Document:

Geospatial Corporation S-1 

Exhibit 10.5

 

EXECUTION
COPY

 

GEOSPATIAL MAPPING SYSTEMS,
INC.

2007
STOCK OPTION PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

 

This OPTION AWARD AGREEMENT
(“Agreement”) is dated effective December 1, 2007 (the “Grant Date”), and is
between Geospatial Mapping Systems, Inc., a Delaware corporation (the “Company”), and Mark A.
Smith (the “Participant”). Any term capitalized but not defined in this Agreement will have the
meaning set forth in the Geospatial Mapping Systems, Inc. 2007 Stock Option Plan (the “Plan”).

 

1. Option
Grant. In accordance with the terms of the Plan and subject to the terms and conditions of this Agreement, the Company
hereby grants to the Participant an option to purchase all or any part of an aggregate of Eight Million (8,000,000) of the
Company’s Shares (the “Option”). The Participant may exercise this Option only after it has become
vested in accordance with the provisions of Section 4. This Option is a nonqualified option that is not intended
to meet the requirements of Code Section 422.

 

2. Exercise
Price. The Exercise Price will be $0.50 per Share, which is no less than the Fair Market Value of a Share on the Grant
Date.

 

3. Payment
of Exercise Price. At the time the Option is exercised, the Participant must pay the Exercise Price to the Company
in full either: (i) in United States dollars, in cash or by check, bank draft, or money order payable to the order of the
Company; (ii) with Shares owned by the Participant with a Fair Market Value equal to the Exercise Price being duly endorsed
for transfer to the Company free and clear of any encumbrance; (iii) through a simultaneous exercise of the Participant’s
Award and sale of the shares thereby acquired pursuant to a brokerage arrangement approved in advance by the Committee to assure
its conformity with the terms and conditions of the Plan; (iv) any combination of cash, check, Shares and/or, with the prior
consent of the Committee, which consent may be refused for any reason, vested Options meeting the requirements of (i) through
(iii) above; or (v) by any other means the Committee determines to be consistent with the Plan’s purposes and applicable
law.

 

(a)
Upon the Participant’s exercise of the Option, the Participant must satisfy any withholding obligation by paying the amount
of any required withholding tax to the Company. If the Participant does not pay the amount of required withholding to the Company,
the Company will withhold from the Shares delivered or from other amounts payable to the Participant, the minimum amount of funds
required to cover all applicable federal, state and local income and employment taxes required to be withheld by the Company by
reason of such exercise of the Option.

 

(b)
Shares used to satisfy the Exercise Price and/or any required withholding tax (including Shares underlying surrendered Options)
will be valued at their Fair Market Value, determined according to the Plan, as of (i) the last day of the calendar month
ending on or immediately preceding the date of the Participant’s exercise, or (ii) the end of the Company’s most
recently concluded Fiscal Year, whichever date produces the lower Fair Market Value figure.

 

(c)
The Company will issue no Shares pursuant to the Option before the Participant has: (i) paid the Exercise Price, and any withholding
obligation, in full; (ii) executed any applicable Shareholder Agreement; and (iii) satisfied all conditions and/or restrictions
applicable to the Options or Shares.

 

4. Term,
Vesting and Exercise of the Option.

 

(a)
The Option will expire on the tenth anniversary of the Grant Date (the “Expiration Date”).

 

(b)
The Options shall be fully vested and exercisable on the Grant Date.

 

(c)
After the Option has vested, and while it is exercisable, the Participant may exercise the Option in whole or in part by signed
written notice to the Company indicating the number of Shares being purchased. An Option must be exercised as to a whole number
of Shares.

 

5. Termination
of Service. After termination of Service, the Participant’s right to exercise the Option will be subject to
the following rules:

 

    	 

    	 

    

 

(a) Unvested
Option Forfeited. The Participant will forfeit the Option to the extent that it was not vested and exercisable on the date
his or her Service terminated, regardless of the reason for such termination.

 

(b) Disability
or Death. If the Participant’s Service terminates as a result of Disability or death, the Participant (or in the case
of his or her death, the Participant’s estate) may exercise the Option to the extent that it was vested and exercisable on
the date of such termination of Service within the six-month period following such termination of Service.

