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deep_ex1011.htm

    EXHIBIT 10.10

     

    
      

       

      AGREEMENT
AND PLAN
OF
REORGANIZATION

       

      This
Agreement and Plan of Reorganization ("Agreement") is made and entered into as
of this day of March
2007 by and among Deep Down, Inc., a Nevada corporation (the "Buyer"),
ElectroWave (USA), Inc., a Nevada corporation ("Merger Sub"), ElectroWave (USA)
Inc., a Texas corporation (the "Settee), Pinemont IV, Martin L. Kershman and
Ronald W. Nance (individually a "Shareholder" and collectively the
"Shareholders").

       

      RECITALS

       

      A. Seller is
engaged in the business of providing products and services in the field of
electrical and electronic
monitoring & control systems for energy, military and commercial business
sectors (the
"Business");

       

      B. Seller
desires to transfer substantially all of its assets to Merger Sub, and Buyer
desires to acquire those
assets and assume certain specified liabilities, on the terms and subject to the
conditions hereinafter set forth; and

       

      C. The
Buyer, the Seller and the Shareholders are executing and delivering this
Agreement in reliance upon an
exemption from securities registration afforded by the provisions of Section
4(2), Section 4(6) and/or Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "1933 Act").

       

      D. Seller
has agreed to distribute, among other things, shares of its Series H preferred
stock (the "Shares")
of Buyer acquired pursuant to this Agreement to its stockholders as part of the
dissolution and liquidation of Seller, which dissolution and liquidation shall
be conducted in accordance with the laws of the State of Texas, and its articles
of incorporation and bylaws.

       

      E. It is intended
that the transactions contemplated by this Agreement shall qualify as a tax-free
reorganization
within the meaning of Section 368(a)(1)(C) of the Internal Revenue Code of 1986,
as amended (the "Code"), and be treated for financial reporting purposes as a
pooling of interests.

       

      NOW,
THEREFORE, in consideration of the premises and the respective warranties,
representations, covenants and agreements hereinafter set forth, Seller and
Buyer hereby mutually agree as follows:

       

      1.  Purchased
Assets. Seller agrees to assign, transfer and deliver to Merger Sub, and
Merger Sub agrees to
acquire from Seller, on the Closing Date (as defined in section 4 hereof),
all of the right, title and interest of Seller in and to all of the following
assets (the "Purchased Assets") which are owned and/or used by Seller in
connection with the Business, free and clear of all security interests,
liens, claims and other encumbrances other than to Capital One:

       

      all of
the Business, goodwill, assets, properties and rights of every nature, kind and
description, whether tangible or intangible, real, personal or mixed, wherever
located and whether or not carried or reflected an the books and records of the
Company, which are owned by the Company or in which the Company has any interest
(including the right to use), cash and marketable securities, licenses, accounts
receivable, prepaid expenses, inventory, equipment including all phone systems,
fixtures and furniture, customer and supplier lists, phone numbers, trademarks,
Vadenantes, corporate names, service marks, trade secrets, proprietary data, and
other intellectual property rights, leases and contracts set forth as Assumed
Liabilities, and books and records.

       

      2.  Liabilities
Assumed by Buyer. Buyer and Seller agree that Merger Sub shall not
assume, nor shall
Merger Sub in any way be responsible for, any liability, obligation, claim or
commitment, contingent, actual or otherwise, known or unknown, of Seller or any
of its shareholders, directors, officers, employees or agents, it being
expressly understood and agreed that Seller shall continue to be responsible for
any and all liabilities, obligations, clans or commitments of Seller or the
Business entered into on or prior to the Closing Date, including but not limited
to, any sales, income, payroll or other taxes, obligations to other creditors
including vendors, employees and

       

       

      
        
          
          

        

        
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      customers
or other liabilities, obligations, claims or commitments of the Seller incurred
m connection with the transactions contemplated hereby. Notwithstanding the
preceding sentence, Buyer agrees that it will, on the Closing Date, assume and
agree to perform and discharge solely and only the following liabilities,
obligations, claims or commitments of Seller (the "Assumed Liabilities"): (a)
trade accounts payable recorded on Seller's balance sheet as of the Closing
Date, (b) all indebtedness to Capital One Bank
as of the Closing Date, provided that all shareholder guaranwes shall be
released at Closing. (c) payables to Ramage Milby in the amount of
$14,415.00 paid at Closing, and (e) leases of real and personal property and
binding contracts.

       

      
        3. Purchase
Price and Payment. The purchase price (the "Purchase Price") for the
Purchased Assets and Assumed Liabilities shall be payable as
follows:

         

        
          (a) 250
shares of Series H redeemable convertible preferred stock of Buyer with the
following principal characteristics:

        

      

       

      (i) Redeemable, in
whole or in part, by Buyer at any time after tea days notice at a price of
$1,000 per share. Upon notice of redemption, Holder will have 30 days to elect
to convert as indicated in paragraph 3(aXii) below.

       

      (ii) Convertible by
Seller at any
time prior to redemption by Seller into up to 500,000 shares of common
stock of Deep Down, Inc., at a conversion price of $.50 per common share
(adjusted tbr any
stock split or other capital adjustments).

       

      (iii)
Holders of shares of Series H redeemable convertible preferred stock will be
entitled
to vote on all issues that holders of common stock are entitled to vote on with
holders of common stock. The number of votes each Holder is entitled to shall
equal the number of shares of common stock into which the Series H redeemable
convertible preferred stock held is convertible.

       

      (b) Up
to an additional 750 shares ("Earn-Out Shares") of the same series of redeemable
convertible
preferred stock described in subparagraph (a) above may be earned based upon the
future financial performance of the Business as follows:

       

      (i) One share
of preferred stock for each $2,000 of net income for the fiscal year
ended
December 31, 2007.

       

      (ii) One share
of preferred stock for each $1,500 increase in net income for the fiscal
year
ended December 31, 2008 over the net income for the fiscal year
ended December 31, 2007.

       

      (iii) One share
of preferred stock
for each $1,000 increase in net income for the fiscal year
ended December 31, 2009 over the net income for the fiscal year ended December 31,
2008.

       

      (iv) The conversion
price of the Earn-Out Shams will be
determined at
the time of issuance
in the greater of: (i) 5.50 per share, or (ii) 20% above the volume weighted
average price of the last reported trades for the 20 trading days immediately
prior to December 31 of the respective year for which the shares are
issued.

       

      (v) Buyer shall
establish ElectroWave (USA) Inc., a Nevada Corporation, to
conduct
the Business, and all opportunities related to the Business shall be conducted
through said new entity. Deep Down, Inc. will not sell EtectroWave (USA) prior to December
31, 2008.

       

      
        
          
          

        

        
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      (c) Additional
amounts shall be paid within 10 days of receipt (along with an accounting)
from the
proceeds, if any, of the sale or license of technology acquired by Buyer from
Seller to an entity generally referred to as the Kelly Group. The net proceeds
as, if and when received shall be distributed in equal shares to: (i) Seller,
(ii) Buyer, and
(iii) a reserve account established by Buyer to be used exclusively for
the development, upgrade and enhancement of the technology for the nonexclusive
benefit of the Kelly Group.

       

      This
purchase price is based on the Net Working Capital (as hereinafter defined) of
Seller as of the Closing Date being not less than
the Net Working Capital at December 31, 2006. Therefore, the purchase
price shall be adjusted on a dollar-for-dollar basis downward in the event the
Net Working Capital of Seller as of the Closing is less than the Net Working
Capital at December 31, 2006. For purposes of this Agreement, "Net working
Capital" means the net working capital of Seller (i.e., total current assets
less total current liabilities), further reduced by any long-term debt of
Seller, as determined in accordance with generally accepted accounting
principles, consistently applied.

       

      The Net
Working Capital of Seller shall be determined at the time of Closing or within
thirty (30) days after the Closing by the parties, in accordance with the terms
of this Agreement. In the event the parties are unable to agree on or calculate
the Net Working Capital of Seller as of the Closing or within 30 days after the
Closing, the Net Working Capital shall be determined subsequently by Malone
& Bailey, PC in accordance with the terms of this Agreement, which
determination (the "Malone & Bailey Determination") shall be final and
binding on the parties unless Seller elects within 30 days from the date of the
Malone & Bailey Determination to submit same to arbitration.

       

      The
parties shall agree on or prior to the Closing to allocate the Purchase Price
among the Purchased Assets in accordance with section 1060 of the Internal
Revenue Code of 1986, as amended, and not to take any inconsistent position on
any tax return or filing.

       

      Purchaser
shall obtain a stepped-up basis in all of the assets of Seller, no
cash-to-accrual liability to Purchaser or Seller shall be created
upon the sale of the Purchased Assets, and all deferred taxes on the
books of Seller shall have been eliminated.

       

      It is
known to the parties that after the Closing Date Seller may dissolve as a
corporation and liquidate by distributing the certificates representing the
preferred stock received at the Closing as well as the future right to receive
the Earn-Out Shares and any future payments to the Shareholders in such
proportions as they may agree. In such event, Seller and the Shareholders shall
execute an agreement to indemnify and protect from liability the Buyer and its
officers, directors, consultants, attorneys and affiliates from any liability or
claim in connection with such distribution. In addition, in the event any
Earn-Out shares are issued to any of the Shareholders individually, any such
Shareholder shall execute a purchaser repiesentatkan letter as a condition to
receipt of such shares.

       

      (d) The
parties hereby acknowledge and agree that:

       

      
        (i)  the
transactions contemplated hereby shall be treated for all purposes
as:

      

       

      
        (1) the
acquisition by Buyer of the Purchased Assets solely in consideration of the
issuance by Buyer to Seller of the Shares and the assumption by Merger Sub of
the Assumed Liabilities; and

      

       

      
        (2) a
tax-free reorganization udder Sections 368(aX )(C) and 368(a)(2XC) of the Code
and any other applicable federal and state laws;

      

       

      
        (ii)  this
Agreement shall constitute a "plan of reorganization" for purposes of Section
368(a) of the Code; and

      

       

      
        (iii)
immediately following the Closing, Buyer will have exclusive dominion and
control over the Assets and Buyer shall exercise to dominion and control to
direct Seller to transfer and deliver all of the Purchased Assets directly to
Merger Sub.

      

       

      
        
          
          

        

        
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      4. Closing.

       

      A. The
Closing ("Closing" or "Closing Date") of the transactions contemplated hereby
shall take
place at the office of Sonfield & Sonfield, 770 South Post Oak Lane, Suite
435, Houston, Texas, at 10 a.m. Houston
time on the earlier of five days after the conditions to Closing are
satisfied or 60 days after the date of execution of this Agreement, or at
such other place, time or date as shall be mutually agreed upon by Seller and
Buyer, including an "attorney escrow closing by mail".

       

      B. At the
Closing, Seller shall deliver to Buyer the following:

       

      (i) such bill
of sale or other good and sufficient instruments of assignment, transfer
and
conveyance as Buyer shall reasonably request, to convey and to transfer to Buyer
all tight, title and interest of Seller in the Purchased Assets to Buyer, free
and cleat of all security interests, liens, claims and encumbrances other than
the Capital One lien unless same is discharged by Buyer at Closing;

       

      (ii) all
appropriate instruments granting to Buyer the right to the use of the corporate
and
tradename "ElectroWave," "ElectroWave USA" and all other tradenames and
trademarks owned or used by Seller in connection with the Business, together
with Articles of Amendment to Seller's Articles of Incorporation changing
Seller's corporate name to a name not confusingly similar to "ElectroWave" or
"ElectoWave USA";

       

      (iii) assignment
agreement covering the Seller's intellectual property rights;

       

      (iv) such
other instrument or instruments of transfer, if any, as shall be necessary or
appropriate
to vest in the Buyer good and marketable title to the Purchased
Assets;

       

      (v) delivery
of Required Consents (as defined in section 7(b); and

       

      (vi) delivery
of all UCC-3 termination statements and all other documents and instruments
necessary to release and discharge all liens, claims, security interests and
other encumbrances on all Purchased Assets other than the Capital One lien
unless same is discharged by Buyer at Closing.

       

      C.At the Closing,
Buyer shall deliver to Seller the following:

      
         

        (i)
certificates representing 250 shares of preferred stock; 

         

        (ii) the
employment agreements described in Section 9(c); 

         

        (iii)
an
assumption agreement to assume the Assumed
Liabilities;

      

       

      (iv) the
Earn-Out Escrow Agreement executed by the Escrow Agent (the cost of which
Escrow Agent shall be borne by Buyer) and Seller,

       

      (v) certificates
representing 750 shares of preferred stock to as the Escrow Agent
pursuant to the
Earn-Out
Escrow Agreement; and

       

      (vi) a
release of all shareholder guarantees related to the Bank One loan.

       

      D. The parties hereto
shall use their reasonable best efforts to cause the transactions contemplated
hereby to be treated for all purposes and
to be recognized as a tax-free reorganization under Section 368(a)(1)(C)
of the Code and any
other applicable state or federal law. Seller hereby covenants
and agrees that, following the Closing, it will promptly effect its
complete liquidation and distribute  all of its remaining assets
(including the Shares) to its
stockholders in accordance with the Texas Business Corporation Act
("T13CA") and its ankles of incorporation and by-laws.

       

       

      
        
          
          

        

        
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      5. Representations,
Warranties and Covenants of Seller. Seller hereby represents and
warrants, and from
and after this date, covenants to Buyer
as follows:

       

      (a) Organization and
Authority. Seller
is a corporation, duly organized, validly existing, and in good standing under
the laws of its stare of incorporation and has all requisite corporate power and
authority to carry on its business as it is presently being conducted, to enter
into this Agreement, and to carry out and perform the transactions contemplated
hereby. Prior to the Closing Date, the execution, delivery and
performance of this Agreement by Seller shall be duly authorized
and approved by its shareholders and its Board of Directors, and will not
violate its Articles of Incorporating, By-Laws, or any agreement to which it is
a party or by which it is bound or any
law, rule, regulation or court order. This Agreement, and all other instruments,
documents and agreements to be delivered by Seller in connection therewith, are
the legal, valid and binding obligation of Seller enforceable in accordance with
its, and their, terms.

       

      (b)
Title. Seller has good
and
marketable title to all of the purchased
Assets, free and
clear of any
liabilities, obligations, claims, security interest, liens or encumbrances other
than to Capital One.

       

      (c)  Financial
Statements. All financial
statements
(including balance sheets, income and cash flow
statements) previously delivered to Buyer by Seller fairly present the financial
condition of Seller for the time period presented. All such financial
statements have been prepared in conformity with generally accepted
accounting principles consistently applied ("GAA.P") (except (i) that such
statements are on the cash basis method of accounting and (ii) for interim
statements which are subject to normal year-end adjustments) and present fairly
in all uuderial respects the financial condition and results of operations of
the Seller for the respective periods indicated.

       

      (d) No Material
Liabilities. Seller is not subject to any material
Liability (including, without limitation,
unasserted claims whether known or unknown), whether absolute, contingent,
accrued or otherwise, which is not shown or which
is in excess of amounts shown or reserved for in the respective balance sheets,
other than (a) liabilities of the same nature as those
set forth in such balance sheet and incurred in the ordinary
course of Seller's business after the date indicated and (b) those items
not required to be accrued, footnoted or otherwise reserved for or disclosed
under GAAP on a cash basis.

       

      (e) No
Material Adverse Change. Since December 31, 2006 there has been (i) no
material adverse change in the
Seller or the Business, or its financial condition or prospects except as noted in the
financial
statements set forth in section 5(c), and (ii) no material damage, destruction, loss
or claim, whether or not covered by insurance, or condemnation or other taking
adversely affecting in any material respect the assets or properties of the
Seller or the Business. Since December 31, 2005 the Seller has conducted its
business only in the ordinary course and in conformity with past
practice.

       

      (f) Taxes. Seller has
timely filed all required federal, etate, county and local income, excise,
withholding,
property, sales, use, franchise and other tax returns, declarations and reports
which are required to be filed on or before the date hereof and has paid or
reserved for all taxes which have become due pursuant to such returns or
pursuant to any assessment which has become payable except for taxes which it
has contested in good faith.

       

      (g) Litigation.
Except as disclosed by Seller to Purchaser, there is no litigation or proceeding
or governmental investigation pending
or to the knowledge of Seller, tisreatened against Seller or relating to the Purchased
Assets or the Business.

       

      (h) Compliance
with Laws. Since December 31, 2004, Seller has complied in all material
respects
with all federal, state and local laws, statutes, rulers,
regulations, ordinances and codes,
and has received no written notice from any governmental
agency asserting that a violation has or may have occurred.

       

      (i) No
Defaults. All leases, agreements and other contracts constituting she
Assumed Liabilities
are in full force and effect, with no default or breach existing (other than as
to Capital One) or
which would occur but for the existence of notice or the lapse of
time.

       

       

      
        
          
          

        

        
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      (j)  Equipment. Each item
of tangible equipment comprising the Purchased Assets is in working
order and repair, ordinary wear and tear excepted.

       

      (k) Completeness of
Assets. The Purchased Assets, except for the Excluded Assets, comprise
all of
the assets which are necessary to conduct the Business in the manner that it has
been previously conducted.

       

      (l) Information on
Buyer. The Seller has been furnished with or has had access at the
EDGAR
Website of the Commission to the Buyer's filings made with the Commission available at the
EDGAR website (hereinafter referred to collectively as the "Reports"). In
addition, the Seller and the Shareholders have received in writing from the
Buyer such other information concerning its operations, financial condition and
other matters as the Seiler or the Shareholders have requested in writing (such
other information is collectively, the "Met Written Information"), and
considered all factors the Seller deems material in deciding on the advisability
of investing in the preferred stock.

       

      (m) Information on
Seller. The Shareholders and the Seller are, and will be at the time of
the conversion
of the preferred stock, "accredited investors", as such term is defined in
Regulation D promulgated by the Commission under the 1933 Act, is experienced in
investments and business matters, has made investments of a speculative nature
and has purchased securities of United States publicly-owned companies in
private placements in the past and, with its representatives, has such knowledge
and experience in financial, tax and other business matters as to enable the
Seller and the Shareholders to ntill7P the information made available by the
Buyer to evaluate the merits and risks of and to make an informed investment
decision with respect to the proposed acquisition of the preferred stock, which
represents a speculative investment. The Seller has the authority and is duly
and legally qualified to purchase and own the Securities. The Seller is able to
bear the risk of such investment for an indefinite period and to afford a
complete loss thereof.

       

      (n) Acquisition of Preferred
Stock. On the Closing Date, the Seller will acquire the preferred
stock as
principal for its own account for investment only and not
with a view toward, or for resale in connection with, the public sale or any
distribution thereof except in connection with the dissolution and liquidation
of Seller,

       

      (o) Compliance with Securities Act. The
Seller understands and agrees that the Securities have not been registered under the 1933
Act or any applicable state securities laws, by reason of their issuance in a
transaction that does not require registration under the 1933 Act (based in part on the accuracy Of the
representations and warranties of Seller contained herein), and that such
Securities must be held indefinitely unless a subsequent disposition is
registered under the 1933 Act or any applicable state securities laws or is
exempt from such registration.

       

      (p) Certificate Legend.
The certificates representing shares of preferred stock shall be the
following
or similar legend:

       

      The
shares represented by this certificate have not been registered under the
Scarifies Act of 1933, as amended These shares may not be sold or offered for
salt in the absence of an elective registration statement under such securities
art or an opinion of counsel reasonably satisfactory to Deep Down, Inc. that
such registration is not required

       

      (q) Communication of Offer. The offer to
sell the preferred stock was directly communicated to the
Seller by the Buyer. At no time was the Seller presented with or solicited by
any leaflet, newspaper or magazine article, radio or television advertisement,
or any other form of general advertising or solicited or invited to
attend a promotional meeting otherwise than in connection and
concurrently with such communicated offer.

       

      6. Representations, Warranties
and Covenants of Buyer. Buyer hereby represents and warrants,
and from
and after this date covenants to Buyer as follows:

       

      
        
          
          

        

        
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      Organization and
Authority. Buyer is a corporation, duly organized, validly existing, and
in good standing under the laws of its state of incorporation and has all
requisite corporate power and authority to carry on its business as it is
presently being conducted, to enter into this Agreement, and to carry out and
perform the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Buyer has been duly authorized and approved by its Board of
Directors, and will not violate its Articles of Incorporation, By-Laws, or any
agreement to which it is a party or by which it is bound or any law, rule,
regulation or court order. This Agreement, and all other instruments, documents
and agreements to be delivered by Buyer in connection therewith, are the legal,
valid and binding obligation of Buyer enforceable in accordance with its, and
their, terms.

       

      7. Actions
Prior to the
Closing Date.
The respective parties hereto covenant and agree to take the following
actions between the
date hereof and the Closing Date:

       

      (a) Investigation
of Seller by the Buyer. Seller shall afford to the officers, employees
and authorized
representatives (including, without limitation, independent public accountants
and attorneys) of the Buyer a full and complete opportunity to conduct and
complete its acquisition review and analysis of the Purchased Assets and Assumed
Liabilities (the "Acquisition Review"), including a review of Seller's books
and records, financial information, contracts and agreements (including all
non-competition and non-solicitation covenants binding on Seller or its
employees), inspection and review of the physical operations of the Seller's
business, and the right to contact and communicate with Seller's vendors,
creditors, customers, employees, independent contractors and others having a
business relationship with Seller. Buyer agrees that it will keep and maintain
any and all information obtained by it, its agents, and counsel, confidential,
and will not make use of any such information other than for its evaluation of
the proposed transaction.

       

      (b) Consents
and Approvals. Seller shall use its best efforts promptly to obtain all
consents and
amendments from parties to leases, contracts, licenses and other agreements
which require consent, together with estoppel letters from parties to material
agreements (the "Required Consents").

       

      (c) Exclusive
Dealing, Seller, Shareholders and their respective affiliates shall deal
exclusively
with the Buyer with respect to the sale of the Purchased Assets and the
Business. Seller shall not solicit, encourage or entertain offers or inquiries
(nor shall Seller or any of its affiliates authorize or permit any director,
officer, employee, attorney, accountant or other representative or agent to
solicit, encourage or entertain offers or inquiries) from other possible
acquiring companies, persons or entities, provide information to or participate
in any discussions or negotiations with any companies, persons or entities with
a view to an acquisition of all or substantially all of Seller's assets or stock
or any interest therein.

       

      (d) Seller's
Employees, On and as of the Closing Date, Seller will take all action
necessary to terminate
the employees of the Business and shalt pay such employees all sums (whether
payroll, bonus, severance, vacation or otherwise) due to them through the close
of business on the Closing Date. Prior to Closing, Buyer, may at its sole
discretion, interview and discuss employment opportunities with Seller's
employees and within ten (10) days prior to Closing, Buyer may offer employment
to any of Seller's employees on terms and conditions unilaterally determined by
Buyer, effective on the Closing Date.

       

      (e) Non-Compete/Non-Solicitation.
The Seller, the Shareholders, and their respective affiliates,
shalt not, individually or as a consultant, shareholder, partner, venturer,
director, officer, agent or otherwise, engage. in any ofthe following
actions:

       

      (i) for a
five (5) year period after their respective terms of employment, solicit, call
on or
contact any past (within the past 12 months) or present customers, suppliers or
employees of Seller with respect to the Business; or

       

      (ii) for a
five (5) year period after their respective terms of employment, engage in
any
activity competitive with the Business as now conducted anywhere in the world
(provided that in the case of Martin Kershman and Ronald W. Nance, said covenant
shall COI:lel:1W during
the period that they receive severance pay).

       

      
        
          
          

        

        
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      In
addition, Seller shall keep and maintain all confidential and proprietary
information of Seller, including without limitation, financial statements,
customer and supplier lists, pricing information, sales and purchases margins
and practices, methods of telephone solicitation and similar Information
regarding the business and affairs of Seller, confidential and shall not disclose
such information to any third person or exploit such information
personally except as required under law, or if such information is in the public
domain.

       

      Seller
understands and
agrees that this section is critical to
this Agreement, and in the event that Seller commits a breach of this
section, Buyer shall
have the non-exclusive right and remedy to
have this section specifically enforced to the event permitted by any
court of competent jurisdiction, it being acknowledged and agieed that any
breach or threatened breach will cause immediate irreparable injury to Buyer and
that monetary
damages will not provide an adequate remedy at law. If any of the
provisions contained herein are construed to be invalid or unenforceable in any
jurisdiction, (x) the same shall not affect the remainder of the provisions or
the enforceability thereof, which shall be given full force and effect and (y)
the court making such determination shall have the power to reform the duration
and/or scope of such section.

       

      8. Conditions Precedent to
Obligations of Seller.. The obligations of the Seller under this
Agreement
shall be subject to the satisfaction, on or prior to the Closing
Dale, of the conditions set forth
below.

       

      (a) No Misrepresentation or
Breach of Representations, Warranties and
Covenants. There Shall
have been no breach by Buyer in the perfarmance of any of its covenants and
agreements herein; each of the representations and warranties of Buyer contained
or referred to herein shall be true and correct in all material respects on the
Closing Date as
though made on the Closing Date, except for changes therein specifically
permitted by this Agreement or resulting from any transaction
expressly consented to in wilting by the Seiler; and there
shall have been delivered to the Seller a certificate or certificates to that
effect, dated
the Closing Date, signed by the Buyer, by its President

       

      (b) Corporate Action.
Buyer shall have taken all corporate action necessary to approve the
transactions
contemplated by this Agreement, and Buyer shall have furnished the Seller with
certified copies of the resolutions adopted by the Board of Directors and the
Sole Shareholder of Buyer, in form and substance reasonably satisfactory to
counsel for the Seller, in connection with such
transactions.

       

      (c) No Restraint or
Litigation. No action, suit, investigation or proceeding shall have been
instituted
or threatened by any third party, governmental or regulatory agency to restrain, prohibit or
otherwise challenge the legality or validity of the transactions
contemplated hereby.

       

      (d) Other Documentation.
Seller shall have
received all of the documents and
showings required
to be delivered by the Buyer at the Closing pursuant to
section 4(C).

       

      9. Condition Precedent to
Obligations of Buyer. Tbe obligations of the Buyer under this
Agreement shall be
subject to the satisfaction, on or prior to the Closing Date, of the conditions
set forth
below.

       

      (a) No Misrepreseatation or
Breach of Warranties and
Covenants. There shall have been no breach
by Seller in the performance of any of
its covenants and agreements herein; each of the representations and
warranties of Seller contained or refenad to herein shall be true and correct in
all material respects on the Closing Date as though made on the
Closing
Date, except for changes therein specifically permitted by this Agreement
or resulting from any transaction expressly consented to in willing by the
Buyer; and there shall have been delivered to the Buyer a certificate or
certificates to that effect, dated the Closing Date, signed by the Seller, by
its President

       

      (b) Corporate Action.
Seller shall have taken all corporate action necessary to approve the
transactions
contemplated by this Agreement,
and Seller
shall have furnished the Buyer with certified copies of the resolutions adopted
by the Board of Directors and the Sole Shareholder of Seller, in form and
substance
reasonably satisfactory to counsel for the Buyer, in connection with such
transactions.

       

      (c) No
Restraint or
Litigation. No action, suit, investigation or proceeding shall have been instituted
or threatened
by any third party, governmental or regulatory agency to restrain,
prohibit or otherwise challenge the legality or validity of the transactions
contemplated hereby.

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

       

      (d) Financial
Statements. Seller shall after Closing at
Buyer's expense furnish to Buyer (1) the audited
balance sheets of the Company as of December 31, 2005 and December 31, 2006, the
related statements of income and retained earnings, and the related statements
of changes of financial position or cash flows, as the case may be,
for the fiscal years then ended, certified by Malone & Bailey, PC,
registered independent certified public aceortntats, to the effect that said
financial statements (a) are prepared in accordance with the books and records of the
Seller; (b)
are prepared in
accordance with generally accepted accounting principles
consistently applied; (c) fairly present the Seller's financial condition and
the results of its operations
as of the relevant dates thereof and for the periods covered thereby; (d)
contain and reflect all necessary adjustments and accruals for a fair
presentation of the Seller's financial condition and the results of its
operations for the
periods
covered by said financial statements; and (e) with respect to contracts
and commitments for the sale of goods or the provision of services by the
Seller, contain and
reflect adequate reserves for all reasonably anticipated material losses
and costs and expenses in excess of expected receipts.

       

      (e)
Employment Agreements.
 Martin
L. Kerslunan and Ronald W, Nance (collectively
referred
to herein as "Key Employees") shall have entered into 5 year employment
agreements with Purchaser with no termination other
than for cause. Such employment agreements shall be
delivered at the Closing, provide a base monthly salary of $10,000 (including
automobile allowance), participation in the annual bonus pool and otherwise be
in form and substance mutually satisfactory to Purchaser and the Key Employees,
In addition, Mr. Kershman's and Mr. Nance's employment agreements will contain
the customary confidentiality agreement and during the term of said Employment
Agreements
and during the period they are paid severance, they will not (i)
participate or engage in the underwater oil service business or the Business of
the Seller within a one hundred (100) mile radius of any office of Purchaser are
any of its customer, (ii) service or solicit any
customers of Purchaser, or (iii) hire any employees of Seller or
Purchaser.

       

      (f) Confidentiality and
Non-Competition Agreement. Albert P. Keller shall have
executed a confidentiality
agreement and agree that for a period of five (5) years from the date of Closing
he will not (i) participate or engage in the
underwater oil service business or the Business of the Seller within a one hundred (100) mile
radius of any office of Purchaser are any of its customer, (ii) service or
solicit any customers of Purchaser, or (iii) hire any employees of Seller or
Purchase

       

      (g) Employee Inventions
Agreement, The Key Employees shall have executed an agreement
to hold in
strictest confidence and not disclose, use, lecture upon, or publish any of the
Buyer's Proprietary Information (as defined) and assign to the Buyer any rights either Key Employee may have
or acquire in such Proprietary Information and confirm that all Proprietary
Information shall be the sole property of the
Buyer and its
assigns.

       

      (h)
Assignment of Intellectual Property
Rights. Buyer shall have
received a Technology Assignment
Agreement covering exclusively throughout the world, all right, title, and
interest in and to
all intellectual property of owned or claimed by Seller or
Shareholders in consideration for a payment of 5% of gross sales related to such
technology for a period of five years following the Closing.
which payment shall be paid monthly.
Seller and its representatives shall have the right to audit all relevant
books and records only as it relates to such payment.

       

      (l) Acquisition Review. Buyer shall have been
satisfied, in its own discretion, with its Acquisition
Review.

       

      (i) Other
Documentation. Buyer shall
have received all of the documents and showings required
to be delivered by the Seller at the Closing pursuant to section 4(B).

       

      10. 
Mutual
Indemnification.

       

      A. Seller
hereby agrees to indemnify and hold the Buyer, and its
shareholder;
directors, officers,
employees and agents, harmless from and against any and all claims, suits,
actions, judgments, liability, losses, damages, fines, penalties, costs and
expenses, including without limitation, reasonable attorney' fees and costs
arising out of or relating to any event, condition, contract, obligation, ace
omission. non-fulfillment, non- Assumed Liability, breach, inaccuracy or
non-fulfillment of any representation, warranty, covenant or agreement with respect to any of the terms
of this Agreement, and any agreement between Seller and/or Shareholders and any

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

       

      
        person.
Seller acknowledges and agrees that Buyer may withhold from and offset any
Earn-Out Shares due under this Agreement.

      

       

      B. Buyer
hereby agrees to indemnify and hold harmless the Seller, and its shareholders,
directors,
officers, employees and agents, from and against any
and all
claims, suits, actions, judgments, liability, lessee, damages, fines,
penalties, costs and expenses, including without limitation, reasonable
attorneys' fees and costs arising out of or relating to any event, condition.
contract,
obligation, act, omission, non-fulfillment, Assumed Liability, breach or
misrepresentation of warranty, representation, covenant or agreement with
respect to any of the terms of this Agreement or any matter which accrues after
Closing.

       

      11. Other
Provisions.

       

      A. All
notices for which provision is made in this Agreement shall be given in writing
either
by actual
delivery of the notice into the hands of the party entitled to the notice or by
mailing the notice by registered or certified mail, return receipt requested, in
which case the notice shall be deemed to be given on the date of its mailing,
addressed as follows:

       

      If to
Seller

       

      ElectroWave
(USA) Inc ,

      6125 W.
Sam Houston Pkwy N.. Ste 406,

      Houston,
TX 77041 USA

      Atm:
Martin L. Kershman, President

      Facsimile:
713.896.7722

       

      If to
Buyer;

       

      Deep
Down, Inc.

      15473
East Freeway

      Channelview,
Texas 77530

      Attn:
John C. Siedhoff Chief Financial Officer 

      Facsimile:
(281) 862-2522

       

      with
a copy to (which shall net eonstinae notice to Deep Down):

       

      Robert L.
Sonfield, Jr., Esq.

      Sonfield
& Sonfield

      770 South
Post Oak Lane, Suite 435 

      Houston,
Texas 77056-1937

      Facsimile:
(713) 877-1547

       

      B. The terms
and provisions hereof shall inure to the benefit of and be binding upon the
undersigned
and each of them and their respective successors and assigns.

       

      C. The
invalidity or unenforceebility of any of the provisions hereof shall not affect
the validity
or enforceability of the remainder hereof.

       

      D. This
Agreement together with all of the Exhibits, Schedules and other documents
referred to herein
constitutes the entire Agreement between the parties with reference to the
subject matter hereof and supersedes all prior agreements and understandings,
whether written or oral, regarding the subject matter hereof, and may only be
changed or modified in writing.

       

      E. Each
party shall bear its own fees and expenses, including any investment banking
fees. Purchaser
acknowledges and agrees that neither Seller or Shareholders shall be liable for any fees or expenses due or payment to
any broker by reason of the transactions contemplated by the
Agreement.

       

      F. All of
the representations, warranties, covenants, agreements, terms and provisions of
this Agreement
shall survive the Closing Date.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

       

       

      Each party to this
Agreement agrees that he will not make any public disclosure of this Agreement
or the execution of the Agreement
without the
others prior approval. Prior to iscning any press release or public statement concerning the
transactions represented herein, a copy shall be made available to the other
parties for their comments. If the proposed transactions are not
consummated for any reason whatsoever, the respective parties hereto shall keep
confidential any information (unless ascertainable from public or published
information or trade sources) concerning the business or operations of the parties
hereto.

       

      This
Agreement is intended to be performed in the State of Texas and shall be governed
by and construed
and enforced
in accordance with the laws of that state.

       

      This
Agreement is intended for the benefit of the parties hereto and is not intended
to benefit any third party.

       

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

       

       

      
        
          	 
      	
                  BUYER:

                
	 
      	 
      
	 
      	
                  DEEP
      DOWN, INC.

                
	 
      	 
      
	 
      	 
      
	 
      	
                  By:
      /s/ Ronald E. Smith

                
	 
      	
                  Ronald
      E. Smith, Chief Executive Officer

                
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                  MERGER
      SUB:

                
	 
      	 
      
	 
      	
                  ELECTROWAVE
      (USA) INC.,

                
	 
      	
                  a
      Nevada corporation

                
	 
      	 
      
	 
      	
                  By:
      /s/ John C. Siedhoff

                
	 
      	
                  John
      C. Siedhoff, Chief Financial Officer

                
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                  SELLER:

                
	 
      	 
      
	 
      	
                  ELECTROWAVE
      (USA) INC.

                
	 
      	 
      
	 
      	
                  By:
      /s/ Martin L. Kershman

                
	 
      	
                  Martin
      L. Kershman, President

                
	 	 
	 	 
	 	SHAREHOLDERS:
	 	 
	 	 
	 	Pinemont
      JV
	 	 
	 	 
	 	 By:
      /s/ Albert P. Keller
	 	 Albert
      P. Keller
	 	 
	 	 
	 	 /s/
      Martin L. Kershman
	 	 Martin
      L. Kershman
	 	 
	 	 
	 	 /s/
      Ronald W. Nance
	 	 Ronald
      W. Nance

        

      

    

     

     

     

    11deep_ex1013.htm

    EXHIBIT 10.12

     

    
      

       

      STATE OF
LOUISIANA

       

      PARISH OF
IBERIA

       

      ACT OF
LEASE

       

      BE IT
KNOWN, that:

       

      SUTTON
INDUSTRIES, INC., a Louisiana corporation domiciled in Iberia Parish, Louisiana,
having as its permanent mailing address, P O Drawer 14238, New Iberia, Louisiana
70562-4238, herein represented by and acting through LIONEL H. SUTTON, II, duly
authorized,

       

      (hereinafter referred to as LESSOR);
and Mako Technologies, Inc.

       

      Mako Technologies, Inc.

        
          

        

      

      (hereinafter
referred to as LESSEE),

       

      have made
and entered into and do hereby make and enter into the following contract of
lease, to wit:

       

      
        
          

        

      

       

      I.

       

      LESSOR
has leased, let and rented and does hereby lease, let and rent unto LESSEE for
the consideration and under the terms and conditions hereinafter set forth, the
property described as follows,
to wit:

       

      All present property and
buildings having a street address of 125 Mako Lane.

       

      II.

       

      This contract of lease is made for a
period of  60 months commencing June 1,
2006 and terminating
May
31,
2011.

       

       

      III. 

       

      The consideration for this lease
is declared to be: A monetary rental of $7300.00
per month payable monthly in advance to LESSOR at P.O. Box 14238,
New Iberia, La. 70562-4238, beginning on the commencement date.

       

      IV.

       

      LESSOR
grants to LESSEE the option to
extend and/or renew this lease for 2 additional terms of 5
yrs. to commence upon expiration of the primary term.
Failure of LESSEE to notify LESSOR at least ninety (90) days prior to the
expiration of the original term or any extensions of its intention to
terminate

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      this
lease and surrender said property shall be conclusively construed as intention
to renew said lease for the succeeding period. Said lease shall thereupon, ipso
facto and without further notice, be extended and remain in full force and
effect for the next option term. Said notice shall be in accordance with the
provisions of Section XXIII
of this lease.

       

      V.

       

      Should
LESSEE exercise it's option to extend and/or renew this lease, the rental shall
be adjusted by increasing or decreasing (whichever is applicable) the base
monthly rental of $7300.00
by the percentage change shown by the United
states Department of Labor, Division of Labor Statistics Consumer Price
Index
(Base 1982-84100) as of commencement date of the primary term and the
starting
date of any renewal term. The base monthly lease rental of $7300.00 Shall be increased or
decreased (whichever is applicable) by the percentage change in said index, and
this sum, when calculated, shall be the rental payable monthly
in advance throughout the next 5
year term. The Consumer Price Index
Adjustment shall also apply to all subsequent
option periods.

       

      VI.

       

      LESSEE
shall maintain and keep in good repair all existing improvements on the leased
premises, including but not limited to, the air conditioners, parking lots,
fences, etc. LESSEE agrees to return the leased premises to the LESSOR at the
expiration of this lease, or the renewal thereof, in a condition at least equal
to the condition existing at the date hereof, reasonable wear and tear and acts
of God accepted.

       

      VII.

       

      The
leased premises shall be used for the purpose of operating thereon
Equipment Rental Company.  LESSEE
shall not use the leased premises or permit others to use the same for any
purpose
or activity which is contrary to law.

       

      VIII.

       

      LESSEE
shall not assign or otherwise alienate this lease, or allow it to be assigned or
otherwise alienated in whole or in part, by operation of law or otherwise, or
mortgage or pledge same,
or sublet the leased premises or any part thereof, without the prior
written consent of the LESSOR, which consent will not be unreasonably withheld
and in no event shall any such assignment or sub-lease ever release LESSEE from
any obligations or liability hereunder.

       

      IX.

       

      LESSEE
obligates itself to
carry a policy or policies of general liability insurance with the
coverage of One Million
Dollars for each occurrence, and the policy or policies shall name LESSEE as the
insured and LESSOR as and additional insured. LESSEE shall promptly pay the premiums due on
all such policies and cause certificates of
insurance to be furnished to LESSOR.

