Document:

<PAGE>

                                                                   EXHIBIT 10.41

                               AMENDMENT NO. 1 TO
                           LOAN AND SECURITY AGREEMENT

     This AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT (this "AMENDMENT")
dated as of December 20, 1999, is by and between UTILX CORPORATION, a
Delaware corporation ("BORROWER"), and FINOVA CAPITAL CORPORATION, a Delaware
corporation ("FINOVA"). Unless otherwise specified herein, capitalized terms
used in this Amendment shall have the meanings ascribed to them by the Loan
Agreement (as hereinafter defined).

                                    RECITALS

     WHEREAS, FINOVA and Borrower are parties to that certain Loan and
Security Agreement, dated as of April 20, 1999 (the "EXISTING LOAN AGREEMENT"
and supplemented, restated or otherwise modified from time to time, the "LOAN
AGREEMENT");

     WHEREAS, Borrower and FINOVA desire to amend the Loan Agreement to INTER
ALIA: amend certain provisions of the Schedule to the Loan Agreement.

     NOW THEREFORE, in consideration of the mutual execution hereof and other
good and valuable consideration, the parties hereto agree as follows:

                  SECTION 1. AMENDMENT TO THE LOAN AGREEMENT.

Subject to the satisfaction of the conditions precedent set forth in Section
8 hereof, the parties hereto hereby agree to amend the Loan Agreement as
follows:

                  (a) The subparagraph (a) at the beginning of page 2 of the
                  Schedule is amended and restated in its entirety to read as
                  follows:

                  "(a)     Twelve Million Dollars ($12,000,000) (the "REVOLVING
                           CREDIT LIMIT"), LESS any Loan Reserves, or"

                  (b)      The paragraph entitled "Compensation" in Section 6.2
                           of the Schedule continuing from the last line of page
                           7 is to include the following: "Also, the Borrower
                           may pay incremental bonuses in the aggregate amount
                           listed below contingent on Borrower having Minimum
                           Excess Availability of at least $1,000,000 after
                           giving effect to such incremental bonuses and
                           complying with all Financial Covenants required of
                           Borrower:

<TABLE>
<CAPTION>
                                                                    Incremental
                                                                      Bonus/
           Pre Bonus                        Net       Bonus/Net     Incremental
            Profit           Bonus         Income       Income      Net Income
------------------------------------------------------------------------------------
<S>                         <C>          <C>             <C>            <C>
          $1,933,333        $333,333     $1,600,000      21%            33%
          $2,066,667        $366,667     $1,700,000      22%            33%
          $2,200,000        $400,000     $1,800,000      22%            33%
          $2,333,333        $433,333     $1,900,000      23%            33%
          $2,466,667        $466,667     $2,000,000      23%            33%
          $2,600,000        $500,000     $2,100,000      24%            33%
          $2,733,333        $533,333     $2,200,000      24%            33%
          $2,866,667        $566,667     $2,300,000      25%            33%
          $3,000,000        $600,000     $2,400,000      25%            33%
          $3,133,333        $633,333     $2,500,000      25%            33%
</TABLE>

<PAGE>

                  SECTION 2. REPRESENTATIONS AND WARRANTIES OF BORROWER.

Borrower represents and warrants that:

                  (a) The execution, delivery and performance by Borrower of
this Amendment have been duly authorized by all necessary corporate action and
this Amendment is a legal, valid and binding obligation of Borrower
enforceable against Borrower in accordance with its terms, except as the
enforcement thereof may be subject to (i) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors' rights generally and (ii) general principles of equity (regardless
of whether such enforcement is sought in a proceeding in equity or at law);

                  (b) Each of the representations and warranties contained in
the Loan Agreement is true and correct in all respects on and as of the date
hereof as if made on the date hereof, except to the extent that such
representations and warranties expressly relate to an earlier date; and

                  (c) Neither the execution, delivery and performance of this
Amendment nor the consummation of the transactions contemplated hereby does or
shall contravene, result in a breach of, or violate (i) any provision of
Borrower's certificate or articles of organization or by-laws, (ii) any law or
regulation, or any order or decree of any court or government instrumentality,
or (iii) any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Borrower is a party or by which Borrower or any of its
property is bound, except in any such case to the extent such conflict or
breach has been waived by a written waiver document, a copy of which has been
delivered to FINOVA on or before the date hereof.

                  SECTION 3. ACKNOWLEDGMENTS REGARDING LOAN AGREEMENT.

                  (a) Except as specifically amended above, the Loan Agreement
and the other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.

