Document:

exhibit10-1.htm

Exhibit 10.1

 

 

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT made and entered into as of the 20th day of May, 2014, by and between FIRST NATIONAL CORPORATION, a Virginia corporation, hereinafter called the "Corporation", and SCOTT C. HARVARD hereinafter called "Employee" (collectively “the Parties”), and provides as follows:

RECITALS

WHEREAS, the Corporation is a bank holding company engaged in the operation of a bank; and

WHEREAS, Employee possesses managerial experience, knowledge, skills and expertise in such type of business; and

WHEREAS, the employment of Employee by the Corporation is in the best interests of the Corporation and Employee; and

WHEREAS, the Corporation desires to protect its confidential information and guard against unfair competition; and

WHEREAS, the Parties have mutually agreed upon the terms and conditions of Employee's continued employment by the Corporation as hereinafter set forth;

TERMS OF AGREEMENT

NOW, THEREFORE, for and in consideration of the promises and undertakings of the Parties as hereinafter set forth, the parties covenant and agree as follows:

Section 1.  Employment. (a) Employee shall be employed as the President and Chief Executive Officer of the Corporation and of its wholly owned subsidiary, First Bank.  He shall perform such services for the Corporation and/or one or more Affiliates as may be assigned to Employee by the Corporation from time to time upon the terms and conditions hereinafter set forth.  Employee's services shall be rendered in a senior management or executive capacity and shall be of the type for which he is suited by background and training.  Employee shall be a director of the Corporation and First Bank.

(b)           References in this Agreement to services rendered for the Corporation and compensation and benefits payable or provided by the Corporation shall include services rendered for and compensation and benefits payable or provided by any Affiliate.  References in this Agreement to the “Corporation” also shall mean and refer to each Affiliate for which Employee performs services.  References in this Agreement to “Affiliate” shall mean any business entity that, directly or indirectly, through one or more intermediaries, is controlled by the Corporation.

 

  

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Section 2.  Term.  The term of this Agreement shall begin on May 22, 2014 and unless sooner terminated pursuant to Section 10 of this Agreement, shall terminate on May 21, 2016; provided that on May 21, 2015 and each May 21 thereafter the term of this Agreement shall be extended for one year.  At any time either party may notify the other that this Agreement shall no longer be extended and that this Agreement will terminate at the end of its term.

Section 3.  Exclusive Service.  Employee shall devote his best efforts and substantially his full business time to rendering services on behalf of the Corporation in furtherance of its best interests. Employee shall comply with all policies, standards and regulations of the Corporation now or hereafter promulgated, and shall perform his duties under this Agreement to the best of his abilities and in accordance with standards of conduct applicable to executive officers of banks.  Employee shall move his principal residence to the Corporation’s market area.  Employee shall be permitted to serve as a director and chairman of the board of directors of the Federal Home Loan Bank of Atlanta.

Section 4.  Salary.  (a)  As compensation while employed hereunder, Employee, during his faithful performance of this Agreement, in whatever capacity rendered, shall receive an annual base salary of $300,000.00 payable in accordance with established payroll practices of the Corporation.  The Board of Directors, in its discretion, may increase Employee’s base salary, but Employee’s base salary after being increased may not be decreased.

(b)           The Corporation shall withhold state and federal income taxes, social security taxes and such other payroll deductions as may from time to time be required by law or agreed upon in writing by Employee and the Corporation.  The Corporation shall also withhold and remit to the proper party any amounts agreed to in writing by the Corporation and Employee for participation in any corporate sponsored benefit plans for which an employee contribution is required.

(c)           Except as otherwise expressly set forth hereunder, no compensation shall be paid pursuant to this Agreement in respect of any month or portion thereof subsequent to any termination of Employee's employment by the Corporation.

Section 5.  Corporate Benefit Plans/Other Benefits.  (a) During the term of this Agreement, Employee shall be entitled to participate in any employee benefit plan of the Corporation presently in effect or hereafter adopted by the Corporation and generally available to any employees of senior executive status in accordance with plan terms, as amended from time to time.

       (b)           The Corporation shall provide Employee with an automobile of a make and model satisfactory to Employee and the Corporation for his business and personal use.

  

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Section 6.  Bonuses.  Employee shall be entitled to participate in the First National Corporation Executive Incentive Plan.  Employee’s incentive award target under such plan shall be no less than twenty-five percent (25%).

Section 7.  Expense Account.  The Corporation shall reimburse Employee for reasonable and customary business expenses incurred in the conduct of the Corporation's business.  Such expenses will include business meals, out-of-town lodging and travel expenses. Employee agrees to timely submit records and receipts of reimbursable items and agrees that the Corporation can adopt reasonable rules and policies regarding such reimbursement.  The Corporation agrees to make prompt payment to Employee following receipt and verification of such reports.

Section 8.  Personal and Sick Leave.  Employee shall be entitled to the same personal and sick leave as the Board of Directors may from time to time designate for all full-time employees of the Corporation.

Section 9.  Paid Time Off.  Employee shall be entitled to thirty-five (35) days of paid time off in each calendar year, with such allowable amount of paid time off prorated (and rounded to the nearest whole day) for the period beginning May 16, 2014 and ending on December 31, 2014.

Section 10. Termination. (a)  Notwithstanding the termination of Employee's employment pursuant to any provision of this Agreement, the parties shall be required to carry out any provisions of this Agreement which contemplate performance by them subsequent to such termination.  In addition, no termination of this Agreement shall affect any liability or other obligation of either party which shall have accrued prior to such termination, including, but not limited to, any liability, loss or damage on account of breach. No termination of employment shall terminate the obligation of the Corporation to make payments of any vested benefits provided hereunder or the obligations of Employee under Sections 11, 12 or 13.  The existence of any claim or cause of action of the Employee against the Corporation, whether predicated on this Agreement or not, shall not constitute a defense to the enforcement by the Corporation of the restrictions, covenants and agreements contained in this Agreement.

(b)  Employee may resign his employment upon thirty (30) days written notice to the Corporation or at any time by mutual agreement in writing.  It shall not constitute a breach of this Agreement for the Corporation to suspend Employee’s duties and to place Executive on a paid leave during the notice period.

(c)           Except as otherwise provided in this Section 10(c), this Agreement shall terminate upon death of Employee.  In such event the Corporation shall pay to the estate of Employee the compensation including salary and accrued bonus, if any, which otherwise would be payable to Employee through the end of the month in which his death occurs.  In addition, Employee’s death is not intended to, and shall not, prevent amounts to which Employee would have been entitled under Sections 10(d)(2) or 10(i) had he lived from being paid under this Agreement to Employee’s estate or beneficiaries at the time or times such amounts would have been paid had Employee lived.

  

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(d)(1)           The Corporation may terminate Employee’s employment other than for “Cause,” as defined in Section 10(e), at any time upon written notice to Employee, which termination shall be effective immediately.  Employee may resign thirty (30) days after notice to the Corporation for "Good Reason", as hereafter defined.

(2)           If the Corporation terminates the Employee's employment without Cause or the Employee resigns for Good Reason, then in either event:

(i)(A)           The Employee shall be paid for the remainder of the then current term of this Agreement, at such times as payment was theretofore made, the salary required under Section 4 (taking into account any salary increases) that the Employee would have been entitled to receive during the remainder of the then current term of this Agreement had such termination not occurred.

(B)           Notwithstanding the foregoing, if such termination or resignation occurs within one year after a Change of Control (as defined below), the time at which the amount described in Section 10(d)(2)(i)(A) is paid shall be determined not under that Section but under Section 10(i), below.

(C)           Further, payments due under Section 10(d)(2)(i)(A), Section 10(d)(2)(iii), or Section 10(d)(3) and made to a Key Employee shall commence or be paid on the first day of the month following the six-month anniversary of the Employee’s termination or resignation.  The initial payment made under the preceding sentence shall include amounts that would have been paid under Section 10(d)(2)(i)(A), Section 10(d)(2)(iii), or Section 10(d)(3) through the date of such initial payment had the Employee not been a Key Employee.  This Section 10(d)(2)(i)(C) shall apply to amounts payable to a Key Employee under Section 10(d)(2)(i)(A) even if the timing of the payments is determined under Section 10(i); and

(ii)           The Corporation shall maintain in full force and effect for the continued benefit of the Employee for the remainder of the then current term of this Agreement all employee welfare benefit plans and programs or arrangements in which the Employee was entitled to participate immediately prior to such termination, provided that continued participation is possible under the general terms and provisions of such plans and programs.  In the event that Employee's participation in any such plan or program is barred, the Corporation shall arrange to provide the Employee with benefits substantially similar to those which the Employee was entitled to receive under such plan or program.

Payments under this Section 10(d)(2)(ii) that do not constitute (i) welfare benefits exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and Treasury Regulations thereunder (the “409A Regulations”) or (ii) reimbursed medical expenses exempt under 409A Regulations Section 1.409A-1(b)(9)(v)(B) shall be limited in the aggregate to the applicable dollar amount under Code Section 402(g)(1)(B) for the year of the separation from service.  In addition, any benefits provided to a Key Employee under this Section 10(d)(2)(ii) that are considered deferred compensation subject to Code Section 409A shall not commence until the first day of the month following the six-month anniversary of the Employee’s termination or resignation.  All determinations required under this Section 10(d)(2)(ii) shall be made by independent counsel selected by the Corporation and reasonably acceptable to the Employee or Key Employee, in accordance with Code Section 409A, the 409A Regulations and other applicable guidance; and

 

 

  

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(iii)           The Employee shall receive a payment in cash on the date his employment terminates equal to the amount of any cash bonus paid to him in respect of the fiscal year of the Corporation prior to the fiscal year in which his employment terminates, multiplied by a fraction, the numerator of which is the number of days that elapse before the date his employment terminates in the fiscal year of the Corporation in which his employment terminates and the denominator of which is three hundred sixty-five (365).

(3)           If, (1) pursuant to the second sentence of Section 2 of this Agreement, the Corporation notifies Employee that this Agreement shall no longer be extended, (2) the Employee’s employment by the Corporation does not terminate before the end of the term of this Agreement and (3) the Employee’s employment by the Corporation terminates after the term of this Agreement then, beginning on the first day of the month that follows the month in which his employment terminates and continuing for the succeeding eleven (11) months, the Corporation shall pay to the Employee an amount equal to one-twelfth (1/12) of his then current salary.

Notwithstanding the foregoing, at any time after payments begin under the preceding paragraph, the Corporation may, for any reason and without liability, terminate all payments under this Section 10(d)(3); provided, however, from and after the date that the Corporation terminates such payments pursuant to this Section 10(d)(3), the Employee shall no longer be bound by Section 12; and provided further, if the Employee breaches Section 11 or any provision of Section 12 while receiving payments under this Section 10(d)(3) (or during any delay in the receipt of payment required by Code Section 409A) and, pursuant to Section 10(d)(4), the Corporation then terminates payments on account of such breach, the Employee shall  remain bound by Section 12.

(4)           Notwithstanding anything in this Agreement to the contrary, if Employee breaches Section 11 or 12, Employee will not thereafter be entitled to receive any further compensation or benefits pursuant to this Section 10(d).

(5)           For purposes of this Agreement, "Good Reason" shall mean:

(i)           The assignment of duties to the Employee by the Corporation which result in the Employee having significantly less authority or responsibility than he has on the date hereof, without his express written consent;

(ii)           Requiring the Employee to maintain his principal office anywhere outside of the Virginia Counties of Frederick, Warren and Shenandoah, or cities located therein;

(iii)           The failure of the Corporation to provide the Employee with substantially the same fringe benefits that are provided to him at the inception of this Agreement;

 

  

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(iv)           The Corporation’s failure to comply with any material term of this Agreement;

(v)           The failure of the Corporation to obtain the assumption of and agreement to perform this Agreement by any successor as contemplated in Section 14 hereof; or

(vi)           The Corporation’s elimination, on or after a Change of Control,  of any benefit plan, program or arrangement (including without limitation a tax-qualified retirement plan) or any change, made on or after a Change of Control, to such plan, program or arrangement that reduces the value of the affected benefit to the Employee.

(6)           For purposes of this Agreement, “Key Employee” shall mean any Employee who, as of December 31 of any calendar year, satisfies the requirement of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with Treasury Regulations thereunder and disregarding Code Section 416(i)(5)).  An Employee who meets the criteria set forth in the preceding sentence will be considered a Key Employee for purposes of this Agreement for the 12-month period commencing on the next following April 1.

(e)           The Corporation shall have the right to terminate Employee’s employment under this Agreement at any time for Cause, which termination shall be effective immediately.  Termination for “Cause” shall include termination for Employee’s failure, neglect or refusal to perform his duties and responsibilities without the same being corrected after ten days prior written notice or termination because of his personal dishonesty, incompetence, willful misconduct, breach of a fiduciary duty involving personal profit, willful violation of any law, rule or regulation (other than traffic violations or similar offenses), conviction of a felony or of a misdemeanor involving moral turpitude, misappropriation of the Corporation’s assets (determined on a reasonable basis) or those of  its Affiliates, or the material breach of any other provision of this Agreement.  Termination for Cause also shall include termination of employment as a result of the Employee's failure to correct a material deficiency in the performance of his duties within 60 days after a written notice from the Board of Directors or such other reasonable period of time specified by the Board of Directors if such deficiency cannot be cured within 60 days.  Any notice given under this subsection shall state that it is a notice pursuant to Section 10(e) of this Agreement and shall set forth the Board's complaints in detail sufficient to allow Employee to understand and correct them.  In the event Employee’s employment under this Agreement is terminated for Cause, Employee shall be paid for all time worked, but thereafter have no right to receive compensation or other benefits under this Agreement.

