Document:

Unassociated Document

    STOCK
PURCHASE AGREEMENT

     

    for
the Acquisition of

     

    SEABOTIX
INC.

     

    by

     

    BOLT
TECHNOLOGY CORPORATION

     

    from

     

    the
Parties Listed on Schedule A

     

    January
6, 2011

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    TABLE
OF CONTENTS

    

    
      
        
          
            
              	 
      	 
      	 
      	
                      Page

                    
	 
      	 
      	 
      	 
      
	
                      ARTICLE
      I

                    	
                      CERTAIN
      DEFINITIONS AND OTHER MATTERS

                    	
                      1

                    
	 
      	
                      1.1

                    	
                      Certain
      Definitions

                    	
                      1

                    
	 
      	
                      1.2

                    	
                      Terms
      Defined in Other Sections

                    	
                      8

                    
	 
      	
                      1.3

                    	
                      Interpretation

                    	
                      9

                    
	
                      ARTICLE
      II

                    	
                      PURCHASE
      AND SALE; CLOSING

                    	
                      9

                    
	 
      	
                      2.1

                    	
                      Purchase
      and Sale

                    	
                      9

                    
	 
      	
                      2.2

                    	
                      Purchase
      Price

                    	
                      9

                    
	 
      	
                      2.3

                    	
                      Pro-Forma
      Working Capital “True Up”

                    	
                      14

                    
	 
      	
                      2.4

                    	
                      Closing

                    	
                      14

                    
	 
      	
                      2.5

                    	
                      Company
      Deliveries at the Closing

                    	
                      14

                    
	 
      	
                      2.6

                    	
                      Sellers’
      Deliveries at the Closing

                    	
                      15

                    
	 
      	
                      2.7

                    	
                      The
      Purchaser’s Deliveries at the Closing

                    	
                      15

                    
	
                      ARTICLE
      III

                    	
                      REPRESENTATIONS
      AND WARRANTIES OF THE SELLERS

                    	
                      16

                    
	 
      	
                      3.1

                    	
                      Organization
      and Standing

                    	
                      16

                    
	 
      	
                      3.2

                    	
                      Affiliates,
      Subsidiaries

                    	
                      17

                    
	 
      	
                      3.3

                    	
                      Capitalization
      and Ownership

                    	
                      17

                    
	 
      	
                      3.4

                    	
                      Power
      and Authority

                    	
                      18

                    
	 
      	
                      3.5

                    	
                      Conflicts;
      Consents and Approvals

                    	
                      18

                    
	 
      	
                      3.6

                    	
                      Title
      to Assets; Condition

                    	
                      19

                    
	 
      	
                      3.7

                    	
                      Taxes

                    	
                      20

                    
	 
      	
                      3.8

                    	
                      Compliance
      with Law

                    	
                      21

                    
	 
      	
                      3.9

                    	
                      Governmental
      Approvals

                    	
                      22

                    
	 
      	
                      3.10

                    	
                      Litigation

                    	
                      22

                    
	 
      	
                      3.11

                    	
                      Intellectual
      Property

                    	
                      22

                    
	 
      	
                      3.12

                    	
                      Real
      Estate

                    	
                      24

                    
	 
      	
                      3.13

                    	
                      Environmental
      Matters

                    	
                      25

                    
	 
      	
                      3.14

                    	
                      Material
      Contracts

                    	
                      27

                    
	 
      	
                      3.15

                    	
                      Books
      and Records

                    	
                      28

                    
	 
      	
                      3.16

                    	
                      Bank
      Accounts

                    	
                      28

                    
	 
      	
                      3.17

                    	
                      Financial
      Statements; Absence of Undisclosed Liabilities, Charges

                    	
                      28

                    
	 
      	
                      3.18

                    	
                      Accounts
      Receivable, Accounts Payable

                    	
                      29

                    
	 
      	
                      3.19

                    	
                      Relationships
      with Customers, Distributors and Suppliers

                    	
                      30

                    
	 
      	
                      3.20

                    	
                      Inventory

                    	
                      30

                    
	 
      	
                      3.21

                    	
                      Quality
      Assurance, Product Claims

                    	
                      31

                    
	 
      	
                      3.22

                    	
                      Employees
      and Consultants

                    	
                      31

                    
	 
      	
                      3.23

                    	
                      Employee
      Benefit Plans

                    	
                      33

                    
	 
      	
                      3.24

                    	
                      Insurance
      and Workers’ Compensation

                    	
                      35

                    
	 
      	
                      3.25

                    	
                      Transactions
      with Affiliates

                    	
                      35

                    
	 
      	
                      3.26

                    	
                      Certain
      Payments

                    	
                      35

                    
	 
      	
                      3.27

                    	
                      Government
      Contracts

                    	
                      36

                    
	 
      	
                      3.28

                    	
                      Compliance
      with Export Controls

                    	
                      36

                    
	 
      	
                      3.29

                    	
                      Brokers

                    	
                      36

                    
	 	3.30	Full
      Disclosure	36

            

          

        

      

    

     

    
      
        
        

      

      
        -i-

        
          

        

      

      
        
        

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  ARTICLE
      IV

                                	
                                  REPRESENTATIONS
      AND WARRANTIES OF PURCHASER

                                	
                                  36

                                
	 
      	
                                  4.1

                                	
                                  Organization
      and Standing

                                	
                                  36

                                
	 
      	
                                  4.2

                                	
                                  Authority

                                	
                                  37

                                
	 
      	
                                  4.3

                                	
                                  Conflicts;
      Consents and Approvals

                                	
                                  37

                                
	 
      	
                                  4.4

                                	
                                  Litigation

                                	
                                  38

                                
	 
      	
                                  4.5

                                	
                                  Brokers

                                	
                                  38

                                
	 	4.6	

                                  SEC
      Filings; Financial Statements

                                	38
	
                                  ARTICLE
      V

                                	
                                  COVENANTS
      AND AGREEMENTS

                                	
                                  39

                                
	 
      	
                                  5.1

                                	
                                  Non-Solicitation
      of Employees

                                	
                                  39

                                
	 
      	
                                  5.2

                                	
                                  Non-competition

                                	
                                  39

                                
	 
      	
                                  5.3

                                	
                                  Confidentiality

                                	
                                  39

                                
	 
      	
                                  5.4

                                	
                                  Rights
      and Remedies

                                	
                                  40

                                
	 
      	
                                  5.5

                                	
                                  Severability
      and Duration

                                	
                                  40

                                
	 
      	
                                  5.6

                                	
                                  Sellers’
      Representative

                                	
                                  40

                                
	 	5.7	

                                  Earnout
      Period Operations

                                	41
	 	5.8	

                                  Directors
      and Officers Insurance

                                	41
	
                                  ARTICLE
      VI

                                	
                                  CONDITIONS
      TO CLOSING

                                	
                                  41

                                
	 
      	
                                  6.1

                                	
                                  Mutual
      Conditions

                                	
                                  41

                                
	 
      	
                                  6.2

                                	
                                  Conditions
      to Purchaser’s Obligations

                                	
                                  42

                                
	 
      	
                                  6.3

                                	
                                  Conditions
      to Sellers’ Obligations

                                	
                                  42

                                
	 
      	
                                  6.4

                                	
                                  Frustration
      of Closing Conditions

                                	
                                  43

                                
	
                                  ARTICLE
      VII

                                	
                                  SURVIVAL;
      INDEMNIFICATION

                                	
                                  43

                                
	 
      	
                                  7.1

                                	
                                  Survival
      of
      Representations and Warranties

                                	
                                  43

                                
	 
      	
                                  7.2

                                	
                                  Indemnification
      by the Sellers

                                	
                                  43

                                
	 
      	
                                  7.3

                                	
                                  Indemnification
      by the Purchaser

                                	
                                  46

                                
	 
      	
                                  7.4

                                	
                                  Definition
      of Damages

                                	
                                  46

                                
	 
      	
                                  7.5

                                	
                                  Procedures
      for Indemnification

                                	
                                  47

                                
	 
      	
                                  7.6

                                	
                                  Dispute
      Resolution Process

                                	
                                  48

                                
	 	7.7	

                                  Exclusive
      Remedy

                                	48
	
                                  ARTICLE VIII

                                	
                                  MISCELLANEOUS

                                	
                                  48

                                
	 
      	
                                  8.1

                                	
                                  Notices

                                	
                                  48

                                
	 
      	
                                  8.2

                                	
                                  Expenses

                                	
                                  49

                                
	 
      	
                                  8.3

                                	
                                  Governing
      Law; Arbitration

                                	
                                  50

                                
	 
      	
                                  8.4

                                	
                                  Assignment;
      Successors and Assigns; No Third Party Rights

                                	
                                  50

                                
	 
      	
                                  8.5

                                	
                                  Counterparts

                                	
                                  50

                                
	 
      	
                                  8.6

                                	
                                  Titles
      and Headings

                                	
                                  50

                                
	 
      	
                                  8.7

                                	
                                  Entire
      Agreement

                                	
                                  50

                                
	 
      	
                                  8.8

                                	
                                  Amendment
      and Modification

                                	
                                  50

                                
	 
      	
                                  8.9

                                	
                                  Publicity;
      Public Announcements

                                	
                                  50

                                
	 
      	
                                  8.10

                                	
                                  Waiver

                                	
                                  51

                                
	 
      	
                                  8.11

                                	
                                  Severability

                                	
                                  51

                                
	 
      	
                                  8.12

                                	
                                  No
      Strict Construction

                                	
                                  51

                                
	 
      	
                                  8.13

                                	
                                  Knowledge
      of the Sellers

                                	
                                  51

                                
	 
      	
                                  8.14

                                	
                                  Specific
      Performance

                                	
                                  51

                                
	 
      	
                                  8.15

                                	
                                  Further
      Assurances

                                	
                                  51

                                

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        -ii-

        
          

        

      

      
         

      

    
  

    
      Exhibits:

    

    Exhibit A – Stock Pledge
Agreement

    Exhibit B
– Employment Agreements

    
      Exhibit C
– DR IP Agreement

    

    
      Exhibit D
– Opinion of Sellers’ Counsel

    

     

    Schedules:

    Schedule A – List of
Sellers

    Schedule 1.1 – Joint Indemnifying
Sellers, Restricted Sellers

    Schedule
2.2(b) – Company Loans and Stockholder Notes

    Schedule
2.3 – Pro–Forma Working Capital Methodology

    Schedule
5.7 – Post–Closing Operations and Earnout Budget

     

    Disclosure
Schedule
 

    
      
         

      

      
        -iii-

        
          

        

      

      
         

      

    
 

    STOCK PURCHASE
AGREEMENT

     

    This
STOCK PURCHASE AGREEMENT, dated as of January 6, 2011 (together with the
schedules, exhibits, annexes and disclosure schedule hereto, this “Agreement”), is entered into
by and among Bolt Technology Corporation, a Connecticut corporation having its
principal place of business at Four Duke Place, Norwalk, Connecticut 06854 (the
“Purchaser”), and the
persons listed on Schedule
A (each a “Seller” and jointly and
severally, the “Sellers”).

     

    RECITALS

     

    WHEREAS, SeaBotix Inc., a
Delaware corporation having its principal place of business at 2877 Historic
Decatur Road, Suite 100, San Diego, California  92106 (“SeaBotix”), is engaged in the
business of developing, manufacturing, marketing and distributing remotely
operated vehicles (“ROVs”) for underwater
applications (the “Business”);

     

    WHEREAS, the Sellers own all
of the issued and outstanding equity interests of the Company (the “Shares”); and

     

    WHEREAS, the Purchaser wishes
to purchase the Shares from the Sellers, and the Sellers wish to sell the Shares
to the Purchaser, in accordance with the terms and subject to the conditions of
this Agreement, such that the Purchaser will own 100% of all of the Shares in
the Company.

     

    NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties agree as
follows:

     

    ARTICLE
I

     

    CERTAIN
DEFINITIONS AND OTHER MATTERS

     

    1.1           Certain
Definitions.  As used in this Agreement, the following terms have
the respective meanings set forth below.

     

    “Action” means any action,
arbitration, audit, hearing, inquiry, investigation, litigation or suit (whether
civil or criminal), brought or heard by or before or otherwise involving any
Governmental Authority or arbitrator.

     

    “Adjustment Revenue” means the
sum of (a) the Company’s aggregate Revenues for the period starting on January
1, 2010 and ending on December 31, 2010, plus (b) the Company’s aggregate
Revenues for New Products for the period starting on January 1, 2011 and ending
on February 28, 2011, plus (c) the amount of any unshipped Booked Orders for New
Products for the period starting on January 1, 2011 and ending on February 28,
2011.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Affiliate” means, with
respect to any Person, any other Person that, directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, such Person.  The term “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the ability
to elect the majority of members of the board of directors or other governing
body of a Person, and the terms “controlled” and “controlling” have correlative
meanings.

     

    “Australian Sub” means
SeaBotix Australia Pty Ltd, an Australian chartered company, which is a wholly
owned Subsidiary of SeaBotix.

     

    “Australian Tax Code” means
all Laws of Australia (including any Governmental Authority thereof) with
respect to Taxes.

     

    “Booked Orders” means signed
purchase orders or similar contracts or agreements for firm orders, containing
standard payment terms and without an express cancellation clause or express
conditions to the performance thereof, to purchase New Products received by the
Company and signed by a customer who is not an Affiliate of the Company, and
agreed as conforming by Purchaser, including, without limitation purchase orders
which do not contain an express cancellation clause or express conditions to the
performance thereof for New Products which have not been delivered and New
Products which have been delivered but against which payment has not yet been
received.

     

    “Business Day” means any day
that is not a Saturday, a Sunday or other day on which banks are required or
authorized by Law to be closed in Connecticut or California.

     

    “C-I Litigation” means the
lawsuit pending in the State of Louisiana, 17th
Judicial District for the Parish of LaFourche, Docket No. 111410, C-Innovation, L.L.C. v.
SeaBotix, Inc. and Norm Robertson, and all matters related
thereto.

     

    “Claims” means any and all
claims, demands, disputes, or causes of action, relating to, or resulting from,
an Action.

     

    “Closing Amount” means the
Holdback Amount plus the Cash Amount, as adjusted by the Cash Adjustment Amount,
if any.

     

    “Code” means the United States
Internal Revenue Code of 1986, as amended, or any successor law.

     

    “Company” means each of and
collectively, SeaBotix and the Australian Sub.

     

    “Consents” means any approval,
consent, ratification, permission, waiver or authorization (including any
Governmental Approval).

     

    “Contract” means any legally
binding contract, agreement, indenture, deed of trust, license, note, bond, loan
instrument, mortgage, lease, purchase or sales order, guarantee and any similar
undertaking, commitment, obligation, understanding or arrangement, whether
written or oral.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

       

    

    “Disclosure Schedule” means
the disclosure schedule that the Sellers have delivered to the Purchaser prior
to the execution hereof and attached hereto.

     

    “Encumbrances” means security
interests, liens (statutory or otherwise), Claims, community property interests,
charges, title defects, mortgages, pledges, easements, encroachments,
restrictions on use, rights-of-way, rights of first refusal, conditional sales
or other title retention agreements, covenants, conditions or other similar
restrictions (including restrictions on transfer) or other encumbrances of any
nature whatsoever.

     

    “Environment” means any
ambient workplace or indoor air, surface water, drinking water supply, surface
water, groundwater, land surface or subsurface strata and river
sediment.

     

    “Environmental Claim” means
any legal proceeding, lien, order, notice of violation or investigation, claim
or demand from any Governmental Authority or any Person alleging liability under
Environmental Law, resulting from or based upon:  (a) the failure to comply
with Environmental Law; (b) the failure to comply with any Environmental Permit;
(c) the presence in the Environment or Release of, or human exposure to, any
Regulated Substance; or (d) the obligation to conduct any Remedial
Action.

     

    “Environmental Law” means any
applicable Law in effect on the date hereof concerning:  (a) the
Environment, including pollution, contamination, cleanup, preservation,
protection, and reclamation thereof; (b) human health or safety relating to
workplace conditions, occupational safety or health, or the exposure of
employees and other persons to any Regulated Substance; (c) any Release or
threatened Release of any Regulated Substance; or (d) the environmental aspects
of the management of any Regulated Substance, including the manufacture,
generation, use, treatment, handling, storage, disposal, transportation, re-use,
recycling or reclamation of any Regulated Substance.

     

    “Environmental Permit” means
any permit, registration, approval, identification number, license or other
authorization required under or issued pursuant to any Environmental
Law.

     

    “ERISA” means the United
States Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder.

     

    “ERISA Affiliate” means any
other Person which, together with the Company, would be treated as a single
employer under Section 414 of the Code.

     

    “GAAP” means United States
generally accepted accounting principles.

     

    “Government Approval” shall
mean (other than any patent) any permit, license, certificate, concession,
approval, consent, ratification, permission, clearance, confirmation, exemption,
waiver, franchise, certification, designation, rating, registration, variance,
qualification, accreditation or authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Authority
or pursuant to any Laws.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

       

    

    “Governmental Authority” means
any federal, state or local government, foreign or domestic, or the government
of any political subdivision of any of the foregoing, or any entity, authority,
agency, commission, court, ministry or other similar body exercising executive,
legislative, judicial, regulatory or administrative authority or functions of or
pertaining to government, including any authority or other quasi-Governmental
Authority or self-regulatory body or stock exchange established by a
Governmental Authority to perform any of such functions.

     

    “Gross Profit Margin” means,
with respect to a particular year, Revenues for such year minus the cost of
goods sold, as calculated in accordance with GAAP and consistent with past
practices of the Company.

     

    “Holdback Amount” means Five
Hundred Thousand Dollars ($500,000), subject to adjustment pursuant to Sections
2.2(f) and 2.3.

     

    “Indebtedness” of any Person
means, without duplication, (a) all obligations of such Person for money
borrowed; (b) all obligations of such Person evidenced by notes, debentures,
bonds or other similar instruments for the payment of which such Person is
responsible or liable; (c) all obligations of such Person issued or assumed for
deferred purchase price payments associated with acquisitions, divestitures or
other similar transactions; (d) all obligations of such Person under leases
required to be capitalized in accordance with GAAP as consistently applied by
such Person; and (e) all obligations of such Person for the reimbursement of any
obligee on any letter of credit, banker’s acceptance, guarantees or similar
credit transaction.

     

    “Intellectual Property” means
any patent, statutory invention registration, utility model (including design
patents and utility patents, all reissues, divisions, continuations,
continuations-in-part and extensions thereof, improvements thereto and, in each
case, as applicable, applications therefor), trademark of any type (whether
registered or unregistered, including service marks, slogans, logos, trade
dress, brand names, certification marks, assumed names, trade names and other
indications of origin, including the goodwill associated therewith and the
registrations and applications therefor), copyrights, copyright registrations,
copyright applications, works of authorship, mask works, moral rights and design
rights, all rights in Internet domain name registrations, any confidential and
proprietary information, including, but not limited to, trade secrets, know-how,
formulae, customer lists, software, manufacturing information and data in
whatever form, technical specifications and plans for products, procedures and
processes.

     

    “IP Agreements” means (a)
licenses of Intellectual Property granted by the Company to any third party,
including to any Affiliate; (b) licenses of Intellectual Property granted by any
third party (including any Affiliate) to the Company, (c) agreements between the
Company and any third party relating to the development or use of Intellectual
Property, and (d) consents, settlements, decrees, orders, injunctions,
judgments, or rulings governing the use, validity, or enforceability of Owned
Intellectual Property.

     

    “IRS” means the Internal
Revenue Service.

     

    “Joint Indemnifying Seller”
means each of the Sellers listed as a “Joint Indemnifying Seller” on Schedule
1.1.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

       

    

    “Joint Indemnifying Seller
Cap” means as to each Joint Indemnifying Seller, the amount equal to (i)
the percentage of the total Shares of the Company represented by the Shares sold
by such Joint Indemnifying Seller, times (ii) the Cash Amount (as adjusted by
the Cash Adjustment Amount) paid by Purchaser; provided however, that Donald
Rodocker as the sole shareholder of Pressure Products, Inc. shall be jointly and
severally liable with Pressure Products, Inc. for the combined amount of the
Joint Indemnifying Seller Cap of Pressure Products, Inc. and Donald
Rodocker.

     

    “Law” or “Laws” means all federal,
state or local laws (including generally applied principles of common law),
constitutions, statutes, codes, rules, regulations, ordinances, directives,
concessions, executive orders, decrees or official notices of a Governmental
Authority.

     

    “Leased Real Property” means
the leasehold estate in any real property leased to the Company.