       

      LESSEE
shall hold harmless, indemnify and defend LESSOR, its employees, and
agents, against all claims,
demand, and actions for loss, liability, damage, cost and expense
(including attorney's fees) resulting from injury or death to any person and damage to
property caused by the act or omission of any person while in, upon or connected
in any way with the leased premises during the term of
this lease or
any occupancy hereunder.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      LESSEE
further agrees to indemnify and hold harmless, LESSOR from and against any and
all claims arising from or in connection with any cleanup or restoration
responsibility with respect to the leased premises and all appurtenances thereto
related to or in connection with the use, consumption, generation, treatment,
storage or disposition of hazardous materials or wastes on the leased premises
on or after the commencement date of this lease.

       

      LESSOR
agrees to indemnify and hold harmless, LESSEE from and against any and all
claims arising from or in connection with any cleanup or restoration
responsibility with respect to the leased premises and all appurtenances thereto
related to or in connection with the use, consumption, generation, treatment,
storage or disposition of hazardous materials or wastes by LESSOR arising before
the commencement date of this lease.

       

      X.

       

      Lessor
assumes full responsibility for securing and maintaining a policy of fire and
extended coverage in an amount to 100% of the current insurable value of the
LESSOR'S buildings and improvements on the leased premises. This amount to be
adjusted periodically as needed due to inflation. Lessor shall be solely
responsible
for the payment of all premiums due under said policy.

       

      XI.

       

      Should
the LESSEE become insolvent or upon the adjudication of LESSEE in bankruptcy,
the appointment of a receiver for LESSEE or the filing of a bankruptcy
receivership or respite petition of LESSEE, and should said condition continue
for a period of
five (5) days after written notice has been given LESSEE by LESSOR, then,
at the option of LESSOR, the rent for the whole unexpired term of this lease
shall at once become due and exigible and the LESSOR shall have the further
option to at once demand the entire rent for the whole term or to immediately
cancel this /ease, reserving its right to later proceed against the LESSEE for
the remaining installments.

       

      XII.

      LESSEE
agrees that it will make no structural changes or other alterations to the
leased premises without the LESSOR's written consent, and without furnishing the
LESSOR fifteen (15) days advance written notice outlining in detail the proposed
changes or alterations. Moreover, any additions or alterations or improvements
made by LESSEE, with or without consent of LESSOR, no matter how attached, shall
remain the property of LESSOR, unless otherwise stipulated herein, and LESSEE
expressly waives any right to compensation for any such additions or alterations
which may be make to the premises. Notwithstanding
the above, however, LESSEE may remove from the premises its trade fixtures,
office supplies, movable office furniture and equipment not attached to the
leased premises provided (a) such removal is made prior to the termination of
the term of this lease; (b) LESSEE is not in default of any obligation or
covenant under this lease at the time of such removal; and (c) LESSEE promptly
repairs all damage caused by the installation, use or removal of
any such furniture or equipment. Moreover, if LESSOR so requests in
writing, LESSEE will, prior to termination of this lease, remove any and all
alterations, additions, or fixtures, equipment and property placed or installed
by it in the leased premises and will repair any damage caused by such
removal.

       

      XIII.

       

      LESSOR
shall pay all real
estate taxes and assessments imposed against the leased premises when
due.

      
         

        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

      

       

      XIV.

       

      LESSEE
shall cause all improvements and appurtenances erected and/or placed by it on
the leased premises to be assessed to it for tax purposes separate from the
property of LESSOR and LESSEE shall pay all such taxes and all other charges
assessed and levied against its property and all appurtenances located on
the

      leased
premises on or before December 31st of that year.

       

      XV.

       

      LESSEE
binds and obligates itself to care for the leased premises as a prudent
administrator, keeping the same free of debris, rubbish and trash at all
time.

       

      XVI.

       

      LESSEE
assumes full responsibility for the fulfillment of all regulations and
requirements of all local, state, and federal laws, regulations and statutes,
including the Occupational Safety Hazard Act (OSHA), the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA) and The
Superfund Amendments and Re-authorization Act (SARA) and for all state and
federal laws and regulations governing, prohibiting and regulating pollution.
LESSEE shall comply with all laws concerning the leased premises or LESSEE'S use
of the premises including without limitation, the obligation at LESSEE's
cost to alter, maintain, or restore the premises in compliance and
conformity with all laws relating to the condition, use or occupancy of the
premises by LESSEE during the term of this lease. LESSEE
shall not use or permit the use of the premises in any manner that will
be in violation of any city or county ordinance or state and federal laws in or
about said leased premises.

       

      XVII.

       

      Failure
on the part of LESSEE to pay rent, including hazard insurance premiums, property
taxes and assessments within thirty (30) days after actual billing of such and
after notice given LESSEE by LESSOR via certified mail, shall entitle LESSOR, in
its sole discretion and at its option, to declare the balance of the rent due
for the term of the lease with interest thereon at the rate of 12% per annum
from the date on which the payment was due, together with 20% of the amount
claimed as stipulated
attorney's fees for the collection of said amount, or LESSOR, at its option, may
evict LESSEE
from the premises and regain possession, reserving its right to later
proceed against the LESSEE
for the remaining installments.

       

      XVIII.

       

      In
addition to the hereinabove stated base monthly rental, LESSEE shall pay all the
charges for water, telephone, electricity, gas, garbage, and delivery pick-up
services, sewerage, and any other utility charge that may accrue by reason of
occupancy or use by LESSEE of the leased premises and shall not permit any lien
or claim to be filed against LESSOR by reason of such charge.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      XIX.

       

      Neither
acceptance of rent by LESSOR nor failure by LESSOR to complain of any action,
non-action, or default of the LESSEE, whether singular or repetitive shall
constitute a waiver of any rights or either a subsequent default of same
obligation or any other default. No act or thing done by LESSOR or its agents
shall be deemed to be an acceptance of surrender of the leased premises and no
agreement to accept surrender of the leased premises shall be valid unless it is
in writing and signed by the duly authorized officer of agent of
LESSOR.

       

      XX.

       

      If LESSEE
should remain in possession of the leased premises after the expiration of the
original term or any extensions of this lease, without the execution by LESSOR and LESSEE of a new
lease, the LESSEE shall be considered as a month to month tenant, bound by and
subject to all the covenants and obligations of this lease.

       

      XXI.

       

      If any
clause or provision of this lease is illegal, invalid or unenforceable, under
present and future laws effective during the term hereof, then it is the
intention of the parties hereto that the remainder of this lease shall not be
affected thereby.

       

      XXII.

