Geospatial Corporation S-1  


EXHIBIT 10.9


 


GEOSPATIAL
CORPORATION


 


STOCK
APPRECIATION RIGHTS AGREEMENT


 


This Stock Appreciation Rights Agreement (this “Agreement”)
is made and entered into as of October 18, 2013 by and between GEOSPATIAL CORPORATION, a Nevada corporation (the “Company”)
and Mark A. Smith (the “Participant”).


 


Grant
Date: _____October 18, 2013_________________


 


Number
of SARs: ___3,000,000____________________


 


Exercise
Price per SAR: _______$0.07_______________


 


Expiration
Date: _____October 18, 2023_______________


 


1.           Grant
of SARs.


 


1.1           Grant.
The Company hereby grants to the Participant an aggregate of 3,000,000 stock appreciation rights (the “SARs”). Each SAR
entitles the Grantee to receive, upon exercise, an amount equal to the excess of (a) the Fair Market Value of a share of Common
Stock on the date of exercise, over (b) the Exercise Price (the “Appreciation Value”). The SARs are being granted pursuant
to the terms of the Company’s 2013 Equity Incentive Plan (the “Plan”).


 


1.2           Consideration;
Subject to Plan. The grant of the SARs is made in consideration of the services to be rendered by the Participant to the Company
and is subject to the terms and conditions of the Plan. Capitalized terms used but not defined herein will have the meaning ascribed
to them in the Plan.


 


2.           Vesting.


 


2.1           Vesting
Schedule. The SARs will vest and become exercisable in three equal installments with the first installment being on the Grant
Date and the balance on each of the first and second anniversaries of the Grant Date. Except as otherwise provided in this Agreement,
the unvested SARs will not be exercisable on or after the Participant’s termination of Continuous Service.


 




    	 



    	 



    

 


2.2           Expiration.
The SARs will expire on the Expiration Date set forth above, or earlier as provided in this Agreement or the Plan.


 


3.           Termination
of Continuous Service.


 


3.1           Termination
for Reasons Other Than Cause, Death, Disability. If the Participant’s Continuous Service is terminated for any reason other
than Cause, death or Disability, the Participant may exercise the vested SARs, but only within such period of time ending on the
earlier of (a) the date three months following the termination of the Participant’s Continuous Service or (b) the Expiration Date.


 


3.2           Termination
for Cause. If the Participant’s Continuous Service is terminated for Cause, the SARs (whether vested or unvested) shall immediately
terminate and cease to be exercisable.


 


3.3           Termination
Due to Disability. If the Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant
may exercise the vested SARs, but only within such period of time ending on the earlier of (a) the date 12 months following the
Participant’s termination of Continuous Service or (b) the Expiration Date.


 


3.4           Termination
Due to Death. If the Participant’s Continuous Service terminates as a result of the Participant’s death, the vested SARs may
be exercised by the Participant’s estate, by a person who acquired the right to exercise the SARs by bequest or inheritance or
by the person designated to exercise the SARs upon the Participant’s death, but only within the time period ending on the earlier
of (a) the date 12 months following the Participant’s termination of Continuous Service or (b) the Expiration Date.


 


4.           Manner
of Exercise.


 


4.1           When
to Exercise. Except as otherwise provided in the Plan or this Agreement, the Participant (or in the case of exercise after
the Participant’s death or incapacity, the Participant’s executor, administrator, heir or legatee, as the case may be) may exercise
his or her vested SARs, in whole or in part, at any time after vesting and until the Expiration Date or earlier termination pursuant
to Section 3 hereof, by following the procedures set forth in this Section 4. If partially exercised, the Participant
may exercise the remaining unexercised portion of the SARs at any time after vesting and until the Expiration Date or earlier termination
pursuant to Section 3 hereof. No SARs shall be exercisable after the Expiration Date.


 


4.2           Election
to Exercise. To exercise the SARs, the Participant (or in the case of exercise after the Participant’s death or incapacity,
the Participant’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company a written notice (or
notice through another previously approved method, which could include a web-based or e-mail system) to the Chief Financial Officer
of the Company which sets forth the number of SARs being exercised, together with any additional documents as the Company may require.
Each such notice must satisfy whatever then-current procedures apply to the SARs and must contain such representations as the Company
requires.