     

    “Liabilities” means any and
all debts, liabilities, commitments and obligations, whether or not fixed,
contingent or absolute, matured or unmatured, direct or indirect, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whether or not required by
GAAP to be reflected in financial statements or disclosed in the notes
thereto.

     

    “Licensed Intellectual
Property” means the Intellectual Property licensed by the Company from
third parties (including any Affiliate) pursuant to the IP
Agreements.

     

    “Material Adverse Effect”
means, with respect to a Person or the Business, any change, effect,
event, occurrence or state of facts, that taken individually or together with
all other changes, effects, occurrences or state of facts, would be reasonably
likely to be materially adverse, to the value of assets, liabilities, business,
properties, operations, results of operations or condition (financial or
otherwise) of such Person or its Subsidiaries, each taken as a whole with
respect to such Person or its Subsidiaries, or the Business, taken as a whole,
provided, however, that with
respect to the Business, Material Adverse Effect shall not include (i) any
changes in general economic conditions except to the extent such changes
disproportionately affect the Business, (ii) any changes, effects, conditions,
events or circumstances that generally affect the ROV industry except to the
extent such changes disproportionally affect the Business, (iii) any acts of
terrorism or acts or war, whether occurring within or outside of the United
States, or any effect of such acts on the general economic conditions except to
the extent such events disproportionally affect the Business, (iv) changes
arising from the consummation or announcement of the transactions contemplated
by this Agreement or (v) earthquakes, hurricanes, typhoons or other natural
disasters.

     

    “Material Contracts” means the
Contracts listed in Section
3.15 of the Disclosure Schedule.

     

    “New Products” means the
Company’s vLBV and SARbot products.

     

    “Orders” means any order,
judgment, injunction, decree or award or writ of any court, tribunal,
arbitrator, Governmental Authority or other Person having
jurisdiction.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

       

    

    “Owned Intellectual Property”
means the Intellectual Property owned by the Company.

     

    “Owned Real Property” means
the real property owned in fee by the Company.

     

    “Permitted Encumbrances” means
(a) Encumbrances for Taxes or other assessments or charges by Governmental
Authorities that arise by operation of Law and are not yet due and payable, or
that are being contested in good faith by appropriate proceedings; and (b)
mechanics’, carriers’, workers’, materialmen’s, warehousemen’s and similar liens
arising or incurred in the ordinary course of business.

     

     “Person” means an
individual, general or limited partnership, corporation, limited liability
company, joint stock company, unincorporated organization or association, trust,
estate, joint venture, firm, branch, registered office, Governmental Authority
or any other entity.

     

    “Plan” means each (i) “employee benefit plan,”
within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA,
and any similar employee benefit plan within the meaning of applicable Law,
maintained by the Company, and (ii) employment, consulting, severance,
termination, retirement, superannuation, change in control, retention,
profit-sharing, incentive or deferred compensation, bonus, stock option or other
equity based compensation, vacation or holiday pay, dependent care assistance,
excess benefit, salary continuation, medical, life, disability or other welfare
or fringe benefit or other compensation plan, policy, program, agreement,
arrangement or commitment, providing employee benefits or compensation to
current or former employees of the Company maintained or contributed to by the
Company or to which the Company is a party.

     

    “Pro-Forma Working Capital”
means (i) cash plus accounts receivable, minus (ii) accounts payable and accrued
expenses, each calculated using the methodology set forth on Schedule 2.3
and determined in accordance with GAAP, consistent with the Company’s past
practices.

     

    “Property, Plant and Equipment”
means, collectively, (a) machinery and equipment and (b) all facilities,
buildings, structures, improvements, furnishings, furniture, fixtures, displays,
appliances, information technology systems, and other personal property of every
kind and nature owned or leased by the Company.

     

    “Real Property” means,
collectively, Owned Real Property and Leased Real Property.

     

    “Regulated Substances” means
any substance that in relevant quantity, form or concentration is listed,
defined or regulated as a pollutant, contaminant, hazardous, toxic substance,
material or waste pursuant to any Environmental Law, including any explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products (including waste
petroleum and petroleum products).

     

    “Release” means any release,
spill, emission, discharge, leaking, pumping, injection, deposit or disposal at,
into or onto the Environment.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

       

    

    “Remedial Action” means any
action, including any capital expenditure, which is required to be undertaken
pursuant to Environmental Law to (a) investigate, monitor, clean up, remove or
treat any Regulated Substance in the Environment; or (b) prevent the Release or
threat of Release, or minimize the further Release, of any Regulated Substance
so it does not endanger or threaten to endanger the Environment or public health
or welfare.

     

    “Restricted Period” means,
with respect to each Restricted Seller, the period beginning as of the Closing
Date and ending as of the earlier to occur of (a) December 31, 2015 and (b) for
each Restricted Seller who is a party to an Employment Agreement, the date that
is two (2) years after the date on which such Restricted Seller resigns with
“Good Reason” or the Company terminates his employment without “Cause” (as each
such term is defined in his Employment Agreement), whether such employment is at
the time pursuant to such Employment Agreement or otherwise.

     

    “Restricted Seller” means each
of the Sellers listed on Schedule 1.1 as a “Restricted Seller”.

     

    “Revenues” means the Company's
operating revenues from sales of products and services of the Company’s
Business, excluding extraordinary events, calculated in accordance with GAAP and
consistent with past practices.

     

    “Seller Party” or “Seller Parties”
means each of and collectively, Sellers and Sellers’
Representative.

     

    “Sellers’ Representative”
means Donald Rodocker.

     

    “Stock Pledge Agreement” means
the Stock Pledge Agreement between the Purchaser and the Sellers’
Representatives, substantially in the form attached hereto as Exhibit
A.

     

    “Subsidiary” of any entity
means, at any date, any Person of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests or more than 80% of the profits or losses of which are, as of such
date, owned, controlled or held by the applicable entity or one or more
subsidiaries of such entity.

     

    “Tax” or “Taxes” means any foreign,
federal, state or local taxes, including but not limited to any income, gross
receipts, payroll, employment, excise, customs duties, severance, stamp,
business, premium, windfall profits, environmental, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, service, service use, occupation,
lease, lease use, transfer, registration, value added, workers’ compensation,
employee withholding tax, or similar tax, any alternative or add-on minimum tax,
and any estimated tax, in each case, including any interest, penalty, or
addition thereto, whether disputed or not.

     

    “Tax Law” means any Law
relating to any Tax.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

       

    

    “Tax Return” means any report
of Taxes due, any Claims for refund of Taxes paid, any information return with
respect to Taxes or financial accounts, or any other similar report, statement,
declaration, or document required to be filed under the Code or other Tax Law,
including any attachments, exhibits, or other materials submitted with any of
the foregoing, and including any amendments or supplements to any of the
foregoing.

     

    “Transaction Documents” means
this Agreement, the Employment Agreements, the DR IP Agreement, the Stock Pledge
Agreement, and the other agreements, stock certificates, stock powers, releases,
consents, resignations, documents and instruments to be executed and delivered
in connection with this Agreement or the Closing.

     

    1.2         Terms Defined in Other
Sections.  The following terms are defined elsewhere in this
Agreement in the following Sections:

     

    
      
        	
                Additional
      Earnout

              	
                Section
      2.2(d)(i)

              
	
                Agreement

              	
                Preamble

              
	
                Audited
      Statements

              	
                Section
      3.17(a)

              
	
                Balance
      Sheet Date

              	
                Section
      3.17(a)

              
	
                Business

              	
                Recitals

              
	
                C-I
      Litigation Agreement

              	
                Section
      2.5(f)

              
	
                Closing

              	
                Section
      2.4

              
	
                Cash
      Amount

              	
                Section
      2.2(b)

              
	
                Closing
      Consents

              	
                Section
      2.5(k)

              
	
                Closing
      Date

              	
                Section
      2.4

              
	
                COBRA

              	
                Section
      3.23(i)

              
	
                Company

              	
                Recitals

              
	
                Competitive
      Business

              	
                Section
      5.2(a)

              
	
                Contractor

              	
                Section
      3.22(a)

              
	
                Damages

              	
                Section
      7.4

              
	
                Dispute

              	
                Section
      7.6(a)

              
	
                Dispute
      Notice

              	
                Section
      2.2(e)(i)

              
	
                DR
      IP Agreement

              	
                Section
      2.5(g)

              
	
                Earnout

              	
                Section
      2.2(e)

              
	
                Earnout
      Payment

              	
                Section
      2.2(d)

              
	
                Earnout
      Period and Earnout Year

              	
                Section
      2.2(d)

              
	
                Employment
      Agreements

              	
                Section
      2.5(d)

              
	
                Financial
      Statements

              	
                Section
      3.17(a)

              
	
                Governance
      Documents

              	
                Section
      3.1(b)

              
	
                Indemnified
      Party

              	
                Section
      7.5

              
	
                Indemnifying
      Party

              	
                Section
      7.5

              
	
                Indemnity
      Threshold

              	
                Section
      7.2(b)

              
	
                Insurance
      Policies

              	
                Section
      3.24

              
	
                Inventories

              	
                Section
      3.20(a)

              
	
                Loans
      

              	
                Section
      2.2(b)(i)

              
	
                Loan
      Payments

              	
                Section
      2.2(b)(i)

              
	
                PBGC

              	
                Section
      3.23(k)

              
	
                Purchase
      Price

              	
                Section
      2.2(a)

              
	
                Purchaser

              	
                Preamble

              
	
                Purchaser
      Basket

              	
                Section
      7.3(b)

              

      

    

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    
      
        	
                Purchaser
      Cap

              	
                Section
      7.3(b)

              
	
                QC
      Systems

              	
                Section
      3.21(a)

              
	
                Representatives

              	
                Section
      7.2(a)

              
	
                Restrictive
      Covenants

              	
                Section
      5.4

              
	
                ROVs

              	
                Preamble

              
	
                Sellers

              	
                Preamble

              
	
                Sellers’
      Basket

              	
                Section
      7.2(b)

              
	
                Sellers’
      Aggregate Cap

              	
                Section
      7.2(b)

              
	
                Sellers’
      knowledge

              	
                Section
      8.13

              
	
                Shares

              	
                Recitals

              
	
                Stockholder
      Notes

              	
                Section
      2.2(b)(ii)

              
	
                Standard
      Products

              	
                Section
      3.11(i)

              
	
                Term
      Loan

              	
                Section
      2.2(b)(i)

              
	
                Title
      Reps

              	
                Section
      7.1

              
	
                Unaudited
      Statements

              	
                Section
      3.17(a)

              

      

    

    

    1.3         Interpretation. 
Unless otherwise indicated to the contrary in this Agreement by the context or
use thereof:  (a) the words, “herein,” “hereto,” “hereof” and words of similar
import refer to this Agreement as a whole and not to any particular Section,
Article or paragraph hereof; (b) references in this Agreement to Sections,
Articles or paragraphs refer to sections, articles or paragraphs of this
Agreement; (c) words importing the masculine gender shall also include the
feminine and neutral genders, and vice versa; (d) words importing the singular
shall also include the plural, and vice versa; and (e) the word “including” means “including without
limitation.” The Disclosure Schedules
and other Schedules and Exhibits and the documents referenced therein constitute
integral parts of this Agreement and are hereby incorporated by reference
herein.  All dollar amounts stated in this Agreement are in US
dollars.

     

    ARTICLE
II

     

    PURCHASE
AND SALE; CLOSING

     

    2.1         Purchase and
Sale.  Upon the terms and subject to the conditions of this
Agreement, at the Closing, the Sellers shall sell, convey, assign, transfer and
deliver to the Purchaser, and the Purchaser shall purchase, acquire and accept
from the Sellers all of the Sellers’ right, title and interest in and to the
Shares free and clear of all Encumbrances, such that at the Closing the
Purchaser owns 100% of the Shares. 

     

    2.2         Purchase Price. 

     

    (a)       
   In consideration for the sale of the Shares by the Sellers to the
Purchaser, the Purchaser shall pay the aggregate purchase price for the Shares
(the “Purchase Price”),
consisting of the Cash Amount (as adjusted by the Cash Amount Adjustment(s), if
any), the Holdback Amount (if any) and the Earnout (including the Additional
Earnout, if any) delivered in accordance with Sections 2.2(b),
2.2(c),
2.2(d)
and 2.2(f)
below.  The Purchase Price shall be payable on each such date by wire
transfer of immediately available funds to an account designated by the
respective recipient described below pursuant to the written instructions of
each such recipient.  

    

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

       

    

    (b)       
   At the Closing, Purchaser shall deliver an amount (the “Cash Amount”) equal to Nine
Million Five Hundred Thousand Dollars ($9,500,000), such Cash Amount to be
subject to upward adjustment based on the Adjustment Revenue as set forth in
Section
2.2(c) below.  The Cash Amount shall be paid as
follows:

    

    (i) 
         the amounts necessary to repay in full the
Company’s existing Indebtedness other than the term loan from JPMorgan Chase
Bank (the “Term Loan”),
as set out on Schedule 2.2(b)(i)
(the “Loans”), including
without limitation, any prepayment penalties, interest, fees or other charges
(the “Loan Payments”),
to be paid to the holders of such Loans pursuant to payoff instructions from the
holders delivered to Purchaser not less than five (5) days prior to
Closing;

     

    (ii) 
         an amount equal to the amounts owed to the
Company by certain  Sellers as set forth on Schedule 2.2(b)(ii)
(the “Stockholder
Notes”), to be paid to the Company and deducted from the amounts
distributed by the Sellers’ Representative to  such Sellers pursuant to
(iv) below; and

     

    (iii) 
         upon payment of the amounts set forth in (i)
through (iii) and confirmation of receipt of the Loan Payments by the holders of
such Indebtedness and release of any and all Encumbrances securing the Loans,
the balance of the Cash Amount shall be paid to the Sellers’ Representative,
which amount the Sellers’ Representative shall distribute to the Sellers in
accordance with their percentage interests in the Company as set forth in Schedule
A, net of the amounts paid on account of the Stockholder Notes to the
Company set forth on Schedule
2.2(b)(ii).

     

    (c)       
   The Cash Amount shall be subject to upward adjustment (the “Cash Amount Adjustment(s)”) as
follows:

     

    (i) 
         if the Company’s Adjustment Revenue is equal
to or greater than Seven Million Three Hundred Thousand Dollars ($7,300,000),
then the Cash Amount shall be increased by Two Million Dollars ($2,000,000) for
a Closing Amount of an aggregate of Twelve Million ($12,000,000), and the
Earnout Amount will be Eighteen Million Dollars ($18,000,000); and

     

    (ii) 
         if the Company’s Adjustment Revenue is equal
to or greater than Eight Million Dollars ($8,000,000) in the aggregate including
the Seven Million Three Hundred Thousand Dollars ($7,300,000) described in (i),
then the Cash Amount shall be increased by the amount described in (i) plus an
additional Three Million Dollars ($3,000,000) for a Closing Amount of an
aggregate amount of Fifteen Million ($15,000,000) and the Earnout Amount will be
Fifteen Million Dollars ($15,000,000).

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

       

    

    The Cash
Amount Adjustment(s) if any shall be paid by the Purchaser to the Sellers’
Representative within ten (10) Business Days after final determination of such
Adjustment Revenue by the Company and confirmation by the Company’s auditors in
the Company’s 2010 year-end audit and in writing with respect to the portion of
the Adjustment Revenue attributable to the period ended February 28, 2011, which
final determination and confirmation shall occur no later than March 15,
2011.  The Sellers’ Representative shall distribute to the Sellers any Cash
Amount Adjustment(s) in accordance with their percentage interests in the
Company as set forth in Schedule
A.

     

    (d) 
         As part of the Purchase Price, the Purchaser
will pay to Sellers’ Representative on behalf of the Sellers an amount (the
“Earnout”) based on the
Company’s cumulative Revenues for the period beginning on January 1, 2011
and ending on December 31, 2014 (the “Earnout Period” and each
included calendar year being an “Earnout Year”), determined as
set forth in this Section
2.2(d).  The Sellers’ Representative shall distribute to the Sellers
any Earnout Payment and Additional Earnout received pursuant to this Section
2.2(d) in accordance with their percentage interests in the Company as
set forth in Schedule
A.

     

    (i) 
         The following definitions shall apply for
purposes of the Earnout.

    

    “Additional Earnout” means,
for any Earnout Year in which the aggregate Revenues through such Earnout Year
are greater than the Total Revenue Target, an amount equal to the sum of (x) the
product of (A) 15% and (B) the aggregate Revenues through such Earnout Year
minus the Total Revenue Target minus (y) any Additional Earnout paid for any
prior Earnout Year.

    

    “Cumulative Revenue Percentage” and “Cumulative Revenue Target” for each
Earnout Year is set
forth in the table below:

    

    
      
        
          
            	
                    Earnout

                    Year

                  	 	
                    
                    

                    Cumulative

                    Revenue Target

                  	 	 	
                    Cumulative

                    Revenue

                    Percentage

                  	 
	
                    2011

                  	 	$	20,799M	 	 	 	15	%
	
                    2012

                  	 	$	52,247M	 	 	 	37	%
	
                    2013

                  	 	$	92,759M	 	 	 	66	%
	
                    2014

                  	 	$	141,048M	 	 	 	100	%

          

        

      

    

     

    “Earnout Amount” means the
amount equal to the product of: (x) the Cumulative Revenue Percentage for the
Earnout Period through the most recently completed Earnout Year and (y) the sum
of (A) Thirty Million Dollars ($30,000,000), minus (B) the Cash Amount, as
adjusted pursuant to Section
2.2(c) above for the Cash Amount Adjustments.

     

     “Earnout Payment” means the
product of: (x) the ratio of (A) cumulative Revenues of the Company for the
Earnout Period through the most recently completed Earnout Year, up to the
Cumulative Revenue Target for such most recently completed Earnout Year, divided
by (B) the Cumulative Revenue Target through such most recently completed
Earnout Year, times (y) the Earnout Amount.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

       

    

    “Net Earnout Payment” means the
aggregate Earnout Payment through the most recently completed Earnout Year minus
the aggregate Earnout Payment amounts previously paid for prior Earnout
Years.

     

     “Total Revenue Target” means One
Hundred Forty One Million, Forty Eight Thousand Dollars
($141,048,000).

     

    (ii) 
         For each Earnout Year, the Purchaser shall pay
to the Sellers’ Representative on behalf of the Sellers the Net Earnout Payment
and the Additional Earnout, if any, for such Earnout Year, within ten (10)
Business Days after the Final Determination of such Net Earnout Payment and
Additional Earnout, if any.  Company’s management shall calculate
Cumulative Revenues for such Earnout Year and deliver such calculation to the
Purchaser and the Sellers’ Representative within sixty (60) days after the end
of such Earnout Year. Unless either Purchaser or Sellers’ Representative objects
to such calculation within the next thirty (30) days after receipt thereof, such
calculation shall be final, binding and conclusive upon the Purchaser, the
Sellers and the Sellers’ Representative (the “Final Determination”). 
In the event of a dispute regarding the calculation of the Cumulative Revenues,
the Additional Earnout, the Gross Profit Margin or any other element of the
Earnout, the dispute resolution process set forth in Section
2.2(e) below shall be used to make the Final Determination.

    

    (iii) 
         No Earnout shall be paid for any Earnout Year
in which   Revenues for such Earnout Year are less than Ten Million
Dollars ($10,000,000); however, such Revenues will be included in the Cumulative
Revenues for any subsequent Earnout Year calculations, including without
limitation, the Additional Earnout calculations, provided that the annual
average of such Cumulative Revenues is at least Ten Million Dollars
($10,000,000) per annum.

    

    (iv) 
         If the Company does not achieve at least a 50%
Gross Profit Margin on Revenues for an Earnout Year, then the Revenues from such
Earnout Year shall not be included in Cumulative Revenues for purposes of any
Earnout calculation, including without limitation, any Additional Earnout
calculations.

    

    Notwithstanding
the foregoing, in the event that a claim or demand for indemnification has been
made under Article VII by Purchaser prior to such payment date, the amount of
such claim or demand may be deducted from the Holdback Amount or the Earnout
amount to be paid to Sellers’ Representative on behalf of the Sellers pursuant
to Section
2.2(f).

