GEOSPATIAL CORPORATION 10-Q





EXHIBIT 10.3


 


CONVERSION AGREEMENT


 


This Conversion Agreement
(“Agreement”) is made and entered into as of May 18, 2016, by and among Geospatial Corporation, a Nevada corporation
(the “Company”), Geospatial Mapping Systems, Inc., a Delaware corporation and a wholly-owned subsidiary of the
Company (“GMS”) and Mark A. Smith, Chairman and Chief Executive Officer of the Company (“Smith”).


 


RECITALS


 


WHEREAS, GMS and
Smith entered into a Lease Agreement dated May 1, 2006 (the “Lease Agreement”) pursuant to which Smith leased
an office to the Company; and


 


WHEREAS, from August
20, 2013 through May 18, 2016 (the “Effective Date”), Smith has incurred expenses and made disbursements in
the course of performing his duties for the Company, which have not been reimbursed to Smith by the Company and Smith was not paid
rent by GMS as required by the terms of the Lease Agreement, all of which unreimbursed and unpaid amounts aggregate $156,782.40
(the “Unpaid Expense Amount”); and


 


WHEREAS, GMS has
not paid to Smith his Base Salary as provided for in the Employment Agreement dated as of October 18, 2013 between GMS and Smith
(the “Employment Agreement”), and such unpaid Base Salary aggregated $766,833.27 for the period from October
18, 2013 through the Effective Date (the “Unpaid Salary Amount”); and


 


WHEREAS, the Company
and GMS desire that Smith (i) exchange the Unpaid Expense Amount for shares of Series C Convertible Preferred Stock, par value
$.001 per share, of the Company (“Series C Stock”) and (ii) exchange the Unpaid Salary Amount for shares of
common stock, par value $.001 per shares of the Company (“Common Stock”), and a warrant to purchase shares of
Common Stock.


 


NOW THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company, GMS and Smith hereby
agree as follows with the intent to be legally bound:


 


AGREEMENT


 


1.           CONVERSION AND RELEASE.


 


1.1          Conversion.  Upon the terms and subject to the conditions of this Agreement, (a) Smith hereby surrenders and releases to the Company his right
to receive payment of the Unpaid Expense Amount and in exchange therefor, the Company hereby issues and delivers to Smith 783,912
shares of Series C Stock (the “Series C Shares”), and (b) Smith hereby surrenders and releases to the Company
his right to receive payment of the Unpaid Salary Amount, and in exchange therefor, the Company hereby issues and delivers to
Smith 19,170,831 shares of Common Stock (the “Common Shares” and with the Series C Shares, the “Shares”)
and a warrant in substantially the form of Exhibit A hereto to purchase 23,004,998 shares of Common Stock at an exercise
price of $0.04 per share (the “Warrant”).


 






    


     


    




 


1.2          Release.  Smith hereby accepts the Shares and the
Warrant in full payment and satisfaction of the Unpaid Expense Amount and the Unpaid Salary Amount, and releases and discharges
the Company, GMS and all of their respective employees, agents, successors, assigns, affiliates, directors and officers from and
against any and all other obligations or liabilities relating to the Unpaid Expense Amount and the Unpaid Salary Amount. Notwithstanding
anything in this Agreement to the contrary, nothing contained herein is intended to, and this Agreement shall not operate to,
release any claims Smith may have to enforce any rights conferred under this Agreement or the Warrant.


 


2.            Representations
and Warranties of the Company and GMS.  The Company and GMS, jointly and severally, represents to Smith, as of the date hereof,
as follows:


 


(a)           Organization and
Standing.  Each of the Company and GMS 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, deliver and perform its obligations under this Agreement and the Warrant. Each of the Company and GMS 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.


 


(b)           Authorization;
Binding Obligation.  All corporate action on the part of the Company and GMS necessary for the authorization, execution and
delivery of this Agreement, the issuance and sale of the Shares and the Warrant and the performance of all obligations of the Company
and GMS hereunder and under the Warrant has been taken. This Agreement has been duly executed and delivered by the Company and
GMS and constitutes the valid and binding obligation of the Company and GMS enforceable against the Company 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.


