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EXHIBIT 10.36
 
RATIFICATION OF GUARANTY,
SECURITY AGREEMENT, AND INTERCREDITOR AGREEMENT

THIS RATIFICATION OF GUARANTY, SECURITY AGREEMENT, AND INTERCREDITOR AGREEMENT
(as amended, restated, or supplemented from time to time, this “Agreement”) is
dated as of April 14, 2010, among Deep Down, Inc., a Nevada corporation
(“Borrower”), Electrowave USA, Inc., a Nevada corporation (“Electrowave”),
Flotation Technologies, Inc., a Maine corporation (“Flotech”), Mako
Technologies, LLC, a Nevada limited liability company (“Mako”), Deep Down Inc.,
a Delaware corporation (“DD Delaware”, and together with Electrowave, Flotech,
and Mako, each a “Guarantor”, and collectively, the “Guarantors”), and Whitney
National Bank, a national banking association (together with its successors and
assigns, “Lender”).
 
RECITALS
 
A.   Borrower, as borrower, and Lender, as lender, previously 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, that
certain Third Amendment to Credit Agreement dated May 29, 2009, and as may be
further amended, the “Existing Credit Agreement”).
 
B.   To support the “Obligation” under, and as defined in, the Existing Credit
Agreement, each of the Guarantors executed that certain Guaranty, dated as of
November 11, 2008 (as amended, restated, or supplemented from time to time, the
“Guaranty”), in favor of Lender.
 
C.   To secure (i) the “Obligation” under, and as defined in, the Existing
Credit Agreement, and (ii) the “Guaranteed Obligations” under, and as defined
in, the Guaranty, Borrower and each Guarantor executed that certain Security
Agreement dated as of November 11, 2008 (as amended by that certain First
Amendment to Security Agreement dated December 18, 2008, that certain Second
Amendment to Security Agreement dated May 29, 2009, and as further amended,
restated, or supplemented from time to time, the “Security Agreement”), pursuant
to which Borrower and each Guarantor granted a lien on all of their respective
assets in favor of Lender.
 
D.   Flotech, as borrower, and TD Bank, N.A., a corporation organized under the
laws of the United States of America (together with its successors and assigns,
“TD Bank”), as lender, previously entered into that certain Loan Agreement dated
February 13, 2009 (as amended, restated or supplemented, the “TD Bank Loan
Agreement”).
 
E.   In connection with the execution of the TD Bank Loan Agreement, Lender and
TD Bank previously executed that certain Intercreditor Agreement dated as of
February 13, 2009 (as amended, restated, or supplemented, the “Intercreditor
Agreement”), which was acknowledged by Borrower and Flotech, and pursuant to
which, subject to the terms and conditions therein, the Lender and TD Bank
agreed to certain terms regarding their respective rights, title, and interest
to (i) certain collateral securing the obligations of Flotech under the TD Bank
Loan Agreement, and (ii) certain collateral securing the obligations of Borrower
under the Existing Credit Agreement.
 
F.   Borrower and Lender have amended and restated the terms of the Existing
Credit Agreement by entering into that certain Amended and Restated Credit
Agreement dated as of November 11, 2008, and amended and restated through the
date hereof (as amended, restated, or supplemented from time to time, the
“Amended and Restated Credit Agreement”).
 
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G.   The execution and delivery of this Agreement is a material inducement for
Lender’s agreement to continue to extend credit to Borrower under the Amended
and Restated Credit Agreement.
 
H.   Capitalized terms used but not defined in this Agreement shall have the
meanings given them in the Amended and Restated Credit Agreement.
 
AGREEMENTS
 
NOW, THEREFORE, for the premises and other valuable consideration, the receipt
and adequacy of which is hereby acknowledged, Borrower and each Guarantor agree
as follows in respect of the Loan Documents or other documents to which it is a
party:
 
1.   Ratification and Amendment of Guaranty.  Each Guarantor hereby (a) ratifies
and confirms its obligations and liabilities under the Guaranty, (b) agrees that
all references in the Guaranty to the “Credit Agreement” shall be amended and
shall refer to the Amended and Restated Credit Agreement, (c) agrees that all
references in the Guaranty to the “Obligation” shall be amended to mean the
“Obligation” under, and as defined in, the Amended and Restated Credit
Agreement, (d) agrees that all references in the Guaranty to the “Loan
Documents” shall be amended to mean the “Loan Documents” under, and as defined
in, the Amended and Restated Credit Agreement, and (e) releases Lender from any
liability for actions or omissions in connection with the Existing Credit
Agreement prior to the date of this Agreement.  Each Guarantor acknowledges and
agrees that the Guaranty continues in full force and effect and that under the
Guaranty, the Guarantor guarantees to Lender the full payment and performance of
the Borrower’s obligations under the Amended and Restated Credit Agreement and
the other Loan Documents (as defined in the Amended and Restated Credit
Agreement).
 