                  (b) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of
FINOVA under the Loan Agreement or any Loan Document, nor constitute a waiver
of any provision of the Loan Agreement or any Loan Document, except as
specifically set forth herein. Upon the effectiveness of this Amendment, each
reference in the Loan Agreement to "this Agreement", "hereunder", "hereof',
"herein" or words of similar import shall mean and be a reference to the Loan
Agreement as amended hereby.

                  (c) Borrower hereby acknowledges and agrees that there is no
defense, setoff or counterclaim of any kind, nature or description to the
Obligations or the payment thereof when due and hereby releases FINOVA and its
directors, officers, employees, agents, attorneys and other persons affiliated
with FINOVA from any claims, causes of action, or damages arising from or
relating to any breach of contract, tort or other wrong relating to this
Amendment, the Loan Agreement or the Obligations or the establishment,
administration, or collection thereof.

                  SECTION 4. COST AND EXPENSES. As provided in SECTION 8.1 of
the Loan Agreement, Borrower agrees to pay FINOVA a $15,000 fee for this
Amendment and to reimburse FINOVA for all fees, costs and expenses, including
the fees, costs and expenses of counsel or other advisors for advice,
assistance, or other representation in connection with this Amendment (and any
other documents to be delivered in connection herewith).

                  SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS
OF LAWS PROVISIONS) OF THE STATE OF ARIZONA.

<PAGE>

                  SECTION 6. HEADING. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purposes.

                  SECTION 7. COUNTERPARTS. This Amendment may be executed in
any number of counterpart, each of which when so executed shall be deemed an
original, but all such counterparts shall constitute one and the same
instrument.

                  SECTION 8. EFFECTIVENESS. This Amendment shall become
effective as of the date first written above when each of the following
conditions precedent have been met to the satisfaction of FINOVA.

                  (a) AMENDMENT. Executed signature pages for this Amendment
signed by FINOVA and Borrower shall have been delivered to FINOVA; and

                  (b) REPRESENTATIONS. The representations and warranties
contained herein shall be true and in all respects.

                  IN WITNESS WHEREOF, the parties hereto hereupon set their
hands as of the date first written above.

                                            UTILX CORPORATION
                                            a Delaware corporation

                                            By: /s/ WILLIAM M. WEISFIELD
                                               ---------------------------------
                                                William M. Weisfield, President

                                            FINOVA CAPITAL CORPORATION

                                            By: /s/ Peter Martinez
                                               ---------------------------------
                                            Its: VICE PRESIDENT<PAGE>
                                                                  EXHIBIT 10.4

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

         AGREEMENT made and entered into in North Falmouth, Massachusetts,
between BENTHOS, INC., a Massachusetts corporation with a usual place of
business situated at 49 Edgerton Drive, North Falmouth, Massachusetts 02556 (the
"Company") and JOHN L. COUGHLIN, of 130 Pine Lake Road, Duxbury, Massachusetts
02332 (the "Executive"), effective as of the 1st day of October, 1999 (the
"Effective Date").

                                   WITNESSETH:

         WHEREAS, the Company and the Executive are currently parties to a
certain Employment Agreement effective as of April 8, 1996 (the "Prior
Employment Agreement");

         WHEREAS, the Prior Employment Agreement has a term which ends on April
7, 2000;

         WHEREAS, the Company and the Executive want to amend and restate the
Prior Employment Agreement in its entirety so that this Agreement will
completely set forth the terms and conditions of the employment of the Executive
by the Company from and after the Effective Date; and

         WHEREAS, subject to the terms and conditions of this Agreement, the
Company wants to continue the employment of the Employee and the Employee wants
to be employed by the Company.

         NOW, THEREFORE, in consideration of the premises, the mutual terms and
conditions set forth herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Executive hereby mutually agree as follows:

1.       AMENDMENT AND RESTATEMENT OF THE EMPLOYMENT AGREEMENT. Pursuant to
         Section 17 of the Prior Employment Agreement, the Prior Employment
         Agreement is amended in its

<PAGE>

         entirety and restated herein, and, as of the effective date of this
         Agreement, the Prior Employment Agreement will be null and void and all
         of the rights and obligations of the Company and the Executive with
         respect to the employment of the Executive by the Company from and
         after the Effective Date will be as set forth herein. The Executive
         hereby acknowledges that the Executive has received from the Company a
         Certificate of the Clerk of the Company certifying that a vote of the
         Board of Directors was duly adopted authorizing the amendment and
         restatement of the Prior Employment Agreement and the approval of this
         Agreement and that Stephen D. Fantone, Chairman of the Board of
         Directors of the Company, is authorized to execute this Agreement on
         behalf of the Company. The Executive also acknowledges that all of the
         obligations of the Company to the Executive pursuant to the Prior
         Employment Agreement have been fully satisfied.