 

(d) Other
Termination of Service. If the Participant’s Service terminates for any reason other than Cause, Disability or death,
the Participant may exercise the Option to the extent that it was vested and exercisable on the date of such termination of Service
within the sixty-day period following such termination of Service.

 

(e)
In no event may the Option be exercised after the Expiration Date.

 

6. Termination
of Service for Cause. Notwithstanding anything in this Agreement to the contrary, if the Participant has been terminated
from Service for Cause, the Participant will forfeit his or her right to exercise the Option, whether or not it has already vested
and become exercisable.

 

7. Confidentiality,
Competition, and Nonsolicitation. Participant has entered into an Agreement Not-To-Compete dated December 1,
2007.

 

8. Transferability of Option
and Shares Acquired Upon Exercise of Option. The Participant may not sell, transfer, pledge, assign or
otherwise alienate or hypothecate the Option, other than by will or by the laws of descent and distribution. The Company will
not be required (i) to transfer on its books any Options or Shares that have been sold or transferred, or (ii) to
treat as owner of such Options or Shares, to accord the right to vote as such owner or to pay dividends, if any, to any
transferee to whom such Options or Shares have been transferred, in violation of the Plan, this Agreement, or any
shareholders agreement.

 

(a)
During the Participant’s lifetime, only the Participant or his or her guardian or legal representative may exercise the Option.
The Board may, in its discretion, require a guardian or legal representative to supply it with the evidence the Board reasonably
deems necessary to establish the authority of the guardian or legal representative to exercise the Option on behalf of the Participant
or transferee, as the case may be.

 

(b)
Prior to the consummation of a Public Offering, in no event may a Participant sell, transfer or otherwise dispose of an Owned Share
without the Board’s advanced written approval.

 

9. Securities
Law Requirements.

 

(a)
If at any time the Board determines that exercising the Option or issuing Shares would violate applicable securities laws, the
Option will not be exercisable, and the Company will not be required to issue Shares. The Board may declare any provision of this
Agreement or action of its own null and void, if it determines the provision or action fails to comply with the short-swing trading
rules. As a condition to exercise, the Company may require the Participant to make written representations it deems necessary or
desirable to comply with applicable securities laws.

 

(b)
No Person who acquires Shares under this Agreement may sell the Shares, unless they make the offer and sale pursuant to an effective
registration statement under the Securities Exchange Act, which is current and includes the Shares to be sold, or an exemption
from the registration requirements of that Act.

 

10. No
Obligation to Exercise Option. Neither the Participant nor his or her transferee is or will be obligated by the grant
of the Option to exercise it.

 

11. No
Limitation on Rights of the Company. The grant of the Option does not and will not in any way affect the right or
power of the Company to make adjustments, reclassifications or changes in its capital or business structure, or to merge, consolidate,
dissolve, liquidate, sell or transfer all or any part of its business or assets.

 

    	 

    	 

    

 

12. Plan
and Agreement Not a Contract of Employment or Service. Neither the Plan nor this Agreement is a contract of employment
or Service, and no terms of the Participant’s employment or Service will be affected in any way by the Plan, this Agreement
or related instruments, except to the extent specifically expressed therein. Neither the Plan nor this Agreement will be construed
as conferring any legal rights on the Participant to continue to be employed or remain in Service with any Company Party, nor will
it interfere with the Company’s or any Company Party’s right to discharge the Participant or to deal with him or her
regardless of the existence of the Plan, this Agreement or the Option.

  

13. Participant
to Have No Rights as a Shareholder. Before the date as of which he or she is recorded on the books of the Company
as the holder of any Shares underlying the Option, the Participant will have no rights as a shareholder with respect to those Shares.