 


(c)           Capitalization.  Immediately prior to giving effect to the transactions contemplated by this Agreement, the authorized capital stock of the Company
consists of (i) 350,000,000 shares of Common Stock, of which 143,336,073 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 and 10,000,000 of which are designated as “Series
C Convertible Preferred Stock”, 2,234,742 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 14,462,500 of which have been granted as of the date hereof. As of the date
hereof there are outstanding warrants to purchase 49,011,648 shares of Common Stock, outstanding warrants to purchase 344,993 shares
of Series B Convertible Preferred Stock and outstanding convertible notes convertible into 45,037,037 shares of Common Stock. As
of the date hereof, 5,473,143 shares of Common Stock are issuable to prior purchasers of the Company’s securities as penalty
shares. 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). The
Company does not have outstanding any securities or other obligations providing the holder the right to acquire Common Stock or
other equity security except as specified in this subsection 2(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)           Issuance of Shares.  The Shares, when issued, sold and delivered in accordance with the terms of this Agreement will be duly authorized, 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. The shares of Common Stock issuable pursuant to the Warrant, when issued, sold and delivered in accordance
with the terms of the Warrant, will be duly authorized, validly issued, fully-paid and nonassessable.


 


(e)           Private Offering.  Assuming the correctness of the representations and warranties of Smith set forth in Section 3 hereof, the issuance of the
Shares and the Warrant is exempt from registration under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the “Securities Act”). Neither the Company nor any person acting on behalf of the Company
has offered or sold the Shares or the Warrant by any form of general solicitation or general advertising.


 


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


 


(a)           Requisite Power
and Authority.  Smith has the requisite legal power and authority to enter into this Agreement and perform his obligations hereunder.
This Agreement constitutes the valid and binding obligation of Smith 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.  Smith understands that the Shares and the Warrant issued to Smith hereunder have not been registered under the Securities Act.
Smith also understands that the Shares and the Warrant are being offered and sold pursuant to an exemption from registration contained
in the Securities Act based in part upon Smith’s representations contained in this Agreement.


 


(c)           Experience; Risk.
 Smith has such knowledge and experience in financial and business matters that Smith is capable of evaluating the merits and risks
of the acquisition of the Shares and the Warrant and of protecting Smith’s interests in connection therewith. Smith 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.


 






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(d)           Investment.  Smith is acquiring the Shares and the Warrant 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 Smith has no present intention of selling, granting any participation
in, or otherwise distributing the same. Smith understands that the Shares and the Warrant 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 Smith’s representations as expressed herein.


 


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


 


(f)           Restricted Securities.  Smith understands that the Shares and the Warrant will be “restricted securities” under applicable securities laws
inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws
and applicable regulations the Shares and the Warrant may be resold without registration under the Acts only in certain limited
circumstances. Smith acknowledges that the Shares and the Warrant must be held indefinitely unless subsequently registered under
the Acts or an exemption from such registration is available.


 


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


 


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


 


(i)            Legends.  Smith
understands and agrees that the certificates representing the Shares will bear a legend as set forth on Exhibit A. In addition,
any certificate or other instrument representing the 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 Smith.


 


(j)            Ownership.  Smith has not assigned, pledged, sold, transferred, granted any lien or security interest in, or otherwise conveyed his right to
receive the Unpaid Expense Amount or the Unpaid Salary Amount or any portion of or any interest therein, except pursuant to this
Agreement.


 






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4.            Registration.  As soon as practicable following the filing and effectiveness of the Amendment, the Company shall prepare and file a Registration
Statement on Form S-1 with the Securities and Exchange Commission (the “Registration Statement”) to register
the Common Shares, the shares of Common Stock issuable upon conversion of the Series C Shares and the shares of Common Stock issuable
upon exercise of the Warrant (collectively, the “Registration Shares”) for resale by Smith. The Company shall
use commercially reasonable efforts to cause such Registration Statement to be declared effective under the Securities Act as soon
as possible, and shall use commercially reasonable efforts to keep the Registration Statement continuously effective until such
time that all Registration Shares may be resold pursuant to Rule 144 under the Securities Act, without volume limitations.


 


5.            Miscellaneous.


 


(a)           Governing Law;
Arbitration.  This Agreement 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 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 and GMS agree 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.


 


(b)           Indemnification.  In consideration of Smith’s execution and delivery of this Agreement and purchase of the Shares hereunder, and in addition
to all of the Company’s and GMS’s other obligations under this Agreement, the Company and GMS shall jointly and severally
defend, protect, indemnify and hold harmless Smith 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 Smith is a party
to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”), incurred by Smith as a result of, or arising out of, or relating to (a) any
material misrepresentation by Company or GMS or any material breach of any covenant, agreement, obligation, representation or warranty
by the Company or GMS contained in this Agreement, or (b) after any applicable notice and/or cure periods, any breach or default
in performance by the Company or GMS of any covenant or undertaking to be performed by the Company or GMS hereunder. To the extent
that the foregoing undertaking by the Company or GMS may be unenforceable for any reason, the Company and GMS 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 any party without the prior written consent of the
other parties. Subject to the foregoing, the rights and obligations of the Company, GMS and Smith 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.