2.       EMPLOYMENT. The Company shall employ the Executive and the Executive
         will serve the Company as President and Chief Executive Officer of the
         Company upon the terms and conditions provided herein. In the discharge
         of the duties of the Executive hereunder, the Executive shall report to
         the Board of Directors of the Company.

3.       TERM. Subject to earlier termination as hereinafter provided, the
         employment of the Executive hereunder shall be for a term of three (3)
         years, commencing on the Effective Date, and may be extended or renewed
         only by a written agreement executed and delivered by the Executive and
         an expressly authorized representative of the Company. The term of this
         Agreement, as from time to time extended or renewed, is hereafter
         referred to as "the term of this Agreement" or "the term hereof".

                                        2
<PAGE>

4.       CAPACITY AND PERFORMANCE.

         (a)      In addition to the duties set forth in Section 2 and without
                  further compensation, the Executive shall serve as a Director
                  of the Company if so elected or appointed from time to time.

         (b)      During the term hereof, the Executive shall be employed by the
                  Company on a full-time basis and shall perform such duties and
                  responsibilities on behalf of the Company as may be designated
                  from time to time by the Board of Directors of the Company.

         (c)      During the term hereof, the Executive shall devote the full
                  business time and the best efforts, business judgment, skill
                  and knowledge of the Executive to the advancement of the
                  business and interests of the Company and to the discharge of
                  the duties of the Executive hereunder. The Executive shall not
                  engage in any other business activity or serve in any
                  industry, trade, professional, governmental, or academic
                  position during the term of this Agreement, except as may be
                  approved in advance by the Board of Directors of the Company.

5.       COMPENSATION AND BENEFITS. As compensation for all services performed
         by the Executive hereunder during the term hereof and subject to the
         satisfactory performance of the duties and obligations of the Executive
         to the Company, the compensation and benefits to be earned by the
         Executive pursuant to this Agreement are as follows:

         (a)      BASE SALARY. During the term hereof, the Company shall pay the
                  Executive a base salary at the rate of One Hundred Eighty-
                  Seven Thousand ($187,000) Dollars per annum, payable in
                  accordance with the payroll practices of the Company for its

                                        3
<PAGE>

                  executives and subject to increase from time to time by the
                  Board of Directors, in its sole discretion. Such base salary,
                  as from time to time increased, is hereafter referred to as
                  the "Base Salary".

         (b)      QUALITATIVE BONUS. Subject to the terms and conditions hereof,
                  with respect to fiscal year 2000 of the Company, the Executive
                  will be eligible to receive a bonus based on the satisfaction
                  of certain criteria which will be given to the Executive by
                  the Board of Directors (the "Qualitative Bonus"). The
                  Qualitative Bonus, if earned, for fiscal year 2000 will be
                  paid within sixty (60) days of the end of the fiscal year.
                  With respect to fiscal years of the Company after fiscal year
                  2000, the Board of Directors of the Company in its sole
                  discretion will determine the amount of the Qualitative Bonus
                  and the conditions which must be satisfied by the Executive
                  for the Executive to be eligible to receive a Qualitative
                  Bonus. Upon the payment of any Qualitative Bonus by the
                  Company to the Executive, the Company will provide to the
                  Executive a written explanation of the factors considered by
                  the Company in awarding the Qualitative Bonus. Notwithstanding
                  any other provision contained in this Agreement, the Executive
                  will only be eligible for a Qualitative Bonus if the Executive
                  is not in breach of this Agreement at the time such
                  Qualitative Bonus is to be paid. In all events, any issues
                  which may arise between the Company and the Executive with
                  respect to the Qualitative Bonus shall be resolved by the
                  Board of Directors of the Company in its sole discretion.

         (c)      QUANTITATIVE BONUS. Subject to the terms and conditions
                  hereof, the Executive will be eligible to receive a bonus
                  based on the amount of operating income earned by

                                        4
<PAGE>

                  the Company in the 2000 fiscal year of the Company (the
                  "Quantitative Bonus"). The Quantitative Bonus with respect to
                  fiscal year 2000 will be computed by adding the sum of (i) one
                  and two tenths (1.2%) per cent of the operating income of the
                  Company for fiscal year 2000 up to a maximum of Two Million
                  ($2,000,000) Dollars of operating income of the Company, plus
                  (ii) one (1%) per cent of the operating income of the Company
                  for fiscal year 2000 which exceeds Two Million ($2,000,000)
                  Dollars. The Quantitative Bonus for fiscal year 2000 will be
                  paid within sixty (60) days after the end of the fiscal year.
                  For fiscal years of the Company after fiscal year 2000, the
                  Board of Directors of the Company in its sole discretion will
                  establish the formula by which any Quantitative Bonus will be
                  earned by the Executive during the remainder of the term of
                  this Agreement. Notwithstanding any other provision contained
                  in this Agreement, the Executive will not be eligible for a
                  Quantitative Bonus unless the Executive is employed by the
                  Company and is not in breach of this Agreement on the date on
                  which any Quantitative Bonus is to be paid. In all events, any
                  issues which may arise between the Company and the Executive
                  with respect to the Quantitative Bonus shall be resolved by
                  the Board of Directors of the Company in its sole discretion.

