Geospatial Corporation - 10-K [gsph-10k_123116.htm]

Exhibit 10.39

 

NOTE AND WARRANT PURCHASE AGREEMENT

 

THIS NOTE AND WARRANT PURCHASE AGREEMENT (the “Agreement”) is dated as of
December 14, 2016, by and between Geospatial Corporation, a Nevada corporation
(the “Company”), and David M. Truitt, an individual resident of Virginia (the
“Purchaser”).

 

RECITALS:

 

WHEREAS, the Company issued and sold to Purchaser a Secured Promissory Note
dated April 2, 2015 in the principal amount of $1,000,000, which was amended
pursuant to Agreements and Amendments dated as of January 27, 2016 and August
12, 2016 (as so amended, the “First Note”); and

 

WHEREAS, the Company issued and sold to Purchaser its Secured Promissory Note
dated January 27, 2016, which was amended pursuant to an Agreement and Amendment
dated as of August 12, 2016 in the principal amount of $250,000.00 (as so
amended, the “Second Note”); and

 

WHEREAS, the First Note and the Second Note (collectively, the “Notes”) are
secured by a first priority security interest in (i) all of the Company’s assets
pursuant to the terms of a Security Agreement dated as of April 2, 2015 between
the Company and Purchaser (the “Security Agreement”) and (ii) all of the assets
of the Company’s wholly-owned subsidiary, Geospatial Mapping Systems, Inc.
(“Mapping”) pursuant to the terms of a Security Agreement dated as of April 2,
2015 between Mapping and Purchaser (the “Mapping Security Agreement”); and

 

WHEREAS, the Company made a payment on the Notes in the amount of $200,000.00 on
November 9, 2016; and

 

WHEREAS, the Purchaser desires to make an additional loan to the Company in the
amount of $100,000.00 and the Company desires to issue to Purchaser a warrant to
purchase 100,000 shares of the Company’s common stock, par value $0.001 per
share (“Common Stock”).

 

NOW, THEREFORE, in consideration of the foregoing recitals and the respective
representations and warranties, covenants and agreements contained herein, and
other good and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

 

1.            Sale and Purchase. Subject to the terms and conditions hereof, the
Company hereby issues and sells to Purchaser, and Purchaser hereby purchases
from the Company, a Secured Promissory Note in the principal amount of
$100,000.00 in the form attached hereto as Exhibit A (the “Note”) and a Warrant
to purchase 100,000 shares of Common Stock (the “Warrant Shares”) in the form
attached hereto as Exhibit B (the “Warrant”). Purchaser shall hereby pay to the
Company the purchase price for the Note and Warrant in the amount of
$100,000.00, by wire transfer of immediately available funds to an account
designated in writing by the Company, and the Company hereby delivers the
executed Note and Warrant to Purchaser. As set forth in the Note, the Note may
be converted into shares of Company Common Stock (“Conversion Shares”) at any
time at the election of Purchaser.

 

 

 

2.            Security. Both the Notes and the Note shall be secured by all of
the assets of the Company on the terms and conditions set forth in the Security
Agreement and by all of the assets of the Mapping pursuant on the terms and
conditions set forth in the Mapping Security Agreement, and each of the Security
Agreement and Mapping Security Agreement shall be deemed amended accordingly.

 

3.            Representations and Warranties of the Company. The Company
represents to Purchaser, as of the date hereof, as follows:

 

(a)          Organization and Standing. The Company is a corporation duly
organized and validly existing in good standing under the laws of its
jurisdiction of organization, with all requisite corporate power and authority
to own and operate its properties and assets and to execute and deliver this
Agreement, the Note and the Warrant. The Company and each of its subsidiaries is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) makes such qualification
necessary, except for those jurisdictions in which failure to do so would not
have a material adverse effect on such corporation or its business. All of the
issued shares of capital stock or other ownership interests of each subsidiary
of the Company have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned directly by the Company and are free and clear
of all liens, encumbrances, equities or claims, other than a security interest
in all of the Company’s assets granted to Purchaser pursuant to the Security
Agreement.

 

(b)          Authorization; Binding Obligation. All corporate action on the part
of the Company necessary for the authorization, execution and delivery of this
Agreement, the Note and the Warrant and the performance of all obligations of
the Company hereunder and thereunder has been taken. This Agreement, the Note
and the Warrant constitute valid and binding obligations of the Company
enforceable in accordance with their terms, except as limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights, and (ii) general
principles of equity that restrict the availability of equitable remedies.

 

(c)          Capitalization. Immediately prior to giving effect to the
transactions contemplated by this Agreement, the authorized capital stock of the
Company consists of (i) 750,000,000 shares of Common Stock, of which 226,229,740
shares are issued and outstanding, and (ii) 25,000,000 shares of preferred
stock, par value $.001 per share, 5,000,000 shares of which are designated as
“Series B Convertible Preferred Stock”, none of which are issued and
outstanding. As of the date hereof 9,050,000 shares of Common Stock are reserved
for issuance upon exercise of stock options granted under the Company’s 2007
Stock Option Plan and 25,000,000 shares of Common Stock are reserved for
issuance upon exercise of stock options and other stock awards to be granted
under the Company’s 2013 Equity Incentive Plan (18,358,500 of which have been
granted as of the date hereof). As of the date hereof there are outstanding
warrants to purchase 50,075,088 shares of Common Stock, and warrants to purchase
344,993 shares of Series B Convertible Preferred Stock. All of the outstanding
shares of capital stock of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are subject to no preemptive
rights (and were not issued in violation of any preemptive rights). Except as
provided in the Note and the Warrant, the Company does not have outstanding any
securities or other obligations providing the holder the right to acquire Common
Stock or other equity security that is not reserved for issuance as specified in
this subsection 5(c), and the Company has not made any other commitment to
authorize, issue or sell any Common Stock or other equity security.

 

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(d)          Proceeds. The Company shall use the proceeds from the issuance and
sale of the Note and Warrant for working capital and other general corporate
purposes.

 

(e)          Reservation of Shares. The Company has reserved from its authorized
and unissued Common Stock a sufficient number of shares, free from preemptive
rights, to provide for the issuance of the Conversion Shares and Warrant Shares.

 

(f)           Issuance of Shares. The Conversion Shares and Warrant Shares are
duly authorized and reserved for issuance and, upon conversion of the Note or
exercise of the Warrant in accordance with their respective terms, will be
validly issued, fully paid and non-assessable, and free from all taxes, liens,
claims and encumbrances with respect to the issue thereof and shall not be
subject to preemptive rights or other similar rights of shareholders of the
Company and will not impose personal liability upon the holder thereof.

