deep_8k-cspw.htm


    Exhibit
4.1

     

    THIS
WARRANT AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED UPON THE EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE, OFFER,
PLEDGE OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT.

    


    DEEP
DOWN, INC.

    COMMON
STOCK PURCHASE WARRANT

     

    


    No.
4 Void after September 3, 2011

    


    THIS
CERTIFIES THAT, for value received, Subsea,
LLC (the
"Holder") is entitled at
any time, during the 27 month period commencing on June 3, 2009 (“Initial Warrant Exercise
Date”), and ending September 3, 2011, to subscribe for and purchase up to
Two Hundred Thousand (200,000) shares of the fully paid and
nonassessable Common Stock, $.001 par value (the "Shares"), of DEEP DOWN, INC.,
a Nevada corporation (the "Company") at the per Share exercise price of $.70 (the “Exercise Price”), subject to the provisions and upon the terms
and conditions hereinafter set forth.

    


    
      	
              1.  

            	
              Method of Exercise;
      Payment.

            


    

    
 

    
      	
              a.  

            	
              Cash
      Exercise. The purchase rights represented by this Warrant may be
      exercised by the Holder, in whole or in part, by the surrender of this
      Warrant (with the notice of exercise form attached hereto as Exhibit A
      duly executed) at the principal office of the Company, and by the payment
      to the Company, by certified, cashier's or other check acceptable to the
      Company or by wire transfer to an account designated by the Company, of an
      amount equal to the aggregate Exercise Price of the Shares being
      purchased.

            


    

     

    
      	
              b.  

            	
              Relinquishment
      of Options.
      (i) The Holder in lieu of purchasing the entire number of Shares subject to purchase hereunder, shall
      have the right to relinquish all or any part of the then unexercised
      portion of this Warrant for a number of Shares to be determined in accordance with
      the following provisions of this clause
(b):

            


    

    


    X  =
   Y(A-B)

                   
A

    


    Where:

    


    X = the number of Shares to be issued to the Holder
under this Section 1(b);

    


    Y = the number of Shares identified in the notice of
relinquishment as being relinquished

    


    (A = the current market value (as defined
belowof one share of Common Stock of the
Company on such date; and

    


    B = the Exercise Price on such date.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
 

     (ii)
Such right of relinquishment may be exercised only upon receipt by the Company
of a written notice of such relinquishment which shall be dated the date of
election to make such relinquishment; and that, for the purposes of this
Warrant, such date of election shall be deemed to be the date when such notice
is sent by registered or certified mail, or when receipt is acknowledged by the
Company, if mailed by other than registered or certified mail or if delivered by
hand or by any telegraphic communications equipment of the sender or otherwise
delivered; provided, that, in the event the method just described for
determining such date of election shall not be or remain consistent with the
provisions of Section 16(b) of the Exchange Act or the rules and regulations
adopted by the Commission thereunder, as presently existing or as may be
hereafter amended, which regulations exempt from the operation of Section 16(b)
of the Exchange Act in whole or in part any such relinquishment transaction,
then such date of election shall be determined by such other method consistent
with Section 16(b) of the Exchange Act or the rules and regulations thereunder
as the Company shall in its discretion select and apply;

    


    (iii) The
“current market value” of a share of Common Stock on a particular date shall be
deemed to be its fair market value on that date determined as
follows:

     

    (A)  If
the Common Stock is listed on a national securities exchange or admitted to
unlisted trading privileges on such exchange, the current value shall be the
last reported sales price of the Common Stock on such exchange on the last
business day prior to the date of exercise of this Option or if no such sale is
made on such day, the average of the closing bid and asked prices for such day
on such exchange; or

    


    (B)  If
the Common Stock is not so listed or admitted to unlisted trading privileges,
the current value shall be the mean of the last reported bid and asked prices
reported by the National Association of Securities Dealers Automated Quotation
System (“NASDAQ”), or if not so quoted on NASDAQ then by the National Quotation
Bureau, LLC, New York, New York, on the last business day prior to the date of
the exercise of this Warrant; or

    


    (C)  If
the Common Stock is not so listed or admitted to unlisted trading privileges and
bid and asked prices are not so reported, the current value shall be an amount,
not less than book value, determined in such reasonable manner as may be
prescribed by the Company’s board of directors, and supported by the written
fairness opinion of an independent, nationally-recognized stock valuation
expert.