         (d)      PRORATION In the event this Agreement is terminated as a
                  result of: (i) the death of the Executive pursuant to Section
                  6(a), (ii) the disability of the Executive pursuant to Section
                  6(b), (iii) by the Company for other than for cause pursuant
                  to Section 6(d), or (iv) upon a Change of Control pursuant to
                  Section 6(e), then the Qualitative Bonus and the Quantitative
                  Bonus will be prorated as of the date of

                                        5
<PAGE>

                  termination of employment of the Executive.

         (e)      OTHER BENEFITS. The Executive will be entitled to such annual
                  vacation as shall be agreed upon between the Executive and the
                  Board of Directors of the Company as well as any fringe
                  benefits and perquisites that may from time to time be
                  afforded generally to senior executive officers of the
                  Company. Without limiting the generality of the foregoing, the
                  Executive shall be entitled to participate in or receive
                  benefits under any 401(k) plan, pension plan, employee stock
                  ownership plan, retirement plan, life insurance, disability
                  insurance, health and accident plan or other arrangement made
                  available by the Company now or in the future, generally to
                  the senior executive officers of the Company, subject to and
                  on a basis consistent with the terms, conditions and overall
                  administration of such plans and arrangements and of the terms
                  of this Agreement.

         (f)      EXPENSES. The Executive shall be entitled to receive prompt
                  reimbursement for all reasonable expenses incurred by the
                  Executive (in accordance with the policies and procedures
                  established from time to time by the Board of Directors of the
                  Company or any Committee thereof) in the performance of the
                  duties of the Executive hereunder, provided such expenses are
                  properly accounted for in accordance with the policies of the
                  Company.

         (g)      TAXES. All payments to the Executive pursuant to this
                  Agreement shall be subject to all applicable federal, state
                  and local withholding payroll and other taxes.

6.       TERMINATION OF EMPLOYMENT AND SEVERANCE BENEFITS. Notwithstanding the
         provisions of Section 3 above, the employment of the Executive
         hereunder shall terminate prior to the

                                        6
<PAGE>

         expiration of the term of this Agreement under the following
         circumstances:

         (a)      DEATH. In the event of the death of the Executive during the
                  term hereof, the employment of the Executive hereunder shall
                  immediately and automatically terminate. In such event, the
                  Company shall pay to the estate of the Executive any earned
                  and unpaid Base Salary and any Qualitative Bonus or
                  Quantitative Bonus shall be prorated through the date of death
                  of the Executive.

         (b)      DISABILITY. The Company may terminate the employment of the
                  Executive hereunder in the event the Executive becomes
                  disabled during the term hereof due to any illness, injury,
                  accident or condition of either a physical or psychological
                  nature and, as a result, is unable to perform substantially
                  all of the duties and responsibilities of the Executive
                  hereunder on a full time basis, for either (i) ninety (90)
                  consecutive days, (ii) one hundred twenty (120) days
                  cumulatively within any twelve (12) month period, or (iii) if
                  in the opinion of a duly licensed physician the same is likely
                  to occur. At the request of the Company the Executive shall
                  submit to a medical examination by a physician selected by the
                  Company to whom the Executive, or the duly appointed guardian
                  of the Executive, if any, has no reasonable objection. If the
                  Executive shall refuse to submit to such medical examination,
                  then the determination of disability of the Executive by the
                  Board of Directors shall be conclusive. During any period of
                  disability of the Executive, the Board of Directors may
                  designate another employee to act in the place of the
                  Executive. Notwithstanding any such designation, the Executive
                  shall continue to receive the Base Salary to the extent
                  permitted by the then applicable benefit plans,

                                        7
<PAGE>

                  until the Executive becomes eligible for any disability income
                  benefits under the disability income plan of the Company or
                  the termination of the employment of the Executive, whichever
                  shall first occur. While receiving disability income payments
                  under any disability income plan of the Company, the Executive
                  shall not be entitled to receive any Base Salary, Qualitative
                  Bonus or Quantitative Bonus, but shall continue to participate
                  in Company benefit plans under Section 5(e) hereof as long as
                  the terms of such plans allow such participation by the
                  Executive until the termination of the Employment of the
                  Executive. The Executive hereby acknowledges that the
                  termination of the Executive under this Section 6(b) does not
                  violate the so-called Americans with Disabilities Act, the
                  Family and Medical Leave Act or similar state statutes.