     

    (e) 
         Any dispute as to the calculation of the
Earnout, including without limitation Cumulative Revenues, the Additional
Earnout and the Gross Profit Margin, or the Pro Forma Working Capital (each, a
“Calculation”) shall be
conclusively determined using the following procedure:

     

    (i) 
         If either the Purchaser or the Sellers’
Representative disputes the Calculation, it shall give notice, as provided in
Section
8.1, to the other Party prior to the end of the 30-day review period (the
“Dispute Notice”), which
Dispute Notice shall list the basis for such dispute in reasonable detail and
propose corrections or changes to the Calculation.  Both the Sellers’
Representative and the Purchaser shall have access to the Company’s books and
records and all relevant work papers in connection with any review of the
Calculation or any dispute with respect to the Calculation and
each of the Seller’s Representative, the Company, the Purchaser and their
respective Affiliates will cooperate with the other parties in such
process.

    

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

       

    

    (ii) 
         The Person receiving a Dispute Notice shall
have ten (10) Business Days to object to the proposed corrections or changes in
the Dispute Notice by providing written notice to the Person submitting a
Dispute Notice.  If no such objection is made within such ten (10) Business
Day period, any proposed corrections or changes set forth in the Dispute Notice
shall be made to such Calculation, and such modified Calculation shall be the
Final Determination.

    

    (iii) 
         If either the Sellers’ Representative or the
Purchaser objects to the corrections or changes to the Calculation pursuant to
(ii), and in the event such disputed items are not resolved by the Sellers’
Representative and the Purchaser within twenty (20) Business Days, then the
disputed items shall be referred to an independent certified public accounting
firm reasonably acceptable to the Purchaser and the Sellers’ Representative
within ten (10) Business Days to make a binding determination of the disputed
items, and the resulting Calculation reflecting such determinations shall be the
Final Determination.  Such certified public accounting firm shall have
access to the Company’s books and records and all relevant work papers in
connection with any review of the Calculation or any dispute with respect to the
Calculation and
each of the Seller’s Representative, the Company, the Purchaser and their
respective Affiliates will cooperate with the other parties in such
process.  The cost of such certified public accounting firm shall be split
between the Purchaser and the Sellers in proportion to the binding resolution of
the disputed items, as compared to the corrections and changes proposed by the
respective parties.

     

    (f) 
         On each date when a payment is to be made
under this Agreement, including without limitation the date of the payment of
any Cash Amount Adjustment(s), the Holdback Amount, any Earnout and the
Pro-Forma Working Capital “true-up” (each, a “Payment Date”), the Purchaser
will pay to the Sellers, an amount equal to the amount otherwise due as of such
Payment Date less the aggregate amount of any claims made by the Purchaser
pursuant to Article VII before such Payment Date.  If at any time after a
Payment Date such a claim is resolved, the Purchaser will pay to the Sellers’
Representative, on behalf of the Sellers, the amount, if any, that is resolved
in favor of the Sellers.  The adjustments to the payments shall be subject
to the terms and conditions of Article VII, including without limitation the
survival periods set forth in Section 7.1
and the Sellers’ Basket and Sellers’ Aggregate Cap in Section 7.2.

     

    (g) 
         As part of the Purchase Price, the Purchaser
will pay to Sellers’ Representative on behalf of the Sellers the Holdback
Amount, subject to adjustment as provided in Sections
2.2(f) and 2.3,
on June 30, 2011.  The Sellers’ Representative shall distribute to the
Sellers any Holdback Amount received pursuant to this Section
2.2(g) in accordance with their percentage interests in the Company as
set forth in Schedule
A.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

       

    

    (h) 
         The Sellers agree that the Purchaser shall
have no responsibility or Liability for any distributions of the Purchase Price
by the Sellers’ Representative.

     

    2.3         
Pro-Forma Working
Capital “True Up”.  As part of the Company’s 2010 year-end audit,
the Company will cause its auditors to calculate and deliver to the Purchaser a
calculation (with appropriate back up) of the finalized Pro-Forma Working
Capital of the Company for the 2010 fiscal year, using the same methodology as
the Pro-Forma Working Capital calculation set forth on Schedule
2.3.   Unless the Purchaser objects to the Pro-Forma Working
Capital calculation within fifteen (15) Business Days after receipt thereof,
such calculation shall become the Final Determination.   In the event
of a dispute regarding the Pro-Forma Working Capital calculation, the dispute
resolution process set forth in Section
2.2(e) above shall be used to make the Final Determination.  If the
Final Determination of the Pro-Forma Working Capital is greater than $zero (-0-)
(the “Target Working
Capital”), within five (5) Business Days after the date of such Final
Determination, the Purchaser shall wire an amount equal to the difference
between the Final Determination of the Pro-Forma Working Capital and the Target
Working Capital to the Sellers’ Representative for distribution to the Sellers
in accordance with their percentage interests in the Company as set forth in
Schedule
A.  If the Pro-Forma Working Capital is less than the Target Working
Capital, the Purchaser and the Sellers’ Representative shall deduct such amount
from the Holdback Amount.

    

    2.4         Closing.  The
closing of the purchase and sale provided for in this Agreement (the “Closing”) shall take place at
10:00 A.M. PST on January 6, 2011, or at such other time as is mutually
agreed in writing by the parties hereto (the “Closing Date”). 
 The Closing shall be effective as of January 1, 2011.

     

    2.5         Company Deliveries at the
Closing.  At the Closing, the Company shall deliver or cause to be
delivered to the Purchaser, the following:

     

    (a) 
         the minute books and stock ledgers of the
Company;

     

    (b) 
         certified copies of the Certificate of
Incorporation from the Secretary of State of Delaware for SeaBotix, which shall
be in full force and effect at the time of the Closing;

     

    (c) 
         certificates from the Secretary of State of
Delaware and the Secretary of State of California as to the good standing of
SeaBotix, and comparable assurances for the Australian Sub for the applicable
jurisdictions in which it does business, each to be dated no earlier than five
(5) Business Days prior to the Closing;

     

    (d) 
         certified copies of resolutions, duly adopted
by the Board of Directors and the stockholders of SeaBotix, which resolutions
shall be in full force and effect at the time of the Closing, authorizing the
execution and delivery by the Sellers and performance by the Company and the
Sellers of this Agreement and the consummation of the transactions contemplated
hereby;

     

    (e) 
         the employment agreements, executed by each of
Donald Rodocker, Rick Timm, Kevin O’Sullivan, Jesse Rodocker and Sheldon Rubin
substantially in the forms attached hereto as Exhibit
B (the “Employment
Agreements”);

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

       

    

    (f)         
 consents and estoppel certificates for each of the leases by the Company
for the Leased Real Property, all on terms (including lease term amendments)
acceptable to the Purchaser;

    

    (g)         
 assignment of Intellectual Property, related termination of that certain
Licensing Agreement between the Company and Donald Rodocker dated September
1, 2003, executed by Donald Rodocker, and the grant of certain purchase price
payment to Donald Rodocker, pursuant to a Patent Assignment Agreement in
substantially in the form attached hereto as Exhibit C
(the “DR IP
Agreement”);

     

    (h) 
         the legal opinions of Company’s counsel(s),
and of Sellers’ counsel, covering the matters set forth in Exhibit
D,

     

    (i) 
         written evidence reasonably satisfactory to
the Purchaser that all Indebtedness of the Company, other than the Loans and the
Term Loan, has been paid off and terminated and all related Encumbrances have
been terminated and released;

     

    (j) 
         the Consents listed on Section
3.5(c) and (e)
of the Disclosure Schedule (the “Closing
Consents”);

    

    (k) 
         the Stock Pledge Agreement executed by the
Sellers’ Representative; and

    

    (l) 
         such other documents as are reasonably
required by the Purchaser to be delivered to effectuate the transactions
contemplated hereby.

     

    2.6         Sellers’ Deliveries at the
Closing.  At the Closing, the Sellers shall deliver or cause to be
delivered to the Purchaser: 

     

    (a)       
   Certificates evidencing ownership of the Shares, which represents
one hundred percent (100%) of the issued and outstanding shares of the Company’s
equity interests, with stock powers duly endorsed sufficient (including without
limitation a waiver of applicable spousal rights) to transfer to Purchaser all
right, title and interest in and to the Shares pursuant to the provisions of
this Agreement, free and clear of any and all Encumbrances;

    

    (b)       
   a general release and discharge from each Seller, in form and
substance reasonably satisfactory to the Purchaser, releasing and discharging
the Company, the Purchaser and their respective Affiliates from any and all
Liabilities and claims in connection with or arising out of any act or omission
of the Company or any of its respective officers, directors, employees or
agents, in such capacity prior to the Closing; and

    

    (c) 
         such other documents as are reasonably
required by the Purchaser to be delivered to effectuate the transactions
contemplated hereby.

    

    2.7         The Purchaser’s Deliveries
at the Closing.  At the Closing, the Purchaser shall deliver or
cause to be delivered the following:

     

    (a)       
   the Cash Amount;

    

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    (b)       
   certified copies of resolutions, duly adopted by the Purchaser,
which shall be in full force and effect at the time of the Closing authorizing
the execution and delivery and performance by the Purchaser, of this Agreement
and the consummation of the transactions contemplated hereby;

    

    (c)       
   the Stock Pledge Agreement executed by the Purchaser;
and

    

    (d)       
   such other documents as are reasonably required by the Sellers’
Representative to be delivered to effectuate the transactions contemplated
hereby.

     

    ARTICLE
III

     

    REPRESENTATIONS
AND WARRANTIES OF THE SELLERS

     

    Except as
set forth in the Disclosure Schedule (which shall include specific references to
the section of this Agreement to which the information stated in such disclosure
schedule relates), each of the Sellers, hereby represents and warrants to the
Purchaser, as of the Closing Date (or, if made as of a specified date, as of
such specified date), as follows:

     

    3.1         Organization and
Standing.  

     

    (a) 
         Section
3.1 of the Disclosure Schedule sets forth (i) the jurisdiction of
organization or formation of the Company, and each Seller that is not a natural
person, (ii) the address of the principal residence of each Seller who is a
natural person,  together with the full name of such Seller’s spouse, if
any, and (iii) each state or other jurisdiction in which the Company is
qualified to do business.  The Company and each Seller that is not a
natural person, is a corporation or other legal entity duly organized, validly
existing and in good standing under the Laws of the state or jurisdiction of its
organization with the full power and authority to own, lease, use and operate
its properties and to conduct its business as currently being conducted. 
The Company is duly qualified or licensed to do business and in good standing in
any other jurisdiction in which the nature of the business conducted by it or
the property it owns, leases, uses or operates requires it to so qualify, be
licensed or be in good standing, except where the failure to be so qualified,
licensed or in good standing would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect.

     

    (b) 
         Complete and correct copies have been
furnished or made available to the Purchaser of (i) (A) the certificate of
incorporation or equivalent formation document for the Company, as amended and
in effect on the date hereof; and (B) all stock records, including, if any,
ledgers and copies of any certificates issued by the Company (collectively, the
“Governance Documents”);
and (ii) all minutes and other records of all meetings and other proceedings
(including any actions taken by written consent or otherwise without a meeting)
of the stockholders of the Company, the Boards of Directors of the Company and
all committees of the Boards of Directors of the Company.

     

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

    

      (c) 
         The minute books of the Company accurately and
completely reflect all meetings and corporate actions of the stockholders, the
Boards of Directors and any committees of the Boards of Directors of the
Company, and true and complete copies of the Company minute books have been
provided to Purchaser.

       

      (d) 
         The Company is not in default or violation
(and no condition or circumstance exists or no event shall have occurred which,
with or without notice or the passage of time or both, would constitute such a
default or violation) of any term, condition or provision of the Governance
Documents.

       

      (e) 
         Section
3.1 of the Disclosure Schedule contains a complete and accurate list of
all officers and directors of the Company.

       

      3.2 
       Affiliates,
Subsidiaries.

       

      (a) 
         All Affiliates of the Company are set forth in
Section
3.2(a) of the Disclosure Schedule.  The Australian Sub is the only
Subsidiary of SeaBotix, and except as set forth in Section
3.2(a) of the Disclosure Schedule, the Company does not own, directly or
indirectly, and has not entered into any agreement, arrangement or understanding
to purchase or sell any capital stock or other ownership interests in any
Person.

       

      (b)         
 Except as set forth in Section
3.2(b) of the Disclosure Schedule, each Affiliate of the Company is
operating its respective business independently of the Company, in separate
locations and with different Contractors and there are no shared assets,
obligations, Intellectual Property, personnel, service agreements or
relationships between the Company and any such Affiliates.  As of the
Closing, the Company has no outstanding warranties, obligations, or Liabilities
to, from or in connection with such Affiliates.

       

      3.3 
       Capitalization and
Ownership.

       

      (a) 
         Section
3.3(a) of the Seller Disclosure Schedule sets out, by class, series and
number of shares (i) the authorized equity interests of the Company, and (ii)
the issued and outstanding equity interests of the Company, together with the
names of the record and beneficial owners thereof.  Sellers own all of the
issued and outstanding equity interests of SeaBotix beneficially and of record,
free and clear of any Encumbrances, other than restrictions on transfer under
federal or state securities laws, and SeaBotix owns all of the issued and
outstanding equity interests of the Australian Sub beneficially and of record,
free and clear of any Encumbrances, other than restrictions imposed by
applicable law.  At the Closing and subject to the delivery of the Purchase
Price, the Purchaser will acquire from the Sellers good and valid title to all
of the Shares, such that the Purchaser will own 100% of the equity interests of
SeaBotix, free and clear of any Encumbrances, other than restrictions on
transfer under the federal or state securities laws of general application to
future transfers by Purchaser.

       

      
        
           

        

        
          -17-

          
            

          

        

        
           

        

      

       

      (b) 
         The Shares have been duly authorized and
validly issued, are fully paid and non-assessable, and not issued in violation
of any preemptive or similar rights.  Except as set forth in Section
3.3(b) of the Seller Disclosure Schedule, there are no stockholder voting
or similar agreements in effect with respect to SeaBotix or any of the Shares,
nor are there any outstanding preemptive rights, subscriptions, options,
warrants, puts, calls, agreements to which any of SeaBotix or any Seller is a
party or other rights of any type or other securities (i) requiring the
issuance, sale, transfer, pledge or other disposition of, or repurchase,
redemption or other acquisition of, any equity interests of SeaBotix or any
securities convertible into any equity interests of SeaBotix, (ii) restricting
the transfer of any equity interests of SeaBotix, or (iii) relating to the
voting of any equity interests of SeaBotix.  There is no issued or
outstanding Indebtedness of SeaBotix having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote), upon the
happening of a certain event or otherwise, on any matters on which the equity
holders of SeaBotix may vote.

       

      (c)         
 All issuances of equity interests of SeaBotix and all repurchases,
exchanges, cancellations and conversions of equity interests, including without
limitation, pursuant to any prior recapitalizations or stock offerings, were
effected in compliance in all material respects with all applicable Laws and the
Governance Documents.  SeaBotix has no Liability to, nor is there any basis
for any Liability to, any former holder of equity interests in SeaBotix with
respect to any such recapitalization or stock offering.

       

      3.4 
       Power and
Authority.

       

      (a) 
         Each Seller Party has all requisite power and
authority or legal capacity, as applicable, to execute and deliver this
Agreement, and the Company and each Seller Party have all requisite power and
authority or legal capacity, as applicable, to execute and deliver the other
Transaction Documents to be executed and delivered by it, and to consummate the
transactions contemplated thereby.

       

      (b) 
         The execution, delivery and performance of
this Agreement by each Seller Party and the consummation by each such Person of
the transactions to be consummated by such Person hereby, and the execution,
delivery and performance of the Transaction Documents to be executed and
delivered by the Company and each Seller Party and the consummation of the
transactions contemplated thereby, have been duly authorized by all necessary
action or proceeding on the part of such Person, as applicable.

       

      (c) 
         This Agreement and the Transaction Documents
have been duly executed and delivered by the Company and each Seller Party
signatory thereto, and constitute the legal, valid and binding obligation of the
Company and such Seller Party, as applicable, enforceable against such Person in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to or affecting creditors’ rights generally,
including the effect of statutory and other Laws regarding fraudulent
conveyances and preferential transfers and subject to the limitations imposed by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding at law or in equity).

       

      3.5 
        Conflicts; Consents and
Approvals.  Neither the execution and delivery by any Seller Party
of this Agreement, nor the other Transaction Documents to be executed and
delivered by any Seller Party or by the Company, nor the consummation of the
transactions contemplated hereby:

       

      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

       

      (a) 
        conflicts with or violates any provision of the
Company Governance Documents or the organizational documents of any Seller Party
that is not a natural person;

       

      (b) 
         violates, or conflicts with, or results in a
breach in any material respect of any provision of, or constitute a default (or
an event that, with the giving of notice, the passage of time or otherwise,
would constitute a default) in any material respect under, or entitle any Person
(with the giving of notice, the passage of time or otherwise) to revoke,
suspend, terminate, accelerate, modify or call a default in any material respect
under, or give rise to any obligation to make a payment under, or to any
increased, additional or guaranteed rights of any Person under, or result in the
creation of any Encumbrance, upon any properties or assets of the Company, the
Business, the Shares, or properties or assets of any Seller Party under any of
the terms, conditions or provisions of (i) any Material Contract, or (ii) any
Governmental Approval to which the Company or a Seller Party is
subject;

       

      (c) 
         requires any action, notice to, Consent or
approval of any lessor of the Real Property, other party to any Material
Contract, or any other non-governmental third party, other than those notices
and consents listed in Section 3.5(c)
of the Disclosure Schedule, all of which have been given and
obtained;

       

      (d) 
         violates any order, writ, or injunction,
decree or Law applicable to the Company or any asset of the Company, or to any
Seller Party, or gives any Governmental Authority or other Person the right to
challenge the transactions contemplated herein or exercise any remedy or obtain
any relief under any Law or Governmental Approval to which a Seller Party is
subject;

       

      (e) 
         requires any action, Consent or approval of,
or review by, or notice, registration or filing by a Seller Party with, any
Governmental Authority; or

       

      (f) 
         causes the Company to become subject to, or
become liable for the payment of any Tax.

       

      3.6 
        Title to Assets;
Condition.

       

      (a)       
   The Company has good and valid title to its respective assets and
properties free and clear of any Encumbrances, other than and subject to
Permitted Encumbrances.

       

      (b)       
   The assets and properties owned, leased or licensed by the Company
comprise all of the assets and properties that are necessary to permit the
Company to conduct the Business as currently conducted, and there are no other
assets or properties that are material to the operation of the Business as
currently conducted.

       

      (c)       
   All of the Property, Plant and Equipment and any other tangible
assets (i) have been maintained in a commercially reasonable manner and are in
good operating condition and repair, ordinary wear and tear excepted,
(ii) to the knowledge of the Sellers, are structurally sound and free of
defects (latent and patent), (iii) capable in all material respects of
performing the functions for which such Property, Plant and Equipment are
currently and normally used by the Business, and (iv) are suitable and adequate
in all material respects for continued use in the manner in which they are
presently being used and adequate to meet the requirements of the
Business.

       

      
        
          
          

        

        
          -19-

          
            

          

        

        
          
          

        

      

       

      3.7 
       Taxes.

       

      (a) 
         The Company has timely filed all Tax Returns
that it was required to file, and such Tax Returns are true, correct and
complete in all material respects.  All Taxes shown to be payable on such
Tax Returns or on subsequent assessments with respect thereto have been paid in
full on a timely basis.  No other Taxes are payable by the Company with
respect to any period ending prior to the date of this Agreement, whether or not
shown due or reportable on such Tax Returns, other than Taxes payable by the
Company for which adequate accruals have been provided in its Financial
Statements.  The Company has no liability for unpaid Taxes accruing after
the date of the latest Financial Statements, except in each case for Taxes
incurred in the ordinary course of business.  There are no Encumbrances for
Taxes on the properties of the Company, other than Encumbrances for Taxes not
yet due and payable.  There are no installment sale or open transactions or
intercompany transactions made on or prior to the Closing Date that will require
the Company to include any item of income or exclude any item of deduction from
taxable income for any taxable period (or portion thereof) ending after the
Closing Date.

       

      (b) 
         Section
3.7 of the Disclosure Schedule lists all Tax Returns filed by the Company
for all taxable periods ending on or after December 31, 2004, indicates those
Tax Returns that have been audited, and indicates those Tax Returns that
currently are subject of audit.  No other audit of any Tax Return is
currently pending, or to the knowledge of Company, threatened.  No claim
has ever been made by any Governmental Authority in a jurisdiction where the
Company does not file Tax Returns that it or the business and assets thereof is
or may be subject to taxation by that jurisdiction.  Sellers have delivered
or made available to the Purchaser correct and complete copies of all Tax
Returns filed, examination reports, and statements of deficiencies assessed or
agreed to by the Company for all taxable periods ending on or after
December 31, 2004.  The Company has not waived any statute of
limitations in respect of any Tax or agreed to an extension of time with respect
to any Tax assessment or deficiency, which period after giving effect to such
extension or waiver has not yet expired.