 

(g)          No Conflicts. The execution, delivery and performance of this
Agreement, the Note and the Warrant by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance and reservation for issuance of the Conversion Shares
and Warrant Shares) will not (i) conflict with or result in a violation of any
provision of the Company’s Articles of Incorporation or By-laws, or (ii) violate
or conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both could become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company or any of its subsidiaries under, any agreement, indenture, patent,
patent license or instrument to which the Company or any of its subsidiaries is
a party, other than pursuant to the Security Agreement, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and regulations of any
self-regulatory organizations to which the Company or its securities are
subject) applicable to the Company or any of its subsidiaries or by which any
property or asset of the Company or any of its subsidiaries is bound or
affected, except, with respect to clauses (ii) and (iii), for such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a material adverse effect
on the Company or its business. No notice to, filing with, exemption or review
by, or authorization, consent or approval of, any governmental body or agency is
required to be made or obtained by the Company in connection with the
performance by the Company of its obligations under this Agreement, the Note or
the Warrant, except for notice filings under applicable securities laws.

 

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4.           Representations and Warranties of Purchaser. Purchaser represents
and warrants to the Company, as of the date hereof, as follows:

 

(a)          Requisite Power and Authority. All action on the part of Purchaser
necessary for the authorization of this Agreement and the performance of all
obligations of Purchaser hereunder has been taken. This Agreement constitutes
the valid and binding obligation of Purchaser enforceable in accordance with its
terms, except as limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors’ rights, and (ii) general principles of equity that
restrict the availability of equitable remedies.

 

(b)          Investment Representations. Purchaser understands that the Note and
the Warrant issued to Purchaser hereunder, and the Warrant Shares have not been
registered under the Securities Act of 1933, as amended (the “Securities Act”).
Purchaser also understands that the Note and the Warrant are being offered and
sold pursuant to an exemption from registration contained in the Securities Act
based in part upon Purchaser’s representations contained in this Agreement.

 

(c)          Experience; Risk. Purchaser has such knowledge and experience in
financial and business matters that Purchaser is capable of evaluating the
merits and risks of the purchase of the Note, the Warrant and the Warrant Shares
and of protecting Purchaser’s interests in connection therewith. Purchaser is
able to fend for himself in the transactions contemplated by this Agreement and
has the ability to bear the economic risk of the investment, including complete
loss of the investment.

 

(d)          Investment. Purchaser is acquiring the Note, the Warrant and the
Warrant Shares for investment for his own account, not as a nominee or agent,
and not with a view to, or for resale in connection with, any distribution
thereof, and Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same. Purchaser understands that
the Note, the Warrant and the Warrant Shares have not been registered under the
Securities Act and applicable state securities laws (collectively, the “Acts”)
by reason of a specific exemption from the registration provisions of the Acts
which depends upon, among other things, the bona fide nature of the investment
intent and the accuracy of Purchaser’s representations as expressed herein.

 

(e)          Information. Purchaser has been furnished with all information
which he deems necessary to evaluate the merits and risks of purchasing the Note
and the Warrant and has had the opportunity to ask questions concerning the
Note, the Warrant and the Company and all questions posed have been answered to
his satisfaction. Purchaser has been given the opportunity to obtain any
additional information he deems necessary to verify the accuracy of any
information obtained concerning the Note, the Warrant and the Company. Neither
such inquiries nor any other investigation conducted by or on behalf of
Purchaser or its representatives or counsel shall modify, amend or affect
Purchaser’s right to rely on the truth, accuracy and completeness of the
Company’s representations and warranties contained in this Agreement. Purchaser
understands that an investment in the Note and Warrant involves significant
risks.

 

(f)           Accredited Investor. Purchaser is an “accredited investor” within
the meaning of Rule 501 promulgated under the Securities Act. Purchaser has
considered the federal and state income tax implications of an investment in the
Note and Warrant and has consulted with his own advisors with respect thereto.

 

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(g)          Residence. The place where Purchaser’s investment decision was made
is located at the address of Purchaser set forth on the signature page hereto.

 

(h)          Legends. Purchaser understands and agrees that the Note will bear a
legend as set forth on Exhibit A and, the Warrant will bear a legend as set
forth on Exhibit B. In addition, the Note, the Warrant and any certificate or
other instrument representing the Warrant Shares and the Conversion Shares will
bear any other legend that may be required by applicable law, by the Company’s
Articles of Incorporation or Bylaws, or by any agreement between the Company and
Purchaser.

 

5.           Reservation of Shares. The Company agrees to take any and all
action as is necessary or desirable to authorize, reserve and issue any shares
of the Company’s capital stock issuable upon exercise of the Warrant and upon
conversion of the Note.

 

6.           Registration Rights.

 

(a)          Definitions. As used in this Section 6 and unless the context
requires a different meaning, the following terms have the meanings indicated:

 

“Register,” “registered” and “registration” refer to a registration effected by
preparing and filing a registration statement in compliance with the Securities
Act, and the declaration or ordering of effectiveness of such registration
statement or document by the Commission.

 

“Registration Expenses” means all expenses incurred by the Company in complying
with this Section 6, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel for the Company, blue
sky fees and expenses and the expense of any special audits incident to or
required by any such registration.

 

“Selling Expenses” means all underwriting discounts and broker commissions
applicable to the sale.

 

(b)          Piggyback Registration. The Company shall notify Purchaser in
writing at least thirty (30) days prior to the filing of any registration
statement under the Securities Act for purposes of a public offering of
securities of the Company (including, but not limited to, registration
statements relating to secondary offerings of securities of the Company, but
excluding registration statements relating to employee benefit plans or with
respect to corporate reorganizations or other transactions under Rule 145 of the
Securities Act), which notice will specify the proposed offering price, the kind
and number of securities proposed to be registered, the distribution
arrangements and such other information that at the time would be appropriate to
include in such notice, and will afford each Purchaser an opportunity to include
in such registration statement all or part of the Warrant Shares held by
Purchaser on terms and conditions at least as favorable as those applicable to
the securities to be sold by the Company and by any other person thereunder.
Purchaser desires to include in any such registration statement all or any part
of the Warrant Shares he shall, within fifteen (15) days after the
above-described notice from the Company, so notify the Company in writing. If
Purchaser decides not to include some or all of his Warrant Shares in any
registration statement thereafter filed by the Company or decides to withdraw
his Registrable Shares from any underwriting or registration pursuant to Section
6(b)(i), Purchaser shall nevertheless continue to have the right to include any
Warrant Shares in any subsequent registration statement or registration
statements as may be filed by the Company with respect to offerings of its
securities, all upon the terms and conditions set forth herein.