         (c)      BY THE COMPANY FOR CAUSE. The Company may, immediately and
                  unilaterally, terminate the Executive's employment hereunder
                  "for cause" at any time during the term of this Agreement
                  without prior written notice to the Executive. Termination of
                  the Executive's employment by the Company shall constitute a
                  termination "for cause" under this Section 6(c) if such
                  termination, as determined by the Board of Directors, is for
                  one or more of the following causes:

                  (i)      Willful failure of the Executive to perform (other
                           than by reason of disability under Section 5(b), or
                           gross negligence in the performance of, the duties
                           and responsibilities of the Executive to the Company
                           which results in demonstrable monetary harm to the
                           Company;

                  (ii)     The commission by the Executive of any act or acts of
                           dishonesty, a breach

                                        8
<PAGE>

                           of fiduciary duty, a material breach of the terms of
                           this Agreement or any other agreement between the
                           Executive and the Company, or a material violation of
                           the written or established rules and policies of the
                           Company as such rules and policies may from time to
                           time be amended or modified by the Company;

                  (iii)    The commission by the Executive of an act of fraud or
                           embezzlement;

                  (iv)     The conviction by the Executive of, or plea of no
                           contest for, any felony;

                  (v)      The commission of an act by the Executive which
                           constitutes unfair competition or a conflict of
                           interest with the Company or which induces any
                           customer, vendor, contractor, or affiliate or any
                           prospective customer, vendor, contractor or affiliate
                           of the Company to breach a contract with the Company
                           or not to enter into a contract with the Company; or

                  (vi)     The commission of an act by the Executive which
                           constitutes a willful violation of the federal or
                           state securities laws.

         In the event of a termination "for cause" pursuant to any of the
provisions of clauses (i) through (vi) above, inclusive, the Executive shall not
be entitled to any severance or other termination benefits under this Agreement.
The Executive will be paid any earned and unpaid Base Salary as of the
termination date.

         (d)      BY THE COMPANY OTHER THAN FOR CAUSE.

                  (i)      The Company may terminate the Executive's employment
                           under this Agreement at any time without cause upon
                           thirty (30) days written notice to the Executive or
                           payment in lieu thereof if the Company elects to

                                        9
<PAGE>

                           accelerate the Executive's departure date. For the
                           purposes hereof, if the Executive is not then in
                           breach of this Agreement, and this Agreement is in
                           effect on the last day of the term hereof, then a
                           failure of the Company to extend or renew this
                           Agreement, or to establish an agreement that is
                           comparable to this Agreement, shall be deemed to be a
                           termination other than for cause. For the purposes
                           hereof, an agreement that provides the Executive with
                           compensation approximately in the amount of the Base
                           Salary hereunder for at least one year shall be
                           deemed to be a "comparable" agreement. Subject to the
                           provisions of Section 6(f), if the Executive is
                           terminated by the Company other than for cause, the
                           Company shall pay the Executive severance
                           compensation as described in Section 6(d) (ii) below.

                  (ii)     In the event the Company exercises its right to
                           terminate the Executive under this Section 6(d)(ii),
                           the Company shall: (i) pay the Executive a severance
                           payment equal to eighteen (18) months' Base Salary at
                           the Executive's then current Base Salary, payable
                           over eighteen (18) months in accordance with the
                           Company's payroll practices and (ii) if the Executive
                           is eligible for, and chooses to elect health
                           insurance continuation in accordance with the
                           Consolidated Omnibus Budget Reconciliation Act of
                           1985 ("COBRA"), pay the same portion of the premium
                           payments of the Executive as were being paid by the
                           Company prior to termination under COBRA for a period
                           of either (i) eighteen (18) months, or (ii) until the
                           Executive receives comparable health insurance from
                           another employer,

                                       10
<PAGE>

                           whichever shall first occur. In addition, the Company
                           shall provide the Executive with up to six (6) months
                           of outplacement services not to exceed a value of
                           $25,000.

         (e)       UPON A CHANGE OF CONTROL.

                  (i)      If a Change of Control occurs and, within one (1)
                           year following such Change of Control, the Company
                           terminates the Executive's employment Other Than for
                           Cause as defined in Section 6 (d) hereof, then and
                           subject to the provisions of Section 6 (d) (i), the
                           Company shall pay the Executive, within ten (10)
                           business days of such termination, a lump sum payment
                           equal to twice the then annual Base Salary of the
                           Executive and if the Executive is eligible for, and
                           chooses to elect health insurance continuation in
                           accordance with the COBRA, pay the same portion of
                           the premium payments of the Executive as were being
                           paid by the Company prior to termination under COBRA
                           for a period of eighteen (18) months, or until the
                           Executive receives comparable health insurance from
                           another employer, whichever shall first occur. In
                           addition, the Company shall provide the Executive
                           with up to twelve (12) months of outplacement
                           services not to exceed a value of $25,000.