(f)           The Corporation may terminate Employee's employment under this Agreement, after having established the Employee's disability by giving to Employee written notice of its intention to terminate his employment for disability and his employment with the Corporation shall terminate effective on the 90th day after receipt of such notice if within 90 days after such receipt Employee shall fail to return to the full-time performance of the essential functions of his position (and if Employee's disability has been established pursuant to the definition of "disability" set forth below).  For purposes of this Agreement, "disability" means either (i) disability which after the expiration of more than 13 consecutive weeks after its commencement is determined to be total and permanent by a physician selected and paid for by the Corporation or its insurers, and acceptable to Employee or his legal representative, which consent shall not be unreasonably withheld or (ii) disability as defined in the policy of disability insurance maintained by the Corporation or its Affiliates for the benefit of Employee, whichever shall be more favorable to Employee.  Notwithstanding any other provision of this Agreement, the Corporation shall comply with all requirements of the Americans with Disabilities Act, 42 U.S.C. § 12101 et. seq.

 

 

  

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(g)  If Employee is suspended and/or temporarily prohibited from participating in the conduct of the Corporation's affairs by a notice served pursuant to the Federal Deposit Insurance Act, the Corporation's obligations under this Employment Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings.  If the charges in the notice are dismissed, the Corporation may in its discretion (i) pay Employee all or part of the compensation withheld while its contract obligations were suspended, and (ii) reinstate (in whole or in part) any of its obligations which were suspended.  If any payment of withheld compensation is made under this Section 10(g) in the Corporation’s sole discretion, it shall be made by March 15 following the calendar year in which the charges in the applicable notice are dismissed.

(h)  If Employee is removed and/or permanently prohibited from participating in the conduct of the Corporation's affairs by an order issued under the Federal Deposit Insurance Act or the Code of Virginia, all obligations of the Corporation under this Employment Agreement shall terminate as of the effective date of the order, but vested rights of the parties shall not be affected.

(i)(1)           If Employee’s employment is terminated without Cause or if he resigns for Good Reason within one year after a Change of Control shall have occurred,  or, if Employee’s employment is terminated without Cause in contemplation of a Change of Control, then on Employee's last day of employment with the Corporation, the Corporation shall pay to Employee as compensation for services rendered to the Corporation and its Affiliates a lump sum cash amount (subject to any applicable payroll or other taxes required to be withheld) equal to the excess, if any, of 299% of Employee’s “annualized includable compensation for the base period”, as defined in Code Section 280G, over the total amount payable to Employee under Section 10(d).  In addition, under such circumstances, if an election has been made pursuant to Section 10(i)(2), below, the amount to which Employee is entitled under Section 10(d)(2)(i) shall not be subject to the payment schedule called for under Section 10(d)(2)(i) but instead shall be paid in accordance with such election.

(2)           Employee’s employment shall be deemed to have been terminated in contemplation of a Change of Control if, at the time of such termination, the Corporation is having discussions that are intended to result in a Change of Control and a reason for terminating Employee’s employment is to avoid an obligation to make a payment to Employee under Section 10(i)(1).

(3)           Notwithstanding the foregoing, the timing of an amount payable to a Key Employee under the first sentence of Section 10(i)(1) (whether or not subject to an installment election) above shall be determined as follows: the lump sum payment shall be made or installments shall commence on the first day of the month following the six-month anniversary of the Key Employee’s termination or resignation date. The initial payment made under the preceding sentence shall include amounts that would have been paid under the first sentence of Section 10(i)(1) through the date of such initial payment had the Employee not been a Key Employee.

 

 

  

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(4)           For purposes of this Agreement, a Change of Control occurs if, after the date of this Agreement, (i) any person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the owner or beneficial owner of Corporation securities having 50% or more of the combined voting power of the then outstanding Corporation securities that may be cast for the election of the Corporation's directors other than a result of an issuance of securities initiated by the Corporation, or open market purchases approved by the Board of Directors, as long as the majority of the Board of Directors approving the purchases is a majority at the time the purchases are made; or (ii) as the direct or indirect result of, or in connection with, a tender or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these events, the persons who were directors of the Corporation before such events cease to constitute a majority of the Corporation's Board, or any successor's board, within two years of the last of such transactions.  For purposes of this Agreement, a Change of Control occurs on the date on which an event described in (i) or (ii) occurs.  If a Change of Control occurs on account of a series of transactions or events, the Change of Control occurs on the date of the last of such transactions or events.

(5)           It is the intention of the parties that no payment be made or benefit provided to Employee pursuant to this Agreement that would constitute an "excess parachute payment" within the meaning of Section 280G of the Code and any regulations thereunder, thereby resulting in a loss of an income tax deduction by the Corporation or the imposition of an excise tax on Employee under Section 4999 of the Code.  If the independent accountants serving as auditors for the Corporation on the date of a Change of Control (or any other accounting firm designated by the Corporation) determine that some or all of the payments or benefits scheduled under this Agreement, as well as any other payments or benefits on a Change of Control, would be nondeductible by the Company under Section 280G of the Code, then the payments scheduled under this Agreement will be reduced to one dollar less than the maximum amount which may be paid without causing any such payment or benefit to be nondeductible.  The determination made as to the reduction of benefits or payments required hereunder by the independent accountants shall be binding on the parties. Employee shall have the right to designate within a reasonable period, which payments or benefits will be reduced; provided, however, that if no direction is received from Employee, the Corporation shall implement the reductions in its discretion.

Section 11.  Confidentiality/Nondisclosure.  Employee covenants and agrees that any and all information maintained as confidential by the Corporation concerning the customers, businesses and services of the Corporation of which he has knowledge or access as a result of his association with the Corporation in any capacity, shall be deemed confidential in nature and shall not, without  the proper written consent of the Corporation, be directly or indirectly used, disseminated, disclosed or published by Employee to third parties other than in connection with the usual conduct of the business of the Corporation.  Such information shall expressly include, but shall not be limited to, information concerning the Corporation's trade secrets, business operations, business records, customer lists or other confidential customer information.  Upon termination of employment Employee shall deliver to the Corporation all originals and copies of documents, forms, records or other information, in whatever form it may exist, concerning the Corporation or its business, customers, products or services.  This Section 10 shall not be applicable to any information which, through no misconduct or negligence of Employee, has previously been disclosed to the public by anyone other than Employee.

 

 

  

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Section 12.  Covenant Not to Compete.  During the term of this Agreement and throughout any further period that he is an officer or employee of the Corporation, and for a period of twelve (12) months from and after the date that Employee is (for any reason) no longer employed by the Corporation or for a period of twelve (12) months from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant in the event of a breach by Employee, whichever is later, Employee covenants and agrees that he will not, directly or indirectly, either as a principal, agent, employee, employer, stockholder, co-partner or in any other individual or representative capacity whatsoever: (i) engage in a Competitive Business anywhere within a ten (10) mile straight-line radius of any office operated by the Corporation on the date Employee’s employment terminates; or (ii) solicit, or assist any other person or business entity in soliciting, any depositors or other customers of the Corporation to make deposits in or to become customers of any other financial institution conducting a Competitive Business; or (iii) induce any individuals to terminate their employment with the Corporation or its Affiliates.  As used in this Agreement, the term “Competitive Business” means all banking and financial products and services that are substantially similar to those offered by the Corporation on the date that Employee’s employment terminates.  Except as otherwise expressly provided in Section 10(d)(3) of this Agreement, the parties intend that the covenants and restrictions in this Section 12 be enforceable against Employee regardless of the reason that his employment by the Corporation may terminate and that such covenants and restrictions shall be enforceable against Employee even if this Agreement expires after a notice of nonrenewal given by Employee or the Corporation under Section 2 of this Agreement.

Section 13.  Injunctive Relief, Damages, Etc.  Employee agrees that given the nature of the positions held by Employee with the Corporation, that each and every one of the covenants and restrictions set forth in Sections 10 and 11 above are reasonable in scope, length of time and are necessary for the protection of the significant investment of the Corporation in developing, maintaining and expanding its business. Accordingly, the parties hereto agree that in the event of any breach by Employee of any of the provisions of Sections 10 or 11 that monetary damages alone will not adequately compensate the Corporation for its losses and, therefore, that it may seek any and all legal or equitable relief available to it, specifically including, but not limited to, injunctive relief and Employee shall be liable for all damages, including actual and consequential damages, costs and expenses, including legal costs and actual attorneys' fees, incurred by the Corporation as a result of taking action to enforce, or recover for any breach of, Section 10 or Section 11. The covenants contained in Sections 10 and 11 shall be construed and interpreted in any judicial proceeding to permit their enforcement to the maximum extent permitted by law.

  

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Section 14.  Binding Effect/Assignability.  This Employment Agreement shall be binding upon and inure to the benefit of the Corporation and Employee and their respective heirs, legal representatives, executors, administrators, successors and assigns, but neither this Agreement, nor any of the rights hereunder, shall be assignable by Employee or any beneficiary or beneficiaries designated by Employee.   The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business, stock or assets of the Corporation, by agreement in form and substance reasonably satisfactory to the Employee, to expressly assume and agree to perform this Agreement in its entirety. Failure of the Corporation to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Employee to the compensation described in Section 10(d). As used in this Agreement, "Corporation" shall mean First National Corporation, a Virginia corporation, and any successor to its respective business, stock or assets as aforesaid which executes and delivers the agreement provided for in this Section 13 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

Section 15.  Governing Law.  This Employment Agreement shall be subject to and construed in accordance with the laws of Virginia.

Section 16.  Invalid Provisions.  The invalidity or unenforceability of any particular provision of this Employment Agreement shall not affect the validity or enforceability of any other provisions hereof, and this Employment Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

Section 17.  Notices.  Any and all notices, designations, consents, offers, acceptance or any other communications provided for herein shall be given in writing and shall be deemed properly delivered if delivered in person or by registered or certified mail, return receipt requested, addressed in the case of the Corporation to its registered office or in the case of Employee to his last known address.

Section 18.  Entire Agreement.

(a)  This Employment Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes any and all other agreements, either oral or in writing, among the parties hereto with respect to the subject matter hereof.

(b)           This Employment Agreement may be executed in one or more counterparts, each of which shall be considered an original copy of this Agreement, but all of which together shall evidence only one agreement.

Section 19.  Amendment and Waiver.  This Employment Agreement may not be amended except by an instrument in writing signed by or on behalf of each of the parties hereto.  No waiver of any provision of this Employment Agreement shall be valid unless in writing and signed by the person or party to be charged.

  

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Section 20.  Case and Gender.  Wherever required by the context of this Employment Agreement, the singular or plural case and the masculine, feminine and neuter genders shall be interchangeable.

Section 21.  Captions.  The captions used in this Employment Agreement are intended for descriptive and reference purposes only and are not intended to affect the meaning of any Section hereunder.

Section 22.  Code Section 409A.  This Employment Agreement is intended to satisfy the requirements of Code Section 409A, the 409A Regulations, and other guidance, including transition rules, issued thereunder.  Each provision and term of this Employment Agreement should be interpreted accordingly, but if any provision or term would be prohibited by or inconsistent with Code Section 409A, the 409A Regulations, or such other guidance, the parties agree that such provision or term may be amended to the extent necessary to comply with or qualify for an exemption from Code Section 409A, the 409A Regulations, and such other guidance, in a manner determined by independent counsel selected by the Corporation and reasonably acceptable to Employee.

Section 23. Regulatory Requirements.  Notwithstanding anything contained in this Agreement to the contrary, it is understood and agreed that the Corporation (or any of its successors in interest) shall not be required to make any payment or take any action under this Agreement if:

(a)  such payment or action is prohibited by any governmental agency having jurisdiction over the Corporation or any of its subsidiaries (hereinafter referred to as “Regulatory Authority”) because the Corporation or any of its subsidiaries is declared by such Regulatory Authority to be troubled, insolvent, in default or operating in an unsafe or unsound matter; or

(b)  such payment or action (i) would be prohibited by or would violate any provision of state or federal law applicable to the Corporation, including, without limitation, the Federal Deposit Insurance Act, as now in effect or hereafter amended, (ii) would be prohibited by or would violate any applicable rules, regulations, orders or statements of policy, whether now existing or hereafter promulgated, of any Regulatory Authority, or (iii) otherwise would be prohibited by any Regulatory Authority.

[SIGNATURES APPEAR ON THE NEXT PAGE]

  

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IN WITNESS WHEREOF, the Corporation has caused this Employment Agreement to be signed by its duly authorized officer and Employee has hereunto set his hand and seal on the 20th day of May, 2014.

	  	
FIRST NATIONAL CORPORATION

	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	
By:

	  	  
	  	  	
Douglas C. Arthur

	  
	  	  	
Chairman of the Board of Directors

	
ATTEST:

	  	  
	  	  	  	  
	  	  	  	  

	  	
EMPLOYEE

	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	
(SEAL)

	  	
SCOTT C. HARVARD

	  
	
ATTEST:

	  	  
	  	  	  
	  	  	  	  

 

  

12Exhibit 10.1

 

SIXTH AMENDMENT TO AMENDED AND RESTATED
CREDIT AGREEMENT 

 

THIS SIXTH AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is entered into as of April 15, 2014 (the
“Effective Date”), between DEEP DOWN, INC., a Nevada corporation (“Borrower”),
and WHITNEY BANK, a Mississippi state chartered bank (the “Lender”). Capitalized terms used but not defined
in this Amendment have the meanings given them in the Credit Agreement (defined below).