 

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(i)       Right to Terminate Registration. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 6(b)
prior to the effectiveness of such registration whether or not Purchaser has
elected to include Warrant Shares in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 6(b) hereof.

 

(c)          Expenses of Registration. Except as specifically provided herein,
all Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 6(b) herein shall be borne by
the Company. All Selling Expenses applicable to Warrant Shares sold by Purchaser
incurred in connection with any registrations hereunder shall be borne by
Purchaser.

 

7.            Confirmations. The Company confirms that the Existing Note remains
outstanding without defense, set off, counterclaim, discount or charge of any
kind as of the date of this Agreement and the security interests granted
pursuant to the Security Agreement and the Mapping Security Agreement shall
continue unimpaired by this Agreement and in full force and effect, and nothing
in this Agreement shall alter the priority of any such lien, security interest,
mortgage, guarantee or pledge.

 

8.            No Other Changes. Except as modified by this Agreement, each of
the Existing Note, the Existing Warrant, the Security Agreement and the Mapping
Security Agreement shall remain in full force and effect and is hereby in all
respects ratified and confirmed.

 

9.            Miscellaneous.

 

(a)          Governing Law; Arbitration. This Agreement and the Note shall be
governed, construed and interpreted in accordance with the laws of the
Commonwealth of Pennsylvania without giving effect to principles of conflicts of
law and choice of law that would cause the laws of any other jurisdiction to
apply. Any dispute or claim arising to or in any way related to this Agreement
or the Note or the rights and obligations of each of the parties hereto shall be
settled by binding arbitration in Pittsburgh, Pennsylvania. All arbitration
shall be conducted in accordance with the rules and regulations of the American
Arbitration Association (“AAA”). AAA shall designate an arbitrator from an
approved list of arbitrators following both parties’ review and deletion of
those arbitrators on the approved list having a conflict of interest with either
party. The Company agrees that a final non-appealable judgment in any such suit
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.

 

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(b)          Indemnification. In consideration of Purchaser’s execution and
delivery of this Agreement and purchase of the Note and the Warrant hereunder,
and in addition to all of the Company’s other obligations under this Agreement,
the Company shall defend, protect, indemnify and hold harmless Purchaser from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether Purchaser is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified Liabilities”), incurred by Purchaser as a
result of, or arising out of, or relating to (a) any material misrepresentation
by Company or any material breach of any covenant, agreement, obligation,
representation or warranty by the Company contained in this Agreement, or (b)
after any applicable notice and/or cure periods, any breach or default in
performance by the Company of any covenant or undertaking to be performed by the
Company hereunder. To the extent that the foregoing undertaking by the Company
may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.

 

(c)          Successors and Assigns. This Agreement may not be assigned,
conveyed or transferred by either party without the prior written consent of the
other party. Subject to the foregoing, the rights and obligations of the Company
and Purchaser under this Agreement shall be binding upon and benefit their
respective permitted successors, assigns, heirs, administrators and transferees.
The terms and provisions of this Agreement are for the sole benefit of the
parties hereto and thereto and their respective permitted successors and
assigns, and are not intended to confer any third-party benefit on any other
person.

 

(d)          Entire Agreement. This Agreement, the exhibits and schedules hereto
and the Note, the Warrant and the Security Agreement delivered pursuant to the
terms hereof constitute the full and entire understanding and agreement between
the parties with regard to the subjects hereof and no party shall be liable or
bound to any other in any manner by any representations, warranties, covenants
and agreements except as specifically set forth herein and therein. Any previous
agreement among the parties relative to the specific subject matter hereof is
superseded by this Agreement, the Note and the Warrant

 

(e)          Severability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

 

(f)           Amendment or Waiver. This Agreement, the Note, the Warrant and the
Security Agreement may be amended, and any term or provision of this Agreement,
the Note and the Warrant may be waived, (either generally or in a particular
instance and either retroactively or prospectively) upon the written consent of
the Company and Purchaser.

 

(g)          Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, including, with respect to Purchaser, upon delivery by
electronic mail to Purchaser’s e-mail address; (ii) when sent by confirmed
facsimile if sent during normal business hours of the recipient, if not, then on
the next business day; (iii) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (iv) the next
business day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent to the Company and to Purchaser at the address or
facsimile number set forth on such party’s signature page hereof or at such
other address as the Company or Purchaser may designate by 10 days’ advance
written notice to the other parties hereto.

 

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(h)          Expenses. Each party shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
this Agreement, the Note and the Warrant.

 

(i)           Titles and Subtitles. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

 

(j)           Counterparts. This Agreement may be executed in any number of
counterparts (and by facsimile or .PDF), each of which shall be an original, but
all of which together shall constitute one instrument.

 

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IN WITNESS WHEREOF the parties hereto have executed this Agreement and Amendment
as of the date set forth in the first paragraph hereof.

 

  COMPANY:             GEOSPATIAL CORPORATION             By: /s/ Mark Smith    
  Mark Smith       Chief Executive Officer  

        Address:           229 Howes Run Road     Sarver, PA 16055          
PURCHASER:           /s/ David M. Truitt     David M. Truitt           Address:
          Discover Technologies, LLC     13241 Woodland Park Road     Suite 610
    Herndon, VA 20171     United States           For Purposes of Agreeing to
Section 2:         GEOSPATIAL MAPPING SYSTEMS, INC.

          By: /s/ Mark Smith       Mark Smith       Chief Executive Officer  

 

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EXHIBIT A

 

FORM OF NOTE

 

 

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT BE TRANSFERRED EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR (B) IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND APPLICABLE STATE SECURITIES LAWS. THIS NOTE IS SUBJECT TO THAT CERTAIN
AGREEMENT AND AMENDMENT, DATED AS OF JANUARY 26, 2016, BY AND BETWEEN THE
COMPANY AND THE HOLDER OF THIS NOTE.

