Contract
THIS
THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”)
is entered into as of May 29, 2009, between DEEP DOWN, INC., a Nevada
corporation (“Borrower”),
and WHITNEY NATIONAL BANK, a national banking association (the “Lender”). Capitalized
terms used but not defined in this Amendment have the meanings given them in the
Credit Agreement (defined below).
RECITALS
A. Borrower
and Lender entered into that certain Credit Agreement dated as of
November 11, 2008 (as amended by that certain First Amendment to Credit
Agreement dated December 18, 2008, that certain Second Amendment to Credit
Agreement dated February 13, 2009, and as further amended, restated, or
supplemented, the “Credit
Agreement”).
B. Borrower
and Lender have agreed to amend the Credit Agreement, subject to the terms and
conditions of this Amendment.
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are acknowledged, the undersigned hereby agree as follows:
1. Amendments to Credit
Agreement.
(a) The
Recitals to the Credit Agreement are deleted and are replaced with the
following:
A. Borrower
has requested that Lender extend credit to it in the form of a revolving credit
facility in the maximum principal amount of up to $2,000,000 to be used for
working capital and general corporate purposes.
B. Borrower
has requested that Lender extend credit in the form of a single advance term
loan to purchase a new Super Mohawk 21 remote operated vehicle.
C. Borrower
has requested that Lender extend credit in the form of a single advance term
loan in the principal amount of up to $2,100,000 to be used to acquire the
Properties.
D. Lender
has agreed to extend to Borrower the requested credit on the terms and
conditions set out in this Agreement:
(b) Section
1.1 of the Credit Agreement is amended to delete the defined terms “Notes” and
“Term
Facility” in their entirety and replace them 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).”
(c) Section
1.1 of the Credit Agreement is further amended to add the following new
defined terms in the appropriate alphabetical order:
“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”).”
(e) Section
2.3(a) of the Credit Agreement is amended to delete the first sentence
thereof in its entirety and to replace it with the following:
“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:
(i) Lender
must receive Borrower’s written or telephonic prepayment notice by
10:00 a.m. on the prepayment date;
2
(ii) Borrower’s
prepayment notice shall (A) specify the prepayment date, (B) specify the amount
of the Loan to be prepaid, and (C) indicate whether the RE Term Principal
Amount, the Revolving Principal Amount, or the Term Principal Amount is to be
repaid;
(iii) each
partial prepayment must be in a minimum amount of not less than (A) $100,000 or a
greater integral multiple of $10,000 or (B) if less than the minimum amount,
the outstanding balance of the RE Term Principal Amount, the Revolving Principal
Amount, or the Term Principal Amount, as applicable;
(iv) all
accrued and unpaid interest on the portion of the RE Term Principal Amount, the
Revolving Principal Amount, or the Term Principal Amount prepaid must also be
paid in full on the prepayment date;
(v) each
partial prepayment of the RE Term Facility shall be applied to the scheduled
principal payments in the inverse order of their maturity; and
(vi) each
partial prepayment of the Term Facility shall be applied to the scheduled
principal payments in the inverse order of their maturity.”
(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.”
3
(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.
(a) Payments
of principal and accrued and unpaid interest on the Loan made under the Term
Facility in the amount of $35,246.35 are due and payable monthly in arrears
beginning on the first day of February 1, 2009, and continuing on the first day
of each month thereafter.
(b) All
outstanding principal and all accrued and unpaid interest in respect of the Term
Facility is due and payable on the Term Maturity Date.
(c) Payments
of principal and accrued and unpaid interest on the RE Term Facility in the
amount of $18,293.25 are due and payable monthly in arrears beginning on the
first day of June 1, 2009, and continuing on the first day of each month
thereafter.
(d) All
outstanding principal and all accrued and unpaid interest in respect of the RE
Term Facility is due and payable on the RE Term Loan Maturity
Date.”
(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.”
(m) Section
7.13 of the Credit Agreement is amended to add the following new subsection (d) in the
appropriate alphabetical order:
“(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.”
4
2. Exhibits and
Schedules.
