SECOND AMENDMENT TO SECURITY AGREEMENT
EXHIBIT
10.4
SECOND
AMENDMENT TO SECURITY AGREEMENT
THIS
SECOND AMENDMENT TO SECURITY AGREEMENT (this “Amendment”)
is executed as of May 29, 2009, by DEEP DOWN, INC., a Nevada corporation (“Parent”),
ELECTROWAVE USA, INC., a Nevada corporation (“Electrowave”),
FLOTATION TECHNOLOGIES, INC., a Maine corporation (“Flotech”),
MAKO TECHNOLOGIES, LLC, a Nevada limited liability company (“Mako”),
and DEEP DOWN INC., a Delaware corporation (“DD
Delaware,” and together with Parent, Electrowave, Flotech, and Mako,
collectively, “Debtor”),
for the benefit of WHITNEY NATIONAL BANK, a national banking association (“Secured
Party”). Capitalized terms used but not defined in this
Amendment have the meanings given them in the Security Agreement (defined
below).
RECITALS
A. Parent,
as borrower (in such capacity, “Borrower”),
and Secured Party, as lender, have entered into that certain Credit Agreement
dated as of 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, restated,
or supplemented, the “Credit
Agreement”).
B. To
further secure the obligations of Borrower under the Credit Agreement,
Electrowave, Flotech, Mako, and DD Delaware executed that certain Guaranty dated
as of November 11, 2008 (as amended, restated, or supplemented, the “Guaranty”)
for the benefit of Secured Party, together with certain other Loan
Documents.
C. To
further secure their respective obligations under the Credit Agreement and
Guaranty, each Debtor executed that certain Security Agreement dated as of
November 11, 2008 (as amended by that certain First Amendment to Security
Agreement dated as December 18, 2008, and as further amended, restated, or
supplemented, the “Security
Agreement”).
D. Debtors
and Secured Party have agreed to amend the Security 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. Exhibits and
Schedules. Schedule 1
to the Security Agreement is hereby deleted in its entirety and replaced with
Schedule
1 to this Amendment.
2. Representations and
Warranties. Each Debtor represents and warrants to Secured
Party 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
Parent, (c) no other consent of any Person (other than Secured Party) 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 Secured Party is required for Secured Party to rely on the
representations and warranties in this Amendment.
3. Scope of Amendment;
Reaffirmation; Release. All references to the Security
Agreement shall refer to the Security Agreement as amended by this
Amendment. Except as effected by this Amendment, the Security
Agreement is unchanged and continues in full force and effect. Each
Debtor 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). Each Debtor hereby releases Secured Party from any
liability for actions or omissions in connection with the Credit Agreement,
Security Agreement, and the other Loan Documents prior to the date of this
Amendment.
4. 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, Security 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 Secured
Party’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 Secured Party
under any provision of this Amendment must be in form and substance satisfactory
to Secured Party 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, the Security Agreement, or the other Loan
Documents.
(d) Costs, Expenses and
Attorneys’ Fees. Each Debtor agrees to pay or reimburse
Secured Party 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 Secured Party’s counsel.
(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 Debtors and Secured Party. Secured Party 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.
2
(h) Entirety. The Loan
Documents (as amended hereby) Represent the Final Agreement Between Debtors and
Secured Party 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
appear on the next page.]
3
The
Amendment is executed as of the date set forth in the preamble.
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DEBTORS:
a
Nevada corporation
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
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SECURED
PARTY:
WHITNEY
NATIONAL BANK,
a
national banking association
By: /s/ Xxxx X.
Xxxx
Xxxx
X. Xxxx
Vice
President
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Signature
Page to Second Amendment to Security Agreement
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SCHEDULE 1
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Location
of Books and Records
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as
to Accounts and Principal Place of
Business
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DEEP DOWN,
INC., a
Nevada corporation
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(a)
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The
exact name of Debtor, as such name appears in its organizational
documents.
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(b)
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Any
change in Debtor’s identity or legal structure within the past five
years.
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In
December 2006, Mediquip Holdings, Inc., a Nevada corporation (later
renamed Deep Down, Inc., a Nevada corporation), divested Westmeria
Healthcare Limited, its wholly-owned subsidiary representing substantially
all of its preceding operations, and subsequently acquired Deep Down,
Inc., a Delaware corporation.