       

      (c) 
         The Company is not a party to or bound by any
tax indemnity agreement, tax sharing agreement or similar contract nor has it
assumed the Tax Liability of any other Person by contract.  The Company is
not, and has not been a party to any joint venture, partnership, or other
arrangement or contract which could be treated as a partnership or “disregarded entity” for
United States or Australian federal, state or local income tax
purposes.

       

      (d) 
         The Company is not obligated under any
agreement, contract or arrangement that may result in the payment of any amount
that would not be deductible by reason of Section 280G or Section 404 of the
Code, or any similar provisions of the applicable Australian Tax
Code.

       

      (e)         
 The Company has not engaged in a transaction that constitutes a
“reportable transaction” as such term is defined in Section 1.6011-4(b)(I)
of the treasury regulations, or any similar provisions of the applicable
Australian Tax Code.

       

      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

        

         

      

      (f)         
 Except as set forth in Section 3.7
of the Disclosure Schedule, neither the Sellers nor the Company have engaged in
any distributions that were purported or intended to be governed in whole or in
part by Code Sections 355 or 361.

       

      (g) 
         SeaBotix is a “United States person” within
the meaning of Section 7701(a)(30) of the Code.

       

      (h) 
         As of the Closing Date, the Company will have
(i) paid, or provided for all installments that are due and payable at such
time on account of Taxes for the current year, (ii) properly withheld and
remitted to the proper taxing authority all Taxes required to be withheld with
respect to amounts paid or credited, or owed to or for the account or benefit
of, any person, including any employee, independent contractor, member,
stockholder, non-resident person or other third party, and (iii) collected
all sales, transfer and use Taxes (including goods and services sales taxes)
required to be collected, and has remitted, or will remit on a timely basis,
such amounts to the appropriate Governmental Authority and has furnished
properly completed exemption certificates for all exempt
transactions.

       

      (i) 
         The Company is not now and has not been a
“United States real property holding corporation” as defined in Section
897(c)(2) of the Code and Section 1.897-2(b) of the regulations thereunder
during the 5-year period that will end as of the date of this
Agreement.

       

      (j)         
 Section 3.7
of the Disclosure Schedule lists all financial accounts maintained by the
Company in a foreign jurisdiction, if any.

       

      3.8 
       Compliance with Law.
Except as set forth in Schedule
3.8, the Company is and has been in compliance at all times since January
1, 2001 in all material respects with all Laws applicable to the Company and the
Business, and to the knowledge of the Sellers, no condition or circumstance
exists, that is reasonably likely (with or without notice or passage of time or
both) to constitute, or result directly or indirectly in a failure to comply in
all material respects with any such Laws. The Company has not received any
written notice from any third party or Governmental Authority regarding any
actual, alleged or potential violation of any Laws nor does the Company have any
knowledge of any such violation. To the actual knowledge of the Sellers without
investigation, no Governmental Authority has proposed or is considering any Laws
that would be reasonably expected to have a Material Adverse Effect on the
Company, the Business, the assets of the Company or the Sellers’ rights to the
Shares.

       

      
        
           

        

        
          -21-

          
            

          

        

        
           

        

      

      3.9 
       Governmental
Approvals.

       

      (a)       
   The Company has all Governmental Approvals that are necessary in
any material respect in connection with their respective ownership and use of
their respective properties or assets or the operation of the Business.  To
the knowledge of the Sellers, the Company has made all filings with, and given
all notifications to, all Government Authorities as required by all applicable
Laws.  Section 3.9
of the Disclosure Schedule contains an accurate, correct and complete list and
summary description of each such Governmental Approval, filing or
notification.  Each such Governmental Approval, filing and notification is
valid and in full force and effect, and there is not any pending or to the
knowledge of the Sellers, threatened, Action or Claim that could result in the
suspension, termination, revocation, cancellation, limitation or impairment of
any such Governmental Approval, filing or notification.  No violations have
been recorded in respect of any Governmental Approvals, and to the knowledge of
the Sellers, no meritorious basis therefor exists.  The Company has
received no notice of any fines or penalties being due and payable in respect of
any Governmental Approval or any violation thereof.

       

      (b)       
   Accurate and complete copies of all of the Governmental Approvals,
filings and notifications identified in Section 3.9
of the Disclosure Schedule, including all renewals thereof and all amendments
thereto, have been delivered to or made available to Purchaser.

       

      3.10 
     Litigation.

       

      Except as
set forth in Section
3.10 of the Disclosure Schedule:

       

      (a)       
   There is no Action (including counterclaims) pending or threatened
in writing or, to the knowledge of the Sellers, otherwise threatened, against
the Company, or any of its assets or properties, operations or business, or any
executive officer or director of the Company.  To the knowledge of the
Sellers, no event has occurred, and no condition or circumstance exists, that
might directly or indirectly give rise to or serve as a basis for the
commencement of any such Action.  No insurance company has asserted in
writing that any such Action is not covered by the applicable policy related
thereto.  Sellers have delivered to the Purchaser accurate and complete
copies of all pleadings and the settlement agreement relating to the C-I
Litigation.  The settlement agreement has been duly executed and delivered
by all parties to the C-I Litigation, and all claims relating to the C-I
Litigation have been fully and finally resolved and released by all the parties
thereto.

       

      (b)       
   There is no pending Action instituted by the Company, and the
Company has not made any such Claim or threatened to make any Claim or commence
any Action.

       

      (c)       
   There are no judgments, decrees, written agreements, memoranda of
understanding or orders of any Governmental Authority outstanding against the
Company or any of its assets, properties, operations or businesses, or to the
knowledge of the Sellers, against any Contractor of the Company that would
prohibit or limit such Contractor from engaging in or continuing any conduct,
activity or practice relating to the Business.

       

      (d) 
         There is no Action pending or threatened in
writing, or, to knowledge of the Sellers, otherwise threatened, against any
Seller that seeks, or would be reasonably likely, to prohibit or restrain the
ability of any Seller to enter into this Agreement or prevent or impede or delay
the consummation by any Seller of any of the transactions contemplated
hereby.

       

      3.11 
     Intellectual
Property.

       

      (a) 
         Section
3.11(a) of Disclosure Schedule sets forth a complete list and summary
description of all patents, patent applications, registered trademarks,
trademark applications, material trademarks not the subject of a registration or
application, registered copyrights, copyright applications and Internet domain
name registrations included in the Owned Intellectual Property, the Licensed
Intellectual Property or the IP Agreements.

       

      
        
          
          

        

        
          -22-

          
            

          

        

        
          
          

        

      

       

      (b) 
         Each item of the Owned Intellectual Property
is exclusively owned by the Company, and each item of the Licensed Intellectual
Property is licensed by the Company pursuant to a license that is in full force
and effect, and with which the Company and, to the knowledge of the Sellers, the
licensor, is in full compliance in all material respects.  Each item of
Owned Intellectual Property and, to the knowledge of the Sellers, each item of
Licensed Intellectual Property:  (i) is valid, subsisting and in full force
and effect; (ii) has not been abandoned or passed into the public domain; (iii)
is free and clear of any Encumbrances placed thereon by the Company; (iv) to the
knowledge of the Sellers, is not subject to any examination, opposition,
invalidation proceeding, or any injunction, judgment, order, decree, writ,
stipulation, ruling or charge; and (v) and its use in connection with the
Business is subject only to the IP Agreements and applicable law.

       

      (c) 
         Section
3.11(c) of the Disclosure Schedule identifies, to the knowledge of the
Sellers, each claim of right to or ownership of or other encumbrance on any
Owned Intellectual Property held by any Person other than the Company.  No
party (other than the Company) to the C-I Litigation has any claim to the
Intellectual Property for the product(s) that were the subject of such C-I
Litigation.

       

      (d) 
         The Owned Intellectual Property and the
Licensed Intellectual Property include all of the Intellectual Property that is
used in or useful to, in any material respect, the operation of the Business as
currently conducted and there are no other items of Intellectual Property that
are used in or useful to the operation of the Business.

       

      (e) 
         The Company has  taken all reasonably
necessary action to maintain and protect (i) the Owned Intellectual Property,
including timely payment of all applicable maintenance and renewal fees with the
United States Patent and Trademark Office, the United States Copyright Office,
and other relevant Governmental Authorities, and (ii) the secrecy,
confidentiality, value and rights in confidential information and trade secrets
of the Company, including by having and enforcing a policy requiring all current
and former Contractors of the Company to execute valid and enforceable
confidentiality and inventions assignment agreements, in substantially the form
attached to Section
3.11(e) of the Disclosure Schedule.  To the knowledge of the
Sellers, there has been no violation of any such confidentiality or inventions
assignment agreement, or any unauthorized disclosure or misappropriation of any
trade secret or confidential information related to the Business.

       

      (f) 
         To the knowledge of the Sellers, no third
party is engaging in any activity that infringes, dilutes, misappropriates, or
otherwise violates the Owned Intellectual Property or the Licensed Intellectual
Property;

       

      (g) 
         The operation of the Business as currently
conducted and the use of the Owned Intellectual Property and Licensed
Intellectual Property in connection therewith, do not conflict with, infringe,
dilute, misappropriate, or otherwise violate the Intellectual Property of any
third party.  Except as set forth in Section
3.11(g) of the Disclosure Schedule, no Action or Claim has been asserted
or is pending, or, to the knowledge of the Sellers, has been threatened against
the Company (i) based upon or challenging or seeking to deny or restrict the use
by the Company of any of the Owned Intellectual Property or Licensed
Intellectual Property, (ii) alleging that the operation of the Business
infringes, misappropriates or violates any Intellectual Property right of any
third party, or (iii) alleging that the Licensed Intellectual Property is being
licensed in conflict with the terms of any license or other agreement. 
Section 3.11(g)
of the Disclosure Schedule lists all Material Contracts that provide for
indemnification by the Company with respect to infringement of Intellectual
Property.

       

      
        
          
          

        

        
          -23-

          
            

          

        

        
          
          

        

      

       

      (h) 
         Section
3.11(h) of the Disclosure Schedule lists all IP Agreements, excepting the
IP Agreements relating to software described in Section
3.11(i) below.  Except as set forth in Section
3.11(h) of the Disclosure Schedule, the Company has not granted any
license or other right to any third party with respect to the Owned Intellectual
Property or Licensed Intellectual Property.  The consummation of the
transactions contemplated by this Agreement will not result in the termination
or impairment of any Owned Intellectual Property, Licensed Intellectual Property
or IP Agreement.

       

      (i)         
 All of the software and firmware used in the Business are commercially
available standard software or firmware products (“Standard Products”), except
for the customized software and firmware created, modified or developed for or
by the Company identified in Section
3.11(i) of the Disclosure Schedule.  The Company has received
licenses to all software and firmware used by it free and clear of any claim of
or obligation to any Person, except for payment to the licensors thereof of
applicable and customary license and maintenance fees, and restrictions as to
use as set forth in the applicable license agreement.  The Company is in
compliance in all material respects with all of the provisions of such software
license agreements.  Other than as listed in Section
3.11(i) of the Disclosure Schedule, none of the Company’s products use or
incorporate open source software code.

       

      (j)         
 No government funding or facilities of a university, college, other
educational institution or research center was used in the development of the
Owned Intellectual Property and no current or former Contractor of the Company,
who was involved in, or who contributed to, the creation or development of any
of the Owned Intellectual Property, has performed services for any government,
university, college or other educational institution or research center during a
period of time during which such Contractor was also performing services for the
Company.

      3.12 
     Real
Estate.

       

      (a)       
   The Company does not currently own nor has ever owned, since its
inception, any Real Property.  Section 3.12 of the Disclosure Schedule sets
forth an accurate, correct and complete list of all Real Property Leases to
which the Company has been a party since January 1, 2003 and any other locations
leased since inception of the Business for purposes other than the executive
offices or involving more than 2500 square feet (such list to include the street
address of such leased Real Property, the name of the lessor and commencement
and expiration dates of each such leased Real Property) and a list of Contracts
to which the Company is a party affecting the use of each Leased Real
Property.  The Company has been in lawful possession of the premises
covered by each Real Property Lease since the commencement of the original term
of such Lease.  The Company has delivered to the Purchaser accurate,
correct and complete copies of each Real Property Lease.

       

      
        
          
          

        

        
          -24-

          
            

          

        

        
          
          

        

      

       

      (b)       
   All Real Property Leases are valid and binding upon, and
enforceable in accordance with their respective terms against, the Company, in
full force and effect and there exists no default or event of default
thereunder, nor to the knowledge of the Sellers, any occurrence or condition
that is reasonably likely to result in a default or event of default thereunder
or penalty or termination thereof and (ii) there are no material disputes, oral
agreements or forbearance programs in effect as to any Real Property
Lease.

       

      (c)       
   The Company has actual and exclusive possession of the leasehold
estate in the Leased Real Property, in each case free and clear of all
Encumbrances created as a result of any act or omission of the Company, other
than Permitted Encumbrances, and the Company has not assigned, transferred or
conveyed any interest in any Real Property Lease.

       

      (d)       
   There does not exist any actual, or to the knowledge of the
Sellers, threatened or contemplated, condemnation or eminent domain proceedings
that materially affect any Leased Real Property.

       

      (e)       
   The current use and occupancy of the Real Property and the
improvements located thereon do not, violate any recorded or known covenants,
easements, conditions, restrictions or reservations, or any Orders, Governmental
Approvals or agreements affecting the Real Property.

       

      (f)       
   To the knowledge of the Sellers, no part of the Real Property is
subject to any building or use restriction that would restrict or prevent in any
respect the present use and operation of such Real Property and the Real
Property is in all respects properly and duly zoned for its current use by the
Company, and such current use is in all respects a conforming use by the
Company.  To the knowledge of the Sellers, no Governmental Authority having
jurisdiction over any Real Property has issued or, to the knowledge of the
Company, threatened to issue any notice or order that adversely affects the use
or operation of such Real Property or a permitted expansion of the improvements
thereon, or requires, as of the date hereof or a specified date in the future,
any repairs or alterations or additions or improvements thereto, or the payment
or deduction of any material fee or exaction of property (other than
Taxes).

       

      (g)       
   Except as listed in Section
3.12 of the Disclosure Schedule, there are no leases, subleases or other
rental agreements or occupancy agreements that grant to anyone other than the
Company any possessory interest in and to any space situated on or in the Real
Property or that otherwise give rights with regard to the use of the Real
Property or any portion thereof.

      3.13 
     Environmental
Matters.

       

      (a)       
   The Business is being conducted, and the Property, Plant and
Equipment are being leased or owned and operated, in compliance in all material
respects with all Environmental Laws.   The Company has not received
any written issuance or proposed issuance of, nor knows of any issuance or
proposed issuance of, any notice of violation alleging non-compliance with any
Environmental Law.

      

      
        
          
          

        

        
          -25-

          
            

          

        

        
          
          

        

      

       

      (b)       
  The Company has obtained and currently maintains all material
Environmental Permits necessary for the conduct of the Business, and the lease
or ownership and operation of the Property, Plant and Equipment, which are being
leased or owned and operated in compliance in all material respects with all
such Environmental Permits, each of which is in full force and effect. 
Section
3.13(b) of Disclosure Schedule lists all such Environmental Permits,
indicating, in each case, the expiration date thereof.  The Company has not
received any written notice that the Business lacks any required Environmental
Permit and, to the knowledge of the Sellers, no such notice is threatened nor is
a change in permitting requirements imminent.

      

      (c)       
  The Company has not received any notice of any Environmental Claim
arising out of the Business or the Property, Plant and Equipment or the
ownership or use of the Real Property, or any formerly owned or leased real
property or formerly operated facilities of the Company, and, to the knowledge
of the Sellers, no such Environmental Claim is threatened.

      

      (d)       
  To the knowledge of the Sellers, there have been no past and are no
present (i) conditions, circumstances, events, activities or practices of or at
the Company that would reasonably be expected to form the basis for any
Environmental Claim, or require Remedial Action, including a Release or
threatened Release of a Regulated Substance, or (ii) investigations or citations
relating to the condition or operation of a third party site to which Regulated
Substances were delivered for disposal by the Company, either directly or by an
independent contractor, that requires Remedial Action.

      

      (e)       
  The Company has not installed, and does not discharge any Regulated
Substances into, any underground or above ground storage tanks, dry wells,
dikes, impoundments or lagoons, nor to the knowledge of the Sellers, does the
Company have any of the foregoing nor have any equipment containing
polychlorinated biphenyls.  The Company does not have and, to the knowledge
of the Sellers, has not had any “Reportable Uses of Hazardous Substances” as
such term is used in any lease for the Leased Real Property.

      

      (f)       
   Other than the leases for the Leased Real Property, there are no
Contracts that would require the Company to fulfill any obligation under or
pursuant to Environmental Law or relating to Remedial Action that it would not
otherwise be required to fulfill on its own in the absence of such a Contract,
including any Contract for indemnification, reimbursement, defense, holding a
Person harmless, release or waiver.

      

      (g)       
   The Purchaser has been provided with all material written
assessments, audits, surveys, investigation or sampling reports, that are in the
possession or custody of the Company, relating to the Environment or any Release
or presence of or exposure to any Regulated Substances.

      

      The
representations and warranties made in this Section
3.13 are the exclusive representations and warranties of the Sellers
relating to environmental matters.

       

      
        
           

        

        
          -26-

          
            

          

        

        
           

        

      

       

      3.14 
     Material
Contracts.

       

      (a) 
        Section
3.14 of Disclosure Schedule contains a complete list of all Contracts to
which the Company is a party or bound and that fall within any of the following
categories (the “Material
Contracts”):

       

      (i) 
         each Contract providing for aggregate payment
of, or the performance of services, or purchase or sale of goods or materials
with a value of, more than $25,000 in any 12 month period, or more than $50,000
over the life of the Contract, by or to the Company;

       

      (ii) 
        each Contract providing for the sale, lease or other
disposition of any of the assets or properties of the Company other than in the
ordinary course of business;

       

      (iii) 
       each Contract for the purchase of any material fixed
assets or properties of the Company;

       

      (iv) 
       each joint venture or partnership agreement and each
Contract providing for the formation of a joint venture, long-term alliance or
partnership or involving an equity investment by the Company;

       

      (v) 
        each Contract (A) that by its express terms affects
or limits in any way the freedom of the Business or the Company to compete in
any line of business or with any Person or in any geographic area or (B) that
imposes non-solicitation, exclusive dealing or other similar obligations on the
Business or the Company;

       

      (vi) 
       each Contract relating to any outstanding commitment
for capital expenditures in excess of $25,000;

       

      (vii) 
      each Contract (or group of related Contracts) under which
the Company has created, incurred, assumed, or guaranteed any Indebtedness or
that provides for the lending or advancing of amounts to or investment in any
other Person or providing for the creation of any Encumbrance (other than a
Permitted Encumbrance);

       

      (viii) 
     each lease, sublease or similar agreement under which the
Company is a lessee or sublessee of tangible personal property used or held for
use for an annual rent in excess of $25,000, or rent over the life of the
Contract in excess of $50,000;

       

      (ix) 
        each Contract concerning the marketing or
distribution by third parties of any products or services of the Company
(including any Contract requiring the payment of any sales or marketing or
distribution commissions or granting to any Person rights to market, distribute
or sell such products or services);

       

      (x) 
         each IP Agreement, other than those for
Standard Products;

       

      
        
           

        

        
          -27-

          
            

          

        

        
           

        

      

       

      (xi) 
        each Contract relating to employees, independent
contractors, consultants or lobbying Contracts;

       

      (xii) 
       each Contract between an Affiliate of the Company and
the Company Entities;

       

      (xiii) 
      each power of attorney, agency appointment or similar
authorization granted by or to the Company to act on behalf of such grantor;
and

       

      (xiv) 
      each other Contract that was entered into other than in the
ordinary course of business or requires payment by the Company of amounts in
excess of $25,000.