    


    (iv) The
Warrant, or any portion thereof, may be relinquished only to the extent that (A)
it is exercisable on the date written notice of relinquishment is received by
the Company, (B) the Holder pays, or makes provision satisfactory to the Company
for the payment of, any taxes which the Company is obligated to collect with
respect to such relinquishment.

    


    (v) If a
Warrant is relinquished, such Warrant shall be deemed to have been exercised to
the extent of the number of shares of Common Stock covered by the Warrant or
part thereof which is relinquished, and no further Warrants will be isssued
covering such shares of Common Stock.

    


    
      	
              c.  

            	
              Stock
      Certificates. In the event of any exercise of the rights
      represented by this Warrant, certificates for the Shares so purchased
      shall be delivered to the Holder within a reasonable time and, unless this
      Warrant has been fully exercised or has expired, a new Warrant
      representing the shares with respect to which this Warrant shall not have
      been exercised shall also be issued to the Holder within such
      time.

            


    

    


    
      	
              2.  

            	
              Stock
      Fully Paid; Reservation of Shares. All of the Shares issuable upon
      the exercise of the rights represented by this Warrant will, upon issuance
      and receipt of the Exercise Price therefor, be fully paid and
      nonassessable, and free from all taxes, liens and charges with respect to
      the issue thereof. During the period within which the rights represented
      by this Warrant may be exercised, the Company shall at all times have
      authorized and reserved for issuance sufficient shares of its Common Stock
      to provide for the exercise of the rights represented by this
      Warrant.

            


    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
 

    
      	
              3.  

            	
              Adjustments.
      The number and kind of securities purchasable upon the exercise of this
      Warrant and the Exercise Price therefor shall be subject to adjustment
      from time to time upon the occurrence of certain events, as
      follows:

            


    

    


    
      	
              a.  

            	
              Reclassification.
      In the case of any reclassification or change of securities of the class
      issuable upon exercise of this Warrant (other than a change in par value,
      or from par value to no par value, or from no par value to par value, or
      as a result of a subdivision or combination), or in case of any merger of
      the Company with or into another corporation (other than a merger with
      another corporation in which the Company is the acquiring and the
      surviving corporation and which does not result in any reclassification or
      change of outstanding securities issuable upon exercise of this Warrant),
      or in case of any sale of all or substantially all of the assets of the
      Company, the Company, or such successor or purchasing corporation, as the
      case may be, shall duly execute and deliver to the Holder of this Warrant a new Warrant (in
      form and substance reasonably satisfactory to the Holder of this Warrant), or the Company
      shall make appropriate provision without the issuance of a new Warrant, so
      that the Holder of this Warrant shall
      have the right to receive, at a total purchase price not to exceed that
      payable upon the exercise of the unexercised portion of this Warrant, and
      in lieu of the shares of Common Stock theretofore issuable upon exercise
      of this Warrant, (i) the kind and amount of shares of stock, other
      securities, money and property receivable upon such reclassification,
      change, merger or sale by a holder of the number of shares of Common Stock
      then purchasable under this Warrant, or (ii) in the case of such a merger
      or sale in which the consideration paid consists all or in part of assets
      other than securities of the successor or purchasing corporation, at the
      option of the Holder of this Warrant, the securities of the successor or
      purchasing corporation having a value at the time of the transaction
      equivalent to the fair market value of the Common Stock at the time of the
      transaction. The provisions of this subparagraph (a) shall similarly apply
      to successive reclassifications, changes, mergers and
      transfers.

            


    

    


    
      	
              b.  

            	
              Stock Splits, Dividends and
      Combinations. In the event that the Company shall at any time
      subdivide the outstanding shares of Common Stock or shall issue a stock
      dividend on its outstanding shares of Common Stock the number of Shares
      issuable upon exercise of this Warrant immediately prior to such
      subdivision or to the issuance of such stock dividend shall be
      proportionately increased, and the Exercise Price shall be proportionately
      decreased, and in the event that the Company shall at any time combine the
      outstanding shares of Common Stock the number of Shares issuable upon
      exercise of this Warrant immediately prior to such combination shall be
      proportionately decreased, and the Exercise Price shall be proportionately
      increased, effective at the close of business on the date of such
      subdivision, stock dividend or combination, as the case may
      be.