 

14. Notice. Any
notice or other communication required or permitted under this Agreement must be in writing and must be delivered personally, sent
by certified, registered or express mail, or sent by overnight courier, at the sender’s expense. Notice will be deemed given
when delivered personally or, if mailed, three days after the date of deposit in the United States mail or, if sent by overnight
courier, on the regular business day following the date sent. Notice to the Company should be sent to Geospatial Mapping Systems,
Inc. [INSERT ADDRESS]. Notice to the Participant should be sent to the address set forth on the signature page below. Either party
may change the Person and/or address to whom the other party must give notice under this Section by giving such other party written
notice of such change, in accordance with the procedures described above.

 

15. Successors. All
obligations of the Company under this Agreement will be binding on any successor to the Company, whether the existence of the successor
results from a direct or indirect purchase of all or substantially all of the business of the Company, or a merger, consolidation,
or otherwise.

 

16. Governing
Law. To the extent not preempted by federal law, this Agreement will be construed and enforced in accordance with,
and governed by, the laws of the State of Delaware, without giving effect to its conflicts of laws principles that would require
the application of the law of any other jurisdiction; provided, however, that in the event the Company’s state of incorporation
shall be changed, then the law of the new state of incorporation shall govern.

 

17. Plan
Document Controls. The rights granted under this Agreement are in all respects subject to the provisions set forth
in the Plan to the same extent and with the same effect as if set forth fully in this Agreement. If the terms of this Agreement
conflict with the terms of the Plan document, the Plan document will control.

 

18. Amendment
of the Agreement. The Company and the Participant may amend this Agreement only by a written instrument signed by
both parties.

 

19. Counterparts. The
parties may execute this Agreement in one or more counterparts, all of which together shall constitute but one Agreement.

 

[signature page
follows]

 

    	 

    	 

    

 

 

IN WITNESS
WHEREOF, the Company and the Participant have duly executed this Agreement as of the date first written above. 

	 	 	 	 	 	 	 	 	 
	GEOSPATIAL MAPPING SYSTEMS, INC.	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	/s/ Mark A. Smith
	 	 	 	 	 	 	 	 	(Participant’s Signature)
	 	 	 	 
	By:	 	/s/ Mark A. Smith	 	 	 	 
	 	 	Its:	 	President	 	 	 	Participant’s Name and Address for notices
	 	 	 	 	 
	 	 	 	 	 	 	 	 	Mark A. Smith
	 	 	 	 	 
	 	 	 	 	 	 	 	 	1001 Carlisle St.
	 	 	 	 	 
	 	 	 	 	 	 	 	 	Natrona Heights, PA 15065

 

    	 

    	 

    

  

OPTION EXERCISE FORM

 

The undersigned
holder of an option to purchase shares of Geospatial Mapping Systems, Inc. pursuant to a Stock Option Award Agreement under the
Geospatial Mapping Systems, Inc. 2007 Stock Option Plan, effective [                    ],
2007, hereby exercises his/her Option to purchase              of
such shares, at the Option price of $    .     per share, in accordance
with the terms and conditions of such Option Award Agreement.

 

I hereby agree to be bound by all
of the provisions of, and to execute any applicable Shareholder Agreement or related document required by the Company.  

	 	 	 	 	 
	Date of Exercise	 	 	 	 
	 	 	 	 	 
	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	Signature of Person Exercising Option

 

Please type or print legibly your
name, as you want it to appear on your stock certificate, your address and your social security number in the space provided below. 

	 	 	 	 	 	 	 	 	 
	Name:	 	 	 	 
	 	 	 
	Address:	 	 	 	 
	 	 
	 	 
	 	 	(Street)	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	(City)	 	(State)	 	 	 	(Zip Code)	 	 

	 	 	 	 	 	 	 	 	 
	Social Security Number:Geospatial Corporation S-1  

Exhibit 10.6

 

EXECUTION COPY

 

AGREEMENT NOT-TO-COMPETE

 

This Agreement Not-To-Compete
(the “Agreement”) is made and entered into as of December 1, 2007, by and between Geospatial Mapping Systems,
Inc., a Delaware corporation (the “Company”) and Mark A. Smith (the “Employee”). Capitalized terms used
but not defined herein shall have the meanings ascribed to such terms in the Employment Agreement dated as of even date herewith
between the Company and the Employee (the “Employment Agreement”).