                  (ii)     Notwithstanding the foregoing or any other provision
                           of this Agreement, the payments and benefits to which
                           the Executive would be entitled pursuant to Section
                           6(e) as a result of a Change of Control shall be
                           reduced to the maximum amount for which the Company
                           will not be limited in its

                                       11

<PAGE>

                           deduction pursuant to Section 280G of the Internal
                           Revenue Code of 1986, as amended, or any successor
                           provision.

                  (iii)    A Change of Control shall be deemed to take place if
                           at any time during the term hereof: (A) any Person or
                           "group" (within the meaning of Section 13(d)(3) or
                           14(d)(2) of the Securities Exchange Act of 1934),
                           other than the Company or any of its Affiliates,
                           becomes a beneficial owner (within the meaning of
                           Rule 13d-3 as promulgated under the Securities
                           Exchange Act of 1934), directly or indirectly, of
                           securities representing fifty (50%) percent or more
                           of the total number of votes that may be cast for the
                           election of directors of the Company and two-thirds
                           (2/3) of the Board has not consented to such event
                           prior to its occurrence or within sixty (60) days
                           thereafter, provided that if the consent occurs after
                           the event it shall only be valid for purposes of this
                           Section 6(e) if a majority of the consenting Board is
                           comprised of directors of the Company who were such
                           immediately prior to the event; (B) any merger or
                           consolidation involving the Company or any sale or
                           other transfer of all or substantially all of the
                           assets of the Company, or any combination of the
                           foregoing, and two-thirds of the Board has not
                           consented to such event prior to its occurrence or
                           within sixty (60) days thereafter, provided that if
                           the consent occurs after the event it shall only be
                           valid for purposes of this Section 6(e) if a majority
                           of the consenting Board is comprised of directors of
                           the Company who were such immediately prior to the
                           event; or (C) within twelve (12) months

                                       12
<PAGE>

                           after a tender offer or exchange offer for voting
                           securities of the Company (other than by the Company)
                           the individuals who were directors of the Company
                           immediately prior thereto shall cease to constitute a
                           majority of the Board.

         (f)      THE COMPANY'S OBLIGATION TO PROVIDE SEVERANCE COMPENSATION.
                  The severance payments and compensation set forth in Sections
                  6 (c), (d) and (e) shall be payable in conformity with the
                  Company's payroll practices for the Executive's compensation
                  as such practices may be modified from time to time and shall
                  be subject to all applicable federal, state and local
                  withholding, payroll and other taxes; PROVIDED, HOWEVER, if
                  the Executive breaches the noncompetition or nonsolicitation
                  obligations under Section 7 hereof, or if the Executive
                  breaches the obligations of the Executive between the
                  Executive and the Company set forth herein, the Company may
                  immediately cease payment of all severance and/or benefits
                  described in this Agreement. This cessation of severance
                  and/or benefits shall be in addition to, and not as an
                  alternative to, any other remedies in law or in equity
                  available to the Company, including the right to seek specific
                  performance or an injunction. The Executive hereby
                  acknowledges that the Company would suffer irreparable harm if
                  the Executive violates the noncompetition or nonsolicitation
                  obligations under Section 7 hereof or if the Executive
                  breaches the obligations hereunder and accordingly the
                  Executive hereby agrees that the Company shall be entitled to
                  preliminary and permanent injunctive relief. The Executive
                  acknowledges that the Company shall not have any further
                  obligations

                                       13
<PAGE>

                  to the Executive in the event of Executive's termination under
                  Sections 6 (c), (d) or (e) except such further obligations as
                  may be imposed by law.

                           The Executive further acknowledges and agrees that
                  the obligation of the Company to pay severance compensation to
                  the Executive under this Agreement is contingent upon the
                  Executive executing and delivering, all in form and substance
                  satisfactory to the Company: (i) if the Executive is then a
                  member of the Board of Directors of the Company, a resignation
                  from the Board of Directors of the Company; (ii) a
                  comprehensive general release of the Company by the Executive;
                  (iii) a resignation as Chief Executive Officer and President
                  of the Company and any other office the Executive may hold
                  with the Company; and (iv) satisfactory evidence to the
                  Company that the Executive has returned all property,
                  confidential information and documents of the Company to the
                  Company. The Executive acknowledges and agrees that the
                  post-termination obligations set forth in Sections 7(a), 7(b)
                  and 7(c) shall survive the termination of this Agreement
                  whether or not the Executive signs the release or provides the
                  resignations described in this Section.