            


    

    


    
      	
              4.  

            	
              Notice of Adjustments.
      Whenever the number of Shares purchasable hereunder or the Exercise Price
      thereof shall be adjusted pursuant to Section 3 hereof, the Company shall
      provide notice to the Holder setting forth, in reasonable detail, the
      event requiring the adjustment, the amount of the adjustment, the method
      by which such adjustment was calculated, and the number and class of
      shares which may be purchased thereafter and the Exercise Price therefor
      after giving effect to such
adjustment.

            


    

    


    
      	
              5.  

            	
              Fractional Shares.
      Whether or not the number of Shares
      purchasable upon the exercise of a Warrant is adjusted pursuant to Section
      3 of this Agreement, this Warrant may not be exercised for fractional
      Shares and the Company shall not be
      required to issue fractions of Shares upon exercise of the Warrants or to
      distribute certificates that evidence fractional Shares.  In
      lieu of fractional Shares, there shall be returned to exercising holders of the Warrants upon such exercise
      an amount in cash, in United States dollars, equal to the amount in excess
      of that required to purchase the largest number of full
      Shares.

            


    

    


    
      	
              6.  

            	
              Representations of the
      Company. The Company represents that all corporate actions on the
      part of the Company, its officers, directors and shareholders necessary
      for the sale and issuance of the Shares pursuant hereto and the
      performance of the Company's obligations hereunder were taken prior to and
      are effective as of the effective date of this
  Warrant.

            


    

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
 

    
      	
              7.  

            	
              Representations and Warranties
      by the Holder. The Holder represents and warrants to the Company as
      follows:

            


    

    


    
      	
              a.  

            	
              This
      Warrant and the Shares issuable upon exercise thereof are being acquired
      for its own account, for investment and not with a view to, or for resale
      in connection with, any distribution or public offering thereof within the
      meaning of the Securities Act of 1933, as amended (the "Act"). Upon
      exercise of this Warrant, the Holder shall, if so requested by the
      Company, confirm in writing, in a form satisfactory to the Company, that
      the securities issuable upon exercise of this Warrant are being acquired
      for investment and not with a view toward distribution or
      resale.

            


    

    


    
      	
              b.  

            	
              The
      Holder understands that the Warrant and the Shares have not been
      registered under the Act by reason of their issuance in a transaction
      exempt from the registration and prospectus delivery requirements of the
      Act pursuant to Section 4(2) thereof, and that they must be held by the
      Holder indefinitely, and that the Holder must therefore bear the economic
      risk of such investment indefinitely, unless a subsequent disposition
      thereof is registered under the Act or is exempted from such
      registration.

            


    

    


    
      	
              c.  

            	
              The
      Holder has such knowledge and experience in financial and business matters
      that it is capable of evaluating the merits and risks of the purchase of
      this Warrant and the Shares purchasable pursuant to the terms of this
      Warrant and of protecting its interests in connection
      therewith.

            


    

    


    
      	
              d.  

            	
              The
      Holder is able to bear the economic risk of the purchase of the Shares
      pursuant to the terms of this
Warrant.

            


    

    


    
      	
              8.  

            	
              Restrictive Legend. The
      Shares (unless registered under the Act) shall be stamped or imprinted
      with a legend in substantially the following form: THE SHARES REPRESENTED
      BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
      TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF, AND HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES
      MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
      UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
      IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND
      PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT. UPON THE FULFILLMENT OF
      CERTAIN OF SUCH CONDITIONS DEEP DOWN, INC. HAS AGREED TO DELIVER TO THE
      HOLDER HEREOF A NEW CERTIFICATE NOT BEARING THIS LEGEND FOR THE SECURITIES
      REPRESENTED HEREBY REGISTERED IN THE NAME OF THE HOLDER HEREOF. A COPY OF
      THE AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
      HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF DEEP DOWN,
      INC.

            


    

    


    
      	
              9.  

            	
              Restrictions Upon Transfer and
      Removal of Legend.

            


    

    


    
      	
              a.  

            	
              The
      Company need not register a transfer of this Warrant or Shares bearing the
      restrictive legend set forth in Section 8 hereof, unless the conditions
      specified in such legend are satisfied. The Company may also instruct its
      transfer agent not to register the transfer of the Shares, unless one of
      the conditions specified in the legend referred to in Section 8 hereof is
      satisfied.

