EXHIBIT B
GUARANTY
(Corporate)
THIS GUARANTY (as amended, supplemented, or
restated, this “ Guaranty ”) is executed
as of November 11, 2008, by ELECTROWAVE USA, INC., a Nevada
corporation, FLOTATION TECHNOLOGIES, INC., a Maine corporation,
MAKO TECHNOLOGIES, LLC, a Nevada limited liability company, and
DEEP DOWN INC., a Delaware corporation (collectively, the “
Guarantors ”) for the benefit of WHITNEY
NATIONAL BANK, a national banking association (“
Lender ”).
RECITALS
A. DEEP
DOWN, INC., a Nevada corporation (“ Borrower
”), as borrower, and Lender, as lender, have entered into
that certain Credit Agreement dated of even date herewith (as
amended, supplemented or restated, the “ Credit
Agreement ”), together with certain other Loan
Documents.
B. Each
Guarantor is a direct wholly-owned subsidiary of Borrower and has
agreed to enter into this Guaranty so that Borrower can receive the
benefits of the Guaranteed Obligation (as defined
below).
C. In
each Guarantor’s judgment, the value of the consideration
received and to be received by it under the Loan Documents is
reasonably worth at least as much as its liability and obligation
under this Guaranty, and such liability and obligation may
reasonably be expected to benefit Guarantors directly or
indirectly.
D. It
is expressly understood among Borrower, Guarantors, and Lender that
the execution and delivery of this Guaranty is a condition
precedent to Lender’s obligations to extend credit under the
Credit Agreement.
NOW, THEREFORE, for valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, each Guarantor guarantees to Lender the prompt
payment at maturity (by acceleration or otherwise), and at all
times thereafter, of the Guaranteed Obligation, as
follows:
1. Definitions
. Each capitalized term used but not defined in this
Guaranty shall have the meaning given that term in the Credit
Agreement. The following terms shall have the following
meanings as used in this Guaranty:
“ Borrower
” has the meaning given in Recital A and includes, without
limitation, all of Borrower’s successors and assigns,
Borrower as a debtor-in-possession, and any receiver, trustee,
liquidator, conservator, custodian, or similar party hereafter
appointed for Borrower or for all or any portion of
Borrower’s assets pursuant to any liquidation,
conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar Debtor Relief
Law from time to time in effect.
“ Company Debt
” means all obligations of Borrower to any Guarantor, whether
direct, indirect, fixed, contingent, liquidated, unliquidated,
joint, several, or joint and several, now existing or arising after
the date of this Guaranty, due or to become due to any Guarantor,
or held or to be held by any Guarantor, whether created directly or
acquired by assignment or otherwise, and whether or not evidenced
by written instrument including the obligation of Borrower to any
Guarantor as a subrogee of the Lender or resulting from any
Guarantor’s performance under this Guaranty.
“ Guaranteed
Obligation ” means any and all existing and future
indebtedness and liabilities of every kind, nature, and character,
direct or indirect, absolute or contingent, liquidated or
unliquidated, voluntary or involuntary, of Borrower to the Lender
arising under the Credit Agreement and the other Loan Documents,
including, the Obligation as defined in the Credit Agreement and
any premium and all interest (including, without limitation,
interest accruing before and after maturity, before and after a
Default, and during the pendency of any bankruptcy, receivership,
insolvency or other similar proceeding under any applicable Debtor
Relief Law (regardless whether such interest is allowed in such
proceeding)), and any and all costs, attorney and paralegal fees
and expenses reasonably incurred by Lender (a) in connection with
any waiver, amendment, consent or default under the Loan Documents,
or (b) to enforce Borrower’s, any Guarantor’s, or any
other obligor’s payment of any portion of the Guaranteed
Obligation.
“ Paid in Full
” or “ Payment in Full ”
means that the Guaranteed Obligation is
completely paid (including principal, interest, fees and expenses),
and all commitments to lend or issue letters of credit under the
Credit Agreement have terminated.
2.
Guaranty . Each Guarantor hereby guarantees the
prompt payment and performance of the Guaranteed Obligation when
due (at the stated maturity, upon acceleration, or otherwise) and
at all times thereafter. This is an absolute,
unconditional, irrevocable and continuing guaranty of payment (and
not of collection) of the Guaranteed Obligation which will remain
in effect until the Guaranteed Obligation is Paid in
Full. The circumstance that at any time or from time to
time all or any portion of the Guaranteed Obligation may be paid in
full shall not affect the Guarantors’ obligation with respect
to the Guaranteed Obligation thereafter incurred. No
Guarantor may rescind or revoke its obligations to Lender under
this Guaranty with respect to the Guaranteed
Obligation. At the Lender’s option, all payments
under this Guaranty shall be made to the office of Lender and in
U.S. Dollars.