(a) The list
of Schedules and Exhibits set out on page iv of the Credit Agreement is deleted
and is replaced with the list of Schedules and Exhibits attached to this
Amendment as Annex
A.
(b) Schedule
7.16 to the Credit Agreement is hereby deleted and is replaced with the
updated Schedule
7.16 attached to this Amendment as Annex
B.
(c) Exhibit
A-3, attached to this Amendment as Annex C,
is added to the Credit Agreement in the appropriate alphanumerical
order.
3. Conditions. This
Amendment shall be effective once each of the following have been delivered to
Lender:
(a) this
Amendment executed by Borrower and Lender;
(b) Guarantors’
Consent and Agreement;
(c) RE Term
Note executed by Borrower and payable to Lender in the original face amount of
$2,100,000;
(d) Officer’s
Certificate from Borrower certifying as to incumbency of officers, specimen
signatures, no changes to its articles of incorporation and bylaws since the
date of the Certificate delivered in connection with the closing of the Credit
Agreement, and resolutions adopted by its Board of Directors authorizing its
execution of this Amendment and the other documents required in connection
herewith;
(e) Evidence
that Borrower has paid not less than $500,000 toward the purchase price of the
Properties;
(f) Deed
conveying good and marketable title to the Properties into
Borrower;
(g) Phase I
environmental assessment regarding the Properties, in form and substance
acceptable to Lender;
(h) Flood
determination regarding the Properties;
(i) Certificate
of Liability Insurance acceptable to Lender, naming Lender as an additional
insured;
(j) Certificate
of Property Insurance acceptable to Lender, naming Lender as a loss
payee;
(k) Deed of
Trust, Security Agreement and UCC Financing Statement for Fixture Filing,
creating a lien on the Properties in favor of Xxxx X. Xxxxxxx, as trustee for
the benefit of Lender;
(l) Second
Amendment to Security Agreement, executed by Borrower and Lender;
(m) Borrower
shall have paid, and Lender shall have received, a closing fee in the amount of
$10,500; and
5
(n) such
other documents and items as Lender may reasonably request.
4. Representations and
Warranties. Borrower represents and warrants to Lender that
(a) it possesses all requisite power and authority to execute, deliver and
comply with the terms of this Amendment, (b) this Amendment has been duly
authorized and approved by all requisite corporate action on the part of
Borrower, (c) no other consent of any Person (other than Lender) is required for
this Amendment to be effective, (d) the execution and delivery of this Amendment
does not violate its organizational documents, (e) 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), (f) it is in full
compliance with all covenants and agreements contained in each Loan Document to
which it is a party, and (g) no Default or Potential Default has occurred and is
continuing. The representations and warranties made in this Amendment
shall survive the execution and delivery of this Amendment. No
investigation by Lender is required for Lender to rely on the representations
and warranties in this Amendment.
5. Scope of Amendment;
Reaffirmation; Release. All references to the Credit Agreement
shall refer to the Credit Agreement as amended by this
Amendment. Except as affected by this Amendment, the Loan Documents
are unchanged and continue in full force and effect. However, in the
event of any inconsistency between the terms of the Credit Agreement (as amended
by this Amendment) and any other Loan Document, the terms of the Credit
Agreement shall control and such other document shall be deemed to be amended to
conform to the terms of the Credit Agreement. Borrower hereby
reaffirms its obligations under the Loan Documents to which it is a party and
agrees that all Loan Documents to which they are a party remain in full force
and effect and continue to be legal, valid, and binding obligations enforceable
in accordance with their terms (as the same are affected by this
Amendment). Borrower hereby releases Lender from any liability for
actions or omissions in connection with the Credit Agreement and the other Loan
Documents prior to the date of this Amendment.
6. Miscellaneous.
(a) No Waiver of
Defaults. Except as expressly set out above, this Amendment
does not constitute (i) a waiver of, or a consent to, (A) any provision of the
Credit Agreement or any other Loan Document not expressly referred to in this
Amendment, or (B) any present or future violation of, or default under, any
provision of the Loan Documents, or (ii) a waiver of Lender’s right to insist
upon future compliance with each term, covenant, condition and provision of the
Loan Documents.