7.       NON-COMPETITION; NON-SOLICITATION.

         (a)      NON-COMPETITION. During the period of the Executive's
                  employment by the Company and for two (2) years after the
                  Executive's employment terminates. The Executive shall not,
                  alone or as a partner, joint venturer, officer, director,
                  employee, agent, consultant, stockholder or investor of any
                  company or business organization, engage in any business
                  activity and/or accept employment with any

                                       14
<PAGE>

                  person or entity, which is directly or indirectly in
                  competition with the products or services under consideration
                  (which consideration can be reasonably demonstrated) being
                  developed, drafted, manufactured, marketed, distributed,
                  planned, sold or otherwise provided by the Company.
                  Notwithstanding the foregoing, the record or beneficial
                  ownership by the Executive of one (1%) per cent or less of the
                  outstanding publicly traded capital stock of any such company
                  shall not be deemed, in and of itself, to be in violation of
                  this Section 7; PROVIDED, HOWEVER, that the Executive is not a
                  partner, joint venturer, officer, director, employee, agent,
                  independent contractor or consultant of such company.

         (b)      CUSTOMER SOLICITATION. The Executive shall not, directly or
                  indirectly, for himself or on behalf of others, during the
                  Executive's employment by the Company and for a period of two
                  (2) years after the Executive's employment terminates,
                  solicit, divert, attempt to divert, accept the business of, or
                  enter into any business relationship, involving activities
                  competitive with the Company, with any former or current
                  clients, customers, suppliers, contractors or affiliates of
                  the Company made known to him during his employment, or in any
                  way interfere with or disrupt any existing relationship
                  between the Company and any of its clients, customers,
                  suppliers, vendors, contractors or affiliates or others with
                  whom the Company transacts business.

         (c)      EMPLOYEE SOLICITATION. The Executive shall not, directly or
                  indirectly, for himself or on behalf of others, during the
                  Executive's employment by the Company and for a period of two
                  (2) years after the Executive's employment terminates, hire,

                                       15
<PAGE>

                  attempt to hire, or knowingly permit any company or business
                  organization by which the Executive is employed or which is
                  directly or indirectly controlled by the Executive, to employ
                  any employee of the Company or any employee who has left the
                  employment of the Company within six (6) months of such
                  employee's termination, or in any manner seek to solicit or
                  induce any employee to leave his or her employment with the
                  Company or otherwise assist in the recruitment of any such
                  person.

         (d)      NONCOMPETITION/NONSOLICITATION. In the event that the
                  Executive's employment terminates because the term of this
                  Agreement expires or is otherwise not renewed, it is agreed
                  and understood that the Executive will be bound by the
                  noncompetition and nonsolicitation obligations pursuant to
                  Section 7 hereof.

8.       ENFORCEMENT OF COVENANTS. The Executive acknowledges that the Executive
         has carefully read and considered all the terms and conditions of this
         Agreement, including the restraints imposed upon the Executive by
         Section 7 hereof. The Executive agrees that said restraints are
         necessary for the reasonable and proper protection of the Company and
         that such restraints are reasonable in respect to subject matter,
         length of time, and geographic area. The Executive further acknowledges
         that, were the Executive to breach any of the covenants contained in
         Section 7 hereof, the damage to the Company would be irreparable. The
         Executive therefore agrees that the Company, in addition to any other
         remedies available to the Company in law or in equity, shall be
         entitled to preliminary and permanent injunctive relief against any
         breach or threatened breach by the Executive of any of said covenants
         without posting bond. The Executive and the Company further agree

                                       16
<PAGE>

         that, if one or more of the clauses contained in Section 7 shall for
         any reason be held to be excessively broad as to scope, activity,
         subject or otherwise so as to be unenforceable at law, such provision
         or provisions shall be construed by the appropriate judicial body by
         limiting or reducing it or them, so as to be enforceable to the maximum
         extent compatible with the applicable law as it shall then appear.

9.       ARBITRATION. Any dispute, controversy or claim arising out of, in
         connection with, or relating to the performance of this Agreement shall
         be settled by arbitration in the City of Boston, Massachusetts, before
         a single arbitrator pursuant to the rules then in effect of the
         American Arbitration Association. The fees and expenses of the
         arbitrator shall be borne equally by the Executive and the Company. Any
         award shall be final, binding and conclusive upon the Executive and the
         Company and the judgment rendered thereon may be entered in any court
         having jurisdiction thereof. This Section 9 will not preclude or affect
         in any manner the rights of the Company to equitable relief pursuant to
         Section 8 of this Agreement.