 




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4.3           Documentation
of Right to Exercise. If someone other than the Participant exercises the SARs, then such person must submit documentation
reasonably acceptable to the Company verifying that such person has the legal right to exercise the SARs.


 


4.4           Date
of Exercise. The SARs shall be deemed to be exercised on the business day that the Company receives a fully executed exercise
notice. If the notice is received after business hours on such date, then the SAR shall be deemed to be exercised on the business
date immediately following the business date such notice is received by the Company.


 


5.           Withholding.
Prior to the payment of the Appreciation Value in connection with the exercise of the SARs, the Participant must make arrangements
satisfactory to the Company to pay or provide for any applicable federal, state and local withholding obligations of the Company.
If approved by the Committee in its discretion, the minimum required withholding obligations may be settled by the delivery to
the Company of previously owned and unencumbered shares of Common Stock.


 


6.           Form
of Payment. Upon the exercise of all or a portion of the SARs, the Participant shall be entitled to a payment in cash or stock
(solely at the discretion of the Committee) equal to the Appreciation Value of the SARs being exercised, less any amounts withheld
pursuant to Section 5.


 


7.           Section
409A; No Deferral of Compensation. Neither the Plan nor this Agreement is intended to provide for the deferral of compensation
within the meaning of Section 409A of the Internal Revenue Code (the “Code”). The Company reserves the right to unilaterally
amend or modify the Plan or this Agreement, to the extent the Company considers it necessary or advisable, in its sole discretion,
to comply with, or to ensure that the SARs granted hereunder are not subject to, Section 409A of the Code.


 


8.           No
Right to Continued Employment. Neither the Plan nor this Agreement shall confer upon the Participant any right to be retained
in any position, as an Employee, Consultant or Director of the Company. Further, nothing in the Plan or this Agreement shall be
construed to limit the discretion of the Company to terminate the Participant’s Continuous Service at any time, with or without
Cause.


 


9.           Transferability.
The SARs are not transferable by the Participant other than to a designated beneficiary upon the Participant’s death or by will
or the laws of descent and distribution, and are exercisable during the Participant’s lifetime only by him or her. No assignment
or transfer of the SARs, or the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise
(except to a designated beneficiary upon death by will or the laws of descent or distribution) will vest in the assignee or transferee
any interest or right herein whatsoever, but immediately upon such assignment or transfer the SARs will terminate and become of
no further effect.


 




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10.           Change
in Control.


 


 10.1           Effect
on SARs. In the event of a Change in Control, notwithstanding any provision of the Plan or this Agreement to the contrary,
the SARs shall become immediately vested and exercisable.


 


 10.2           Cash-out.
In the event of a Change in Control, the Committee may, in its discretion and upon at least ten (10) days’ advance notice to the
Participant, cancel the SARs and pay to the Participant the Appreciation Value of the SARs based upon the price per share of Common
Stock received or to be received by other shareholders of the Company in the event. Notwithstanding the foregoing, if at the time
of a Change in Control the Exercise Price of the SAR equals or exceeds the price paid for a share of Common Stock in connection
with the Change in Control, the Committee may cancel the SAR without the payment of consideration therefor.


 


11.           Adjustments.
The SARs may be adjusted or terminated in any manner as contemplated by Section 11 of the Plan.


 


12.           Tax
Liability and Withholding. Notwithstanding any action the Company takes with respect to any or all income tax, social insurance,
payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is
and remains the Participant’s responsibility and the Company (a) makes no representation or undertakings regarding the treatment
of any Tax-Related Items in connection with the grant, vesting, or exercise of the SARs and (b) does not commit to structure the
SARs to reduce or eliminate the Participant’s liability for Tax-Related Items.