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(c)
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All
other names (including trade names) used by Debtor or any of its divisions
or other business units in connection with the conduct of its business or
ownership of its properties at any time in the past five
years.
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See
(b)
above.
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(d)
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Debtor’s
federal taxpayer identification
number.
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00-0000000
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(e)
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Debtor’s
principal place of business.
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00000
Xxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxx
00000
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(f)
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The
locations where Debtor maintains its
inventory.
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00000
Xxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxx
00000
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(g)
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All
real property owned by Debtor.
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00000
Xxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxx
00000
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(h) All
real property leased by Debtor.
0000 X. Xxx Xxxxxxx Xxxxxxx X., Xxxxx
000, Xxxxxxx, Xxxxx 00000
(i) All
intellectual property of Debtor.
None.
Schedule
1 to Second Amendment to Security Agreement – Page 1
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ELECTROWAVE USA, INC.,
a Nevada corporation
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(a)
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The
exact name of Debtor, as such name appears in its organizational
documents.
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Electrowave
USA, Inc. (“Electrowave”)
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(b)
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Any
change in Debtor’s identity or legal structure within the past five
years.
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In
2007, Deep Down, Inc., a Nevada corporation, formed a wholly-owned
subsidiary, Electrowave, for purposes of acquiring substantially all of
the assets of Electrowave USA, Inc., a Texas
corporation.
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(c)
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All
other names (including trade names) used by Debtor or any of its divisions
or other business units in connection with the conduct of its business or
ownership of its properties at any time in the past five
years.
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(d)
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Debtor’s
federal taxpayer identification
number.
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00-0000000
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(e)
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Debtor’s
principal place of business.
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00000
Xxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxx
00000
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(f)
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The
locations where Debtor maintains its
inventory.
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00000
Xxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxx
00000
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(g)
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All
real property owned by Debtor.
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None.
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(h) All
real property leased by Debtor.
None.
(i) All
intellectual property of Debtor.
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·
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One
issued patent – US Patent No.
6,869,254
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·
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The
following trademark registrations with the United States Patent and
Trademark Office: Electrowave, Reg. No. 2,853,428; Drilsys,
Reg. No. 2,831,872; and Mudsys, Reg. No.
2,869,165
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Schedule
1 to Second Amendment to Security Agreement – Page 2
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FLOATATION
TECHNOLOGIES, INC., a Maine
corporation
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(a)
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The
exact name of Debtor, as such name appears in its organizational
documents.
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Flotation
Technologies, Inc.
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(b)
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Any
change in Debtor’s identity or legal structure within the past five
years.
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Deep
Down, Inc., Nevada, acquired all of the issued and outstanding stock
effective June 5, 2008.
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(c)
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All
other names (including trade names) used by Debtor or any of its divisions
or other business units in connection with the conduct of its business or
ownership of its properties at any time in the past five
years.
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N/A
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(d)
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Debtor’s
federal taxpayer identification
number.
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00-0000000
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(e)
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Debtor’s
principal place of business.
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00
Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000
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(f)
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The
locations where Debtor maintains its
inventory.
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00
Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000
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(g)
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All
real property owned by Debtor.
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00
Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000
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(h) All
real property leased by Debtor.
None.
(i) All
intellectual property of Debtor.
Patents
Drilling Riser Buoyancy Produced with
Plastic Shell, Serial No. 61/000,476
Driller Riser Auxiliary Clamp with
Integral Mux Clamp, Serial No. 61/000,471
Distributed Buoyancy Module, Serial No.
60/503,811
Clamp for Holding Distributed Buoyancy
Modules, Serial No. 60/503,812
Schedule
1 to Second Amendment to Security Agreement – Page 3
Unregistered
Trademarks
HardBallTM
floats
Quick-LocTM cable
floats
FlotecTM
syntactic foams
Flex-LokTM
buoyancy bend restrictors
Hydro-FloatTM of
HydrofloatTM mooring
buoys
StablemoorTM high
current ADCP buoys
ROVitTM
floats
CoreTecTM
drilling riser buoyancy modules
FLOTECTTM and
FLOTECT HDTM impact
and abrasion protection
InflexTM bend
restrictors and bend stiffeners
The
Company has used the motto “A Company with Depth” for many years.