       

      (b) 
       The Sellers have made available to the Purchaser or
its representatives correct and complete copies of all Material Contracts (or
written summaries of the material terms thereof, if not in writing) with all
amendments thereof.  As to the Company, each Material Contract is valid,
binding and enforceable in accordance with its terms and is in full force and
effect.  The Company is not in breach or default in any material respect,
and no party has notified the Company that it is in breach or default in any
material respect, under any Material Contract.  No event has occurred, and
no circumstance or condition exists, that is reasonably likely to (with or
without notice or passage of time or both) (i) result in a violation or breach
in any material respect of any of the provisions of any Material Contract by the
Company or to the knowledge of the Sellers, any other party; (ii) give any
Person the right to declare a default or exercise any remedy under any Material
Contract; or (iii) give any Person the right to accelerate the maturity or
performance of any Material Contract or to cancel, terminate or modify any
Material Contract.  The Company has not waived in any material respect its
rights under any Material Contract.  There are no renegotiations or
disputes pending or, to the knowledge of the Seller, contemplated with respect
to any Material Contracts.

       

      3.15 
     Books and
Records.  The books of account and other records of the Company are
complete and correct in all material respects, and have been maintained in
accordance with sound business practices and in compliance in all material
respects with all applicable Laws.  The Company maintains a system of
internal control over its financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934) sufficient to provide
reasonable assurance regarding the reliability of its financial reporting and
preparation of financial statements in accordance with GAAP.

       

      3.16 
     Bank Accounts. 
The name of each bank or other depositary in which any of the Company maintains
any bank account, trust account or safety deposit box is set forth in Section 3.16
of the Disclosure Schedule, along with the names of all Persons authorized to
draw thereon or who have access thereto.

       

      3.17 
     Financial Statements;
Absence of Undisclosed Liabilities, Charges.

       

      (a)       
 The Sellers have previously delivered to the Purchaser the following
financial statements (collectively, the “Financial Statements”),
copies of which are attached to the Disclosure Schedule:  (i) the
unaudited balance sheets, and the related statements of operations, changes in
equity, and cash flows (the “Unaudited Statements”), of the
Company as of and for the eleven-month period ended November 30, 2010 (the
“Balance Sheet Date”);
(ii) the audited balance sheets, and the related statements of operations,
changes in equity, and cash flows, of the Company as of and for the fiscal years
ended December 31, 2008 and December 31, 2009, as certified by the
Company’s outside certified independent accountants, Considine &
Considine together with any notes thereto (“Audited Statements”). 
Sellers have delivered to Buyer copies of all letters from the Company’s
auditors to the Company’s board of directors or audit committee thereof during
the 36 months prior to the date of this Agreement, together with copies of all
responses thereto.

       

      
        
          
          

        

        
          -28-

          
            

          

        

        
          
          

        

      

       

      (b)       
   All of the Financial Statements (i) are consistent with the
books and records of the Company; (ii) present fairly the financial
condition of the Company as of the respective dates thereof and the results of
operations, changes in equity and cash flows of the Company for the periods
covered thereby; and (iii) have been prepared in accordance with GAAP,
applied on a consistent basis throughout the periods covered, subject, in the
case of the Unaudited Statements, to normal recurring year-end adjustments (the
effect of which will not, individually or in the aggregate, be material) and the
absence of notes (that, if presented, would not differ materially from those
included in the Audited Statements).  All reserves established by the
Company and set forth in the Financial Statements are adequate for the purposes
for which they were established in accordance with GAAP, applied on a consistent
basis.

       

      (c) 
         The Company has no material Liabilities or any
Indebtedness other than (i) those set forth in the Unaudited Statements; (ii)
those incurred in the ordinary course of business and not required to be set
forth in the Unaudited Statements under GAAP; and (iii) those incurred in the
ordinary course of business since the Balance Sheet Date.  Except as set
forth in Section 3.17(c)
of the Disclosure Schedule, the Company is not directly or indirectly (a)
liable, by guarantee or otherwise, upon or with respect to, or (b) obligated to
provide funds with respect to, or to guarantee or assume, any Indebtedness or
performance or obligation of any other Person.

       

      (d)         
 Since the Balance Sheet Date, (i) the Company has conducted the Business
in the ordinary course of business; and (ii) no event or circumstance has
occurred that could reasonably be expected to have a Material Adverse Effect on
the Company or the Business.  As of the Closing Date, to the knowledge of
the Sellers, the Company has a reasonable expectation based on orders received
to the Closing Date and anticipated to be received before year-end, that the
2010 year-end revenues for the Company will be at least Six Million Six Hundred
Thousand Dollars ($6,600,000).

       

      3.18 
     Accounts Receivable,
Accounts Payable.  Section 3.18
of the Disclosure Schedule sets forth an accurate, correct and complete
breakdown and aging of the Company’s accounts receivable and accounts payable
(including to all of its suppliers) as of the Balance Sheet Date.  Except
as set forth in Section 3.18
of the Disclosure Schedule, since the Balance Sheet Date, accounts receivable
have been collected and accounts payable have been paid in the ordinary course
of business and on a basis consistent with such accounts receivable and accounts
payable breakdowns and agings.  All accounts receivable of the Company
reflected in the Financial Statements or outstanding as of the Closing Date
represent valid obligations arising from actual sales made in the ordinary
course of business and properly recorded in accordance with GAAP, and are
collectible, net of the reserves shown on the Unaudited Financial Statements, in
the ordinary course of business.  There is no dispute, claim or right of
set-off pending or, to the  knowledge of the Sellers, threatened relating
to the amount or validity of any such account receivable.

       

      
        
           

        

        
          -29-

          
            

          

        

        
           

        

      

       

      3.19 
     Relationships with
Customers, Distributors and Suppliers.

       

      (a)       
   Set forth in Section
3.19(a) of Disclosure Schedule is a true and correct list of (i) the ten
(10) largest customers, including distributors (by revenues) of the Business and
(ii) the ten (10) largest suppliers (by purchases) of the Business, in each
case, during the fiscal years ended December 31, 2008 and December 31, 2009, and
the ten (10) months ending October 31, 2010.  No customer or supplier
that is not listed in Section
3.19(a) of Disclosure Schedule accounted for in excess of 5% of the
revenues or purchases of the Business during the fiscal year ended
December 31, 2009.  No customer or supplier listed in Section
3.19(a) of Disclosure Schedule has canceled or otherwise terminated, or
to the knowledge of the Sellers, threatened to terminate, its relationship with
the Company.

       

      (b)       
   Except as set forth in Section
3.19(b) of the Disclosure Schedule, the Company has not entered into any
Contract under which it is restricted from selling, licensing or otherwise
distributing any products to any class of customers (including distributors) in
any geographic area, during any period of time, or in any segment of the
market.  Except as set forth in Section
3.19(b) of the Disclosure Schedule, there is no purchase commitment that
provides that any supplier will be the exclusive supplier of the Company and
there is no purchase commitment requiring the Company to purchase the entire
output of a supplier.  The Company has not received any notice from any
supplier that it intends to terminate its relationship with the Company, and to
the knowledge of the Sellers, no customer or supplier listed on Schedule 3.19(a)
is threatened with bankruptcy or insolvency.

       

      
         
              3.20      
Inventory.

      

       

      (a) 
         Subject to amounts reserved therefor in the
Financial Statements, the values at which all Inventories are carried on the
Financial Statements reflect the historical inventory valuation policy of the
Company of stating such Inventories at the lower of cost (determined on the
first-in, first-out method) or market value and all Inventories are valued such
that the Company reasonably expects to earn its customary gross margins
thereon.  The Company has good and marketable title to the Inventories free
and clear of all Encumbrances except Permitted Encumbrances.  Section 3.20(a)
of the Disclosure Schedule contains a complete list of the addresses of all
warehouses and other facilities in which the Inventories are located.  The
Inventories are in good and merchantable condition in all material respects, are
suitable and useable for the purposes for which they are intended and of an
quantity, quality and condition such that they can be used or sold in the
ordinary course of the business consistent with past practice.  “Inventories” means finished
goods, samples, supplies, work-in-progress or raw materials.

       

      (b)         
 Except as described in Section
3.20(b) of the Disclosure Schedule, the Company has not experienced any
shortage of supply or inability to obtain raw materials, labor or services
required to manufacture and supply its products since January 1, 2009. 
Schedule 3.20(b)
sets forth the Company’s backlog by quarter from January 1, 2009 through
September 30, 2010.

       

      
        
           

        

        
          -30-

          
            

          

        

        
           

        

      

       

      3.21 
     Quality Assurance, Product
Claims.

       

      (a) 
         The Business has in place commercially
reasonable quality controls and quality management systems, procedures and
standards to provide quality assurance for the manufacturing, storage and
transport of Inventories (the “QC Systems”).  Such QC
Systems comply in all material respects with all applicable Laws, Governmental
Approvals, ISO or similar certification requirements, and customer quality
assurance requirements, and are utilized by the Business in its operations,
including the use of commercially reasonable procedures to monitor, detect,
report and cure any failure of such QC Systems.  Section
3.21(a) of the Disclosure Schedule lists any ISO certification or similar
quality designation or registration, currently in effect with respect to the
Business and the expiration date thereof, and describes any audits,
investigations or inspections since January 1, 2009 conducted with respect to
such certification, designation or registration, or otherwise conducted by any
(i) Governmental Authority, or (ii) other Person regarding the QC
Systems.

       

      (b) 
         Section
3.21(b) of the Disclosure Schedule sets forth a brief description of (i)
the product warranty for each of the Company’s products and services, (ii) the
Company’s service and product warranty arrangement with its distributors, and
(iii) any product recalls, warranty claims, complaints or claims regarding
product quality or product liability of the Business whether by customers or
Governmental Authorities, with respect to products experienced since
January 1, 2006, other than minor customer complaints or claims that were
resolved in the ordinary course of business at a cost of less than 5% of the
value of the customer purchase order to which the complaint or claim
related.  There is no Action pending nor has any Action been pending in the
past ten (10) years, or to the knowledge of the Sellers, threatened, alleging
that any product developed, manufactured or sold by or on behalf of the Company
was or is defective, improperly designed or manufactured, or subject to any
product liability claim (whether or not based in strict liability), nor to the
knowledge of the Sellers, is there any basis for any such Action.

       

      3.22 
     Employees and
Consultants.

       

      (a)       
   The Purchaser has been provided copies of all employment agreements
entered into between the Company and its current employees.  Except as
provided in the Employment Agreements or as set forth in Section 3.22
of the Disclosure Schedule, no employee of the Company has been granted the
right to continued employment by the Company or to any compensation following
termination of employment with the Company.  Except as provided herein, the
Company has no present intention to terminate the employment or engagement of
any officer, director, employee, independent contractor or consultant of the
Company (“Contractor”)
and to the knowledge of the Sellers, no Contractor intends to terminate his or
her employment or other engagement with the Company, as applicable.

       

      
        
           

        

        
          -31-

          
            

          

        

        
           

        

      

      (b)       
   Section
3.22 of the Disclosure Schedule sets forth an accurate, correct and
complete list of all (i) employees of the Company, including each
employee’s name, title or position, present annual compensation (including
bonuses, commissions and deferred compensation), accrued and unused paid
vacation and other paid leave, years of service, interests in any incentive
compensation plan, and estimated entitlements to receive supplementary
retirement benefits or allowances (whether pursuant to a contractual obligation
or otherwise), (ii) individuals who are currently performing services for
the Company who are classified as “consultants” or “independent contractors,”
and (iii) bonuses, severance payments, termination pay and other special
compensation of any kind paid to, accrued with respect to, or that would be
payable to (or as a result of the transactions contemplated herein), any present
or former Contractor since the Balance Sheet Date.  No employee of the
Company is eligible for, or with the consummation of the transactions
contemplated by this Agreement would be eligible for, payments that would
constitute “parachute payments” under Section 280G of the
Code.

       

      (c)       
   All employee terminations by the Company, whether of individuals or
of groups of employees, have been performed in accordance with all applicable
Laws, and, to the knowledge of Sellers, there is no basis for any Claim against
the Company, its officers, employees or directors, with respect to any such
termination.  Section
3.22(c) of the Disclosure Schedule sets forth each employee termination
by the Company since January 1, 2009, together with any severance
arrangement agreed with respect to such employee, all of which have been fully
paid.  Except as otherwise noted in Section
3.22(c) of the Disclosure Schedule, each such terminated employee
executed and delivered a full release of the Company (and its officers,
directors, employees and stockholders), copies of which have been provided to
Purchaser.  Each such release was obtained in accordance with all
applicable Laws, is in full force and effect, enforceable in accordance with its
terms, and the terminated employee has not revoked or rescinded, or attempted to
revoke or rescind, or otherwise challenged any such release.

       

      (d)       
   There is no (i) claim, dispute or controversy pending or, to the
knowledge of the Sellers, threatened involving any employee or group of
employees; (ii) collective bargaining agreement, union contract or similar
agreement or arrangement in effect that covers any employees of the Company;
(iii) labor strike, or dispute, lockout or stoppage pending or to the knowledge
of the Sellers, threatened against the Company, and the Company has not
experienced any labor strike or any material dispute, lockout or stoppage since
January 1, 2006; (iv) unfair labor practice charge or complaint against the
Company pending or, to the knowledge of the Sellers, threatened before the
National Labor Relations Board or before any similar state or foreign agency;
(v) organizing activity occurring for purposes of collective bargaining or other
collective labor representation; and (vi) charge pending before the Equal
Employment Opportunity Commission or any other agency responsible for the
prevention of unlawful employment practices.

       

      (e)       
   The Company has complied in all material respects with all Laws
related to the employment of its employees, including provisions related to
wages, hours, leaves of absence, equal opportunity, working conditions,
occupational health and safety, workers’ compensation, severance, employee
handbooks or manuals, collective bargaining and the payment of social security
and other Taxes.

       

      (f)       
   Except as set forth in Section 3.22
of the Disclosure Schedule, neither the execution and delivery of this Agreement
nor the consummation of any or all of the contemplated transactions will: 
(i) entitle any current or former employee of the Company to unemployment
compensation or any similar payment, or (ii) accelerate the time of payment
or vesting or increase the amount of any compensation due to any such employee
or former employee.

       

      
        
           

        

        
          -32-

          
            

          

        

        
           

        

      

       

      (g)         
 To the knowledge of the Sellers, no Contractor of the Company has entered
into any Contract that restricts or limits in any way (i) the scope or type of
work in which such Contractor may be engaged, or (ii) the Contractor’s ability
to transfer, assign, or disclose information concerning his work, or any
inventions, improvements or Intellectual Property created by such Contractor, to
the Company.

       

      3.23 
    Employee
Benefit Plans.

       

      (a)       
   Section 3.23(a)
of the Disclosure Schedule sets forth a complete list of all Plans of
SeaBotix.  The Australian Sub has not at any time had any employees, and
has not had and does not have any obligations to any Person for any employee
benefit, insurance, welfare, pension or other Plan.

      

      (b)       
   With respect to each Plan, the Sellers delivered or made available
to the Purchaser a current, accurate and complete copy thereof and, to the
extent applicable:  (i) all documents that comprise the most current
version of each such Plan and any related trust agreement or other funding
instrument; (ii) the most recent summary plan description for each such
Plan; (iii) Plan Form 5500’s or similar Plan forms for the three preceding
plan years, to the extent required by Title I of ERISA, together with any
audited financial statements and actuarial reports  relating to such Plan;
and (iv) the most recent Governmental Authority determination for each Plan
that is intended to be qualified within the meaning of Section 401(a) of
the Code.

       

      (c)       
   Neither of the Company nor any ERISA Affiliate is currently
contributing to, or has in the past six years contributed to, nor had any
liability in respect of, any multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA, any defined benefit plan within the meaning of
Section 3(35) of ERISA, or any plan that is subject to Section 302 of ERISA or
Title IV of ERISA or Section 412 of the Code.

       

      (d)       
   Except as set forth in Section 3.23(d)
of the Disclosure Schedule, (i) for each Plan that is intended to be
qualified under Code Section 401(a), a favorable determination letter from
the IRS to such effect has been obtained, and nothing has occurred, whether by
action or inaction, that could reasonably be expected to cause the loss of such
qualification and (ii) to the knowledge of the Sellers, each applicable
Plan has been administered in compliance with the Economic Growth and Tax Relief
Reconciliation Act of 2001, the Pension Protection Act of 2006 and all
subsequent legislation enacted through the date hereof and Section 501 of the
Code.

       

      (e)       
   No “prohibited
transaction” within the meaning of Section 406 of ERISA has occurred with
respect to any Plan and no tax has been imposed pursuant to Section 4975 or
Section 4976 of the Code in respect thereof.

       

      (f)       
   Except as set forth in Section 3.23(f)
of the Disclosure Schedule, there are no claims, suits or actions pending or, to
the knowledge of the Sellers, threatened by or on behalf of any of the Plans, by
any employee or beneficiary covered under any such Plan, or otherwise involving
any such Plan (other than routine claims for benefits).

       

      
        
           

        

        
          -33-

          
            

          

        

        
           

        

      

       

      (g)       
   Each Plan listed on Section 3.23(a)
of the Disclosure Schedule is in material compliance with the provisions of
ERISA, the Code, its governing documents and all other applicable Law,
including, without limitation, all notice and other requirements of the Health
Insurance Portability and Accountability Act of 1996, the American Recovery and
Reinvestment Act of 2009 and the Patient Protection and Affordable Care Act as
amended by Healthcare and Reconciliation Act of 2010.

       

      (h)       
   All reports, forms and other documents to the extent required to be
filed with any Governmental Authority or furnished to employees, former
employees or beneficiaries with respect to any Plan (including without
limitation, summary plan descriptions, Forms 5500 and summary annual reports)
have been timely filed and furnished and are accurate or there is a remaining
period of time in which to timely File.

       

      (i)       
    The Company is in material compliance with the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), and all other Laws
that require the continuation of benefit coverage upon the happening of certain
events, such as the termination of employment or change in beneficiary or
dependent status.  The Company does not have  any obligation to
provide health or other non-pension benefits to retired or other former
employees, except as specifically required by COBRA.

       

      (j)       
    There are no unpaid contributions due prior to the date hereof
with respect to any Plan that are required to have been made.

       

      (k)       
   With respect to any Plan:  (i) no filing, application or
other matter is pending with the IRS, the Pension Benefit Guaranty Corporation
(“PBGC”), the United
States Department of Labor or any other governmental body of any Governmental
Authority, and (ii) there are no outstanding material liabilities for
Taxes, penalties or fees.

       

      (l)       
   The Company has not incurred any liability or taken any action, and
to the knowledge of the Sellers there is no action or event that is reasonably
likely to cause it to incur any liability under Section 412 of the Code or
Title IV of ERISA with respect to any “single-employer plan” (as defined in
Section 4001(a)(15) of ERISA).

       

      (m) 
        The Company does not have any Plans that are
nonqualified deferred compensation plans subject to Code Sections 409A and
457A.  The Company does not have any actual or potential obligations to
reimburse or otherwise gross-up any Person for interest or additional tax set
forth in Code Sections 280G, 409A, 457A or 4999.

       

      
        
           

        

        
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      3.24 
     Insurance and Workers’
Compensation.  (a)  Section
3.24(a) of the Disclosure Schedule sets forth an accurate and complete
list of all insurance policies, self-insurance arrangements and fidelity bonds,
currently in effect, that insure the Business and/or the properties of the
Company or are maintained by or on behalf of or provides coverage to the Company
or the Business (collectively, the “Insurance Policies”). 
The Company has delivered to the Purchaser true, correct and complete copies of
all Insurance Policies.  All such Insurance Policies are valid, binding,
and in full force and effect, and all provide occurrence-based, not claims-made
coverage.  The Company is not in breach of any Insurance Policy in any
material respect, and no event has occurred that, with notice or the passage of
time, or both, would constitute such a breach, or permit termination,
modification, or acceleration, of any Insurance Policy.  The Company has
not received any notice of cancellation or non-renewal of any Insurance
Policy.  The consummation of the transactions contemplated herein will not
cause a breach, termination, modification, or cancellation of any Insurance
Policy.  There is no claim under any Insurance Policy as to which any
insurer has questioned, disputed or denied liability.  The Company has not
received any notice of, nor do Sellers have any knowledge of, any facts relating
solely to the Company or the Business that are likely to result in, an increase
in the premium for any Insurance Policy.  Section
3.24 of the Disclosure Schedule sets forth a true and complete list as of
the date hereof of (i) all claims made since January 1, 2006 by the Company
under any insurance policies and (ii) all Claims made or Actions commenced since
January 1, 2006 by or against the Company in which an amount in excess of
$10,000 was claimed, awarded or otherwise paid in settlement.

       

      (b) 
         The workers’ compensation Insurance Policies
maintained by the Company comply with all applicable Laws relating to the
obligation of the Company to maintain such policies.  Section 3.24(b)
of the Disclosure Schedule sets forth all workers’ compensation claims asserted
or filed against the Company or the Business since January 1, 2006, all of
which are covered by the Insurance Policies and have been fully paid except as
otherwise noted, and describes the remedial actions, if any, taken to minimize
future claims, or in response to any audits or inspections by the carrier(s) of
the workers’ compensation Insurance Policies of the Property, Plant and
Equipment of the Company with respect to worker safety, occupational conditions
or Environmental Laws.

       

      3.25 
      Transactions with
Affiliates.  Except as set forth in Section
3.25 of the Disclosure Schedule, no Seller Party or Affiliate of the
Company (a) owns, directly or indirectly, any debt, equity or other
interest in, has a business relationship or competes with the Company;
(b) is indebted to the Company, nor is the Company indebted (or committed
to make loans or extend or guarantee credit) to any Seller Party or Affiliate of
the Company other than with respect to any of the Company’s obligations to pay
accrued salaries, reimbursable expenses or other standard employee benefits to
its employees; (c) has any direct or indirect interest in any asset,
property or other right used in the conduct of or otherwise related to the
Business; (d) has any claim or right against the Company, and to the
knowledge of the Sellers, no event has occurred, and no condition or
circumstance exists, that might (with or without notice or passage of time or
both) directly or indirectly give rise to or serve as a basis for any claim or
right in favor of any Seller Party or Affiliate of  the Company
against  the Company; (e) is a party to any Contract or has had any
direct or indirect interest in, any Contract, transaction or business dealing of
any nature involving the Company; or (f) received from or furnished to the
Company any goods or services (with or without consideration.

      3.26   
    Certain
Payments.  Neither the Company nor any of its officers, directors,
agents or employees, or to the Sellers’ knowledge, any other Person, has
directly or indirectly (a) given or agreed to give any rebate, gift or
contribution, influence payments, bribe, or other payments or benefit to any
customer, supplier, distributor, broker, governmental employee or other Person,
who was, is or may be in a position to help or hinder the Business (or assist in
connection with any actual or proposed transaction) in violation of any law or
that could subject the Company (or the Purchaser after consummation of the
transactions contemplated herein) to any damage or penalty in any civil,
criminal or governmental litigation or proceeding or that would have a Material
Adverse Effect on the Company (or the Purchaser after consummation of the
transactions contemplated herein) or the Business, or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Company.

       

      
        
          
          

        

        
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      3.27 
      Government
Contracts.  The operation of the Business by the Company, as it
relates to the contracts or subcontracts for any Governmental Authority, has
been conducted in all material respects in accordance with all applicable Laws,
and with all requirements of such Governmental Authority, and no condition or
circumstance exists that is reasonably likely to (with or without notice or
passage of time or both) constitute, or result directly or indirectly in, a
default under, a breach or violation of, or a failure to comply by the Company
with any applicable Laws or with the requirements of such Governmental
Authority.  There are no outstanding claims, disputes or audits with
respect to contracts or subcontracts for any Governmental Authority, other than
routine invoices in process and unbilled charges, by any of the Company against
a customer, or by a customer against any of the Company.

       

      3.28 
      Compliance with Export
Controls.  All technology, products and services of the Company are
assembled in and exported solely from the United States.  All the products
and services of the Company are authorized for export from the United States to
all destinations (other than Cuba, Iran, Libya, North Korea, Sudan and Syria)
pursuant to the authorizations listed in Section 3.28
of the Disclosure Schedule, and all requisite government review and
authorizations required for such export have been obtained, and the Company
otherwise complies with all applicable United States and foreign export and
import requirements.

       

      3.29 
      Brokers.  No
Person has acted directly or indirectly as a broker, finder or financial advisor
for the Company or any of Sellers in connection with the negotiations relating
to or the transactions contemplated by this Agreement, and no Person is entitled
to any fee or commission or like payment in respect thereof based in any way on
any agreement, arrangement or understanding made by or on behalf of the Company
or any of the Sellers.

      

      3.30 
      Full
Disclosure.  Neither this Article III of this Agreement, the
Disclosure Schedule, nor any certificate furnished to the Purchaser by or on
behalf of the Sellers in connection the transactions contemplated in this
Agreement contains an untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances in which they were made, not
misleading.

       

      ARTICLE
IV

       

      REPRESENTATIONS
AND WARRANTIES OF PURCHASER

       

      The
Purchaser hereby represents and warrants to the Sellers as of the Closing Date
(or, if made as of a specified date, as of such specified date), as
follows:

       

      4.1 
        Organization and
Standing.  The Purchaser is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
organization.

       

      
        
           

        

        
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    4.2 
        Authority.

     

    (a)       
   The Purchaser has all requisite corporate power and authority to
execute and deliver this Agreement and the Transaction Documents to be executed
and delivered by it and to consummate the transactions contemplated
hereby.

     

    (b)       
   The execution, delivery and performance of this Agreement and the
consummation by the Purchaser of the transactions contemplated hereby, and the
execution, delivery and performance of the Transaction Documents to be executed
and delivered by the Purchaser and the consummation of the transactions
contemplated thereby, have been duly authorized by all necessary action or
proceeding on the part of the Purchaser.

     

    (c)       
   This Agreement and the Transaction Documents to which the Purchaser
is a party, have been duly executed and delivered by the Purchaser, and
constitute the legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser, in accordance with their respective terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws now or hereafter in effect relating to or affecting
creditors’ rights generally, including the effect of statutory and other Laws
regarding fraudulent conveyances and preferential transfers and subject to the
limitations imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).

     

    4.3 
        Conflicts; Consents and
Approvals.  Neither the execution and delivery by the Purchaser, of
this Agreement or the Transaction Documents to which the Purchaser is a party,
nor the consummation of the transactions contemplated hereby:

     

    (a)       
   conflicts with, or results in a breach of any provision of, the
organizational documents of the Purchaser;

     

    (b)       
   violates, or conflicts with, or results in a breach of any
provision of, or constitutes a default (or an event that, with the giving of
notice, the passage of time or otherwise, would constitute a default) under, or
entitles any Person (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate, modify or call a default under, or gives
rise to any obligation to make a payment under, or to any increased, additional
or guaranteed rights of any Person under, or result in the creation of any
Encumbrance upon any of the properties or assets of the Purchaser under any of
the terms, conditions or provisions of (i) any Contract to which the Purchaser
is a party or to which any of its properties or assets are bound or (ii) any
permit, registration, approval, license or other authorization or filing to
which the Purchaser is subject or to which any of its properties or assets is
subject, that would, individually or in the aggregate, be reasonably likely to
prevent or materially impede or delay the consummation by the Purchaser, of the
transactions contemplated by this Agreement;

     

    (c)       
   requires any action, consent or approval of any non-governmental
third party other than any such action, consent or approval the failure to
obtain which would not, individually or in the aggregate, be reasonably likely
to prevent or materially impede or delay the consummation by the Purchaser, as
applicable, of the transactions contemplated by this Agreement;

    
      
         

      

      
        -37-

        
          

        

      

      
         

      

    

    (d)       
   violates any material order, writ, or injunction, decree or Law
applicable to the Purchaser; or

     

    (e)       
   requires any material action, consent or approval of, or review by,
or registration or filing by the Purchaser with, any Governmental
Authority.

     

    4.4 
        Litigation. 
There is no Action pending or threatened in writing, or, to Purchaser’s
knowledge, otherwise threatened, against the Purchaser that seeks, or would be
reasonably likely, to prohibit or restrain the ability of the Purchaser to enter
into this Agreement or prevent or impede or delay the consummation by the
Purchaser of any of the transactions contemplated hereby.

     

    4.5 
        Brokers.  No
Person has acted directly or indirectly as a broker, finder or financial advisor
for the Purchaser in connection with the negotiations relating to or the
transactions contemplated by this Agreement, and no Person is entitled to any
fee or commission or like payment in respect thereof based in any way on any
agreement, arrangement or understanding made by or on behalf of the
Purchaser.

     

    4.6 
        SEC Filings; Financial
Statements.  The Purchaser has timely filed all reports required to
be filed by it under the Exchange Act of 1934, as amended (the “Exchange Act”) prior to the
date hereof by it with the SEC since July 1, 2007 (such reports, including any
amendments thereto (excluding, for the avoidance of doubt, any items “furnished”
but not filed with the SEC), the “Purchaser SEC Reports”). 
As of their respective dates, or, if amended or superseded by a subsequent
filing, as of the date of the last such amendment or superseding filing prior to
the date hereof, the Purchaser SEC Reports complied in all material respects
with the requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002, as
the case may be, and the applicable rules and regulations promulgated
thereunder, and to the knowledge of the Purchaser, do not contain any statements
that were, at the time and in light of the circumstances made, false or
misleading with respect to any material fact.  The financial statements of
the Purchaser included in the Purchaser SEC Reports, comply in all material
respects with applicable accounting requirements and the requirements of the
Exchange Act and the Sarbanes-Oxley Act of 2002, as the case may be, and the
applicable rules and regulations promulgated thereunder with respect thereto as
in effect at the time of filing.  Such financial statements have been
prepared in all material respects in accordance with GAAP applied on a
consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto and except that
unaudited financial statements may not contain footnotes required by GAAP, and
fairly present in all material respects the financial position of the Purchaser
as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
year-end audit adjustment.

    
      
         

      

      
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    ARTICLE
V

     

    COVENANTS
AND AGREEMENTS

     

    5.1 
        Non-Solicitation of
Employees.  During the Restricted Period, each of the Sellers, each
of whom acknowledge that they are deriving substantial economic benefit from the
transactions contemplated by this Agreement, shall not directly or indirectly,
hire, solicit or encourage to leave the employment of the Company, any Person
who is an employee of the Company at any time during the Restricted Period 
or hire any such employee who has left the employment of the Company; provided,
however, that the foregoing provisions shall not apply to a general
advertisement or solicitation program that is not specifically targeted at such
persons.

     

    5.2 
        Non-competition. 
In partial consideration of the Purchase Price and as an inducement for the
Purchaser to enter into this transaction and in order to preserve the goodwill
of the Business, each Restricted Seller, each of whom acknowledges that he or it
is deriving substantial economic benefit from the transactions contemplated by
this Agreement, (i) agrees that he or it will not directly or indirectly, during
the Restricted Period, solicit any Person who is a customer of the Business, as
of the Closing Date, or to the knowledge of the Restricted Seller, a customer or
potential customer (identified by the Company or the Purchaser and known by the
Restricted Seller) of the Business during the Restricted Period, or directly or
indirectly, encourage any licensor, supplier or other third party contractor of
any of the Company, to terminate, or not to renew its arrangement with the
Company and (ii) agrees that he or it will not (and will cause each of its
controlled Affiliates not to), directly or indirectly, during the Restricted
Period, engage in or carry on, directly or indirectly, or be employed by or be
engaged as a director, consultant or adviser or provide services to any business
engaged in the business of manufacturing, developing, marketing or selling
micro, mini or observation class ROVs (the “Competitive Business”) or
become interested in any such Person engaged in a Competitive Business as
an individual, partner, member, stockholder, officer, director, principal,
agent, employee, trustee, consultant or in any other relationship or
capacity.  Notwithstanding the foregoing, nothing in this Section 5.2
of this Agreement shall prevent any of the Restricted Sellers from owning as a
passive investment less than 2% of the outstanding equity or participation
interests in any Person.

     

    5.3 
        Confidentiality. 
Each of the Sellers, each of whom acknowledge that they are deriving substantial
economic benefit from the transactions contemplated by this Agreement, shall
keep secret and retain in strictest confidence, and shall not use for the
benefit of himself or others, all Proprietary Information relating to the
Business or the Company, including, without limitation, Intellectual Property,
operational methods and other business affairs relating to the Business or the
Company.  “Proprietary Information” includes but is not limited to any and
all (a) technical, non-technical, scientific, biological and other information,
computer software (whether in source code or object code form), programs, tools,
data, research, designs, drawings, diagrams, plans, specifications, concepts,
structures, improvements, products, prototypes, methods, techniques, know-how,
trade secrets, hardware, devices, schematics, works in process, systems,
technologies or applications; (b) financial and other information about costs,
profits, markets, sales and pricing structures, customers, subscribers, donors,
members, and bids; (c) plans, forecasts and strategies for business, marketing,
future development and new product concepts; and (d) employee personnel files
and information about employee compensation and benefits; in any form and
whether or not labeled or identified as confidential or proprietary; provided,
however, the foregoing shall not include (i) information that is or becomes
generally available to the public other than as result of a disclosure by a
Seller or any of its or his agents, representatives, Affiliates, employees or
consultants in violation of its or his obligations of confidentiality hereunder
or (ii) information that is or becomes available to a party on a
non-confidential basis from a source which is not prohibited from disclosing
such information to that party by a legal contractual or fiduciary obligation to
the other party.

    
      
         

      

      
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    5.4 
        Rights and
Remedies.  The obligations under Sections
5.1 through 5.3,
inclusive (the “Restrictive
Covenants”) shall be in addition to any obligations any of the Sellers
may have under any other Contract with the Company or the Purchaser.  The
parties to this Agreement agree that the remedy at law for any breach of the
Restrictive Covenants will be inadequate and that each of the parties, in
addition to any other relief available to it, shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual
damages.

     

    5.5 
        Severability and
Duration.  Each Seller agrees that the Restrictive Covenants shall
be deemed to be a series of separate covenants, one for each month of the
Restricted Period and for each county, state, territory and jurisdiction of the
United States and each foreign jurisdiction in which the Business is conducted
as of Closing.  With respect to any judicial proceeding, each applicable
party  agrees that (i) if a court or arbitrator shall refuse to enforce any
of these separate covenants, such unenforceable covenants shall be deemed
eliminated from the provisions hereof for the purposes of such proceeding to the
extent necessary for the remaining separate covenants to be enforced in such
proceeding and (ii) if a court or arbitrator shall refuse to enforce one or more
of the separate covenants because the total time thereof is deemed to be
excessive or unreasonable, then such covenants which would otherwise be
unenforceable due to such excessive or unreasonable period of time shall be
enforced for such lesser period of time as shall be deemed reasonable and not
excessive by such court or arbitrator.

     

    5.6 
        Sellers’
Representative.  Each Seller irrevocably appoints
Donald Rodocker as the Sellers’ Representative, to act as its duly
authorized representative in all matters of the administration and enforcement
of this Agreement and the Stock Pledge Agreement, to receive and distribute the
Purchase Price in accordance with the percentage interests set forth in Schedule
A hereto, to defend, negotiate and resolve any indemnification claims or
demands by or against the Purchaser, and otherwise to exercise the powers and
perform the duties of the Sellers set forth in this Agreement.  If such
appointed Sellers’ Representative resigns or is unable to serve, then each
Seller agrees that a majority in interest of the Sellers shall select a
successor Sellers’ Representative within ten (10) Business Days after notice of
such resignation or inability to serve.  Each of the Sellers acknowledge
and agree that the Purchaser shall have no obligation of investigation with
respect to, and no responsibility or liability for, any actions or inactions of
the Sellers’ Representative, including without limitation, any distributions of,
or failure to distribute, the Purchase Price, or for any insolvency or
malfeasance of the Sellers’ Representative.  The Sellers’ Representative
shall have the right to deduct from any amount otherwise payable to the Sellers
the amount of the Sellers’ Representatives reasonable fees and costs incurred in
connection with serving in such capacity.

    
      
         

      

      
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    5.7 
   Earnout
Period Operations.  During the Earnout Period, the Purchaser shall
make an intercompany line of credit available to the Company to fund Company
operations in accordance with past practices and operations as of the Closing,
such operations not to exceed the expense to revenue ratios set forth in the
budget attached as Schedule
5.7 hereto (the “Earnout
Budget”).  In addition, the Purchaser agrees that it shall not
unilaterally cause changes to be made in the Company’s operations and Business
during the Earnout Period, provided that the Company’s operations are not
exceeding the expense to revenue ratios set forth in the Earnout Budget. 
Such expense to revenue ratios shall be measured on a rolling twelve month basis
(historical).

     

    5.8 
   Directors
and Officers Insurance.

     

    (a)         
 The Purchaser shall direct the Company to maintain, at the Company’s
expense, a policy of run-off directors’ and officers’ liability insurance, for
acts and omissions occurring prior to the Closing Date (“D&O Insurance”) with
coverage in amount and scope at least as favorable as the Company’s existing
directors’ and officers’ liability insurance coverage for a period of six years
after the Closing Date, provided that such D&O Insurance does not cost in
excess of Ten Thousand Dollars ($10,000).

     

    (b)         
 If the Purchaser or the Company or any of their respective successors or
assigns (i) shall consolidate with or merge into any other corporation or other
entity and shall not be the continuing or surviving corporation or entity of the
consolidation or merger or (ii) shall transfer all or substantially all of its
properties and assets to any individual, corporation or other entity, then and
in each such case, proper provisions shall be made so that the successors and
assigns of Purchaser or the Company shall assume all of the obligations set
forth in this Section 5.8.

     

    (c)         
 The provisions of this Section
5.8 are intended to be for the benefit of, and shall be enforceable by
each of the persons covered by such D&O Insurance, their heirs and their
representatives.

     

    ARTICLE
VI

     

    CONDITIONS
TO CLOSING

     

    6.1 
        Mutual
Conditions.  The respective obligations of each party hereto to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment or, if legally permitted, waiver by all parties hereto at or
prior to the Closing of the following conditions:

    (a)       
   There shall not be in effect any Order issued by any Governmental
Authority preventing the consummation of the transactions contemplated herein,
seeking any material damages as a result of the transactions contemplated
herein, or otherwise materially affecting the right or ability of the Sellers to
sell the Shares or the Purchaser to own, operate or control the Business or the
Shares, nor shall any Action be pending that seeks any of the
foregoing.

     

    
      
        
        

      

      
        -41-

        
          

        

      

      
        
        

      

    

     

    (b)       
   There shall not be any Law prohibiting the Sellers from selling the
Shares or the Purchasers from owning, operating or controlling the Business or
the Shares or that makes this Agreement or the consummation of the transactions
contemplated herein illegal.

     

    6.2 
        Conditions to Purchaser’s
Obligations.  The obligations of the Purchaser to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment
or waiver by the Purchaser prior to or at the Closing of each of the following
conditions:

     

    (a)       
   The representations and warranties of the Sellers set forth in
Article III of this Agreement shall be true and correct in all respects as of
the date hereof and as of the Closing (except that representations and
warranties made as of a specified date, shall be true and correct only as of
such specified date).

     

    (b)       
   The Sellers and the Company shall have performed in all material
respects each obligation and agreement to be performed by it, and shall have
complied in all material respects with each covenant, in each case, required by
this Agreement to be performed or complied with by it at or prior to the
Closing.

     

    (c) 
         Prior to or at the Closing, the Company and
the Sellers shall have delivered to the Purchaser the items to be delivered by
the Company, and each Seller.

    

    (d) 
         No Action shall have been commenced or
threatened against the Purchaser (i) involving any challenge to, or seeking
Damages or other relief in connection with, the transactions contemplated
herein; or (ii) that may have the effect of preventing, delaying, making
illegal, imposing limitations or conditions on or otherwise interfering with the
transactions contemplated herein.

     

    6.3 
        Conditions to Sellers’
Obligations.  The obligations of the Sellers to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment
or waiver by Sellers’ Representative at or prior to the Closing of each of the
following conditions:

     

    (a)       
   The representations and warranties of the Purchaser set forth in
Article IV of this Agreement shall be true and correct in all respects as
of the date hereof and as of the Closing (except that representations and
warranties made as of a specified date shall be true and correct only as of such
specified date).

     

    (b)       
   The Purchaser shall have performed in all material respects each
obligation and agreement to be performed by it, and shall have complied in all
material respects with each covenant, in each case, required by this Agreement
to be performed or complied with by it at or prior to the Closing.

    

     

    (c)       
   Prior to or at the Closing, the Purchaser shall have delivered to
the Sellers the items to be delivered pursuant to Section
2.7.

     

    (d)       
   No Action shall have been commenced or threatened against the
Sellers or the Company (i) involving any challenge to, or seeking Damages
or other relief in connection with, the transactions contemplated herein; or
(ii) that may have the effect of preventing, delaying, making illegal,
imposing limitations or conditions on or otherwise interfering with the
transactions contemplated herein.

     

    
      
         

      

      
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    6.4 
        Frustration of Closing
Conditions.  None of the Sellers or the Purchaser may rely on the
failure of any condition set forth in this Article VI to be satisfied if such
failure was caused by such party’s failure to act in good faith or to use its
commercially reasonable efforts to cause the Closing to occur.