3. Default
by Borrower . If a Default exists, Guarantors shall
pay the amount of the Guaranteed Obligation then due and payable to
Lender on demand and without (a) further notice of dishonor to any
Guarantor, (b) any prior notice to any Guarantor of the acceptance
by Lender of this Guaranty, (c) any notice having been given to any
Guarantor prior to such demand of the creating or incurring of such
Debt, or (d) notice of intent to accelerate or notice of
acceleration to any Guarantor or Borrower (except as otherwise
required under the Credit Agreement). To enforce such
payment by Guarantors it shall not be necessary for Lender to first
or contemporaneously institute suit or exhaust remedies against
Borrower or others liable on such Debt, or to enforce rights
against any security or collateral ever given to secure such
Debt.
4. Amount
of Guaranty and Consideration . The Lender’s
books and records showing the amount of the Guaranteed Obligation
shall be admissible in evidence in any action or proceeding, and
shall be binding upon the Guarantors and conclusive (absent
manifest error) for the purpose of establishing the amount of the
Guaranteed Obligation. In consummating the transactions
contemplated by the Credit Agreement, Guarantors do not intend to
disturb, delay, hinder, or defraud either any of their present or
future creditors. Each Guarantor is familiar with, and
has independently reviewed books and records regarding, the
financial condition of Borrower and is familiar with the value of
the security and support for the payment and performance of the
Guaranteed Obligation. Based upon such examination, and
taking into account the fairly discounted value of each
Guarantor’s contingent obligations under this Guaranty and
the value of the subrogation and contribution claims any Guarantor
could make in connection with this Guaranty, and assuming each of
the transactions contemplated by the Credit Agreement is
consummated and Borrower makes full use of the credit facilities
thereunder, the present realizable fair market value of the assets
of Guarantors exceeds the total obligations of Guarantors, and each
Guarantor is able to realize upon its assets and pay its
obligations as such obligations mature in the normal course of
business. Each Guarantor represents and warrants to
Lender that the value of consideration received and to be received
by it is reasonably worth at least as much as its liability under
this Guaranty, and such liability may reasonably be expected to
benefit each such Guarantor, directly or indirectly.
5.
Avoidance Limitation . The obligations of
Guarantors under this Guaranty shall be limited to an aggregate
amount equal to the largest amount that would not render its
obligations under this Guaranty subject to avoidance under Section
548 of the U.S. Bankruptcy Code or any comparable provisions of any
applicable state law.
6.
Liability for Other Debt of Borrower . If any
Guarantor becomes liable for any Debt owing by Borrower to Lender,
by endorsement or otherwise, other than under this Guaranty, such
liability shall not be impaired or affected by this Guaranty and
the rights of Lender under this Guaranty shall be cumulative of any
and all other rights that Lender may ever have against
Guarantors.
7.
Subordination . Each Guarantor hereby expressly
subordinates all Company Debt to the Payment in Full of the
Guaranteed Obligation. Each Guarantor agrees not to
receive or accept any payment from Borrower with respect to the
Company Debt at any time a Default exists and, in the event any
Guarantor receives any payment on the Company Debt in violation of
the foregoing, such Guarantor shall hold any such payment for the
benefit of Lender and promptly turn it over to Lender, in the form
received (with any necessary endorsements), to be applied to the
Guaranteed Obligation. If Lender so requests, any such
Company Debt shall be enforced and all amounts received by any
Guarantor shall be received in trust for the Lender and the
proceeds thereof shall be paid over to the Lender on account of the
Guaranteed Obligation, but without reducing or affecting in any
manner the liability of Guarantors under this Guaranty.
8.
Subrogation . Until the Guaranteed Obligation is
Paid In Full, each Guarantor agrees that it will not assert,
enforce, or otherwise exercise (a) any right of subrogation to any
of the rights or liens of Lender or any other beneficiary against
Borrower or any other obligor on the Guaranteed Obligation or any
Collateral or other security, or (b) any right of recourse,
reimbursement, subrogation, contribution, indemnification, or
similar right against Borrower or any other obligor or other
guarantor on all or any part of the Guaranteed Obligation (whether
such rights in clause (a) or clause (b) arise in
equity, under contract, by statute, under common law, or
otherwise).
9.
Enforceability of Guaranty; No Release .
(a) This Guaranty
shall not be affected by the genuineness, validity, regularity or
enforceability of the Guaranteed Obligation or any instrument or
agreement evidencing any part of the Guaranteed Obligation, or by
the existence, validity, enforceability, perfection, or extent of
any Collateral securing the Guaranteed Obligation, or by any fact
or circumstance relating to the Guaranteed Obligation which might
otherwise constitute a defense to the obligations of the Guarantors
under this Guaranty.
(b) Each Guarantor
agrees that the Lender may, at any time and from time to time, and
without notice to any Guarantor, make any agreement with the
Borrower or with any other person or entity liable on any of the
Guaranteed Obligations or providing collateral as security for the
Guaranteed Obligations, for the extension, renewal, payment,
compromise, discharge or release of the Guaranteed Obligations or
any Collateral (in whole or in part), or for any modification or
amendment of the terms thereof or of any instrument or agreement
evidencing the Guaranteed Obligations or the prov