The
Company has used the saying “Tales from the Deep” for many years for its annual
OTC party and a previous newsletter.
Internet Domain Names owned
by Debtor
Xxxxxx.xxx
Xxxxxxxxxxxxxxxxxxxxx.xxx
Xxxxxxxxx.xxx
Xxxxxxxxxxxxxxx.xxx
Xxxxxxxxxxxxxxx.xxx
Xxxxxxxxxxxxxxxxx.xxx
Xxxxx-xxxxxx.xxx
Xxxxxxxxxx.xxx
Xxxxxxxxxxx.xxx
Xxxxxxxxxxxxxx.xxx
Xxxxxxxxxxxxxxxxxxx.xxx
Xxxxxxxxxxxxxxxxxx.xxx
Xxxxxxxxxxxxxxxxx.xxx
Schedule
1 to Second Amendment to Security Agreement – Page 4
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MAKO TECHNOLOGIES,
LLC, a Nevada limited liability
company
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(a)
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The
exact name of Debtor, as such name appears in its organizational
documents.
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Mako
Technologies, LLC (“Mako”)
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(b)
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Any
change in Debtor’s identity or legal structure within the past five
years.
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In
December 2007, Deep Down, Inc., a Nevada corporation formed a wholly-owned
subsidiary, Mako, for purposes of acquiring all of the outstanding common
stock of Mako Technologies, Inc., a Louisiana corporation, which then
merged with and into Mako, with Mako as the surviving
entity.
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(c)
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All
other names (including trade names) used by Debtor or any of its divisions
or other business units in connection with the conduct of its business or
ownership of its properties at any time in the past five
years.
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(d)
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Debtor’s
federal taxpayer identification
number.
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00-0000000
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(e)
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Debtor’s
principal place of business.
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000
Xxxx Xxxx, Xxxxxx Xxxx, XX 00000
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(f)
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The
locations where Debtor maintains its
inventory.
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000
Xxxx Xxxx, Xxxxxx Xxxx, XX 00000
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(g)
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All
real property owned by Debtor.
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None.
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(h) All
real property leased by Debtor.
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000
Xxxx Xxxx, Xxxxxx Xxxx, XX 00000
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(i) All
intellectual property of Debtor.
None.
Schedule
1 to Second Amendment to Security Agreement – Page 5
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DEEP DOWN
INC., a
Delaware corporation
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(a)
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The
exact name of Debtor, as such name appears in its organizational
documents.
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Deep
Down Inc. (“Deep Down”)
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(b)
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Any
change in Debtor’s identity or legal structure within the past five
years.
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On
November 21, 2006 Subsea Acquisition Corporation (“Subsea”), a Texas
corporation acquired all of the outstanding capital stock of Strategic
Offshore Services Corporation (“SOS”), a Texas corporation, and also
acquired Deep Down. Immediately after the acquisition, Subsea
merged with and into SOS, with Subsea continuing as the surviving
company. Immediately thereafter, Subsea merged with and into
its wholly-owned subsidiary Deep Down, with Deep Down continuing as the
surviving company. In December 2006, Mediquip Holdings, Inc., a
Nevada corporation (later renamed Deep Down, Inc., a Nevada corporation),
divested Westmeria Healthcare Limited, its wholly-owned subsidiary
representing substantially all of its preceding operations, and
subsequently acquired Deep Down.
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(c)
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All
other names (including trade names) used by Debtor or any of its divisions
or other business units in connection with the conduct of its business or
ownership of its properties at any time in the past five
years.
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(d)
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Debtor’s
federal taxpayer identification
number.
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00-0000000
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(e)
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Debtor’s
principal place of business.
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00000
Xxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxx
00000
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(f)
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The
locations where Debtor maintains its
inventory.
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00000
Xxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxx
00000
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(g)
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All
real property owned by Debtor.
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None.
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(h) All
real property leased by Debtor.
None.
(i) All
intellectual property of Debtor.
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The
following trademark registrations with the United States Patent and
Trademark Office: Moray, Reg. No. 2,745,237; Aquasox, Reg. No.
2,890,204; and Seastax, Reg. No.
2,647,390
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Schedule
1 to Second Amendment to Security Agreement – Page
6