 






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(d)           Entire Agreement.
 This Agreement and the exhibits and schedules hereto 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.


 


(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 may be amended, and any term or provision of this Agreement may be waived, (either generally or in a particular
instance and either retroactively or prospectively) upon the written consent of the Company, GMS and Smith.


 


(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 Smith, upon delivery by electronic mail to Smith’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, GMS, and to Smith at the address or facsimile
number set forth on such party’s signature page hereof or at such other address as the Company, GMS or Smith may designate
by 10 days’ advance written notice to the other parties hereto.


 


(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.


 


(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, 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 Conversion Agreement as of the date set forth in the first paragraph hereof. 


 





	 	COMPANY
	 	 
	 	GEOSPATIAL CORPORATION
	 	 
	 	By:	/s/ Thomas R. Oxenreiter
	 	 	Thomas R. Oxenreiter
	 	 	Chief Financial officer


 





	 	Address:
	 	229 Howes Run Road
	 	Sarver, PA 16055
	 	thomas.oxenreiter@geospatialcorp.com


 





	 	GMS:
	 	GEOSPATIAL MAPPING SYSTEM, INC.
	 	 
	 	By:	/s/ Thomas R. Oxenreiter
	 	 	Thomas R. Oxenreiter
	 	 	Chief Financial Officer


 





	 	Address:
	 	229 Howes Run Road
	 	Sarver, PA 16055
	 	thomas.oxenreiter@geospatialcorp.com


 


	 	SMITH:
	 	 
	 	/s/ Mark A. Smith
	 	Mark A. Smith



  





	 	Address:
	 	1001 Carlisle Street
	 	Natrona Heights, PC 15065
	 	mark@gooselakecapital.com


  






    


     


    




 


EXHIBIT A


 


LEGEND


 


SERIES C PREFERRED STOCK:


 


NEITHER THE SHARES OF SERIES C PREFERRED
STOCK REPRESENTED BY THIS CERTIFICATE NOR ANY SECURITIES ISSUABLE UPON CONVERSION THEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THE SHARES OF SERIES C PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE
NOR ANY SECURITIES ISSUABLE UPON CONVERSION THEREOF 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.


 


COMMON STOCK:


 


THE SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THE SHARES
OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE 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.


 






    


     


    




 





EXHIBIT B


 


WARRANT


 









    


     


    




   








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: May 18, 2016 


 


COMMON STOCK PURCHASE WARRANT


 


For value received, Geospatial
Corporation (the “Company”), a Nevada corporation, hereby certifies that Mark A. Smith (the “Holder”)
or his 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, Twenty-Three Million Four Thousand Nine Hundred Ninety-Eight (23,004,998) shares of the
Company’s Common Stock, par value $.001 per share (“Common Stock” or “Warrant Shares”),
at a price per share equal to $0.04 (the “Exercise Price”). This Warrant is subject to the following terms
and conditions. This Warrant is issued pursuant to that certain Conversion Agreement dated as of May 18, 2016, by and among the
Company, Geospatial Mapping Systems, Inc. and the Holder (the “Conversion Agreement”). This Warrant is subject
to the terms of the Conversion 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 Warrant Issue Date and ending on 5:00 p.m. (prevailing local time at the principal
executive office of the Company) on the tenth anniversary of the Warrant Issue Date.


 


(c)           “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.


 






    


     


    




 


(d)           “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).


 





(e)           “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.


 


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
the surrender of this Warrant, with the form of Subscription Agreement attached hereto as Annex A duly completed and executed
by the Holder, to the Company at its principal executive office, accompanied by 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 Stock being purchased pursuant to such exercise of the Warrant.


 


(b)           This
Warrant may be exercised for less than the full number of shares of Common Stock first shown 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 payment of the Exercise Price, and in any event within 20 business
days thereafter, 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.


 


(e)           In the event that
the Company proposes to engage in a Change in Control, it shall give the Holder written 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.


  


(f)           Cashless
Exercise.  If at the time of exercise hereof there is no effective registration statement registering the resale of the Warrant
Shares, or the prospectus contained therein is not available for the resale of the Warrant Shares by the Holder, then this Warrant
may only be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall
be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by
(A), where:


 


(A)
= the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless
exercise,” as set forth in the applicable Notice of Exercise;


 


(B)
= the Exercise Price of this Warrant, as adjusted hereunder; and


 


(X) = the number of Warrant
Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were
by means of a cash exercise rather than a cashless exercise.