 

SECURED PROMISSORY NOTE

    $100,000.00 Issue Date:      December 14, 2016  

 

For value received, Geospatial Corporation, a Nevada corporation (together with
its successors and assigns, the “Company”), promises to pay to David M. Truitt
(the “Holder,” which term shall include any holder or other transferee of this
Note), the principal sum of one hundred thousand ($100,000.00) together with any
and all interest accrued but unpaid thereon. This Note is issued pursuant to
that certain Note and Warrant Purchase Agreement dated as of December 14, 2016,
by and between the Company and the Holder (as may from time to time be modified,
supplemented and replaced, the “Agreement”). This Note is subject to the terms
of the Agreement and the following additional terms and conditions.

 

1.            Definitions; Security. Capitalized terms used herein and not
otherwise defined have the meanings given such terms in the Agreement. As used
herein, the term “Loan Documents” shall mean this Note, the Agreement, the
Security Agreement, the Mapping Security Agreement, any other instrument or
agreement which now or hereafter evidences, governs, secures or guaranties the
indebtedness evidenced by this Note, including any loan agreement, deed of
trust, security agreement or guaranty, and all renewals, extensions and
modifications thereof and substitutions therefor. This Note is secured pursuant
to the terms of a Security Agreement dated as of April 2, 2015 between the
Company and the Holder (as may from time to time be modified, supplemented and
replaced, the “Security Agreement”) and a Security Agreement dated as of April
2, 2015 between the Company and Mapping (as may from time to time be modified,
supplemented and replaced, the “Mapping Security Agreement”).

 

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2.            Payment Terms.

 

2.1          Maturity Date. This Note will automatically mature and all unpaid
principal and accrued and unpaid interest will be due and payable on the earlier
of (a) January 31, 2017; (the “Maturity Date”), or (b) the occurrence of an
Event of Default (as defined in Section 5).

 

2.2          Interest. Subject to Section 4.2, interest shall accrue on the
unpaid principal amount of this Note at a fixed rate per annum of (10%) from the
date hereof until paid in full.

 

2.3          Prepayment. The Company shall have the right to prepay all or any
portion of this Note, at any time and from time to time, by paying the amount to
be prepaid and interest thereon. A partial prepayment of principal shall not
affect the obligation of the Company to make subsequent scheduled principal
payments at the times and in the amounts required until this Note is paid in
full.

 

3.            Payment. Except as set forth herein, all payments shall be made in
immediately available funds in lawful money of the United States of America to
the Holder, without offset, at 13241 Woodland Park Road Suite 610 Herndon, VA
20171 (or at such other address as the Holder shall designate). The making of
any payment in other than immediately available funds which the Holder, at its
option, elects to accept shall be subject to collection, and interest shall
continue to accrue until the funds by which payment is made are available to the
Holder for its use. Payment shall be credited first to any accrued interest then
due and payable and the remainder applied to principal.

 

4.            Events of Default.

 

4.1          The entire unpaid principal sum of this Note, together with any and
all interest accrued but unpaid thereon, shall become immediately due and
payable upon the occurrence of an Event of Default. Subject to the foregoing, an
“Event of Default” shall be deemed to have occurred upon the occurrence of any
of the following:

 

(a)          the nonpayment of any principal, interest or other amounts due
under this Note or the Existing Note within ten (10) calendar days after when
due;

 

(b)          any default under the terms of any of the Loan Documents, or the
failure to perform or observe any warranty, covenant, or other condition of any
of the Loan Documents, which, in any such case, has not been cured within 20
days after notice in writing has been sent to the Company;

 

(c)          the merger, consolidation, reorganization, dissolution, or
termination of existence of the Company; or the pledge, lease or other
disposition of all or substantially all of the assets of the Company;

 

(d)          the filing by or against the Company of any proceeding in
bankruptcy, receivership, insolvency, reorganization, liquidation,
conservatorship or similar proceeding (and, in the case of any such proceeding
instituted against any obligor, such proceeding is not dismissed or stayed
within 60 days of the commencement thereof);

 

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(e)          any assignment by the Company for the benefit of creditors;

 

(f)           a default with respect to any other indebtedness of the Company
for borrowed money, if the effect of such default is to cause or permit the
acceleration of such debt, unless the holder of such debt waives such default or
otherwise agrees to forbear from exercising its rights with respect to such
default;

 

(g)          the entry of a final judgment against the Company in an amount
exceeding $100,000 and the failure of the Company to discharge the judgment
within thirty (30) days of the entry thereof;

 

(h)          the Company ceases doing business as a going concern; or

 

(i)           any agreement or other document granting the Holder security for
the payment of this Note shall cease for any reason to be in full force and
effect as such security with the priority stated to be created thereby, or the
grantor of such security shall contest the validity or enforceability of the
security or deny that it has any further liability or obligation under such
agreement or other document.

 

4.2          Upon the occurrence of an Event of Default, interest shall accrue
on the unpaid principal of this Note at a fixed rate of 20% per annum from the
date of such Event of Default until the date such Event of Default has been
waived by the Holder or cured to the reasonable satisfaction of the Holder.

 

4.3          Upon the occurrence of an Event of Default, and at any time
thereafter unless and until such Event of Default has been waived by the Holder
or cured to the reasonable satisfaction of the Holder, the Holder may, by notice
to the Company declare the unpaid principal of and any accrued interest in
respect of or under this Note to be due whereupon the same shall be immediately
due and payable. The Holder shall also have any other rights which the Holder
may have pursuant to the Loan Documents and applicable law. Notwithstanding the
foregoing, if an Event of Default specified in Section 4.1(b) shall occur, then
the aggregate principal amount of this Note (together with all accrued interest
thereon), shall become immediately due and payable without any action on the
part of the Holder and the Company shall immediately pay to the Holder all
amounts due and payable with respect to this Note.

 

4

 

 

5.             Conversion.

 

5.1          Conversion. The Holder shall have the right, at any time and from
time to time, to convert the unpaid principal and accrued interest, if any, of
this Note, in whole or in part, into shares of common stock, par value $ .001
per share, of the Company (“Common Stock” or “Conversion Shares”) at a price per
share (the “Conversion Price”) equal to 75% of (i) if the Common Stock is then
traded on a national securities exchange or the Nasdaq Stock Market (or a
similar national quotation system), the average of the closing “bid” prices of
the Common Stock on such exchange or system for the ten (10) trading days ending
on the date of delivery to the Company of a Notice of Conversion in the form
annexed hereto as Exhibit A, or (ii) if the Common Stock is then actively traded
over-the-counter, the average of the closing bid prices for the ten (10) trading
days ending on the date of delivery to the Company of a Notice of Conversion in
the form annexed hereto as Exhibit A. The number of shares of Common Stock to be
issued upon each conversion of this Note shall be determined by dividing the
Conversion Amount (as defined below) by the applicable Conversion Price then in
effect on the date specified in the notice of conversion; provided that the
Notice of Conversion is submitted by facsimile or e-mail (or by other means
resulting in, or reasonably expected to result in, notice) to the Company before
6:00 p.m., New York, New York time on such conversion date (the “Conversion
Date”). The term “Conversion Amount” means, with respect to any conversion of
this Note, the sum of (1) the principal amount of this Note to be converted in
such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if
any, on such principal amount at the interest rates provided in this Note to the
Conversion Date.