 

RECITALS

 

A.Borrower and
Whitney National Bank, a national banking association, are parties to that certain Amended and Restated Credit Agreement dated
as of November 11, 2008, and amended and restated through April 14, 2010 (as amended by the First Amendment to Amended and Restated
Credit Agreement dated as of December 31, 2010, the Second Amendment to Amended and Restated Credit Agreement dated as of April
14, 2011, the Third Amendment to Amended and Restated Credit Agreement dated as of June 9, 2011, the Fourth Amendment to Amended
and Restated Credit Agreement dated as of April 15, 2012, the Fifth Amendment to Amended and Restated Credit Agreement dated as
of March 5, 2013, and as further amended, restated, or supplemented from time to time, the “Credit Agreement”).

 

B.Whitney National Bank is now Whitney
Bank, a Mississippi state chartered bank.

 

C.As of the Effective
Date, (i) each of the ROV Term Loan, the RLOC Term Loan, the Acquisition Term Loan, and the Equipment Term Loan have been paid
in full, (ii) the LC Facility has been refinanced as a revolving credit facility with a letter of credit subfacility pursuant to
the Fourth Amendment to Amended and Restated Credit Agreement dated as of April 15, 2012, and (iii) Borrower’s obligations
with respect to each of the Revolving Credit Facility and the RE Term Facility remain in full force and effect.

 

D.Deep Down, Inc.,
a Delaware corporation (“DDI Delaware”), as buyer, has entered into that certain Purchase and Sale Agreement
dated effective November 5, 2013 (the “Carousel PSA”) with EMAS AMC, Inc. (“EMAS”),
as seller, to purchase a certain portable umbilical carousel (as more particularly described in the Carousel PSA (the “Carousel”).
Under the terms of the Carousel PSA, DDI Delaware agreed to pay to EMAS the purchase price for the Carousel in monthly installments.

 

E.Borrower has
requested that Lender amend the Credit Agreement in order to, among other things, (i) extend the maturity date of the Revolving
Credit Facility to June 30, 2015 and (ii) make a new single-advance term loan to Borrower in the original principal amount of $2,200,000
(the “Carousel Term Loan”) to fund the outstanding portion of the purchase price under the Carousel PSA
as of the Effective Date, in each case, subject to the terms and conditions of this Amendment.

 

NOW THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are acknowledged, the undersigned hereby agree as follows:

 

1.Amendments
to Credit Agreement.

 

(a)The
index of Exhibits on page iv of the Credit Agreement is hereby amended to add the following new reference to Exhibit
A-8 in the appropriate alphanumeric order:

 

“EXHIBIT A-8                    Carousel
Term Note”

 

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(b)Section
1.1 (Definitions) of the Credit Agreement is amended to delete the defined terms “Notes” and “Revolving
Credit Termination Date” in their entirety and to replace them with the following in the appropriate alphabetical order:

 

“Notes
means the RE Term Note, the Revolving Note, and the Carousel Term Note.

 

Revolving
Credit Termination Date means the earlier of (a) June 30, 2015, or (b) the effective date that Lender’s Commitment
to make Loans under the Revolving Credit Facility is otherwise canceled or terminated in accordance with Section 12
of this Agreement or otherwise.”

 

(c)Section
1.1 (Definitions) of the Credit Agreement is further amended to add the following new defined terms in the appropriate
alphabetical order:

 

“Equipment
Term Committed Amount means $250,000.

 

Carousel
means that certain portable umbilical carousel as described in the Carousel PSA.

 

Carousel
PSA means that certain Purchase and Sale Agreement effective as of November 5, 2013 by and between Deep Down, Inc., a Delaware
corporation, as buyer, and EMAS AMC, Inc., a Delaware corporation, as seller.

 

Carousel
Term Committed Amount means $2,200,000.

 

Carousel
Term Loan is defined in Section 2.1.

 

Carousel
Term Loan Maturity Date means the earlier of (a) October 15, 2016, and (b) the acceleration
of maturity of the Carousel Term Loan in accordance with Section 12 of this Agreement.

 

Carousel
Term Note means a promissory note substantially in the form of Exhibit A-8 executed by Borrower and
made payable to Lender in the original principal amount of the Carousel Term Committed Amount, together with all renewals, extensions,
modifications, amendments, supplements, restatements and replacements of, or substitutions for, each such promissory note.

 

Carousel
Term Principal Amount means, when determined, the outstanding principal balance of the Carousel Term Note.

 

Sixth
Amendment Effective Date means April 15, 2014.”

 

(d)Section
2.1 (Credit Facility) of the Credit Agreement is amended by adding the following new subsection (e) to the end of
such Section:

 

“(e)Subject to the
terms and conditions of this Agreement, effective as of the Sixth Amendment Effective Date, Lender agrees to make a term loan to
Borrower in a single advance on the Sixth Amendment Effective Date in an amount equal to the Carousel Term Committed Amount, which,
when paid or prepaid, may not be reborrowed (the “Carousel Term Loan”).”

 

    	2

    	 

    

 

(e)Schedule
2.2(b) (Loan Procedure) of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“(b)Subject to compliance
with Section 5, Borrower may request the Carousel Term Loan by submitting a Loan Request to Lender. Such Loan
Request (i) must be received no later than 11:00 a.m. on the proposed Loan Date and (ii) shall be irrevocable and binding
on Borrower.”

 

(f)Section
2.3 (Prepayment) of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“2.3Prepayment.

 

(a)Borrower
may voluntarily pay or prepay all or any part of the RE Term Principal Amount, the Carousel Term Principal Amount, or the Revolving
Credit Facility without premium or penalty, at any time, and while no Cash Management Agreement is in effect, subject to the following
conditions:

 

(i)Lender
must receive Borrower’s written or telephonic prepayment notice by 10:00 a.m. on the prepayment date;

 

(ii)Borrower’s
prepayment notice shall (A) specify the prepayment date, (B) specify the amount of the Loan to be prepaid, and (C) indicate
whether the RE Term Principal Amount, the Carousel Term Principal Amount, or the Revolving Principal Amount is to be repaid;

 

(iii)each
partial prepayment must be in a minimum amount of not less than (A) $10,000 or a greater integral multiple of $1,000 or
(B) if less than the minimum amount, the outstanding balance of the RE Term Principal Amount, the Carousel Term Principal
Amount, or the Revolving Principal Amount as applicable;

 

(iv)all
accrued and unpaid interest on the portion of the RE Term Principal Amount or the Carousel Term Principal Amount must also be paid
in full on the prepayment date;

 

(v)each
partial prepayment of the RE Term Principal Amount, or the Carousel Term Principal Amount, as applicable, shall be applied to the
scheduled principal payments in the inverse order of their maturity.