 

WHEREAS, the Employee
is employed by the Company;

 

WHEREAS, in the course
of the Employee’s employment, the Employee will obtain extensive knowledge of and experience in the business conducted by
the Company;

 

WHEREAS, the Employee
will enjoy extensive high level contacts with customers and prospective customers of the Company and will have access to confidential
and proprietary information of the Company;

 

WHEREAS, the Company
has entered into the Employment Agreement with the Employee in consideration for the Employee entering into this Agreement;

 

NOW, THEREFORE, in
consideration of the mutual promises and covenants set forth herein, the parties agree as follows:

 

1. Confidential
Information.

 

(a) The Employee acknowledges that
(i) during employment by, and as a result of the Employee’s relationship with, the Company, the Employee will
obtain knowledge of and gain access to information regarding the business, operations, products, proposed products,
production methods, processes, customer lists, advertising, marketing and promotional plans and materials, price lists,
pricing policies, financial information and other trade secrets of the Company, other confidential information of, and
material proprietary to, the Company or designated as being confidential by the Company which is not generally known to
persons outside of the Company, including information and material originated, discovered or developed in whole or in part by
the Employee (collectively referred to herein as “Confidential Information”), (ii) the direct and indirect
disclosure of any such Confidential Information to existing or potential competitors of the Company would place the Company
at a competitive disadvantage and would do damage, monetary or otherwise, to the business of the Company; and (iii) the
engaging by the Employee in any of the activities prohibited by this Section 1 may constitute improper appropriation
and/or use of such information and trade secrets. The Employee expressly acknowledges the trade secret status of the
Confidential Information and that the Confidential Information constitutes a protectable business interest of one or more
members of the Company. Accordingly, the Employee agrees that during the Period of Employment with the Company (or any member
thereof) and, to the fullest extent permitted by law, thereafter, the Employee will, in a fiduciary capacity for the benefit
of the Company, hold all Confidential Information strictly in confidence and will not directly or indirectly reveal, report,
disclose, publish or transfer any of such Confidential Information to any person, firm or other entity, or utilize any of the
Confidential Information for any purpose, except in furtherance of the Employee’s employment with the Company or with
any member of the Company or as may be required by law.

 

(b) Proprietary
Interest. All inventions, designs, improvements, patents, copyrights and discoveries conceived by the Employee during the
Period of Employment that are useful in or directly or indirectly related to the business of any member of the Company, or to
any experimental work carried on by any member of the Company, shall be the property of the Company. The Employee will promptly
and fully disclose to the Company all such inventions, designs, improvements, patents, copyrights and discoveries (whether developed
individually or with other persons) and shall take all steps necessary and reasonably required to assure the Company’s ownership
thereof and to assist the Company in protecting or defending proprietary rights therein of the Company and/or the appropriate
member of the Company.

 

    	 

    	 

    

 

(c) Return
of Materials. The Employee expressly acknowledges that all lists, books, records and other Confidential Information of the
Company obtained in connection with the business of any member of the Company is the exclusive property of the Company and the
appropriate member of the Company and that upon the termination of the Period of Employment, or earlier if so requested by the
Company, the Employee will immediately surrender and return to the Company all such items and all other property belonging to
any member of the Company then in the possession of the Employee, and the Employee shall not make or retain any copies thereof.

 

2. Noncompetition
and Nonsolicitation.

 

(a) The Employee
agrees that during the Period of Employment and for a period of twelve full months following the Date of Termination (the “Non-Compete
Period”), the Employee will not, directly or indirectly, individually or otherwise, engage in a business competing with
any of the businesses conducted by any member of the Company any where in the United States, nor without the prior written consent
of the Board directly or indirectly have any interest in, own, manage, operate, control, be connected with as a stockholder, joint
venturer, lender, officer, employee, partner or consultant, or otherwise engage, invest or participate in any business that is
competitive with any of the businesses conducted by any member of the Company; provided, however, that nothing
contained in this Section 2(a) shall prevent the Employee from being the registered or beneficial owner of up to 2% of any
class of the capital stock of a corporation registered under the Securities Exchange Act of 1934, as amended. The Employee further
agrees that during the Non-Compete Period the Employee will not, in any manner, directly or indirectly, for the Employee’s
benefit or for the benefit of any other person, firm or entity, (1) induce or attempt to induce any employee of any member
of the Company to terminate or abandon his or her employment with any such member for any purpose whatsoever, (2) solicit
from any customer doing business with any member of the Company during the Non-Compete Period, business of the same or similar
nature to the business of any member of the Company with such customer, or (3) otherwise interfere with the business or accounts
of any member of the Company.