10.      CONFLICTING AGREEMENTS. The Executive hereby represents and warrants
         that the execution of this Agreement and the performance of the
         obligations of the Executive hereunder will not breach or be in
         conflict with any other agreement to which the Executive is a party or
         is bound and that the Executive is not now subject to any covenants
         against competition or similar covenants that would affect the
         performance of the Executive hereunder. The Executive will not disclose
         to or use on behalf of the Company any proprietary information of a
         third party without the consent of such third party.

11.      ASSIGNMENT. The Executive acknowledges that the services to be rendered
         by the

                                       17
<PAGE>

         Executive hereunder are unique and personal in nature. Accordingly, the
         Executive may not assign any of his rights or delegate any of his
         duties or obligations under this Agreement. The rights and obligations
         of the Company under this Agreement shall inure to the benefit of, and
         shall be binding upon, the successors and assigns of the Company.

12.      SEVERABILITY. If any portion or provision of this Agreement shall to
         any extent be declared illegal or unenforceable by a court of competent
         jurisdiction, then the remainder of this Agreement, or the application
         of such portion or provision in circumstances other than those as to
         which it is so declared illegal or unenforceable, shall not be affected
         thereby, and each such portion and provision of this Agreement shall be
         valid and enforceable to the fullest extent permitted by law.

13.      WAIVER. No waiver of any provision hereof shall be effective unless
         made in writing and signed by the waiving party. The failure of either
         party to require the performance of any term or obligation of this
         Agreement, or the waiver by either party of any breach of this
         Agreement, shall not prevent any subsequent enforcement of such term or
         obligation or be deemed a waiver of any subsequent breach.

14.      NOTICES. Any and all notices, requests, demands and other
         communications provided for by this Agreement shall be in writing and
         shall be effective when delivered in person or deposited in the United
         States mail, postage prepaid, registered or certified, and addressed to
         the Executive at the last known address of the Executive on the books
         of the Company or, in the case of the Company, at its principal place
         of business, attention of the Chairman of the Board of Directors, or to
         such other address as either party may specify by notice to the other,
         with a copy to John T. Lynch, Esq., Davis, Malm & D'Agostine, P.C., One

                                       18
<PAGE>

         Boston Place, 37th Floor, Boston, Massachusetts 02108.

15.      ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
         between the parties and supersedes all prior communications, agreements
         and understandings, written or oral, with respect to the terms and
         conditions of the Executive's employment, including the Executive's
         salary, bonus, or other compensation of any description, equity
         participation, pension, post-retirement benefits, severance or other
         remuneration, except for a certain Employee's Patent Agreement with
         Benthos, Inc., dated April 8, 1996 between the Company and the
         Executive, and a certain Incentive Stock Option Agreement, dated as of
         April 8, 1996 between the Company and the Executive, both of which
         shall remain in full force and effect.

16.      AMENDMENT. This Agreement may be amended or modified only by a written
         instrument signed by the Executive and by an expressly authorized
         representative of the Company who is authorized by a vote of the Board
         of Directors of the Company to execute such amendment or modification
         on behalf of the Company.

17.      HEADINGS. The headings and captions in this Agreement are for
         convenience only and in no way define or describe the scope or content
         of any provision of this Agreement.

18.      COUNTERPARTS. This Agreement may be executed in two or more
         counterparts, each of which shall be an original and all of which
         together shall constitute one and the same instrument.

19.      GOVERNING LAW. This is a Massachusetts contract and shall be construed
         and enforced under and be governed in all respects by the laws of the
         Commonwealth of Massachusetts, without regard to the conflict of laws
         principals thereof, and this Agreement shall be

                                       19
<PAGE>

         deemed to be performable in Massachusetts. Any claims or legal actions
         by one party against the other arising out of the relationship between
         the parties contemplated herein (whether or not arising under this
         Agreement) shall be commenced or maintained in any state or federal
         court located in Massachusetts, and the Executive hereby submits to the
         jurisdiction and venue of any such court. The Executive hereby further
         agrees that the language of all parts of this Agreement shall in all
         cases be construed as a whole according to its fair meaning and not
         strictly for or against either of the parties.

         IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized representative, and by the
Executive, as of the date first above written.

COMPANY:                             BENTHOS, INC.

                                     By: STEPHEN D. FANTONE
                                         ---------------------------------------
                                           Stephen D. Fantone
                                           Chairman of the Board of Directors on
                                           Behalf of the Board of Directors

Executive:                           JOHN L. COUGHLIN
                                     -------------------------------------------
                                     John L. Coughlin

                                       20

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