 

(b)All
prepayments under this Section 2.3 shall be without premium or penalty.

 

(c)If
the Revolving Credit Exposure at any time exceeds the Revolving Credit Limit, then Borrower shall repay the Revolving Principal
Amount (or if no Revolving Principal Amount is outstanding, Cash Collateralized the LC Exposure), in at least the amount of that
excess, together with all accrued and unpaid interest on the principal amount so repaid.

    	3

    	 

    

 

(d)On
the date such amounts are received by, or for the account of, Borrower, the following amounts shall be paid to Lender in the form
received with any endorsement or assignment and shall be applied as follows:

 

(i)100%
of the Net Proceeds with respect to the Disposition of any Property shall be applied first, to the RE Term Principal Amount, and
second, to the Carousel Term Principal Amount;

 

(ii)100% of the Net Proceeds
with respect to the Disposition of the Carousel shall be applied first, the Carousel Term Principal Amount, and second, to the
RE Term Principal Amount.

 

(iii)100% of the Net Proceeds
with respect to the Disposition of any asset other than the Dispositions described in clauses (i) and (ii) above
(and other than any Dispositions permitted by Section 9.9), shall be applied in accordance with Section 2.3(e).

 

(iv)100% of the Net Proceeds
from the issuance of Subordinated Debt shall be applied in accordance with Section 2.3(e).

 

The non-cash
portion of all Net Proceeds Lender is entitled to receive under this Section 2.3 shall be pledged to Lender
concurrently with the applicable Disposition.

 

(e)Unless
otherwise specified in this Agreement, prepayments under this Section 2.3 shall be applied (i) first, to the
prepayment of the outstanding RE Term Principal Amount, and shall be applied to the scheduled principal payments in the inverse
order of their maturity until the RE Term Principal Amount is paid in full, and (ii) second, to the prepayment of the outstanding
Carousel Term Principal Amount, and shall be applied to the scheduled principal payments in the inverse order of their maturity
until the Carousel Term Principal Amount, is paid in full.

 

(f)After
proper application of all proceeds under this Section 2.3, any remaining proceeds shall be applied to (i) repay
the Revolving Credit Facility, with the proceeds being applied in accordance with Section 3.4, and (ii) to
Cash Collateralize all LC Exposure, with the excess, if any, being payable to Borrower.”

 

(g)Section
3.1(a) (Notes and Payments) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

“(a)The
Loans shall be evidenced as follows:

 

(i)The
Loan under the RE Term Facility shall be evidenced by the RE Term Note.

 

    	4

    	 

    

 

(ii)The
Loans under the Revolving Credit Facility shall be evidenced by the Revolving Note.

 

(iii)The
Loan under the Carousel Term Loan shall be evidenced by the Carousel Term Note.”

 

(h)Section
3.2 of the Credit Agreement is amended to delete the heading thereof in its entirety and replace it with the following:

 

“3.2RE
Term Facility, Carousel Term Loan, and Revolving Credit Facility.”

 

(i)Section
3.2 (RE Term Facility, Carousel Term Loan, and Revolving Credit Facility) of the Credit Agreement is amended to delete
subsections (c), (d), and (e) in their entirety and to replace them with the following:

 

“(c)Accrued
and unpaid interest on the Carousel Term Principal Amount is due and payable monthly in arrears on the first day of each month
beginning July 1, 2014, and continuing on the first day of each month thereafter until the Carousel Term Loan Maturity Date.

 

(d)Principal
payments on the Carousel Term Loan in the amount of $65,000 are due and payable monthly in arrears on the first day of each month
beginning July 1, 2014, and continuing on the first day of each month thereafter until the Carousel Term Loan Maturity Date.

 

(e)All
outstanding principal and all accrued and unpaid interest in respect of the Carousel Term Loan is due and payable on the Carousel
Term Loan Maturity Date.”

 

(j)Section
3.4 (Interest) of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“3.4Interest.
Except as otherwise provided in this Agreement:

 

(a)The
RE Term Principal Amount shall accrue interest at an annual rate equal to the lesser of (i) 4.00% and (ii) the Maximum Rate.

 

(b) The
Carousel Term Principal Amount shall accrue interest at an annual rate equal to the lesser of (i) 3.50% and (ii) the Maximum Rate.

 

(c)The
Revolving Principal Amount shall accrue interest at an annual rate equal to the lesser of (i) 3.50% and (ii) the Maximum Rate.

 

(d)Each
change in the Maximum Rate is effective has of the date of such change without notice to Borrower or any other Person.”

 

(k)Section
7.13(a) (Purpose of Credit Facilities) of the Credit Agreement is amended to add the following last sentence to the end
of such Section:

 

“The
proceeds of the Carousel Term Loan will be used to fund the outstanding portion of the purchase price under the Carousel PSA as
of the Sixth Amendment Effective Date.”

 

    	5

    	 

    

(l)Section
8.10(d) (Application of Insurance and Eminent Domain Proceeds) of the Credit Agreement is deleted in its entirety and replaced
with the following:

 

“(d)Any
Eminent Domain Proceeds arising from the Properties or Insurance Proceeds arising from losses incurred by Borrower shall be applied
(i) first, to the RE Term Facility, (ii) second, to the Carousel Term Loan, (iii) third, to the Revolving Credit Facility,
and (iv) fourth, to Cash Collateralize LC Exposure, with the excess, if any, payable to Borrower.”

 

(m)Section
9.9 (Sale of Assets) of the Credit Agreement is deleted in its entirety and replaced with the following:

 

9.9Disposition
of Assets.

 

(a)No Company
may make any Disposition or enter into any agreement to make any Disposition, except (a) Dispositions in the ordinary course of
business, (b) Dispositions of (i) obsolete or worn out assets, (ii) assets which are no longer needed in such Company’s
business, (iii) inventory in the ordinary course of business, or (iv) delinquent accounts receivable in the ordinary course
of business for purposes of collection; provided that, all of the consideration of each such Disposition is cash, and (c) to
the extent permitted by Section 9.6.

 

(b)No Company may lease
the Carousel to any Person without Lender’s prior written consent, which consent shall be conditioned upon the execution
and delivery to Lender of a subordination agreement in Proper Form. Such subordination agreement shall subordinate in all respects
any Liens on the Carousel in favor of any third party to any Liens on the Carousel which secure the Obligation.”

 

(n)Section
10.3 (Tangible Net Worth) of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“10.3Tangible
Net Worth. The Tangible Net Worth may not at any time from and after March 31, 2014, be less than an amount equal to
the sum of (a) $16,700,000, plus (b) 50% of the Companies’ net income, if positive, after provision
for Taxes, for each whole or partial fiscal year completed after March 31, 2014.”

 

2.Schedule
and Exhibit.