  

(b) As consideration
for the Employee’s agreement to the provisions of Sections 1 and 2(a), the Company has entered into the Employment Agreement
with Employee.

 

3. Injunctive
Relief. The Employee acknowledges that a breach of the covenants contained in Section 1 or Section 2 hereof shall
cause irreparable damage to the Company, the exact amount of which shall be difficult to ascertain, and that the remedies at law
for any such breach shall be inadequate. Accordingly, the Employee agrees that, notwithstanding any provision of the Employment
Agreement to the contrary, if the Employee breaches any of the covenants contained in Section 1 or Section 2 hereof,
then the Company shall be entitled to injunctive relief in addition to any other remedy or remedies available to the Company at
law or in equity.

 

4. Notices.
All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed to have
been duly given or made the second business day after the date of mailing, if delivered by registered or certified mail, postage
prepaid; upon delivery, if sent by hand delivery; upon delivery, if sent by prepaid courier, with a record of receipt; or the
next day after the date of dispatch, if sent by cable, telegram, facsimile or telecopy (with a copy simultaneously sent by registered
or certified mail, postage prepaid, return receipt requested), to the parties at the following addresses: 

	 	 
	 	if to the Executive, to:
	 	 
	 	Mark A. Smith 

        1001 Carlisle Street 

        Natrona Heights, PA 15065 

        Telephone: 724-226-2067

	 	 
	 	if to Company, to:
	 	 
	 	Geospatial Mapping Systems, Inc. 

        229 Howes Run Road 

        Sarver, PA 16055 

        Attention: General Counsel 

        Facsimile: 724-353-3049 

        Telephone: 724-353-3400

 

Any party hereto may change the address
to which notice to it, or copies thereof, shall be addressed, by giving notice thereof to the other parties hereto in conformity
with the foregoing.

 

    	 

    	 

    

 

5. Entire
Agreement. This Agreement, together with the Employment Agreement, constitutes the entire agreement between the parties and
supersedes all prior written and oral and all contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may not be changed orally, but only by an agreement in writing signed by both parties.

  

6. Counterparts.
This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute
one agreement.

 

7. Governing
Law and Construction. This Agreement shall be governed under and construed in accordance with the laws of the state of Pennsylvania,
without regard to the principles of conflicts of laws. The paragraph headings and captions contained herein are for reference
purposes and convenience only and shall not in any way affect the meaning or interpretation of this Agreement. It is intended
by the parties that this Agreement be interpreted in accordance with its fair and simple meaning, not for or against either party,
and neither party shall be deemed to be the drafter of this Agreement.

 

8. Severability.
If any portion or provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable,
the remaining portions or provisions hereof shall not be affected. The covenants in this Agreement are severable and separate,
and the unenforceability of any specific covenant shall not affect the enforceability of any other covenant. Moreover, in the
event that any court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent that the court
deems reasonable, and this Agreement shall thereby be reformed.

 

9. Binding
Effect. The rights and obligations of the parties under this Agreement shall be binding upon and inure to the benefit of the
permitted successors, assigns, heirs, administrators, executors and personal representatives of the parties.

 

IN WITNESS WHEREOF, the parties
have executed this Agreement on the day and in the year first written above. 

	 	 	 	 
	 	COMPANY:
	 	 
	 	GEOSPATIAL MAPPING SYSTEMS, INC.
	 	 
	 	 
	 	By:	 	MARK A. SMITH
	 	Its:	 	PRESIDENT
	 	 
	 	MARK A. SMITH

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