| 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 (to the      extent then      exercisable) for a number of shares of Common Stock to be      determined in accordance with the following provisions of this clause      (b): |
|----------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 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. |
|-----------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|     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: |
|-----------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 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 Shares certificates that evidence fractional      Shares. In lieu of fractional Shares, there shall be returned to      exercising Registered 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. |
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|       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. |
|----------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|       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 hear the economic      risk of such investment indefinitely, unless a subsequent disposition      thereof is registered tinder 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 thisWarrant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

|       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. |
|----------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 for a transfer without consideration by any holder (i) if such      holder is a partnership, to a partner or retired partner of such      partnership who retires after the date hereof or to the estate of any such      partner or retired partner, or (ii) if such holder is a corporation, to a      shareholder of such corporation, or to any other corporation under common      control, direct or indirect, with such  holder. |

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|       10.           | Rights      of Shareholders. No holder of this Warrant 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 providedherein. |
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|       11.           | Registration      Rights. |
|-----------------------------------------------------------------------------------------------------|---------------------------|

| a.         | Definitions.As usedherein: |
|----------------------------------------------------|----------------------------|

|            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 registrationstatement. |
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|            ii.      | For      the purposes hereof the term "Registerable 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. |
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| 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 Registerable Securities, the Company will give notice to I      folder 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 Registerable 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 Registerable      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 Registerable      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      1.2      to the contrary, the Company shall have no obligation to cause      Registerable Securities to be registered with respect to any Registerable      Securities which shall be      eligible for resale under Rule 144(k) of the Securities      Act. |
|----------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|            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. |
|-----------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|            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. |
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| 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 Companywill: |
|----------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|             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 |
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|             ii.      | furnish such number      of prospectuses and any other documents incident thereto as the Holder      from time to time may reasonablyrequest. |
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|        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. |
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|         13.         | Governing      Law.This Warrant and all actions arising out of or in      connection with this Agreement shall he governed by and construed in      accordance with the laws of the State of Nevada, without regard to the      conflicts of law provisions of the State of Nevada or of any other      state. |
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|         14.         | Entire      Agreement;      Modification; Waivers. This Agreement contains the entire      agreement of the parties, and supersedes any prior agreements with respect      to its subject matter. Except for the provisions of subsection 4.2. the      Warrant Agent and the Company, by supplemental agreement, may make any      changes in this Agreement (i) that they shall deem appropriate to cure any      ambiguity or to correct any defective or inconsistent provision or      manifest mistake or error herein contained; or (ii) that they may deem      necessary or desirable and that shall not adversely affect the interests      of the Registered Holders of Warrant Certificates (this provision, for      instance, shall permit the Exercise Price to be decreased at the Company's      option). |
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|          15.         | Assignment.      This Warrant may be assigned or transferred, in whole or in part, by due      execution of the assignment form attached hereto as Exhibit B and the      delivery of a true and correct copy thereof to the principal office of the      Company along with a certification by the Holder that the assignee is, or      was at the time this Warrant was issued. a registered representative with      Dragonfly Capital Partners, LLC. Any assignment shall he null, void and of      no force or effect unless the assignee is, or was at the time this Warrant      was issued, a registered representative with Dragonfly Capital Partners,      LLC and the assignment is accompanied by a certification to such      effect. |
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|           16.        | Jurisdiction      and Venue. The courts of the State      of Texas. sitting in the City of Houston.      (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      Registered Holder hereby irrevocably consent and submit to the exclusive      personal jurisdiction of the Texas Courts to hear, adjudicate, decide.      determine and enter Final judgment in any Related Action. The Company and      the Registered 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 nun conveniens or that the Texas. Courts are not the proper      venue or form to adjudicate any Related Action. It' 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 Registered Holder,      dismiss that action. |
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|           17.        | 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 Registered Holder by reason of a failure to issue the Shares      under this Agreement, and that the Registered Holder may seek to      specifically enforce the Company's obligation to issue the Shares.      Therefore, if the Registered Holder shall institute any action or      proceeding to enforce the provisions hereof, the Company hereby waives all      claims or defenses therein that the Registered I !older has an adequate      remedy at law, and hereby agrees not to assert or otherwise raise any such      claim or defense. |
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|           18.        | Waiver      of Jury Trial.TheCompany and the      Registered Holder hereby waive trial by jury in any Related      Action. |
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|           19.        | 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. |
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|           20.        | Binding      Effect.This Agreement shall be binding on, and shall      inure to the benefit of the partiesand their respective      successors in interest. |
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|           21.        | 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. Heading 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 he deemed an original for all      purposes. |
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|   | DEEP      DOWN, INC. |                                  |
|--------|----------------------|---------------------------------------|
|   |                 |                                  |   |
|   | By:                  | /s/ Ronald      E. Smith         |   |
|   |                 | Name:      Ronald E. Smith       |   |
|   |                 | Title:      President & CEO  |   |
|   |                 |                                  |   |

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|     1.      | The      undersigned hereby elects to purchase _______ Shares of DEEP DOWN, INC.      pursuant to the terms of the attachedWarrant. |
|----------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------|

|     2.      | Method      of Exercise (Please initial the applicable blank); |
|----------------------------------------------------------|----------------------------------------------------------------|

|     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 datehereof. |
|----------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | _______________________________    |
|--------|-----------------------------------------|
|   | (Signature)                        |
|   | Title:___________________________  |

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|   | ___________________________________________________  |
|--------|-----------------------------------------------------------|
|   | Signature      Guaranteed:                      |
|   | ___________________________________________________  |