 

(a)Exhibit
A-8 (Carousel Term Note) attached to this Amendment is hereby added to the Credit Agreement in the appropriate alphanumeric
order.

 

(b)Exhibit
C (Loan Request) to the Credit Agreement is hereby deleted in its entirety and replaced with the Exhibit C attached
to this Amendment.

 

3.Conditions.

 

(a)This
Amendment shall be effective once each of the following have occurred or have been delivered to Lender, each in Proper Form:

 

(b)this
Amendment executed by Borrower and Lender;

 

(c)Guarantors’
Consent and Agreement;

 

(d)a
Carousel Term Note in the original principal amount of $2,200,000 executed by Borrower and made payable to the order of Lender;

 

    	6

    	 

    

(e)a
fully executed copy of the Carousel PSA;

 

(f)a
pay-off letter from EMAS;

 

(g)a
Secretary’s Certificate of Borrower certifying as to incumbency, specimen signatures, resolutions adopted by Borrower’s
Board of Directors authorizing this Amendment and the transactions contemplated hereby and thereby, and no changes to Borrower’s
Certificate of Incorporation and Bylaws since the date of the Secretary’s Certificate delivered by Borrower to Lender in
connection with the Credit Agreement;

 

(h)a
UCC-1 Financing Statement with respect to the Carousel.

 

(i)Borrower
shall have paid, and Lender shall have received an upfront fee in the amount of $36,000 which fee shall be duly earned when paid
and shall be non-refundable;

 

(j)Borrower
shall have paid, and Lender shall have received, payment of Lender’s other fees and expenses incurred in connection with
this Amendment, including fees and expenses of its legal counsel; and

 

(k)such
other documents and items as Lender may reasonably request.

 

4.Further
Assurances. Each Company agrees to take such action as Lender may reasonably request to further the attachment, perfection
and first priority of, and the ability of Lender to enforce Lender’s Lien upon the Carousel.

 

5.Representations
and Warranties. Borrower represents and warrants to Lender that upon giving effect to all prior written waivers granted by
Lender in connection with the Credit Agreement (a) it possesses all requisite power and authority to execute, deliver and comply
with the terms of this Amendment, (b) this Amendment has been duly authorized and approved by all requisite corporate action on
the part of Borrower, (c) no other consent of any Person (other than Lender) is required for this Amendment to be effective, (d)
the execution and delivery of this Amendment does not violate its organizational documents, (e) the representations and warranties
in each Loan Document to which it is a party are true and correct in all material respects on and as of the date of this Amendment
as though made on the date of this Amendment (except to the extent that such representations and warranties speak to a specific
date), (f) it is in full compliance with all covenants and agreements contained in each Loan Document to which it is a party, and
(g) no Default or Potential Default has occurred and is continuing. The representations and warranties made in this Amendment shall
survive the execution and delivery of this Amendment. No investigation by Lender is required for Lender to rely on the representations
and warranties in this Amendment.

 

6.Scope
of Amendment; Reaffirmation; Release. All references to the Credit Agreement shall refer to the Credit Agreement as amended
by this Amendment. Except as affected by this Amendment, the Loan Documents are unchanged and continue in full force and effect.
However, in the event of any inconsistency between the terms of the Credit Agreement (as amended by this Amendment) and any other
Loan Document, the terms of the Credit Agreement shall control and such other document shall be deemed to be amended to conform
to the terms of the Credit Agreement. Borrower hereby reaffirms its obligations under the Loan Documents to which it is a party
and agrees that all Loan Documents to which they are a party remain in full force and effect and continue to be legal, valid, and
binding obligations enforceable in accordance with their terms (as the same are affected by this Amendment). Borrower hereby releases
Lender from any liability for actions or omissions in connection with the Credit Agreement and the other Loan Documents prior to
the date of this Amendment.

 

    	7

    	 

    

7.Miscellaneous.

 

(a)No
Waiver of Defaults. Except as expressly set out above, this Amendment does not constitute (i) a waiver of, or a consent to,
(A) any provision of the Credit Agreement or any other Loan Document not expressly referred to in this Amendment, or (B) any present
or future violation of, or default under, any provision of the Loan Documents, or (ii) a waiver of Lender’s right to insist
upon future compliance with each term, covenant, condition and provision of the Loan Documents.

 

(b)Form.
Each agreement, document, instrument or other writing to be furnished Lender under any provision of this Amendment must be in form
and substance satisfactory to Lender and its counsel.

 

(c)Headings.
The headings and captions used in this Amendment are for convenience only and will not be deemed to limit, amplify or modify the
terms of this Amendment, the Credit Agreement, or the other Loan Documents.

 

(d)Costs,
Expenses and Attorneys’ Fees. Borrower agrees to pay or reimburse Lender on demand for all its reasonable out-of-pocket
costs and expenses incurred in connection with the preparation, negotiation, and execution of this Amendment, including, without
limitation, the reasonable fees and disbursements of Lender’s counsel.

 

(e)Successors
and Assigns. This Amendment shall be binding upon and inure to the benefit of each of the undersigned and their respective
successors and permitted assigns.

 

(f)Multiple
Counterparts. This Amendment may be executed in any number of counterparts with the same effect as if all signatories had signed
the same document. All counterparts must be construed together to constitute one and the same instrument. This Amendment may be
transmitted and signed by facsimile or portable document format (PDF). The effectiveness of any such documents and signatures shall,
subject to applicable law, have the same force and effect as manually-signed originals and shall be binding on Borrower 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.

 

(g)Governing
Law. This Amendment and the other Loan Documents must be construed, and their performance enforced, under Texas law.

 

(h)Entirety.
The Loan Documents (as amended hereby) Represent the Final Agreement Between Borrower
and Lender and May Not Be Contradicted by Evidence of Prior, Contemporaneous, or Subsequent Oral Agreements by the Parties. There
Are No Unwritten Oral Agreements among the Parties.

 

[Signatures appear on following page.]

 

    	8

    	 

    

 

The Amendment is executed
as of the Effective Date set out in the preamble to this Amendment.