 

5.2          Mechanics and Effect of Conversion.

 

(a)          No fractional shares will be issued upon conversion of this Note.
In lieu of any fractional share to which the Holder would otherwise be entitled,
the Company will pay to the Holder in cash the unconverted balance that would
otherwise be converted into such fractional share.

 

(b)          In the event that this Note is converted in full pursuant to
Section 5.1, the Holder shall surrender this Note, and the Notice of Conversion
annexed hereto as Exhibit A by e-mail or facsimile, duly endorsed (but without
the requirement of a medallion signature guarantee), to the Company and the Note
shall thereupon be canceled; provided that if this Note is converted only in
part, then only the Notice of Conversion, duly endorsed (but without the
requirement of a medallion signature guarantee), shall be required to be
delivered by e-mail or facsimile to the Company. As soon as practicable
following the Company’s receipt of a Notice of Conversion and at its expense,
but not later than ten business days after receipt of a Notice of Conversion,
the Company will issue and deliver to the Holder, a certificate or certificates
representing the number of shares of the Company’s Common Stock to which the
Holder is entitled upon conversion, together with (i) a check payable to the
Holder for any cash amounts in lieu of fractional shares as described in clause
(a) above and (ii) to the extent that the Holder has converted this Note only in
part, a replacement Note in the form hereof in the principal amount equal to the
remaining principal balance of this Note (the “Replacement Note”). If
permissible under Rule 144 under the Securities Act of 1933, as amended, or if
the Conversion Shares have been registered for re-sale, all shares shall be
delivered without legend and if, the Company is so eligible, by electronic
delivery to a brokerage account designated by Holder. The Company shall pay the
cost of any legal opinion that may be necessary for the delivery of the
Conversion Shares.

 

5

 

 

5.3          Termination of Rights. Upon conversion of this Note in accordance
with Section 5.1, all rights with respect to the converted portion of this Note
shall terminate, whether or not the Note has been surrendered for cancellation,
and the Company will be forever released from all of its obligations and
liabilities under the converted portion of this Note except its obligations
pursuant to Section 5.2.

 

5.4          Buy-In. In addition to any other rights available to the Holder, if
the Company fails to deliver to a Holder the Conversion Shares as required
pursuant to this Note, and the Holder purchases (in an open market transaction
or otherwise) shares of Common Stock (or a broker or trading counterparty
through which the Holder has agreed to sell shares makes such purchase) to
deliver in satisfaction of a sale by such Holder of the Conversion Shares which
the Holder was entitled to receive from the Company (a “Buy-In”), then the
Company shall pay in cash to the Holder (in addition to honoring its obligation
to deliver to Holder a certificate or certificates representing the Conversion
Shares and any remedies available to or elected by the Holder) the amount by
which (A) the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of common stock so purchased exceeds (B) the aggregate
Conversion Price of the Conversion Shares required to have been delivered
together with interest thereon at a rate of 5% per annum, accruing until such
amount and any accrued interest thereon is paid in full (which amount shall be
paid as liquidated damages and not as a penalty). For example, if a Holder
purchases shares of Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to a Conversion Amount of $10,000 to have been
received upon conversion of this Note, the Company shall be required to pay the
Holder $1,000, plus interest. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In,
along with the appropriate supporting documentation for such purchase.

 

6.            Transfer; Successors and Assigns. Subject to the restrictions set
forth in the Agreement, this Note may be transferred only upon surrender of the
original Note for registration of transfer, duly endorsed, or accompanied by a
duly executed written instrument of transfer in form satisfactory to Holder.
Thereupon, a new note for the same principal amount and interest will be issued
to, and registered in the name, of, the transferee. Interest and principal are
payable only to the registered holder of this Note. The terms and conditions of
this Note shall inure to the benefit of and binding upon the respective
successors and assigns of the parties.

 

7.            Governing Law. This Note and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the Commonwealth of
Virginia, without giving effect to principles of conflicts of law and choice of
law that would cause the laws of any other jurisdiction to apply.

 

6

 

 

8.            Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing by facsimile, e-mail, mail or personal
delivery and shall be effective upon delivery of such notice. The addresses for
such communications shall be to the addresses as shown on the books of the
Company or to the Company at the address set forth in the Agreement. A party may
from time to time change the address to which notices to it are to be delivered
or mailed hereunder by notice in accordance with the provisions of this Section
8.

 

9.            Amendments and Waivers. This Note and any term hereof may be
amended, waived, discharged or terminated only by an instrument in writing
signed by the party against whom enforcement of such amendment, waiver,
discharge or termination is sought. No waivers of any term, condition or
provision of this Note, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or
provision.

 

10.          Stockholders, Officers and Directors Not Liable. In no event shall
any stockholder, officer or director of the Company be liable for any amounts
due or payable pursuant to this Note.

 

11.          Headings. The headings in this Note are for purposes of reference
only, and shall not limit or otherwise affect the meaning hereof.

 

12.          Benefits of this Note. Nothing in this Note shall be construed to
give any person or corporation other than the Company and the Holder any legal
or equitable right, remedy or claim under this Note and this Note shall be for
the sole and exclusive benefit of the Company and the Holder and any other
permitted holder or holders of the Note.

 

13.          Jurisdiction. The Company irrevocably (i) submit to the exclusive
jurisdiction of any Virginia state court or federal court sitting in the
Commonwealth of Virginia with respect to any suit, action, or proceeding
relating to this Note, (ii) waives any objection which it may now or hereafter
have to the laying of venue of any such suit, action, or proceeding brought in
any such court and any claim that any such suit, action, or proceeding brought
in any such court has been brought in an inconvenient forum, (iii) waives the
right to object that any such court does not have jurisdiction over it, and (iv)
consents to the service of process in any such suit, action, or proceeding by
the mailing of copies of such process to it by certified mail at the addresses
indicated in this Note or at such other addresses of which the Holder shall have
received notice. Nothing in this paragraph shall affect the Holder’s right to
serve process in any other manner permitted by law or to bring proceedings
against the Company in any other court having jurisdiction.