     

    ARTICLE
VII

     

    SURVIVAL;
INDEMNIFICATION

     

    7.1 
        Survival of Representations
and Warranties.  All of the representations and warranties provided
for in this Agreement or in any certificate delivered pursuant to the provisions
hereof or in connection with the transactions contemplated hereby shall survive
the Closing until September 30, 2012; provided that the representations and
warranties set forth in the second sentence of Section
3.1(a), and Sections
3.2(a), 3.3, 3.4, 3.6(a) and Sections 
4.1 and
4.2
(collectively, the “Title
Reps”) shall survive indefinitely, and the representations and warranties
set forth in Sections
3.1(b)-(d), 3.5, 3.7, 3.8, 3.9(a), 3.11, 3.13, 3.23 and Section
4.3 shall
survive until the statute of limitations; provided further that
any representations and warranties shall survive with respect to, and to the
extent of, any claim for indemnification made in accordance with this Article
VII prior to the applicable termination date until final resolution of such
claim.  No party shall have a right to bring a claim for indemnification
after the expiration of the survival period of such representation or warranty
set forth in the first sentence of this paragraph. The representations and
warranties contained in this Agreement, rights to indemnification, covenants,
obligations, payment of Damages and or other remedies, shall not be affected by
any investigation, verification or examination by any party hereto or by any
Representative of any such party.

     

    7.2 
        Indemnification by the
Sellers.

     

    (a) 
         Subject to the limitations set forth in this
Article VII, the Sellers shall (i) jointly and severally as to the Joint
Indemnifying Sellers, and (ii) severally as to the Sellers who are not Joint
Indemnifying Sellers, indemnify, defend and hold harmless the Purchaser and its
Affiliates, and their respective officers, directors, employees, agents and
representatives (collectively, the “Representatives”), and each of
their heirs, executors, successors and assigns, against and in respect of any
and all Damages to the extent arising out of or resulting from:

     

    (i) 
         any breach of a representation or warranty
made by the Sellers in  this Agreement or any Schedule hereto;

     

    (ii) 
        any breach of or failure to carry out, perform,
satisfy and discharge any agreement or covenant of the Sellers contained in this
Agreement;

     

    (iii) 
       the actions or inactions of the Sellers’
Representative in connection with this Agreement and distribution of the
Purchase Price in accordance with Section
2.2;

    
      
         

      

      
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    (iv) 
       any claim by any Seller or any former stockholder
arising out of or in connection with any action, event or occurrence relating to
the Company prior to the Closing;

     

    (v) 
        any claim arising from a defective product shipped
or manufactured by, or any services provided by, the Company, prior to the
Closing;

     

    (vi) 
       any claim arising from or asserted in connection with
the C-I Litigation;

     

    (vii) 
      any and all liability for Taxes imposed on the Company or
the Purchaser for or relating to, (A) any taxable period, or portion thereof,
ending on or before the Closing Date in excess of any amount of Taxes taken into
account as a liability in computing the Pro-Forma Working Capital, or (B) any
Seller Party, in each case whenever arising or asserted; and any and all
liability, costs, expenses or penalties incurred by or assessed against the
Company in connection with the currently pending audit by the IRS of the
Company; or

     

    (viii) 
      any Environmental Claim arising out of or relating
to:  (i) (A) the ownership, operation, or condition at any time on or prior
to the Closing Date of the Real Property, or any other properties and asset
(whether real, personal, or mixed and whether tangible or intangible) in which
the Company has or had an interest, (B) any Regulated Substances that were
present on the Real Property or such other properties and assets at any time on
or prior to the Closing Date; or (ii) (Y) any Regulated Substances that were, or
were allegedly, generated, transported, stored, treated, Released, or otherwise
handled by the Company or any Seller Party or by any other Person for whose
conduct they are or may be held responsible at any time on or prior to the
Closing Date, or (Z) any activities relating to Regulated Substances that were,
or were allegedly, conducted by the Company or any Seller Party or by any other
Person for whose conduct they are or may be held responsible at any time on or
prior to the Closing Date; or

     

    (ix) 
        any bodily injury (including illness, disability,
and death, and regardless of when any such bodily injury occurred, was incurred,
or manifested itself), personal injury, property damage (including trespass,
nuisance, wrongful eviction, and deprivation of the use of real property), or
other claim by or damage of or to any Person, including any employee or former
employee of the Company or any other Person for whose conduct they are or may be
held responsible, in any way arising from or allegedly arising from any
violation of Environmental Law conducted or allegedly conducted with respect to
the Real Property or the operation of the Company prior to the Closing Date at
any time, or from Regulated Substances that were (i) present or suspected to be
present on or before the Closing Date on or at the Real Property (or present or
suspected to be present on any other property, if such Regulated Substances
emanated or allegedly emanated from any of the Real Property on or prior to the
Closing Date), or (ii) Released or allegedly Released by the Company or any
other Person for whose conduct they are or may be held responsible, at any time
on or prior to the Closing Date.

    
      
         

      

      
        -44-

        
          

        

      

      
         

      

    

    The
indemnification obligations of the Joint Indemnifying Sellers set forth in this
Section 7.2
shall be the joint and several obligations of each Joint Indemnifying Seller and
the Purchaser shall not have an obligation to pursue or join each of the Joint
Indemnifying Sellers or any other Seller in any Claim asserted
hereunder.

     

    (b) 
        Notwithstanding the foregoing,

     

    (i) 
         in the case of Damages incurred as a result of
breach(es) of clause (i) of Section
7.2(a) above, (A) the Sellers shall not be liable for indemnification
hereunder unless and until the aggregate amount of such Damages exceeds $100,000
(the “Sellers’ Basket”),
in which event the Purchaser and such other indemnified persons shall be
entitled to indemnification for all Damages as a result of such breach(s), and
(B) the Sellers shall not be liable for any such claim unless Damages resulting
from or relating to such claim exceed Ten Thousand Dollars ($10,000) (the “Indemnity Threshold”), in
which case such claim shall count against the Sellers’ Basket and, subject to
the amount of the claims applied against the Sellers’ Basket exceeding the
amount of Sellers’ Basket, the Sellers shall be liable for all such Damages for
such claim without regard to the Indemnity Threshold; and

     

    (ii) 
          the Sellers’ aggregate liability under
clauses (i) through (v) of Section
7.2(a) above shall in no event exceed Ten Million Dollars ($10,000,000)
(the “Sellers’ Aggregate
Cap”);

     

    provided,
however, that the Indemnity Threshold, the Sellers’ Basket, Joint Indemnifying
Seller Cap and the Sellers’ Aggregate Cap shall not apply to any Seller
indemnification obligation (w) contained in clauses (vi) through (viii) of Section 7.2(a),
(x) arising out of, relating to or resulting from actual fraud by a Seller, (y)
arising out of, or relating to a failure of any Seller to comply with a
Restrictive Covenant, or (z) from a breach of any of the Title Reps made by the
Sellers.

     

    (c) 
        Prior to making a claim for indemnification
hereunder arising from a matter that is covered by the Company’s insurance, the
Purchaser shall cause the Company to take commercially reasonable measures to
pursue such insurance coverage for any Damages incurred by Purchaser for which
the Company has such insurance.  If such insurer has not acknowledged
liability for any indemnity amount claimed within a reasonable amount of time,
not to exceed sixty (60) days from the date the claim was filed, or paid the
amount of any claim within a reasonable amount of time, not to exceed one
hundred twenty (120) days from the date the claim was filed, then the Purchaser
may, subject to the limits set forth in this Article VII, seek indemnification
from the Sellers for the amount of such Damages.  The amount of any Damages
for which indemnification is provided under this Article VII shall be net of any
amounts actually recovered by the Company, Purchaser or its Representatives or
by a Seller, as the case may be, under an insurance policy or from any third
party pursuant to indemnification (or otherwise) with respect to such loss,
liability, cost or expenses (without imposing any obligation on Purchaser to
pursue such insurance or third party indemnification (or otherwise), except
solely to the extent provided above with respect to the Company’s
insurance).  Upon payment of any indemnification amount to Purchaser
(including by offset) for Damages covered by the Company’s insurance, the
Purchaser shall, upon request of Sellers Representative, cause the Company to
assign over to the Sellers its rights, if any to pursue such
insurance.

    
      
         

      

      
        -45-

        
          

        

      

      
         

      

    

    (d) 
        In addition to any other remedies available to the
Purchaser hereunder, the Purchaser, at its election, shall have the right to
apply the amount of all or any portion of any Damages for which it is
indemnified pursuant to this Section 7.2 to offset and reduce the amount any
Earnout Payments or of the Holdback Amount.

     

    7.3 
        Indemnification by the
Purchaser.

     

    (a) 
         Subject to the limitations set forth in this
Article VII, the Purchaser shall indemnify, defend and hold harmless the Sellers
and their Representatives, against and in respect of any and all Damages to the
extent arising out of or resulting from:

     

    (i) 
         any breach of a representation or warranty
made by the Purchaser in this Agreement or any Schedule hereto; or

     

    (ii) 
        any breach of or failure to carry out, perform,
satisfy and discharge any agreement or covenant of the Purchaser contained in
this Agreement.

     

    (b) 
         Notwithstanding the foregoing, (i) in the case
of Damages incurred as a result of a breach set forth in clause (i) of Section
7.3(a) above, (A) the Purchaser shall not be liable for indemnification
hereunder unless and until the aggregate amount of such Damages exceeds $100,000
(the “Purchaser’s
Basket”), in which event the Sellers shall be entitled to indemnification
for all Damages in excess of the Purchaser’s Basket as a result of such breach,
and (B) the Purchaser shall not be liable for any claim until Damages resulting
from or relating to such claim exceed the Indemnity Threshold, in which case
such claim shall count against the Purchaser’s Basket and, subject to the amount
of the claims applied against the Purchaser’s Basket exceeding the amount of the
Purchaser’s Basket, the Purchaser shall be liable for all Damages for such claim
without regard to the Indemnity Threshold; and (ii) the Purchaser’s aggregate
liability under clauses (i) and (ii) of Section
7.3(a) above shall in no event exceed Ten Million Dollars ($10,000,000)
(the “Purchaser’s Cap”);
provided, however, that the Purchaser’s Basket and the Purchaser’s Cap shall not
apply to (x) any Purchaser indemnification obligation arising out of, relating
to or resulting from actual fraud by the Purchaser or (y) any claim relating to
the payment of the Purchase Price as the same is earned and becomes
due.

     

    7.4 
        Definition of
Damages.  “Damages” shall mean and
include, collectively, any and all damages, injuries, claims, expenses, demands,
settlements, judgments, awards, fines, penalties, Taxes, losses, Liabilities,
together with all out-of-pocket costs and expenses, including reasonable fees
and disbursements of counsel, accountants, consultants or experts and expenses
paid to third parties for investigation, reasonably incurred or suffered by a
party entitled to indemnification hereunder as a result of a matter giving rise
to a claim for indemnification hereunder, whether or not involving a third party
claim.

    
      
         

      

      
        -46-

        
          

        

      

      
         

      

    

    7.5 
        Procedures for
Indemnification.

     

    A party
entitled to be indemnified pursuant to Section
7.2 or 7.3
(the “Indemnified
Party”) shall promptly notify, in accordance with Section
8.1, the party liable for such indemnification (the “Indemnifying Party”), in
writing, of any claim or demand with reasonable specificity, under which the
Indemnified Party has determined has given or is reasonably likely to give rise
to a right of indemnification under this Agreement within 45 days of such
determination; provided, however, that a failure to provide such notice shall
not relieve any Indemnifying Party of its obligations hereunder except to the
extent that it has been materially prejudiced by such failure.

     

    If the
Indemnified Party shall notify the Indemnifying Party of any claim or demand
pursuant to Section
7.5, and if such claim or demand relates to a claim or demand asserted by
a third party against the Indemnified Party that the Indemnifying Party
acknowledges is a claim or demand for which it must indemnify or hold harmless
the Indemnified Party under Section
7.2 or 7.3,
the Indemnifying Party shall have the right to employ counsel of its choice, and
reasonably acceptable to the Indemnified Party, to defend any such claim or
demand asserted against the Indemnified Party.  The Indemnified Party shall
have the right to participate in the defense of any such claim or demand at its
own expense.  The Indemnifying Party shall notify the Indemnified Party in
writing, as promptly as possible (but in any case before the due date for the
answer or response to a claim, as such due date may be modified or extended)
after the date of the notice of claim given by the Indemnified Party to the
Indemnifying Party under Section
7.5, of its election to defend in good faith any such third party claim
or demand.  So long as the Indemnifying Party is defending in good faith
any such claim or demand asserted by a third party against the Indemnified
Party, the Indemnified Party shall not settle or compromise such claim or
demand.  The Indemnified Party shall make available to the Indemnifying
Party or its agents, at the Indemnifying Party’s cost, all records and other
material in the Indemnified Party’s possession reasonably required by it for its
use in contesting any third party claim or demand.  Neither the
Indemnifying Party nor the Indemnified Party shall settle or compromise any such
claim or demand unless the Indemnifying Party or the Indemnified Party, as the
case may be, is given a full and complete release of any and all liability by
all relevant parties relating thereto.  If notice is given to an
Indemnifying Party of the commencement of any action and it does not, within 15
days after the Indemnified Party’s notice is given, give notice to the
Indemnified Party of its election to assume the defense thereof, the
Indemnifying Party shall be bound by any determination made in such action or
any compromise or settlement thereof effected by the Indemnified Party. 
Notwithstanding the foregoing, if an Indemnified Party determines in good faith
that there is a reasonable probability that an action may adversely affect it or
its Affiliates other than a result of monetary damages, such Indemnified Party
may, by notice to the Indemnifying Party, assume the exclusive right to defend,
compromise or settle such action, but the Indemnifying Party shall not be bound
by any determination of an action so defended or any compromise or settlement
thereof effected without its consent (which shall not be unreasonably withheld,
conditioned or delayed).

    
      
         

      

      
        -47-

        
          

        

      

      
         

      

    

    

    7.6 
        Dispute Resolution
Process.

    

    (a) 
         The parties will attempt in good faith to
resolve by negotiation any legal controversy or claim arising out of or relating
to this Agreement other than disputes which are expressly governed by other
contractual agreements (a “Dispute”).  To invoke
this procedure, the disputing party will give to each of the other relevant
parties written notice of the Dispute in accordance with Section
8.1, citing this Section
7.6.  Within thirty (30) days after delivery of the notice, each
party receiving the notice will submit to the others a written response. 
Each notice and response will include a statement of the party’s position and a
summary of the evidence and arguments supporting the party’s position; the
failure by any party to mention particular evidence or argument in any notice or
response will not, however, preclude the party from presenting additional
evidence or arguments during the course of negotiations or any subsequent
proceeding.  The parties to the Dispute will thereafter delegate three (3)
persons each to meet promptly at a mutually acceptable place, to attempt to
resolve the Dispute. 

     

    (b) 
         If for any reason the Dispute is not resolved
within sixty (60) days after delivery of the original notice of the Dispute, any
party may proceed to pursue arbitration pursuant to Section
8.3 hereof.

    

    (c) 
         A party may seek a preliminary injunction or
other preliminary judicial relief if in his or its judgment such action is
necessary to avoid irreparable damage.  Despite any such action, the
parties will continue to participate in good faith in the procedures set forth
in this Section
7.6.  All applicable statutes of limitation will be tolled during
the pendency of any Dispute resolution hereunder, and the parties agree to take
such action, if any, required to effectuate such tolling.

     

    7.7 
        Exclusive
Remedy.  From and after the date of this Agreement, the Purchaser
and each Seller hereby acknowledge and agree that, other than with respect to
claims alleging actual fraud, their respective sole and exclusive remedy for
Damages with respect to any and all Claims against any other party, its
Affiliates for indemnification under this Article VII shall be in lieu of any
rights the parties may have under law.  All of the indemnification
obligations contained in this Article VII shall survive indefinitely; provided
that, for avoidance of doubt, no party shall have a right to bring a claim for
indemnification for breach of a representation or warranty after the expiration
of the survival period of such representation or warranty as set forth in the
first sentence of Section 7.1  All covenants and agreements contained
herein that by their terms contemplate actions or impose obligations following
the Closing shall survive the Closing and remain in full force and effect in
accordance with their terms, and not subject to the exclusive remedy provisions
set forth in this Section 7.7.

    

    ARTICLE
VIII

     

    MISCELLANEOUS

     

    8.1 
        Notices.  All
notices or other communications required or permitted hereunder shall be in
writing and shall be delivered personally, by facsimile or electronic mail (with
confirming copy sent by one of the other delivery methods specified herein) or
by prepaid courier, and shall be deemed given when so delivered personally, or
when so received by facsimile or electronic mail or courier, after the date of
mailing, as follows:

     

    If to the
Sellers:

     

    Donald Rodocker

    as
Sellers’ Representative

    c/o
SeaBotix Inc.

    2877
Historic Decatur Road, Suite 100

    San
Diego, CA 92106

    Facsimile: 
           619-450-4001

    Attention: 
           Donald Rodocker

    Don @SeaBotix.com

    
      
         

      

      
        -48-

        
          

        

      

      
         

      

    

    with a
copy to:

    

    Mintz
Levin Cohn Ferris Glovsky and Popeo

    3580
Carmel Mountain Rd, Suite 300

    San
Diego, CA 92130

    Facsimile: 
 858-314-1501

    Attention: 
  Jeremy Glaser

     
    jglaser@mintz.com

     

    If to
Purchaser:

     

    Bolt
Technology Corporation

    Four Duke
Place

    Norwalk,
CT  06854

    Facsimile: 
     203-854-9601

    Attention: 
      Raymond Soto

    ray.soto@bolt-technology.com

     

    with a
copy to:

     

    Levett
Rockwood P.C.

    33
Riverside Avenue

    Westport,
CT  06880

    Facsimile: 
     203-226-8025

    Attention: 
      Barbara A. Young, Esq.

     
                     
byoung@levettrockwood.com

     

    or to
such other address and with such other copies as any party hereto shall notify
the other parties hereto (as provided above) from time to time.

     

    8.2 
        Expenses. 
Regardless of whether the transactions provided for in this Agreement are
consummated, each of the Sellers, and the Company on the one hand and the
Purchaser on the other, shall pay its own expenses incident to this Agreement
and the transactions contemplated hereby and thereby (including legal fees,
accounting fees, investment banking fees and filing fees).

    
      
         

      

      
        -49-

        
          

        

      

      
         

      

    

    8.3 
         Governing Law;
Arbitration.  This Agreement and any claim, controversy or dispute
arising under or related to the Agreement, the relationship of the parties,
and/or the interpretation and enforcement of the rights and duties of the
parties, shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to choice of law principles.  Each of the
parties consent to the exclusive jurisdiction of the courts of the State of
Delaware and the federal district courts for the State of Delaware, and waive
any claim of lack of jurisdiction.  Should the parties be unable to resolve
a Dispute pursuant to Section
7.6, the parties hereto hereby agree that such Dispute will be resolved
by final and binding three-person arbitration under the applicable rules of the
American Arbitration Association.  Such arbitration shall be subject to the
rules, and procedures and fee schedule in effect at the time the arbitration is
requested.  The costs of such arbitration shall be borne equally by the
parties with their legal fees and legal costs borne by each party
separately.  Such arbitration decision shall be final and binding upon the
parties, except that, should a court having jurisdiction find any portion of
this Agreement unenforceable, the remainder of the Agreement shall remain in
effect.

     

    8.4 
         Assignment; Successors and
Assigns; No Third Party Rights.  This Agreement may not be assigned
by any party hereto or thereto without the prior written consent of the other
parties hereto or thereto, and any attempted assignment shall be null and void;
provided, however, this Agreement may be assigned or transferred by the
Purchaser without the prior written consent of the other parties hereto to an
Affiliate of the Purchaser.  This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.  Except as provided in Sections
5.8, 7.2
and 7.3,
this Agreement shall be for the sole benefit of the parties hereto, and their
respective successors and permitted assigns and is not intended, nor shall be
construed, to give any Person, other than the parties hereto and their
respective successors and permitted assigns any legal or equitable right,
benefit, remedy or claim hereunder.

     

    8.5 
         Counterparts. 
This Agreement may be executed in counterparts, each of which shall be deemed an
original agreement, but all of which together shall constitute one and the same
instrument.

     

    8.6 
         Titles and
Headings.  The headings and table of contents in this Agreement are
for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.

     

    8.7 
         Entire
Agreement.  This Agreement and the Transaction Documents constitutes
the entire agreement among the parties hereto with respect to the matters
covered hereby and thereby, and supersedes all previous written, oral or implied
understandings among them with respect to such matters, including without
limitation, the letter of intent between the Purchaser and the Company dated
September 10, 2010.

     

    8.8 
         Amendment and
Modification.  This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.

     

    8.9 
         Publicity; Public
Announcements.  Unless otherwise required by applicable Laws or the
requirements of any national securities exchange (and, in that event, only if
time does not permit), the Sellers’ Representative and the Purchaser shall
consult with each other before issuing, and give each other a reasonable
opportunity to review and comment upon, any press release with respect to the
transactions contemplated hereby and shall not issue any such press release
without each other’s consent, which consent shall not be unreasonably withheld
or delayed.  The parties agree that the initial press release to be issued
with respect to this Agreement and the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the
parties.

    
      
         

      

      
        -50-

        
          

        

      

      
         

      

    

    8.10 
       Waiver.  Any of
the terms or conditions of this Agreement may be waived at any time by the party
or parties hereto entitled to the benefit thereof, but only by a writing signed
by the party or parties waiving such terms or conditions.

     

    8.11 
       Severability. 
If any term, provisions, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.  Upon such determination, the parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the fullest extent possible.

     

    8.12 
       No Strict
Construction.  Each of the parties hereto acknowledges that this
Agreement has been prepared jointly by the parties hereto and shall not be
strictly construed against any party hereto.

     

    8.13 
       Knowledge of the
Sellers.  To the extent that any representation is made to “Sellers’ knowledge” (or
similar words, including “to
the knowledge of the Sellers”), such knowledge shall be deemed to include
(a) the actual knowledge of Donald Rodocker, Rick Timm, Michael Jones, Kevin
O’Sullivan, Jesse Rodocker and Sheldon Rubin, each in his capacity as an owner
of Shares, officer, director and/or Contractor of the Company,  and (b) any
fact that is contained in the Company’s electronic or physical files as of the
Closing Date.

     

    8.14 
       Specific
Performance.  The parties agree that if any of the provisions of
this Agreement were not performed in accordance with its specific terms or were
otherwise breached, irreparable damage would occur, no adequate remedy at law
would exist and damages would be difficult to determine; accordingly, the
parties shall be entitled to specific performance of the terms hereof or
injunctive relief, in addition to any other remedy at law or in
equity.

     

    8.15 
       Further
Assurances.  Each party agrees to (a) furnish upon request to each
other party such further information, (b) to execute and deliver to each other
party such other documents and (c) to do such other acts and things, all as
another party may reasonably request for the purpose of carrying out the intent
of this Agreement and the transactions contemplated herein.

     

    IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed as of the day and
year first above written.

    
      
         

      

      
        -51-

        
          

        

      

      
         

      

    

    

    
      
        	
                PURCHASER:

              
	 
      
	
                BOLT
      TECHNOLOGY CORPORATION

              
	 
      
	
                By: 
      

              	
                /s/ Raymond M. Soto

              
	 
      	
                Name:
      Raymond M. Soto

              
	 
      	
                Title:
      President

              
	 
      	 
      
	
                SELLERS:

              
	 
      	 
      
	
                /s/ Doug Austin

              
	
                Doug
      Austin

              
	 
      
	
                /s/ Karla Bayne Rodocker

              
	
                Karla
      Bayne Rodocker

              
	 
      
	
                /s/ Beth Berkley

              
	
                Beth
      Berkley

              
	 
      
	
                /s/ Tracy Congdon

              
	
                Tracy
      Congdon

              
	 
      
	
                /s/ Jeff Conger

              
	
                Jeff
      Conger

              
	 
      
	
                /s/ Bill Good

              
	
                Bill
      Good

              
	 
      
	
                /s/ William Hagey

              
	
                William
      Hagey

              
	 
      
	
                /s/ Barbara Howland

              
	
                Barbara
      Howland

              

      

    

    
      
         

      

      
        -52-

        
          

        

      

      
         

      

    

    

    
      
        	
                /s/ Michael Jones,
  Trustee

              
	
                Michael
      Jones, Trustee under the Trust

              
	
                Agreement
      dated 12/04/84, as amended

              
	 
      
	
                /s/ Valentina Jones-Wagner,
      Trustee

              
	
                Valentina
      Jones-Wagner, Trustee under the

              
	
                Trust
      Agreement dated 12/04/84, as amended

              
	 
      
	
                /s/ Michael Kelley

              
	
                Michael
      Kelley

              
	 
      
	
                /s/ Jeffery Krause

              
	
                Jeffery
      Krause

              
	 
      
	
                /s/ Kenneth Mendoza

              
	
                Kenneth
      Mendoza

              
	 
      
	
                /s/ Sean Newsome

              
	
                Sean
      Newsome

              
	 
      
	
                /s/ Kevin O’Sullivan

              
	
                Kevin
      O’Sullivan

              
	 
      
	
                /s/ Jim Pena

              
	
                Jim
      Pena

              
	 
      
	
                Pressure
      Products, Inc.

              
	 
      	 
      
	
                By: 
      

              	
                /s/ Donald Rodocker

              
	 
      	
                Name:
      Donald Rodocker

              
	 
      	
                Title:
      President

              
	 
      	 
      
	
                /s/ Pete Richardson

              
	
                Pete
      Richardson

              
	 
      
	
                /s/ Shelly Robertson

              
	
                Shelly
      Robertson

              

      

    

    
      
         

      

      
        -53-

        
          

        

      

      
         

      

    

    

    
      
        	
                /s/ Donald Rodocker

              
	
                Donald
      Rodocker

              
	 
      
	
                /s/ Trina Kindsfater

              
	
                Trina
      Kindsfater

              
	 
      
	
                /s/ Jesse Rodocker

              
	
                Jesse
      Rodocker

              
	 
      
	
                /s/ Ruby Rodocker

              
	
                Ruby
      Rodocker

              
	 
      
	
                /s/ Chris Roper

              
	
                Chris
      Roper

              
	 
      
	
                /s/ Robyn Winterbourne

              
	
                Robyn
      Winterbourne

              
	 
      
	
                /s/ Brock Rosenthal

              
	
                Brock
      Rosenthal

              
	 
      
	
                /s/ Sheldon Rubin

              
	
                Sheldon
      Rubin

              
	 
      
	
                /s/ Richard Timm

              
	
                Richard
      Timm

              
	 
      
	
                /s/ David Whillas

              
	
                David
      Whillas

              

      

    

    
      
         

      

      
        -54-Exhibit 10.3

                              CONSULTING AGREEMENT

This Consulting Agreement (this "Agreement") is made effective as of May 1, 2010
(the  "Effective   Date"),   by  and  among  Hay  Creek  Consultants  Inc.  (the
"Consultant") and Liberty Coal Energy Corp. (the "Company").

                                    ARTICLE I
                                 TERM AND DUTIES

     1.1  ENGAGEMENT.  The  Company  hereby  retains the  Consultant,  who shall
provide the services of Edwin Morrow,  and the  Consultant  hereby accepts being
retained by the Company as a mining  exploration and  development  consultant to
the Company, upon the terms and conditions set forth in this Agreement.

     1.2  TERM.  This  Agreement  shall  be for a term of three  years  from the
Effective  Date can be  terminated by either party upon ninety (90) days written
notice to the other party.

     1.3  DUTIES.  The  Consultant  agrees  that Edwin  Morrow  shall act as the
President,  CEO, interim CFO, Secretary and Treasurer of the Company and provide
consulting services to the Company consistent with the duties of those positions
and such other  consulting  services as the board of  directors  may  reasonably
require  from time to time (the  "Services").  The  Consultant  will devote such
business time,  attention,  skill,  and energy to the business of the Company as
shall be reasonably required to perform his duties hereunder.

     1.4  INDEPENDENT  CONTRACTOR.  In performing  the services,  the Consultant
shall be an independent  contractor and not an employee or agent of the Company,
except  that  the  Contractor  shall  be the  agent  of the  Company  solely  in
circumstances  where  the  Contractor  must  be  the  agent  to  carry  out  its
obligations as set forth in this  Agreement.  Nothing in this Agreement shall be
deemed to require the  Consultant  to provide the  services  exclusively  to the
Company and the Consultant hereby  acknowledges that the Company is not required
and shall not be  required  to make any  remittances  and  payments  required of
employers by statute on the Consultant's behalf and the Consultant or any of its
agents shall not be entitled to the fringe  benefits  provided by the Company to
its employees.

     1.5 NON-DISCLOSURE.

     (a)  The Consultant shall hold in confidence, and shall not disclose to any
          person outside of the Company,  except on a "need to know" basis,  any
          Proprietary  Information  concerning the Company. The Consultant shall
          use  Proprietary  Information  only for the purpose of performing  the
          Services for the Company and shall not use or exploit such Proprietary
          Information  for his  benefit or the  benefit  of any other  person or
          entity without the prior consent of the Company.

     (b)  Proprietary  Information means any tangible or intangible  proprietary
          or confidential information or materials or trade secrets belonging to
          the Company or its affiliates  (whether  disclosed orally, in writing,
          in electronic  format or  otherwise),  including,  but not limited to,
          customers,  suppliers,  processes, methods and techniques;  equipment;
          data;  reports;  know-how;  existing and proposed contracts with third
          parties;  and business  plans,  including  information  concerning the
          existence  and  scope  of  activities  of any  research,  development,
<PAGE>
          marketing or other projects of the Company, and including confidential
          financial information and information  concerning the business affairs
          of the Company which are  furnished,  disclosed,  learned or otherwise
          acquired by the  Consultant  during or in the course of discussions or
          otherwise  pursuant to this  Agreement.  Proprietary  Information of a
          Company shall also include  information  embodying or developed by use
          or testing of Proprietary Information of the Company.

     (c)  The  non-disclosure  obligations of the Consultant  shall not apply to
          any  Proprietary  Information  to the  extent  that  such  Proprietary
          Information:  (i) is known to the public at the time of  disclosure or
          becomes known through no wrongful act on the part of the Consultant or
          any of her  representatives;  (ii)  becomes  known  to the  Consultant
          through  disclosure by sources other than the Company having the legal
          right  to  disclose  such  Proprietary  Information;  (iii)  has  been
          independently  developed by the Consultant without reference to or use
          of the Proprietary Information; or (iv) is required to be disclosed by
          the  Consultant to comply with a court order or similar legal process,
          provided that the  Consultant  provides  prior written  notice of such
          disclosure to the Company and at no cost or expense to the  Consultant
          takes  reasonable  and lawful  actions to avoid  and/or  minimize  the
          extent of such disclosure.

     (d)  The  Consultant  agrees  that the  Company  is and  shall  remain  the
          exclusive  owner  of  the  Proprietary  Information  and  all  patent,
          copyright,  trade secret,  trademark and other  intellectual  property
          rights  therein.  No license or  conveyance  of any such rights to the
          Consultant  is  granted or implied  under this  Agreement.  Consultant
          shall maintain all copyright,  confidentiality  and other  proprietary
          markings on the Proprietary Information of the Company.

     (e)  The Consultant shall,  upon the request of the Company,  return to the
          Company all media,  documents and other  manifestations of Proprietary
          Information  received or developed by the Consultant  pursuant to this
          Agreement and all copies and reproductions thereof, including, without
          limitation, all back-up copies in electronic formats.

     1.6   COMPANY   APPROVAL   REQUIRED.   The   Consultant   agrees  that  all
communications,  releases, interviews, and materials intended to be disseminated
for the  purposes  of  investor  relations  must be  approved  by the Company in
advance.

                                   ARTICLE II
                                  COMPENSATION

     2.1  COMPENSATION.  As  compensation  for the Services,  the Company hereby
agrees to pay to the Consultant a fee (the "Monthly Fee") of $5,000,  payable on
the 1st day of each  month  of the  term  of  this  Agreement  for 50% of  Edwin
Morrow's  time  commitment,  and  $10,000  per month  starting  upon the Company
determining that the full time engagement of Mr. Morrow is warranted.

     2.2 OTHER BUSINESSES.  The Company  acknowledges and agrees that during the
Term,  the  Consultant  will  continue to be involved  with,  engaged in, render
services for, and permit his name and the names of his  affiliates to be used in
connection with, both existing and new businesses  other than the Company.  With
the exception of North American coal  projects,  the assumption by Consultant of
his duties hereunder shall be without  prejudice to his rights (or the rights of
his  affiliates) to maintain such other  interests and activities and to receive
and enjoy profits or compensation there from.

                                       2
<PAGE>
                                  ARTICLE III
                                    EXPENSES

     3.1 EXPENSES.  The Consultant  shall be responsible for all of his expenses
related to operation of its office,  employees,  and  telephone(s).  The Company
will pay on behalf of the  Consultant  (or  reimburse  the  Consultant  for) the
reasonable  expenses  related  to  travel  incurred  by  the  Consultant  in the
performance of the Services as well as any pre-approved expenses.

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

     4.1 BY THE  CONSULTANT.  The  Consultant  represents  and  warrants  to the
Company that the execution and delivery of this Agreement by the Consultant does
not, and the  performance  by the  Consultant  of the  Consultant's  obligations
hereunder will not, with or without the giving of notice or the passage of time,
or both:  (a) violate any  judgment,  writ,  injunction,  or order of any court,
arbitrator, or governmental agency applicable to the Consultant; or (b) conflict
with,  result  in the  breach of any  provisions  of or the  termination  of, or
constitute a default under,  any agreement to which the Consultant is a party or
by which the Consultant is or may be bound.

     4.2 BY THE  COMPANY.  The Company  hereby  represents  and  warrants to the
Consultant  that the  following  statements  in this section 4.2 are correct and
complete as of the Effective Date:

     (a)  The Company is duly organized,  validly  existing and in good standing
          under the laws of the State of Nevada, and has all requisite power and
          authority to own,  lease and operate its  properties and assets and to
          carry on its business as it is presently  being  conducted.  The entry
          into this Agreement,  the performance of its obligations hereunder are
          not in violation of, in conflict  with, or in default under any of the
          certificate of incorporation,  bylaws or comparable  charter documents
          of the Company,  and there  exists no condition or event which,  after
          notice or lapse of time or both,  would result in any such  violation,
          conflict or default.

     (b)  The  Company  has all  requisite  power to execute  and  deliver  this
          Agreement and to perform its obligations hereunder and, subject to the
          conditions   set  forth  herein,   to  consummate   the   transactions
          contemplated  hereby. The execution,  delivery and performance of this
          Agreement has been duly authorized by all requisite  corporate  action
          on behalf of the Company.

     (c)  The  execution,  delivery  and  performance  by  the  Company  of  its
          obligations   under  this  Agreement  and  the   consummation  of  the
          transactions  contemplated  hereby,  do not and will not: (i) violate,
          conflict with,  constitute or result in (in each case, with or without
          notice, lapse or time or both) a material default or a material breach
          under, or result in the  acceleration,  termination or cancellation of
          (or  entitle  any person or give any  person the right to  accelerate,
          terminate or cancel) any material  obligation  under, or result in the
          loss of a material  benefit  under,  or require any material  consent,
          approval or authorization  under, any contract to which the Company is
          a party;  (ii)  contravene  or  violate in any law,  statute,  rule or
          regulation  applicable  to  the  Company  or  any  of  its  assets  or
          properties,  or any governmental order to which the Company is a party
          or by which the Company or any of its assets or  properties  is bound;
          (iii) result in the creation or imposition of any  encumbrance  on any
          of the material  assets or material  properties  of the Company;  (iv)
          constitute  an event  which,  after  notice  or lapse of time or both,
          would result in any conflict, breach, violation, default, requirement,

                                       3
<PAGE>
          loss,  creation  or  imposition  of any  encumbrance,  termination  or
          impairment or similar event described in clauses (i)-(iii) above.

                                   ARTICLE V
                               GENERAL PROVISIONS

     5.1  INJUNCTIVE  RELIEF  AND  ADDITIONAL   REMEDIES.   The  parties  hereto
acknowledge that the injury that would be suffered by the non-breaching party as
a result of a breach of the  provisions of this  Agreement  would be irreparable
and that an award of  monetary  damages  to the  non-breaching  party for such a
breach would be an inadequate remedy. Consequently, the non-breaching party will
have the right,  in addition to any other rights such party may have,  to obtain
injunctive  relief to restrain any breach or  threatened  breach or otherwise to
specifically  enforce any  provision of this  Agreement,  and the  non-breaching
party will not be  obligated  to post bond or other  security  in  seeking  such
relief.

     5.2 WAIVER.  The rights and remedies of the parties to this  Agreement  are
cumulative  and not  alternative.  Neither  the  failure nor any delay by either
party in exercising  any right,  power,  or privilege  under this Agreement will
operate as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right,  power,  or  privilege  will  preclude  any other or
further exercise of such right, power, or privilege or the exercise of any other
right,  power, or privilege.  To the maximum extent permitted by applicable law,
(a) no claim or right  arising out of this  Agreement  can be  discharged by one
party,  in whole or in part, by a waiver or  renunciation  of the claim or right
unless in writing signed by the other party;  (b) no waiver that may be given by
a party  will be  applicable  except in the  specific  instance  for which it is
given; and (c) no notice to or demand on one party will be deemed to be a waiver
of any  obligation of such party or of the right of the party giving such notice
or demand to take further  action  without  notice or demand as provided in this
Agreement.

     5.3 BINDING EFFECT,  DELEGATION OF DUTIES PROHIBITED.  This Agreement shall
inure to the benefit of, and shall be binding upon, the parties hereto and their
respective  successors,  permitted  assigns,  heirs, and legal  representatives,
including any entity with which the Company may merge or consolidate or to which
all or  substantially  all of their  respective  assets may be transferred.  The
rights and obligations of the Consultant  under this Agreement,  being personal,
may not be  assigned  or  delegated  without  the prior  written  consent of the
Company.  The rights and obligations of the Company under this Agreement may not
be assigned without the prior written consent of the Consultant.

     5.4 NOTICES. All notices, consents, waivers, and other communications under
this  Agreement  must be in  writing  and will be deemed to have been duly given
when (a) delivered by hand (with written  confirmation of receipt),  (b) sent by
facsimile (with written confirmation of receipt), provided that a copy is mailed
by  registered  mail,  return  receipt  requested,  or (c) when  received by the
addressee,  if  sent  by a  nationally  recognized  overnight  delivery  service
(receipt  requested),  in each case to the  appropriate  addresses and facsimile
numbers set forth below (or to such other  addresses and facsimile  numbers as a
party may designate by notice to the other parties):

     If to Consultant:   Edwin Morrow
                         PO Box 9963
                         South Lake Tahoe, CA 96158

                                       4
<PAGE>
     If to Company:      c/o William L. Macdonald
                         Macdonald Tuskey, 1210 - 777 Hornby Street
                         Vancouver B.C. V6Z 1S4

5.5      INDEPENDENT LEGAL ADVICE.  The Consultant acknowledges that:

     (a)  this Agreement was prepared by the W.L.  Macdonald Law Corporation for
          the Company;

     (b)  W.L. Macdonald Law Corporation received  instructions from the Company
          and does not represent the Consultant;

     (c)  the Consultant has been requested to obtain his own independent  legal
          advice on this Agreement prior to signing this Agreement;

     (d)  the  Consultant  has been given  adequate  time to obtain  independent
          legal advice;

     (e)  by signing  this  Agreement,  the  Consultant  confirms  that he fully
          understands this Agreement; and

     (f)  the Consultant has obtained independent legal advice.

     5.6  JURISDICTION.  This  Agreement is governed by the laws of the State of
Nevada and the federal laws of the United States applicable therein.

     5.7  SEVERABILITY.  If any  provision of this  Agreement is held invalid or
unenforceable  by any court of competent  jurisdiction,  the other provisions of
this  Agreement  will remain in full force and  effect.  Any  provision  of this
Agreement  held invalid or  unenforceable  only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.

     5.8   COUNTERPARTS.   This  Agreement  may  be  executed  in  one  or  more
counterparts,  each of  which  will be  deemed  to be an  original  copy of this
Agreement and all of which,  when taken  together,  will be deemed to constitute
one and the same agreement.

     IN WITNESS WHEREOF,  the parties have executed and delivered this Agreement
effective as of the date above first written above.

LIBERTY COAL ENERGY CORP.

/s/ Mauricio Beltran
-----------------------------
Name: Mauricio Beltran
Position: Director

HAY CREEK CONSULTANTS INC.

/s/ Edwin Morrow
-----------------------------
Name: Edwin Morrow
Position: President

                                       5

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