statement) required by the Guaranty and Collateral Agreement or
any
Mortgage or under law or requested by the Agent to be filed, registered or
recorded in order to create
in favor of the Agent, for the benefit
of the Lenders, a perfected Lien on the Collateral described
therein (including any Collateral received in connection with the Mako
Acquisition), prior and superior in right to any other Person, shall be in
proper form for filing, registration or recordation.
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w. The Agent
shall have received a copy of a fully-executed payoff letter from
Regions
Bank to the Borrower evidencing (i) the payoff of all amounts due by the
Borrower or any other Loan Party in connection with the credit facility between.
Regions Bank and the Borrower, (ii) the termination of all commitments under
such credit facility and (iii) the releases of all liens in favor of Regions
Bank pursuant to such credit facility.
x. The Agent
shall have received such other agreements, instruments, approvals,
opinions
and other documents, each satisfactory to the Agent in tbiin and substance, as
the Agent may reasonably request.
4. Miscellaneous.
a. Use
of Proceeds. The proceeds of the Loans made by the Lenders to the
Borrower
on the First Amendment Effective Date shall be used for the purposes set forth
on Schedule 5.20 of Annex A attached hereto.
b. Confilination.
The provisions of the Credit Agreement, as amended by this First
Amendment,
shall remain in full force and effect in accordance with its terms following the
effectiveness of this First Amendment.
c. Ratification
and Affirmation; Representations and Warranties. Borrower
hereby (a)
ratifies and affirms its obligations under, and acknowledges, renews and extends
its continued liability under, each Loan Document to which it is a party and
agrees that each Loan Document to which it is a party remains in full force and
effect, except as expressly amended hereby, notwithstanding the amendments
contained herein and (b) represents andl warrants to the Lenders that as of the
date hereof, after giving effect to the terms of this First Amendment: (i) all
of the representations and warranties contained in each Loan Document to which
it is a party are true and correct, except to the extent any such
representations and warranties are expressly limited to an earlier date, in
which case, such representations and warranties shall continue to be true and
correct as of
such specified earlier date, (ii) no Default has occurred and is continuing
(iii) since the Effective Date, there has been no event, development or
circumstance that has had or could reasonably be expected to have a Material
Adverse Effect, (iv) the Pro Forma Balance Sheet has been prepared based on the
best information available to the Borrower as of the date of delivery thereof,
and presents fairly on a pro forma basis the estimated financial position of the
Borrower and its consolidated subsidiaries as at November 30, 2007 assuming that
the events specified in Section 3(r)(i) and (ii) had actually occurred at such
date and (v) each representation and warranty contained in each Mako Acquisition
Document is true and correct.
d. Loan
Document. This First Amendment and each agreement, instrument,
certificate
or document executed by the Borrower or any of its officers in connection
therewith are "Loan Documents" as defined and described in the Credit Agreement
and all of the terms and provisions of the Credit Agreement relating to Loan
Documents shall apply hereto and thereto.
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e. Loan
Party. In connection with the Mako Acquisition, any Person acquired by,
or that
consolidates into, any Loan Party in connection therewith shall itself be a
"Loan Party" as defined and described in the Credit Agreement and all of the
terms and provisions of the Credit Agreement relating to Loan Parties shall
apply hereto and thereto.
f. Counterparts.
This First Amendment may be executed by one or more of the parties
hereto in any number of separate counterparts, and all of such counterparts
taken together shall be deemed to constitute one and the same instrument.
Delivery of this First Amendment by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
g. NO
ORAL AGREENUNT. This First Amendment, the Credit Agreement and the
other
Loan Documents executed in connection herewith and therewith represent the final
agreement among the parties and may not be contradicted by evidence of prior,
contemporaneous, or unwritten oral agreements of the parties. There arc no
subsequent oral agreements between the parties.
h. GOVERNING
LAW. THIS FIRST AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITIL TIHE LAWS OF THE STATE OF NEW YORK.
[SIGNATURES
BEGIN ON NEXT PAGE]
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The
parties hereto have caused this First Amendment to be duly executed as of the
day and year first above written.
| BORROWOR: | DEEP DOWN, INC., a Nevada corporation |
| By: /s/ Xxxxxx X. Xxxxx | |
|
Name: Xxxxxx
X. Xxxxx
|
|
| Title: President | |
Signature Page to First Amendment to Credit Agreement
13
| LENDER: | PROSPECT CAPITAL CORPORATION |
| By: | |
|
Name:
|
|
| Title: | |
Signature
Page to First Amendment to Credit Agreement
14