 

7

 

 

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed and
delivered by its authorized officer, as of the date first above written.

 

  GEOSPATIAL CORPORATION     [SEAL]         By:       Mark A. Smith     Chief
Executive Officer

 

8

 

 

EXHIBIT A

 

NOTICE OF CONVERSION

 

(To be Executed by the Registered Holder in order to Convert the Note)

 

The undersigned hereby irrevocably elects to convert $                       of
the Note (defined below) into shares of common stock, par value $.001 per share
(“Common Stock”), of Geospatial Corporation, a Nevada corporation (the
“Company”) according to the conditions of the Company’s Secured Promissory Note
dated as of                        (the “Note”), as of the date written below.
If securities are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates. No fee will be charged to
the Holder for any conversion, except for transfer taxes, if any. A copy of the
Note is attached hereto (or evidence of loss, theft or destruction thereof).

 

The undersigned hereby requests that the Company issue a certificate or
certificates for the number of shares of Common Stock set forth below (which
numbers are based on the Holder’s calculation attached hereto) in the name(s)
specified immediately below or, if additional space is necessary, on an
attachment hereto:

 

Name:             Address:           Tax ID/SS #:    

 

The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable to the undersigned upon conversion of the
Note shall be made pursuant to registration of the securities under the
Securities Act of 1933, as amended (the “Act”), or pursuant to an exemption from
registration under the Act.

 

Date of Conversion:     

 

Applicable Conversion Price:     

 

Number of Shares of Common Stock to be Issued   Pursuant to Conversion of the
Notes:     

 

9

 

 

Signature:         Name:           Address:      

 

10

 

 

EXHIBIT B

 

FORM OF WARRANT

 

11

 

 

NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY
BE TRANSFERRED EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR
(B) IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS.

 

Warrant Issue Date: December 14, 2016

 

COMMON STOCK PURCHASE WARRANT

 

For value received, Geospatial Corporation (the “Company”), a Nevada
corporation, hereby certifies that David M. Truitt (the “Holder”) or its
permitted assign(s) is entitled to purchase from the Company, at any time or
from time to time during the Exercise Period (as defined below), in whole or in
part, one hundred thousan (100,000) shares of the Company’s common stock, par
value $.001 per share (“Common Stock” or “Warrant Shares”) at a price of $0.01
per share (the “Exercise Price”). This Warrant is issued pursuant to that
certain Note and Warrant Purchase Agreement dated as of December 14, 2016, by
and between the Company and the Holder (the “Purchase Agreement”). This Warrant
is subject to the terms of the Purchase Agreement and the following additional
terms and conditions.

 

1.            Certain Definitions.

 

(a)          “Change in Control” means any sale of capital stock of the Company
or consolidation or merger of the Company with or into any other corporation or
other entity or person, or any other corporate reorganization, in which the
stockholders of the Company immediately prior to such sale, consolidation,
merger or reorganization, do not hold at least a majority of the resulting or
surviving corporation’s voting power immediately after such consolidation,
merger or reorganization, or the sale, lease, or other disposition of all or
substantially all of the assets of the Company.

 

(b)          “Exercise Period” means the period commencing on the date of this
Warrant and ending on 5:00 p.m. (prevailing local time at the principal
executive office of the Company) on the tenth anniversary of the date of this
Warrant.

 

12

 

 

(c)          “Fair Market Value” means, for any date, the price determined by
the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of
the Common Stock for such date (or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed or quoted as reported by
Bloomberg L.P. (based on a Trading Day from 9:30 a.m.(New York City time) to
4:02 p.m. (New York City time)), (b) if the OTC Markets, Inc. OTCQB is not a
Trading Market, the volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the OTCQB, (c) if the Common Stock is
not then listed or quoted for trading on the OTCQB and if prices for the Common
Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc.
(or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported, or
(d) in all other cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by the Holder and
reasonably acceptable to the Company, the fees and expenses of which shall be
paid by the Company.

 

(d)         “Trading Day” means (x) if the Common Stock is not listed on the
NYSE Euronext or NYSE AMEX but sale prices of the Common Stock are reported on
Nasdaq Global Market, Nasdaq Global Select Market, Nasdaq Capital Market or
another automated quotation system, a day on which trading is reported on the
principal automated quotation system on which sales of the Common Stock are
reported, (y) if the Common Stock is listed on the NYSE Euronext or NYSE AMEX, a
day on which there is trading on such stock exchange, or (z) if the foregoing
provisions are inapplicable, a day on which quotations are reported by National
Quotation Bureau Incorporated.

 

(e)          “Trading Market” means any of the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in question:
the NYSE AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange or the OTCQB operated by OTC
Markets, Inc. (or any successors to any of the foregoing).

 

(f)          “VWAP” means, for any date, the price determined by the first of
the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the
Common Stock for the preceding 10 Trading Days on the Trading Market on which
the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time), (b) if the OTCQB operated by OTC Markets, Inc. is not a Trading Market,
the volume weighted average price of the Common Stock for the nearest preceding
10 days on the OTCQB, (c) if the Common Stock is not then listed or quoted for
trading on the OTCQB and if prices for the Common Stock are then reported in the
“Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or
agency succeeding to its functions of reporting prices), the last reported bid
price averaged over the preceding 10 days per share of the Common Stock so
reported, or (d) in all other cases, the fair market value of a share of Common
Stock as determined by the Company’s board of directors.

 

13

 

 

2.            Exercise of Warrant.

 

(a)          The purchase rights represented by this Warrant are exercisable by
the Holder, in whole or in part, during the Exercise Period by delivery of the
form of Notice of Exercise attached hereto as Annex A (the “Notice of Exercise”)
duly completed and executed by the Holder by e-mail or facsimile, to the Company
at its principal executive office. The Holder shall deliver to the Company
payment in cash, in lawful money of the United States of America, including by
certified or official bank check made payable to the order of the Company or by
wire transfer of immediately available funds to an account designated by the
Company, of an amount equal to the Exercise Price multiplied by the number of
shares of Common being purchased pursuant to such exercise of the Warrant within
two (2) business days of delivery of the Notice of Exercise. The number of
shares of Common Stock to be issued upon each exercise of this Warrant shall be
as set forth in the Notice of Exercise delivered to the Company by the Holder;
provided that the Notice of Exercise is submitted by facsimile or e-mail (or by
other means resulting in, or reasonably expected to result in, notice) to the
Company before 6:00 p.m., New York, New York time on such exercise date.