 


13.          Non-competition
and Non-solicitation.


 


13.1    In
consideration of the SARs, the Participant agrees and covenants not to:


 


(a)         contribute
his or her knowledge, directly or indirectly, in whole or in part, as an employee, officer, owner, manager, advisor, consultant,
agent, partner, director, shareholder, volunteer, intern or in any other similar capacity to an entity engaged in the same or similar
business as the Company and its Affiliates, including those engaged in the business of Infrastructure Mapping or Software Development
for a period of 36 months following the Participant’s termination of Continuous Service;


 


(b)           directly
or indirectly, solicit, hire, recruit, attempt to hire or recruit, or induce the termination of employment of any employee of the
Company or its Affiliates for 36 months following the Participant’s termination of Continuous Service; or


 




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(c)           directly
or indirectly, solicit, contact (including, but not limited to, e-mail, regular mail, express mail, telephone, fax, and instant
message), attempt to contact or meet with the current, former or prospective customers of the Company or any of its Affiliates
for purposes of offering or accepting goods or services similar to or competitive with those offered by the Company or any of its
Affiliates for a period of 36 months following the Participant’s termination of Continuous Service.


 


 13.2   In
the event of a breach or threatened breach of any of the covenants contained in Section 13.1:


 


(a)           any
unvested SARs shall be forfeited effective as of the date of such breach, unless sooner terminated by operation of another term
or condition of this Agreement or the Plan; and


 


(b)           the
Participant hereby consents and agrees that the Company shall be entitled to seek, in addition to other available remedies, a temporary
or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction,
without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the
necessity of posting any bond or other security. The aforementioned equitable relief shall be in addition to, not in lieu of, legal
remedies, monetary damages or other available forms of relief.


 


14.           Compliance
with Law. The exercise of the SARs shall be subject to compliance by the Company and the Participant with all Applicable Laws,
including the requirements of any stock exchange on which the Company’s shares of Common Stock may be listed. The Participant may
not exercise the SARs if such exercise would violate any applicable Federal or state securities laws or other laws or regulations.
The Participant understands that the Company is under no obligation to register the shares of Common Stock with the Securities
and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.


 


15.           Notices.
Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Chief Financial
Officer of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Participant under
this Agreement shall be in writing and addressed to the Participant at the Participant’s address as shown in the records of the
Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.


 


16.           Governing
Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Nevada without regard to
conflict of law principles.


 


17.           Interpretation.
Any dispute regarding the interpretation of this Agreement shall be submitted by the Participant or the Company to the Committee
for review. The resolution of such dispute by the Committee shall be final and binding on the Participant and the Company.


 


18.           SARs
Subject to Plan. This Agreement is subject to the Plan as approved by the Company’s shareholders. The terms and provisions
of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between
any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will
govern and prevail.


 




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19.           Successors
and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to
the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement
will be binding upon the Participant and the Participant’s beneficiaries, executors, administrators and the person(s) to whom the
SARs may be transferred by will or the laws of descent or distribution.


 


20.           Severability.
The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability
of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and
enforceable to the extent permitted by law.


 


21.           Discretionary
Nature of Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion.
The grant of the SARs in this Agreement does not create any contractual right or other right to receive any SARs or other Awards
in the future. Future Awards, if any, will be at the sole discretion of the Company. Any amendment, modification, or termination
of the Plan shall not constitute a change or impairment of the terms and conditions of the Participant’s employment with the Company.


 


22.           Amendment.
The Committee has the right to amend, alter, suspend, discontinue or cancel the SAR, prospectively or retroactively; provided,
that, no such amendment shall adversely affect the Participant’s material rights under this Agreement without the Participant’s
consent.


 


23.           No
Impact on Other Benefits. The value of the Participant’s SARs is not part of his or her normal or expected compensation for
purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.


 


24.           Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute
one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic
mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial
appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.


 


25.           Acceptance.
The Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. The Participant has read and understands
the terms and provisions thereof, and accepts the SARs subject to all of the terms and conditions of the Plan and this Agreement.
The Participant acknowledges that there may be adverse tax consequences upon exercise of the SARs and that the Participant should
consult a tax advisor prior to such exercise.


 




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


 


	 	GEOSPATIAL CORPORATION

	 	 
	 	By:	/s/ Thomas R. Oxenreiter
	 	Name: 	Thomas R. Oxenreiter
	 	Title:	Chief Financial Officer/Secretary


 


	 	Mark A. Smith

	 	 
	 	By:	/s/ Mark A. Smith
	 	Name: 	Mark A. Smith