STOCK OPTION AGREEMENT
 
THIS STOCK OPTION AGREEMENT (the “Agreement”) is made and entered into on this
March 3, 2009, by and between Brownie’s Marine Group, Inc., a Nevada corporation
(the “Company”), and Robert Carmichael (“Optionee”).
 
RECITALS
 
WHEREAS, the Company has agreed to issue options to purchase shares of common
stock of the Company to Optionee pursuant to that certain Asset Purchase
Agreement dated even herewith.
 
NOW, THEREFORE, in consideration of the foregoing provisions, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:
 
1.           Grant of Option.  The Company hereby grants, bargains, sells,
conveys and delivers unto Optionee an option (the “Option”) to purchase 315,000
shares of the Company’s common stock (the “Option Shares”), exercisable at the
time and in the manner set forth below.
 
1.1.      Option Price.  The price that Optionee shall pay for the Option Shares
in the exercise of the Option shall be One Dollar ($1.00) per share (the “Option
Price”).
 
1.2.      Option Period.  The Option may be exercised at any time and from time
to time commencing on the date hereof and ending ten (10) years from the date
hereof (the “Option Period”).
 
1.3.      Vesting of Option.  This right to purchase the Option Shares is
immediately vested.
 
1.4.      Exercise of Option.  The Option to acquire the Option Shares may be
exercised by Optionee during the Option Period by delivery to the Company of the
Option Price in certified or good funds or other funds as accepted by the
Company, along with a written notice, substantially in the form attached hereto
as Exhibit A, indicating that Optionee is electing to exercise the Option to
acquire the Option Shares. This Option may also be exercised at such time by
means of a “cashless exercise” in which the Optionee shall be entitled to
receive a certificate for the number of Option Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
 
(A) =  
the closing price on the trading day immediately preceding the date of such
election;
   
(B) =  
the Option Price of the Options as adjusted; and
   
(X) =  
the number of Option Shares issuable upon exercise of the Option in accordance
with the terms of this Option.

 
 

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2.           Termination of Option.  To the extent not exercised, the Option
shall terminate upon the end of the Option Period.
 
3.           Securities Laws.  The Option and the Option Shares have not been
registered under the Securities Act of 1933, as amended (the “Act”).  The
Company has no obligations to ever register the Option or the Option
Shares.  All shares of common stock acquired upon the exercise of the Option
shall be “restricted securities” as that term is defined in Rule 144 promulgated
under the Act. The certificate representing the shares shall bear an appropriate
legend restricting their transfer.  Such shares cannot be sold, transferred,
assigned or otherwise hypothecated without registration under the Act or unless
a valid exemption from registration is then available under applicable federal
and state securities laws and the Company has been furnished with an opinion of
counsel satisfactory in form and substance to the Company that such registration
is not required.
 
4.           Reclassification, Consolidation or Merger.  If and to the extent
that the number of issued common shares of the Company shall be increased or
reduced by a change in par value, combination, subdivision, reclassification,
distribution of a dividend payable in shares, or the like, the number of shares
subject to Option and the Option Price for them shall be proportionately
adjusted.  If the Company is reorganized or consolidated or merged with another
corporation, Optionee shall be entitled to receive options covering shares of
such reorganized, consolidated or merged company in the same proportion at an
equivalent price, and subject to the same conditions.  The new Option or
assumption of the old Option shall not give Optionee additional benefits, which
he did not have under the old Option.
 
5.           Rights Prior to Exercise of Option.  The Option is nontransferable
by Optionee without prior consent of the Company, and during Optionee’s lifetime
is exercisable only by Optionee. In the event of Optionee’s death, his personal
representative may exercise the Option as to any Option Shares not previously
exercised during his lifetime until the end of the Option Period.  Optionee
shall have no rights as a shareholder in the Option Shares until payment of the
Option Price and delivery to him of such shares as herein provided.
 
6.           Consultation With Counsel.  The Optionee has consulted with such
independent legal counsel or other advisory he deems appropriate to assist him
in the consummation of this Agreement.
 
7.           Notices.  All notices, waivers, demands and instructions given in
connection with this Agreement shall be made in writing, with a copy to each
party, and shall be deemed to have been duly given and delivered (a) five (5)
days after posting if mailed by U.S. Mail, certified or registered, return
receipt requested, postage prepaid, or (b) upon receipt if sent by overnight
courier maintaining records of receipt by addresses, by hand or by telecopy,
with the original notice being sent the same day by one of the foregoing
methods, addressed as first above written (or to such other address as a party
may from time to time designate by notice to all other parties as aforesaid).

 
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8.           Further Assurances.  Each of the parties hereto shall execute such
other instruments, documents and papers and shall take such further actions, as
may be reasonably required or appropriate to carry out the provisions hereof.
 
9.           Entire Agreement.  This Agreement constitutes the full and complete
understanding of the parties with respect to its subject matter, is an exclusive
statement of the terms and conditions of their agreement in relation hereto, and
supersedes all prior negotiations, understandings and agreements, whether
written or oral, between the parties with respect hereto.
 
10.         Governing Law.  This Agreement shall be governed by, construed
under, and enforced in accordance with the laws of the State of Nevada without
regard to any conflict-of-laws provisions to the contrary.
 
11.         Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which, when
taken together shall constitute one and the same instrument.
 
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
 
THE COMPANY:
 
BROWNIE’S MARINE GROUP, INC.
 
By:
/s/Robert M. Carmichael
Name: Robert M. Carmichael
Its: Chief Executive Officer
 
OPTIONEE:
 
/s/Robert M. Carmichael
Robert Carmichael

 
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EXHIBIT A
 
NOTICE OF EXERCISE
 
The undersigned hereby elects to exercise the within Option to the extent of
purchasing ____________ shares of Common Stock of Brownie’s Marine Group, Inc.,
a Nevada corporation, and hereby makes payments of $_________ in payment
therefore.
 
  
Signature
    
Date

 
INSTRUCTIONS FOR ISSUANCE OF STOCK
 
Name:
 
(Please type or print in block letters.)

Address:
         

Social Security Number: 
 

 
 

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