 

(b)          This Warrant may be exercised for less than the full number of
shares of Common Stock calculated above, provided that this Warrant may not be
exercised in part for less than a whole number of shares of Common Stock. Upon
any such partial exercise, the Company at its expense will forthwith issue to
the Holder a new Warrant or Warrants of like tenor exercisable for the number of
shares of Common Stock as to which rights have not been exercised (subject to
adjustment as herein provided), such Warrant or Warrants to be issued in the
name of the Holder or its nominee.

 

(c)         As soon as practicable after the exercise of this Warrant and in any
event within ten (10) business days after the Exercise Price is paid as set
forth above for an exercise for cash, the Company, at its expense, will cause to
be issued in the name of and delivered to the Holder a certificate or
certificates for the number of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock to which the Holder shall be entitled upon
such exercise, plus, in lieu of any fractional share to which the Holder would
otherwise be entitled, cash in an amount determined in accordance with Section
3(d) hereof. The Company agrees that the shares so purchased shall be deemed to
be issued to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for such shares as aforesaid.

 

(d)         Prior to the exercise of this Warrant, the Holder shall not be
entitled to any rights of a stockholder of the Company with respect to shares
for which this Warrant shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company.

 

14

 

 

(e)          In the event that the Company proposes to engage in a Change in
Control, it shall give the Holder written notice of its intention not less than
ten (10) days prior to the date of the proposed closing of such transaction. The
notice shall describe the material terms and conditions upon which the Company
proposes to consummate such transaction.

 

3.            Adjustments.

 

(a)          Adjustments Generally. In order to prevent dilution of the rights
granted hereunder in the specific circumstances contemplated by this Section 3,
the Exercise Price shall be subject to adjustment from time to time in
accordance with this Section 3. Upon each adjustment of the Exercise Price
pursuant to Section 3(b) and 3(c) (but not Section 3(d)), the Holder shall
thereafter be entitled to acquire upon exercise, at the Exercise Price resulting
from such adjustment, the number of shares of Common Stock determined by (i)
multiplying (A) the Exercise Price in effect immediately prior to such
adjustment by (B) the number of shares of Common Stock issuable upon exercise
hereof immediately prior to such adjustment, and (ii) dividing the product
thereof by the Exercise Price resulting from such adjustment; provided that no
such adjustments shall be made in the Exercise Price and/or the number of shares
of Common Stock subject to this Warrant if the conversion ratio of the Common
Stock already reflects such event.

 

(b)          Subdivisions, Stock Dividends and Recapitalizations. In case the
Company shall at any time subdivide its outstanding shares of Common Stock into
a greater number of shares (including, without limitation, through any stock
split effected by means of a dividend on the Common Stock which is payable in
Common Stock), the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased, unless the conversion ratio of
such Common Stock already reflects such event.

 

(c)          Reorganization, Reclassification, Consolidation, Merger or Sale of
Assets. If any capital reorganization or reclassification of the capital stock
of the Company, or consolidation or merger of the Company with another
corporation, or the sale of a significant amount of assets to another
corporation shall be effected in such a way that (i) does not constitute a
Change in Control, and (ii) holders of Common Stock shall be entitled to receive
stock, securities, cash or other property with respect to or in exchange for
Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provision shall be made
whereby the Holder shall have the right to acquire and receive upon exercise of
this Warrant such shares of stock, securities, cash or other property of the
successor corporation that a holder of the shares deliverable upon exercise of
this Warrant would have been entitled to receive in such reorganization,
reclassification, consolidation, merger or sale if this Warrant had been
exercised immediately before such reorganization, reclassification,
consolidation, merger or sale. The foregoing provisions shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers or sales
and to the stock or securities of any other corporation that are at the time
receivable upon the exercise of this Warrant. In all events, appropriate
adjustments (as determined by the Board of Directors of the Company) shall be
made in the application of the provisions of this Warrant with respect to the
rights and interests of the Holder after the transaction, to the end that the
provisions of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.

 

15

 

 

(d)          Share Issuance. If, at any time after the date hereof while the
Warrant is outstanding, the Company shall make a Dilutive Issuance (as defined
below), for a price per share that is less than the Exercise Price that would be
in effect at the time of such Dilutive Issuance, then, and thereafter
successively upon each such Dilutive Issuance, the Exercise Price shall be
reduced to the price per share in the Dilutive Issuance and if more than one
Dilutive Issuance occurs while this Warrant is exercisable, the Exercise Price
shall be reduced to the price per share in the Dilutive Issuance with the lowest
price per share. In such event, the number of shares of Common Stock which may
be acquired upon exercise of this Warrant shall not change. The reduction of the
Exercise Price described in this paragraph is in addition to the other rights
hereunder.

 

A “Dilutive Issuance” shall mean the issuance by the Company, other than an
Excepted Issuance (as defined below) of any Common Stock, security or debt
instrument carrying the right to convert such security or debt instrument into
Common Stock, or of any warrant, right or option to purchase Common Stock with a
purchase price, exercise price or conversion price less than the Exercise Price.
A Dilutive Issuance for no consideration will be deemed issuable or to have been
issued for $0.001 per share of Common Stock.

 

For purposes of this Warrant, “Excepted Issuance” shall mean (i) any issuance or
sale by the Company of its securities as full or partial consideration in
connection with a strategic merger, acquisition, consolidation or purchase of
the securities or assets of a corporation or other entity (or any division or
business unit thereof) so long as such issuances are not for the purpose of
raising capital, (ii) any issuance of securities in connection with strategic
supply, sale or license agreements and other partnering arrangements so long as
such issuances are not for the purpose of raising capital, (iii) any issuance of
securities upon the conversion or exercise of options or convertible securities
issued on or prior to the date hereof, or (iv) any issuance of shares of Common
Stock in connection with employee benefit plans and compensation related
arrangements in the ordinary course and consistent with past practice approved
by the Board of Directors.