(b) Form. Each
agreement, document, instrument or other writing to be furnished Lender under
any provision of this Amendment must be in form and substance satisfactory to
Lender and its counsel.
(c) Headings. The
headings and captions used in this Amendment are for convenience only and will
not be deemed to limit, amplify or modify the terms of this Amendment, the
Credit Agreement, or the other Loan Documents.
(d) Costs, Expenses and
Attorneys’ Fees. Borrower agrees to pay or reimburse Lender on
demand for all its reasonable out-of-pocket costs and expenses incurred in
connection with the preparation, negotiation, and execution of this Amendment,
including, without limitation, the reasonable fees and disbursements of Lender’s
counsel.
6
(e) Successors and
Assigns. This Amendment shall be binding upon and inure to the
benefit of each of the undersigned and their respective successors and permitted
assigns.
(f) Multiple
Counterparts. This Amendment may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document. All counterparts must be construed together to constitute
one and the same instrument. This Amendment may be transmitted and
signed by facsimile or portable document format (PDF). The
effectiveness of any such documents and signatures shall, subject to applicable
law, have the same force and effect as manually-signed originals and shall be
binding on Borrower and Lender. Lender may also require that any such
documents and signatures be confirmed by a manually-signed original; provided that the failure to
request or deliver the same shall not limit the effectiveness of any facsimile
or PDF document or signature.
(g) Governing
Law. This Amendment and the other Loan Documents must be
construed, and their performance enforced, under Texas law.
(h) Entirety. The Loan
Documents (as amended hereby) Represent the Final Agreement Between Borrower and
Lender and May Not Be Contradicted by Evidence of Prior, Contemporaneous, or
Subsequent Oral Agreements by the Parties. There Are No Unwritten
Oral Agreements among the Parties.
[Signatures are on the following
page.]
7
The
Amendment is executed as of the date set out in the preamble to this
Amendment.
|
BORROWER:
a
Nevada corporation
By: /s/ Xxxxxx X.
Xxxxxx
Xxxxxx
X. Xxxxxx
Chief
Financial Officer
LENDER:
WHITNEY
NATIONAL BANK,
a
national banking association
By: /s/ Xxxx X.
Xxxx
Xxxx
X. Xxxx
Vice
President
|
8
GUARANTORS’ CONSENT AND AGREEMENT
TO
THIRD
AMENDMENT TO CREDIT AGREEMENT
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/ Xxxxxx X.
Xxxxxx
Xxxxxx
X. Xxxxxx
Chief
Financial Officer of each of the foregoing
companies
|
ANNEX
A
Schedules
and Exhibits
|
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
X-0
XXXXXXX
X-0
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
|
ANNEX
B
SCHEDULE
7.16
Material
Agreements
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 0000 X.
Xxx Xxxxxxx Xxxxxxx X., Xxxxx 000, Xxxxxxx, Xxxxx 00000.
Annex B
to Third Amendment to Credit Agreement
ANNEX
C
EXHIBIT
A-3
REAL ESTATE TERM
NOTE
| $ __________ |
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.
the
rights and obligations of the parties hereto shall be determined solely from
written agreements, documents, and instruments, and any prior oral agreements
between the parties are superseded by and merged into such
writings. this note, the credit agreement and the other written loan
documents executed by the borrower and the lender (or by the borrower for the
benefit of the lender) represent the final agreement between the borrower and
the lender and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements by the parties. there are no unwritten
oral agreements between the parties.
This note
must be construed — and its performance enforced — under Texas law.
Annex C
to Third Amendment to Credit Agreement
EXECUTED
as of the date first written above.
|
BORROWER:
a
Nevada corporation
|
|||
|
Date
|
By:
|
/s/ Xxxxxx X. Xxxxxx | |
| Xxxxxx X. Xxxxxx | |||
| Chief Financial Officer | |||
Annex C
to Third Amendment to Credit Agreement