            


    

    


    
      	
              b.  

            	
               Notwithstanding
      the provisions of paragraph (a) above, no opinion of counsel shall be
      necessary, and no approval or consent of the Company shall be
      required, for a transfer of this
      Warrant, or any Shares purchased pursuant to exercise of this Warrant, by
      the Holder thereof if (i) such Holder is a  limited liability
      company, and the transfer of this
      Warrant or such Shares is made to a member, or a retired who retires after the date
      hereof, or to the estate of any such
      member or retired member, or (ii) such Holder is a corporation, and the transfer of this Warrant or such Shares
      is made to a shareholder of such corporation, or to any other
      corporation under common control, direct or indirect, with such
      holder. In the event of any such transfer,
      upon surrender of this Warrant to the Company with a properly executed
      notice of assignment from the Holder, the Company at its expense will issue and deliver to
      or upon the order of the Holder, a new warrant or warrants in the name of
      such transferee(s), in such denomination or denominations as may be
      requested by the Holder.

            


    

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
 

    
      	
              10.  

            	
              Rights of Shareholders.
      No Holder shall be entitled, as a
      Warrant holder, to vote or receive dividends or be deemed the holder of
      any Shares or any other securities of the Company which may at any time be
      issuable on the exercise hereof for any purpose, nor shall anything
      contained herein be construed to confer upon the Holder of this Warrant, as such, any of the
      rights of a stockholder of the Company or any right to vote for the
      election of directors or upon any matter submitted to shareholders at any
      meeting thereof, or to give or withhold consent to any corporate action
      (whether upon any recapitalization, issuance of stock, reclassification of
      stock, change of par value, consolidation, merger, conveyance, or
      otherwise) or to receive notice of meetings, or to receive dividends or
      subscription rights or otherwise until the Warrant shall have been
      exercised and the Shares purchasable upon the exercise hereof shall have
      become deliverable, as provided
herein.

            


    

     

    
      	
              11.  

            	
              Registration
      Rights.

            


    

    


    
      	
              a.  

            	
              Definitions.  As
      used herein:

            


    

    


    
      	
              i.  

            	
              The
      terms “register,” “registered” and “registration” refer to a registration
      effected by preparing and filing with the Securities and Exchange
      Commission (the “SEC”) a registration statement pursuant to the Securities
      Act of 1933, as amended (the “Act”), and the declaration or order of
      effectiveness of such registration
statement.

            


    

     

    
      	
              ii.  

            	
              For
      the purposes hereof the term “Registrable Securities” means shares of (i)
      common stock, preferred stock or debt securities of the Company (the
      “Securities”), (ii) stock or debt securities issued in lieu of the
      Securities in any reorganization which have not been sold to the public
      and (iii) stock issued in respect of the stock referred in (i) and (ii) as
      a result of a stock split, stock dividend, recapitalization or
      combination, which have not been sold to the
  public.

            


    

     

    
      	
              b.  

            	
              Incidental
      Registration.

            


    

     

    
      	
              i.  

            	
              If
      the Company at any time proposes to register any of its securities under
      the Act, whether of its own accord or at the demand of any holder of such
      securities pursuant to an agreement with respect to the registration
      thereof (provided such agreement does not prohibit third parties from
      including additional securities in such registration), and if the form of
      registration statement proposed to be used may be used for the
      registration of Registrable
      Securities, the Company will give notice to Holder not less than 10 days
      nor more than 30 days prior to the filing of such registration statement
      of its intention to proceed with the proposed registration (the
      “Incidental Registration”), and, upon written request of the Holder made
      within ten (10) days after the receipt of any such notice (which request
      will specify the Registrable
      Securities intended to be disposed of by the Holder and state the intended
      method of disposition thereof), the Company will use its best efforts to
      cause all Registrable Securities of
      Holder as to which registration has been requested to be registered under
      the Act, provided that if such registration is in connection with an
      underwritten public offering, Holder’s Registrable Securities to be included in
      such registration shall be offered upon the same terms and conditions as
      apply to any other securities included in such
      registration.  Notwithstanding anything contained in this
      Section 11 to the contrary, the
      Company shall have no obligation to cause Registrable Securities to be registered
      with respect to any Registrable
      Securities which shall be eligible for resale under Rule 144(k) of the
      Securities Act.

            


    

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
              ii.  

            	
              If
      an Incidental Registration is a primary registration on behalf of the
      Company and is in connection with an underwritten public offering, and if
      the managing underwriters advise the Company in writing that in their
      opinion the amount of securities requested to be included in such
      registration (whether by the Company, the Holder, or other holders of the
      Company’s securities pursuant to any other rights granted by the Company
      to demand inclusion of any such securities in such registration) exceeds
      the amount of such securities which can be successfully sold in such
      offering, the Company will include in such registration the amount of
      securities requested to be included which in the opinion of such
      underwriters can be sold, in the following order (A) first, all of the
      securities the Company proposes to sell, and (B) second, any other
      securities requested to be included in such registration, pro rata among
      the holders thereof on the basis of the amount of such securities then
      owned by such holders.

            


    

     

    
      	
              iii.  

            	
              If
      an Incidental Registration is a secondary registration on behalf of
      holders of Securities of the Company
      and is in connection with an underwritten public offering, and if the
      managing underwriters advise the Company in writing that in their opinion
      the amount of Securities requested to
      be included in such registration (whether by such holders, by the Holder,
      or by holders of the Company’s securities pursuant to any other rights
      granted by the Company to demand inclusion of securities in such
      registration) exceeds the amount of such Securities which can be sold in such
      offering, the Company will include in, such
      registration the amount of Securities
      requested to be included which in the opinion of such underwriters can be
      sold, in the following order (A) first, all of the Securities requested to be included by
      holders demanding or requesting such registration, and (B) second, any
      other securities requested to be included in such registration, pro rata
      among the holders thereof on the basis of the amount of such securities
      then owned by such holders.

            


    

    


     

    
      	
              c.  

            	
              Registration
      Procedures.  The Company will advise the Holder in writing as to
      the effective date of the registration and as to the completion
      thereof.  At its expense the Company
  will:

            


    

    


    
      	
              i.  

            	
              keep
      the registration effective for a period of days or until the Holder has
      completed the distribution described in the registration statement
      relating thereto, whichever first occurs;
and

            


    

     

    
      	
              ii.  

            	
              furnish
      such number of prospectuses and any other documents incident thereto as
      the Holder from time to time may reasonably
  request.

            


    

     

    
      	
              12.  

            	
              Notices. All notices and
      other communications required or permitted hereunder shall be in writing,
      shall be effective when given, and shall in any event be deemed to be
      given upon receipt or, if earlier, (a) five (5) days after deposit with
      the U.S. Postal Service or other applicable postal service, if delivered
      by first class mail, postage prepaid, (b) upon delivery, if delivered by
      hand, (c) one business day after the business day of deposit with Federal
      Express or similar overnight courier, freight prepaid or (d) one business
      day after the business day of facsimile transmission, if delivered by
      facsimile transmission with copy by first class mail, postage prepaid, and
      shall be addressed (i) if to the Holder, at the Holder's address as set
      forth on the books of the Company, and (ii) if to the Company, at the
      address of its principal corporate offices (attention: President) or at
      such other address as a party may designate by ten days advance written
      notice to the other party pursuant to the provisions
  above.

            


    

    


    
      	
              13.  

            	
              Governing Law. This
      Warrant and all actions arising out of or in connection with this
      Agreement shall be governed by and construed in accordance with the laws
      of the State of Texas, without regard
      to the conflicts of law provisions of the State of Texas
      or of any other state.

            


    

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
 

    
      	
              14.  

            	
              Entire Agreement; Modification;
      Waivers.  This Warrant contains the entire agreement of
      the parties, and supersedes any prior agreements with respect to its
      subject matter..This Warrant may be modified or amended only by an
      agreement in writing executed by the Company and the Holder.
      

            


    

    


    
      	
              15.  