 

(e)          Fractional Shares. The Company shall not issue fractions of shares
of Common Stock upon exercise of this Warrant or scrip in lieu thereof. If any
fraction of a share of Common Stock would, except for the provisions of this
Section 3(e), be issuable upon exercise of this Warrant, then the Company shall
in lieu thereof pay to the person entitled thereto an amount in cash equal to
the current value of such fraction, calculated to the nearest one-hundredth
(1/100) of a share, to be computed on the basis of the fair market value per
share as determined in good faith by the Board of Directors of the Company.

 

16

 

 

(e)          Certificate as to Adjustments. Whenever the Exercise Price shall be
adjusted as provided in Section 3 hereof, the Company shall promptly compute
such adjustment and furnish to the Holder a certificate setting forth such
adjustment and showing in reasonable detail the facts requiring such adjustment,
the Exercise Price that will be effective after such adjustment and the number
of shares and the amount, if any, of other property that at the time would be
received upon the exercise of this Warrant.

 

4.            Reservation of Stock Issuable on Exercise of Warrants. The Company
shall at all times reserve and keep available out of its authorized but unissued
stock, solely for the issuance and delivery upon the exercise of this Warrant
and other similar Warrants, such number of its duly authorized shares of Common
Stock as from time to time shall be issuable upon the exercise of this Warrant
and other similar Warrants. All of the shares of Common Stock issuable upon
exercise of this Warrant and other similar Warrants, when issued and delivered
in accordance with the terms hereof and thereof, will be duly authorized,
validly issued, fully paid and non-assessable, subject to no lien or other
encumbrance other than restrictions on transfer arising under applicable
securities laws and restrictions imposed by Section 6(a) hereof and the
Agreements to which reference is made in Section 6(c) hereof.

 

5.            Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement reasonably satisfactory to the Company (with surety if
reasonably required), or (in the case of mutilation) upon surrender and
cancellation thereof, the Company will issue, in lieu thereof, a new Warrant of
like tenor and amount.

 

6.            Negotiability. This Warrant is issued upon the following terms:

 

(a)          Transfer. By acceptance hereof, the Holder acknowledges and agrees
that the Holder is acquiring the Warrant and the shares of Common Stock issuable
upon exercise hereof for investment for its own account, not as a nominee or
agent, and not with a view to, or for resale in connection with, any
distribution thereof, and Holder has no present intention of selling, granting
any participation in, or otherwise distributing the same.

 

(b)          Subject to compliance with clause (e) of this Section 6, this
Warrant and all rights hereunder are transferable, in whole or in part, upon the
books of the Company by the registered holder hereof in person or by duly
authorized attorney, and a new warrant shall be made and delivered by the
Company, of the same tenor and date as this Warrant but registered in the name
of one or more transferees, upon surrender of this Warrant, duly endorsed, to
the Company. All expenses (other than stock transfer taxes) and other charges
payable in connection with the preparation, execution and delivery of the new
warrants pursuant to this Section 6 shall be paid by the Company.

 

17

 

 

(c)          Agreements. As a condition to the Company’s obligation to issue
shares of Common Stock upon exercise hereof, the Holder shall execute the Notice
of Exercise attached hereto as Annex A.

 

(d)          Transfer Taxes. The Company shall not be required to pay any
federal or state transfer tax or charge that may be payable in respect of any
transfer involved in the transfer or delivery of this Warrant or the issuance or
delivery of certificates for Common Stock in a name other than that of the
Holder or to issue or deliver any certificates for Common Stock upon the
exercise of this Warrant until any and all such taxes and charges shall have
been paid by the Holder or until it has been established to the Company’s
reasonable satisfaction that no such tax or charge is due.

 

(e)          Compliance with Securities Laws. The Holder, by acceptance hereof,
acknowledges that this Warrant, the shares of Common Stock to be issued upon
exercise hereof are being acquired solely for the Holder’s own account and not
as a nominee for any other party, and for investment, and that the Holder will
not offer, sell or otherwise dispose of this Warrant, any shares of Common Stock
to be issued upon exercise hereof except under circumstances that will not
result in a violation of applicable federal and state securities laws.

 

7.            Subdivision of Rights. Subject to Section 6, this Warrant (as well
as any new Warrants issued pursuant to the provisions of this Section 7) is
exchangeable, upon the surrender hereof by the Holder, at the principal
executive office of the Company for any number of new Warrants of like tenor and
date representing in the aggregate the right to subscribe for and purchase the
number of shares of Common Stock of the Company which may be subscribed for and
purchased hereunder.

 

8.            Miscellaneous.

 

(a)          Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing by facsimile, e-mail, mail or personal
delivery and shall be effective upon delivery of such notice. The addresses for
such communications shall be to the addresses as shown on the books of the
Company or to the Company at the address set forth in the Purchase Agreement. A
party may from time to time change the address to which notices to it are to be
delivered or mailed hereunder by notice in accordance with the provisions of
this Section 8(a).

 

(b)          Books of the Company. The Company may treat the holder hereof as
appearing on the Company’s books at any time as the holder for all purposes.

 

(c)          Headings. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect the meaning hereof.

 

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(d)          Amendment; Waiver. This Warrant and any term hereof may be amended,
waived, discharged or terminated only by an instrument in writing signed by the
party against whom enforcement of such amendment, waiver, discharge or
termination is sought. No waivers of any term, condition or provision of this
Warrant, in any one or more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such term, condition or provision.

 

(e)          Benefits of this Warrant. Nothing in this Warrant shall be
construed to give any person or corporation other than the Company and the
Holder any legal or equitable right, remedy or claim under this Warrant and this
Warrant shall be for the sole and exclusive benefit of the Company and the
Holder and any other permitted holder or holders of the Warrant.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

19

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed and
delivered by its authorized officer, as of the date first above written.

      Geospatial Corporation         By:     Mark Smith   Chief Executive
Officer  

 

20

 

 

ANNEX A

 

NOTICE OF EXERCISE

 

To:           GEOSPATIAL CORPORATION

 

(1)            The undersigned hereby elects to exercise the attached Warrant
(i) for and to purchase thereunder, ______ shares of Common Stock, and herewith
makes payment therefor of $_______.

 

(2)            Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:

        (Name)           (Address)        

 

(3)            Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below:

 

Dated:               (Name)                   (Signature)                  
(Address)  

 

Dated:                       (Signature)    

 

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to ________________________________________ whose address is
_________________________________________________________

 

Dated: ______________

 

  Holder’s Signature:               Holder’s Address:                    

 

Signature Guaranteed:    

 

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.