 

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

 

 

 

 

 

 

 

 

 

Signature Page to Sixth Amendment to Amended
and Restated Credit Agreement

 

    	 

    	 

    

 

	 	LENDER:
	 	 
	 	WHITNEY BANK,
	 	a Mississippi state chartered bank
	 	 
	 	 
	 	By:     /s/ Paul W. Cole
	 	Paul W. Cole
	 	Senior Vice President

 

 

 

 

 

 

 

 

 

 

Signature Page to Sixth Amendment to Amended
and Restated Credit Agreement

 

    	 

    	 

    

 

GUARANTORS’ CONSENT AND AGREEMENT

TO

SIXTH AMENDMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT

 

As an inducement to Lender
to execute, and in consideration of Lender’s execution of, this Amendment, each of the undersigned hereby consents to this
Amendment and agrees that this Amendment shall in no way release, diminish, impair, reduce or otherwise adversely affect the obligations
and liabilities of the undersigned under the Guaranty executed by the undersigned in connection with the Credit Agreement, or under
any Loan Documents, agreements, documents or instruments executed by the undersigned to create liens, security interests or charges
to secure any of the Obligation (as defined in the Credit Agreement), all of which are in full force and effect. Each of the undersigned
further represents and warrants to Lender that (a) the representations and warranties in each Loan Document to which it is a party
are true and correct in all material respects on and as of the date of this Amendment as though made on the date of this Amendment
(except to the extent that such representations and warranties speak to a specific date), (b) it is in full compliance with all
covenants and agreements contained in each Loan Document to which it is a party, and (c) no Default or Potential Default has occurred
and is continuing. Each Guarantor hereby releases Lender from any liability for actions or omissions in connection with the Loan
Documents prior to the date of this Amendment. This Consent and Agreement shall be binding upon the undersigned, their successors
and permitted assigns, and shall inure to the benefit of Lender, and its successors and assigns.

 

	 	GUARANTORS:
	 	 
	 	MAKO TECHNOLOGIES, LLC,
	 	a Nevada limited liability company
	 	 
	 	DEEP DOWN INC.,
	 	a Delaware corporation
	 	 
	 	 
	 	By: /s/ Eugene L. Butler
	 	Eugene L. Butler
	 	Executive Chairman and Chief Financial Officer of each of the foregoing companies

 

 

 

 

Guarantors’ Consent and Agreement to Sixth
Amendment to Amended and Restated Credit Agreement

    	 

    	 

    

 

 

EXHIBIT A-8

 

Carousel TERM
NOTE

 

	$2,200,000	Houston, Texas	April 15, 2014

 

FOR VALUE RECEIVED, DEEP
DOWN, INC., a Nevada corporation (“Borrower”), hereby promises to pay to the order of Whitney
Bank, a Mississippi state charted bank (“Lender”), on or before the Carousel Term Loan Maturity
Date, the principal amount of $2,200,000 or so much thereof as may then be outstanding under this note, together with interest,
as described below.

 

This note has been executed
and delivered under, and is subject to the terms of, the Amended and Restated Credit Agreement dated as of November 11, 2008, and
amended and restated through April 14, 2010 (as amended by that certain First Amendment dated as of December 31, 2010, that certain
Second Amendment dated as of April 14, 2011, that certain Third Amendment dated as of June 9, 2011, that certain Fourth Amendment
dated as of the date hereof, that certain Fourth Amendment dated as of April 15, 2012, that certain Fifth Amendment dated
as of March 5, 2013, that certain Sixth Amendment dated as of the date hereof, and as further amended, supplemented or restated,
the “Credit Agreement”), between Borrower and Lender and is the “Carousel Term Note”
referred to in the Credit Agreement. Unless defined in this note, or the context requires otherwise, capitalized terms used in
this note have the meanings given to such terms in the Credit Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and interest payment dates, final maturity, voluntary and mandatory
prepayments, acceleration of maturity, exercise of rights, payment of attorneys’ fees, court costs and other costs of collection,
certain waivers by Borrower and others now or hereafter obligated for payment of any sums due under this note, and security for
the payment of this note. This note is a Loan Document and, therefore, is subject to the applicable provisions of Section
13 of the Credit Agreement, all of which applicable provisions are incorporated into this note by reference as if set forth
in this note verbatim.

 

Specific reference is made
to Section 3.7 of the Credit Agreement for usury savings provisions.

 

the
rights and obligations of the parties hereto shall be determined solely from written agreements, documents, and instruments, and
any prior oral agreements between the parties are superseded by and merged into such writings. this note, the credit agreement
and the other written loan documents executed by the borrower and the lender (or by the borrower for the benefit of the lender)
represent the final agreement between the borrower and the lender and may not be contradicted by evidence of prior, contemporaneous,
or subsequent oral agreements by the parties. there are no unwritten oral agreements between the parties.

 

This note must be construed
— and its performance enforced — under Texas law.

 

 

[Signature
appears on the following page.]

    	 

    	 

    

 

EXECUTED as of the date
first written above.

 

	 	BORROWER:
	 	 
	 	DEEP DOWN, INC.,
	 	a Nevada corporation
	 	 
	 	By:     _____________________________
	 	Eugene L. Butler
	 	Executive Chairman and Chief Financial Officer

 

 

 

 

 

 

 

 

Signature Page to Carousel Term Note

 

 

    	 

    	 

    

 

EXHIBIT C

 

LOAN REQUEST

 

________, ____

Whitney Bank

4265 San Felipe, Suite 200

Houston, Texas 77027

Attn: Paul W. Cole

 

Reference is made to that
certain Amended and Restated Credit Agreement dated as of November 11, 2008 and amended and restated through April 14, 2010
(as amended by that certain First Amendment dated as of December 31, 2010, that certain Second Amendment dated as of April 14,
2011, that certain Third Amendment dated as of June 9, 2011, that certain Fourth Amendment dated as of April 15, 2012, that
certain Fifth Amendment to Credit Agreement dated as of March 5, 2013, that certain Sixth Amendment to Credit Agreement dated as
of April 15, 2014, and as further amended, supplemented or restated, the “Credit Agreement”), between
the undersigned and Whitney Bank, a Mississippi state chartered bank (the “Lender”).
Capitalized terms used but not defined in this Loan Request shall have the meanings given such terms in the Credit Agreement. The
undersigned hereby gives you notice pursuant to Section 2.2 of the Credit Agreement that it requests a Loan
under the Credit Agreement on the following terms:

 

	(A)	Loan Date (a Business Day)[1]	__________
	(B)	Under the following facility:	__________
	 	(i)       Carousel Term Loan	 
	 	(ii)      Revolving Credit Facility 	 
	(C)	Amount of Loan Requested	__________

 

The undersigned hereby
certifies that the following statements are true and correct on the date this Loan Request, and will be true and correct on the
Loan Date specified above after giving effect to such Loan: (a) all of the representations and warranties in the Loan Documents
are true and correct in all material respects (except to the extent that they speak to a specific date); (b) no Material Adverse
Event has occurred; and (c) no Default or Potential Default exists.

 

[Signature appears on the following page.]

 

 

 

 

____________________

[1]
Lender must receive Loan Request no later than 11:00 a.m. on the proposed Loan Date.

**With respect to the Revolving Credit Facility, must
be in an amount not less than $100,000 or a greater multiple of $10,000.

 

Exhibit C – Page 1

    	 

    	 

    

 

	 	Very truly yours,
	 	 
	 	deep down, inc.,
	 	a Nevada corporation
	 	 
	 	 
	 	By:   __________
	 	Eugene L. Butler
	 	Executive Chairman and Chief Financial Officer 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page to Loan Request

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