       

      Lessee
has reviewed the environmental assessment done by the previous tenant, and plans
on having his own independent assessment done (a copy of •which he has delivered
to Lessor prior to
occupation of the Leased Premises and accepts the Leased Premises in its
present condition as particularly evidenced by the two reports. Prior to
vacating the Leased Premises Lessee shall have caused to be prepared and paid
for a Phase I
environmental assessment showing that the property is clear of any
environmental hazards and to the extent that such report identifies any
remediation work necessary on the property, all such work shall be done by
Lessee prior to vacating the property. Lessee shall deliver such report to
Lessor on or before five (5) days prior to vacating the Leased
Premises.

       

      In
particular, but in no way intended to limit obligations of Lessee, Lessee
specifically agrees to obtain, maintain and fully comply with all permits,
licenses or permission required, necessary, contemplated by or related to all
operations on or related to the property which is the subject of the Lease or
performance there under and to fully comply with all
governmentalregt.dations,statutes,laws and regulations concerning underground
storage tanks, clean air provisions, water quality provisions, hazardous
substances and/or hazardous waste provisions, CERCLA provisions or otherwise.
Further, Lessee agrees to fully defend, indemnify and hold Lessor, its
subsidiaries and affiliated corporations, their heirs, successors and assigns
totally harmless from any and all liabilities, and/or claims, punitive or
otherwise, fines, penalties, cost of compliance, investigation, remediation,
reclamation, expert fees and/or cost/expenses of any nature whether said costs
were paid or activities entered into voluntarily or otherwise associated
directly or indirectly with Lessee, Lessee's heirs, successors, assigns,
contractors, subcontractors or any other party involved with said property by
Lessee's actions, failure to obtain and fully comply with any permits, licenses
or permission or with a notice of violation, order, regulation or governmental edict or any kind, and all costs and
expenses related in any way, whether directly or indirectly, thereto whether
said monies were paid or activities entered into voluntarily or
otherwise.

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      In
addition, and in no way intended to be limited by the above obligations. Lessee
further agrees to indemnify and hold Lessor, its subsidiary and affiliated
companies, their heirs, successors and assigns totally harmless from any and all
governmental and/or third party I j. claims of whatever kind or nature arising
out of or in any way related to the actions or failure f    j to
act by Lessee or Lessee's heirs, successors or assigns, contractors,
subcontractors,
invitees or any other party involved with said property by Lessee's actions,
whether arising out of common law or statute including but in no way limited to
Comprehensive Environmental Response, Compensations and Liability Act of 1980,
as
amended by the Superfund Amendments and Reauthorization Act of 1986 (as amended,
and often referred to as I "CERCLA"), the Resource Conservation and
Recovery
Act of 1976, (as amended by thef Used Oil Recycling Act of 1980), and the
Hazardous
and Solid Waste Amendments of 1984   j (as amended, often
referred to as "RCRA"),
the Toxic Substance Control Act, 15 U.S.C.A. 2601 to 2654, "TSCA", the
Occupational
Safety & Health Administration, "OSHA", the      i
Louisiana Department of
Environmental Quality Act, the Louisiana Solid Waste I Management and
Resource
Recovery Law, the Hazardous Waste Control Law, the Inactive and
Abandoned
Hazardous Waste Site Laws, the Taxation of Disposal and Storage ofI Hazardous
Waste, the Liability for Hazardous Substance Remedial Action, the Louisiana *
Waste Reduction Law, Underground Storage Tank Regulation, and any and all
federal, state and local rules, ordinances, and statutes governing hazardous
and/or toxic materials, and underground storage tanks and any and all other
state and/or federal and/or local environmental and/or ton and/or contractual
and/or health and/or safety and/or land use
legislation, regulations or orders or otherwise which are in any way related to
or in any way arise out of the use of property subject to this lease by Lessee
or Lessee's heirs, successors,assigns, contractors, subcontractors, or invitees
during the term herein.

       

      It is
expressly understood that Lessor, its subsidiaries and affiliated companies are
not to be liable for any damages, fines, claims, costs, expenses or liabilities
of any kind or nature arising in any way or related in any way to, whether
directly or indirectly, the use, possession, operation on or activities
involving said property by Lessee or Lessee's heirs, / successors, assigns,
subcontractors or contractors, invitees or any other party involved by Lessee's
actions.

       

      Notwithstanding
anything herein to
the contrary, none of the foregoing indemnities, assumptions of liability
or releases on the part of Lessee shall extend to any losses, costs, claims, or
omissions of Lessor or any other person in any way related to the use,
possession, operation on or activities involving said property by said person,
occurring prior to or subsequent to the term of the Lease or (ii) any such acts
or omissions by any of such persons occurring during the term of this Lease in
connection with a trespass or other act in derogation of Lessee's rights under
this Lease and without any fault or negligence on the part of the
Lessee.

       

      It is
expressly agreed to and understood by the parties hereto that the liability and
obligations assumed by Lessee under this Agreement are to survive the
termination of the Agreement to the extent not prohibited by law. Furthermore,
should any portion of the Agreement be found by a court of competent
jurisdiction to be void and/or unenforceable, then the remaining obligations
shall continue in full force and effect to the extent not prohibited by
law.

       

      XXIII.

       

      Whenever
under this lease a provision is made for any demand, notice or declaration of
any kind, it shall be in writing and serviced either personally or sent by
registered or certified mail, postage pre-paid, addressed at the address set
forth below:

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      To
LESSOR:

      SUTTON
INDUSTRIES, Inc.

      P.O.
Drawer 14238

      New
Iberia, Louisiana 70562-4238 

      Telephone: (337)
365-7012

       

      To
Lessee:

      Mako
Technologies, Inc.

      125 Mako
Lane

      Morgan City,
LA
70380

       

      XXIV

       

      AND THERE
INTERVENED: Jacob J. Marcell, of
age,
having a permanent mailing address P.O. Box 3186 Morgan City, LA 70381. Who guarantees
LESSEE'S performance under the aforementioned lease and agrees to fulfill the
obligation of LESSEE with respect to the said lease should LESSEE default on the
obligations.

       

      
        
          	 
      	 
      	
                  /s/
      Jacob J. Marcell

                
	 
      	 
      	
                  Jacob
      J. Marcell

                
	
                  WITNESSES:

                	 
      	 
      
	
                  /s/
      Karen Sampey

                	 
      	 
      

        

        

        

        IN
WITNESS WHEREOF, this Agreement is signed in duplicate originals as of this 1
day of June, 2006.

        

        
          	
                  WITNESSES:

                	 
      	
                  /s/
      Jacob J. Marcell

                
	
                  /s/
      signature

                	 
      	
                  LESSEE

                
	 
      	 
      	
                  Mako
      Technologies

                
	 
      	 
      	 
      
	 
      	 
      	
                  SUTTON
      INDUSTRIES, INC.

                
	
                  /s/
      signature

                	 
      	 
      
	 
      	 
      	
                  By:
      /s/ Lionel H. Sutton, II

                
	 
      	 
      	
                  LIONEL
      H. SUTTON, II LESSOR

                

        

        
 

         

         

        7

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