            	
              Jurisdiction and
      Venue  The courts of the State of Texas (the “Texas Courts”) shall have
      exclusive jurisdiction to hear, adjudicate, decide, determine and enter
      final judgment in any action, suit, proceeding, case, controversy or
      dispute, whether at law or in equity or both, and whether in contract or
      tort or both, arising out of or related to this Agreement, or the
      construction or enforcement hereof or thereof (any such action, suit,
      proceeding, case, controversy or dispute, a “Related
      Action”).  The Company and the Holder hereby irrevocably
      consent and submit to the exclusive personal jurisdiction of the TexasCourts to hear, adjudicate, decide,
      determine and enter final judgment in any Related Action.  The
      Company and the Holder hereby irrevocably waive and agree not to assert
      any right or claim that it is not personally subject to the jurisdiction
      of the Texas Courts
      in any Related Action, including any claim of forum non conveniens or
      that the Texas Courts are not the
      proper venue or forum to adjudicate
      any Related Action.  If any Related Action is brought or
      maintained in any court other than the Texas Courts, then that court shall, at the
      request of the Company or the Holder, dismiss that
  action.

            


    

    


    
      	
              16.  

            	
              Specific
      Performance  The Company hereby acknowledges and agrees
      that it is difficult, if not impossible to measure in money the damages
      that will accrue to the Holder by reason of a failure to issue the Shares
      under this Agreement, and that the Holder may seek to specifically enforce
      the Company’s obligation to issue the Shares.  Therefore, if the
       Holder
      shall institute any action or proceeding to enforce the provisions hereof,
      the Company hereby waives all claims or defenses therein that the Holder
      has an adequate remedy at law, and hereby agrees not to assert or
      otherwise raise any such claim or
defense.

            


    

    


    
      	
              17.  

            	
              Waiver of Jury
      Trial  The Company and the Holder hereby waive trial by
      jury in any Related Action.

            


    

    


    
      	
              18.  

            	
              Attorney’s
      Fees  The prevailing party in any Related Action shall be
      entitled to recover that party’s costs of suit, including reasonable
      attorney’s fees.

            


    

    


    
      	
              19.  

            	
              Binding
      Effect  This Agreement shall be binding on, and shall
      inure to the benefit of the parties and their respective successors in
      interest.

            


    

    


    
      	
              20.  

            	
              Construction,
      Counterparts  This Agreement shall be construed as a
      whole and in favor of the validity and enforceability of each of its
      provisions, so as to carry out the intent of the parties as expressed
      herein. Headings are for the
      convenience of reference, and the meaning and interpretation of the text
      of any provision shall take precedence over its heading. This Agreement
      may be signed in one or more counterparts, each of which shall constitute
      an original, but all of which, taken together shall constitute one
      agreement. A faxed copy or photocopy of a party’s signature shall be
      deemed an original for all
purposes.

            


    

    


    Issued
this 6th day
of 
June, 2008.

    


    


    
 

    DEEP
DOWN, INC.

     

    By: /s/Ronald E. Smith        

    Name:
Ronald E. Smith

    Title:
President & CEO

    


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
A

    


    NOTICE OF
EXERCISE

    


    TO:      DEEP
DOWN, INC.

    15473
East Freeway

    Channelview,
TX 77530

    Attention:
Eugene L. Butler

    


    
      	
              1.  

            	
              The
      undersigned hereby elects to purchase __________ Shares of DEEP DOWN, INC.
      pursuant to the terms of the attached
Warrant.

            


    

    


    
      	
              2.  

            	
              Method
      of Exercise (Please initial the applicable
  blank):

            


    

    


    [_] in
lawful money of the United States; or


     

    [_] [if
permitted] the cancellation of such number of Shares as is necessary, in
accordance with the formula set forth in subsection 1(b), to
exercise this Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth in subsection
1(b)).

    


    
      	
              3.  

            	
              Please
      issue a certificate or certificates representing said Shares in the name
      of the undersigned or in such other name as is specified
      below:

            


    

    


    


    _________________________________

    (Name)

    _________________________________

    
 

    _________________________________

    (Address)

    
 

    
      	
              4.  

            	
              The
      undersigned hereby represents and warrants that the aforesaid Shares are
      being acquired for the account of the undersigned for investment and not
      with a view to, or for resale, in connection with the distribution
      thereof, and that the undersigned has no present intention of distributing
      or reselling such shares and all representations and warranties of the
      undersigned set forth in Section 7 of the attached Warrant are true and
      correct as of the date hereof.

            


    

    


    


    ______________________________


    (Signature)


    Title:__________________________

    


    ____________________________

    (Date)

     

     

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