2.   Ratification and Amendment of Security Agreement.  Borrower and each
Guarantor hereby (a) ratifies and confirms its obligations and liabilities under
the Security Agreement, (b) agrees that all references in the Security Agreement
to the “Credit Agreement” shall be amended and shall refer to the Amended and
Restated Credit Agreement, (c) agrees that all references in the Security
Agreement to the “Obligation” shall be amended to mean the “Obligation” under,
and as defined in, the Amended and Restated Credit Agreement, (d) agrees that
all references in the Security Agreement to the “Loan Documents” shall be
amended to mean the “Loan Documents” under, and as defined in, the Amended and
Restated Credit Agreement, and (e) releases Lender from any liability for
actions or omissions in connection with the Existing Credit Agreement and the
Security Agreement prior to the date of this Agreement.  Borrower and each
Guarantor acknowledges and agrees that the Security Agreement continues in full
force and effect and that under the Security Agreement, Borrower and each
Guarantor, as applicable, has pledged to Lender the “Collateral” under, and as
defined in, the Security Agreement to secure the full payment and performance of
the Borrower’s obligations under the Amended and Restated Credit Agreement and
the other Loan Documents (as defined in the Amended and Restated Credit
Agreement).
 
3.   Ratification of Intercreditor Agreement.  Each of Borrower and Flotech
hereby (a) ratifies and confirms the agreements set forth in the Intercreditor
Agreement, and (b) releases Lender from any liability for actions or omissions
in connection with the Existing Credit Agreement or the Intercreditor Agreement
prior to the date of this Agreement.
 
4.   Successors and Assigns.  This Agreement binds Borrower, Guarantors, and
their respective successors and assigns, as applicable, and inures to the
benefit of Lender, and its successors and assigns.
 
5.   Governing Law.  This Agreement must be construed – and its performance
enforced – under Texas law.
 
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6.   Counterparts.  This Agreement 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 Agreement may be transmitted and signed by facsimile or by PDF
(portable document format).  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, Guarantors, 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.
 
7.   Entire Agreement.  THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG THE
PARTIES 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 pages.]
 
 
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date set out in the Preamble.
 
 

 
BORROWER:
 
DEEP DOWN, INC.,
a Nevada corporation
         
 
By:
/s/ Eugene L. Butler       Eugene L. Butler       Chief Financial Officer      
   

 

 

 
 
 
 
 

 
Signature Page to Ratification of Guaranty, Security Agreement,
and Intercreditor Agreement
 
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GUARANTORS:
 
ELECTROWAVE USA, INC.,
a Nevada corporation
         
 
By:
/s/ Eugene L. Butler       Eugene L. Butler       Chief Financial Officer  

 
 

 
FLOTATION TECHNOLOGIES, INC.,
a Maine corporation
         
 
By:
/s/ Eugene L. Butler       Eugene L. Butler       Chief Financial Officer  

 
 

 
MAKO TECHNOLOGIES, LLC,
a Nevada limited liability company
         
 
By:
/s/ Eugene L. Butler       Eugene L. Butler       Chief Financial Officer  

 
 

 
DEEP DOWN INC.,
a Delaware corporation
         
 
By:
/s/ Eugene L. Butler       Eugene L. Butler       Chief Financial Officer  

 
 
Signature Page to Ratification of Guaranty, Security Agreement,
and Intercreditor Agreement
 
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LENDER:
 
WHITNEY NATIONAL BANK,
a national banking association
         
 
By:
/s/ Paul W. Cole       Paul W. Cole      
Vice President
 

 

 

 
 
 
 
Signature Page to Ratification of Guaranty, Security Agreement,
and Intercreditor Agreement
 
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