 






    


     


    




 





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 this Section 3, 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 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.


 


(d)           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(d), 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.


 






    


     


    




 


(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, such number of its duly authorized
shares of Common Stock as from time to time shall be issuable upon the exercise of this Warrant. All of the shares of Common Stock
issuable upon exercise of this Warrant, 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(b) 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)           Agreements.
 As a condition to the Company’s obligation to issue shares of Common Stock upon exercise hereof, the Holder shall
execute the Subscription Agreement attached hereto as Annex A.


 


(c)           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 conversion 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.


 






    


     


    




 


(d)           Compliance with Securities Laws.
 The Holder, by acceptance hereof, acknowledges that this Warrant and 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 or 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 and given as provided in the Conversion
Agreement.


 


(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.


 


(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]


 






    


     


    

 





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
                                         A. Smith
	 	 	Chief
                                         Executive Officer


 






    


     


    

 


ANNEX A


 


SUBSCRIPTION
AGREEMENT


 





	Date:		 
	 	 	 
	To:		 
	 		 
	 		 






 


The undersigned (the “Purchaser”),
pursuant to the provisions set forth in the attached Warrant, hereby irrevocably elects (a) to purchase _____ shares of Common
Stock (the “Warrant Shares”) covered by such Warrant and herewith makes payment of $_________, representing
the full purchase price for such shares at the price per share provided for in such Warrant or (b) to exercise the Warrant with
respect to __________ shares of Common Stock, pursuant to Section 2(b) of the Warrant [STRIKE (a) OR (b) AS APPLICABLE].


 


Purchaser represents and
warrants to the Company as follows:


 


1.            Investment Representations.
 Purchaser understands that the Warrant Shares have not been registered under the Securities Act. Purchaser also understands that
the Warrant Shares 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.


 


2.            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 Warrant Shares and of protecting Purchaser’s interests in connection therewith. Purchaser
is able to fend for itself 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.


 


3.            Investment.
 Purchaser is acquiring the Warrant Shares 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 Purchaser has no present intention of selling, granting any participation
in, or otherwise distributing the same. Purchaser understands that 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.


 






    


     


    




 


4.            Information.
 Purchaser has been furnished with all information which it deems necessary to evaluate the merits and risks of purchasing the Warrant
Shares and has had the opportunity to ask questions concerning the Warrant Shares and the Company and all questions posed have
been answered to its satisfaction. Purchaser has been given the opportunity to obtain any additional information it deems necessary
to verify the accuracy of any information obtained concerning the Warrant Shares and the Company. Purchaser has such knowledge
and experience in financial and business matters that it is able to evaluate the merits and risks of purchasing the Warrant Shares
and to make an informed decision relating thereto.


 


5.            Restricted Securities;
Restrictions on Transfer.  Purchaser understands that the Warrant Shares will be “restricted securities” under applicable
securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that
under such laws and applicable regulations the Warrant Shares may be resold without registration under the Acts only in certain
limited circumstances. Purchaser acknowledges that Warrant Shares must be held indefinitely unless subsequently registered under
the Acts or an exemption from such registration is available. To the extent that Purchaser is not already a party to such agreements,
Purchaser agrees to execute and deliver a counterpart signature page, and become a party, to such stockholder and registration
rights agreements as are then in effect by and among the Company and its stockholders.


 


6.            Accredited Investor.
 Purchaser is an “accredited investor” within the meaning of Rule 501 promulgated under the Securities Act. The Purchaser
has considered the Federal and state income tax implications of the exercise of the Warrant and the purchase and subsequent sale
of the Warrant Shares.


 


7.            Residence.
 If Purchaser is an individual, then Purchaser resides in the state or province identified in the address of Purchaser set forth
below; if Purchaser is a partnership, corporation, limited liability company or other entity, then the office or offices of Purchaser
in which its investment decision was made is located at the address or addresses of Purchaser set forth below.


 





	 		
	 	Signature	 
	 	 	 
	 	Print
name:	
	 	 	 
	 	Address:	
	 		
	 		


 









    


     


    

 











NOTICE OF TRANSFER


 


[To be signed only upon transfer of Warrant]


 


FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto the Assignee named below the rights and obligations represented by the within Warrant with respect
to the number of shares of Common Stock of ____________ set forth below:


 





	Name
of Assignee	Address	No. of Shares





 


 


 


and appoints _______________ attorney to transfer said right on
the warrant register of __________ with full power of substitution in the premises.


 





	Dated:		 	
	 	 	 	(Signature
must conform in all respects to name of Holder as specified on the face of the Warrant)
	 	 	 	 
	 	 	 	Address: