-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DrGyau4tdqup1e4zeR0gR7SpEjT+XVy7WDrc1mJZOyBkZmeWELmhhfuMv9Mz/7+f DGaOPIVt7kreleKsRMAX2A== 0001050502-02-000392.txt : 20020515 0001050502-02-000392.hdr.sgml : 20020515 20020515130831 ACCESSION NUMBER: 0001050502-02-000392 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLANGRAPHICS INC CENTRAL INDEX KEY: 0000783284 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 840868815 STATE OF INCORPORATION: CO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-14273 FILM NUMBER: 02650144 BUSINESS ADDRESS: STREET 1: 112 EAST MAIN STREET STREET 2: FLOOR 1 CITY: FRANKFORT STATE: KY ZIP: 40601 BUSINESS PHONE: 502 223 1501 MAIL ADDRESS: STREET 1: 19039 E PLAZA DR STREET 2: STE 245 CITY: PARKER STATE: CO ZIP: 80134 FORMER COMPANY: FORMER CONFORMED NAME: DCX INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: DOUGLAS COUNTY INDUSTRIES INC DATE OF NAME CHANGE: 19860109 FORMER COMPANY: FORMER CONFORMED NAME: INTEGRATED SPATIAL INFORMATION SYSTEMS INC DATE OF NAME CHANGE: 19980710 FORMER COMPANY: FORMER CONFORMED NAME: INTEGRATED SPATIAL INFORMATION SOLUTIONS INC /CO/ DATE OF NAME CHANGE: 19981015 10QSB 1 plangraph302.txt 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2002. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . -------------- --------------- Commission file number 0-14273 PLANGRAPHICS, INC. ------------------ (Exact name of registrant as specified in its charter) COLORADO 84-0868815 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 112 East Main Street Frankfort, KY 40601 ------------------- (Address of principal executive offices) (Zip Code) Administrative Office at 19039 East Plaza Drive, Suite 245 Parker, CO 80134 (720) 851-0716 -------------- (Registrant's telephone number, including area code) INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC. ---------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No 97,062,903 Shares of common stock were outstanding as of May 6, 2002. CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-QSB and the information incorporated by reference may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. All statements regarding our expected financial position and operating results, our business strategy, our financing plans and the outcome of any contingencies are forward-looking statements. These statements can sometimes be identified by our use of forward-looking words such as "may," "believe," "plan," "will," "anticipate," "estimate," "expect," "intend," and other phrases of similar meaning. Known and unknown risks, uncertainties and other factors could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and was derived using numerous assumptions. Forward-looking statements include, but are not limited to, statements in this Form 10-QSB regarding: o our ability to compete effectively; o the strength of our technical expertise and customer service; o our acquisition strategy; o the potential fluctuation of the market price of our stock; o our ability to raise funds through equity and debt financing; o the evolving market for global information systems; o the potential gross profit margin in information technology; o the impact of recent accounting pronouncements. Although we believe that the expectations that we expressed in these forward-looking statements are reasonable, we cannot promise that our expectations will turn out to be correct or will be accomplished in the time frame we contemplated. Our actual results could be materially different from our expectations, including the following: o we may lose customers or fail to grow our customer base; o we may not be able to sustain our current growth or to successfully integrate new customers or assets obtained through future acquisitions; o we may fail to compete successfully with existing and new competitors; o we may not adequately anticipate and respond to technological developments impacting information services and technology; This list is intended to identify some of the principal factors that could cause actual results to differ materially from those described in the forward-looking statements included elsewhere in this report. These factors are not intended to represent a complete list of all risks and uncertainties inherent in our business, and should be read in conjunction with the more detailed cautionary statements included in our Annual Report for the period ended September 30, 2001 and filed on Form 10-KSB under the caption "Item 1. Business - Risk Factors" beginning on page 7, our other Securities and Exchange Commission filings, and our press releases. The use of pronouns "we," "us," and "our" refer to the company and its subsidiary collectively. We may refer to the investor or investors in our company as "you" or "your" in this report. 2 Table of Contents Cautionary Note About Forward-Looking Statements 2 Part I Financial Information 4 Item 1. Financial Statements 4 Condensed and Consolidated Balance Sheets 4 Condensed and Consolidated Statements of Operations 6 Condensed and Consolidated Statements of Cash Flow 7 Notes to Condensed and Consolidated Financial Statements 8 Item 2. Management Discussion and Analysis 11 Part II Other Information 15 Submission of Matter to Vote of Shareholders 16 Exhibit Index 16 Signature Page 17 Exhibits 18 3 Part I Financial Information Item 1. Financial Statements PLANGRAPHICS, INC. Condensed and Consolidated Balance Sheets March 31 September 30 2002 2001 (Unaudited) (Audited) ----------- ----------- Assets Current: Cash and Cash Equivalents $ 841,781 $ 18,799 Accounts receivable (net of allowance for doubtful accounts of $12,754) 2,338,202 2,134,739 Prepaid expenses and other 148,281 123,144 ----------- ----------- Total current assets 3,328,264 2,276,682 ----------- ----------- Property and Equipment: Land and building under capital lease - related party 1,866,667 1,866,667 Equipment and furniture 772,270 710,054 Other leased assets 255,602 255,600 ----------- ----------- 2,894,539 2,832,321 Less accumulated depreciation and amortization (1,480,592) (1,372,613) ----------- ----------- Net property and equipment 1,413,947 1,459,708 ----------- ----------- Other Assets: Goodwill, net of accumulated amortization 3,948,343 3,948,343 Other 111,857 101,959 ----------- ----------- Total other assets 4,060,200 4,050,302 ----------- ----------- $ 8,802,411 $ 7,786,692 =========== =========== See accompanying notes to financial statements 4 PLANGRAPHICS, INC. Condensed and Consolidated Balance Sheets March 31 September 30 2002 2001 (Unaudited) (Audited) ------------ ------------ Liabilities and Stockholders' Equity Current: Notes payable - current maturities $ 526,142 $ 788,780 Obligations under capital leases - related party - current 108,952 102,263 Checks written against future deposits -- 24,100 Accounts payable 660,262 1,406,455 Accrued payroll costs and vacation 439,335 428,438 Accrued expenses 203,791 387,265 Accrued litigation costs -- 358,344 Deferred revenue 317,448 181,575 ------------ ------------ Total current liabilities 2,255,930 3,677,220 ------------ ------------ Long-term Liabilities: Obligations under capital leases - related party 1,553,753 1,609,955 ------------ ------------ Total liabilities 3,809,683 5,287,175 ------------ ------------ Commitments and Contingencies: Stockholders' Equity: Cumulative convertible preferred stock, $.001 par value, 20,000,000 shares authorized, none outstanding -- -- Common stock, no par value, 2,000,000,000 shares authorized, 97,062,903 and 19,649,539 shares issued and outstanding at March 31, 2002 and September 30, 2001, respectively 20,549,133 18,103,781 Accumulated deficit (15,556,405) (15,604,264) ------------ ------------ Total stockholders' equity 4,992,728 2,499,517 ------------ ------------ $ 8,802,411 $ 7,786,692 ============ ============ See accompanying notes to financial statements 5
PLANGRAPHICS, INC. Condensed and Consolidated Statements of Operations (Unaudited) Six Months Ended Three Months Ended March 31, March 31, 2002 2001 2002 2001 ------------ ------------ ------------ ------------ Revenues $ 4,280,855 $ 3,438,028 $ 2,160,639 $ 1,789,006 ------------ ------------ ------------ ------------ Costs and expenses: Salaries and employee benefits 792,159 799,037 325,687 429,797 Direct contract costs 2,508,451 1,935,946 1,344,075 967,674 General & administrative costs 475,518 548,616 258,026 258,329 Marketing costs 112,593 103,491 66,168 62,661 Being public & corporate affairs 75,335 145,573 42,794 27,281 Other operating costs 110,448 322,928 56,888 158,747 ------------ ------------ ------------ ------------ Total costs and expenses 4,074,504 3,855,591 2,093,638 1,904,489 ------------ ------------ ------------ ------------ Operating income (loss) 206,351 (417,563) 67,001 (115,483) ------------ ------------ ------------ ------------ Other income (expense): Interest expense (173,712) (238,763) (59,872) (158,166) Other income 15,220 44,404 2,796 30,978 ------------ ------------ ------------ ------------ Total other expense (158,492) (194,359) (57,076) (127,188) ------------ ------------ ------------ ------------ Net income (loss) $ 47,859 $ (611,922) $ 9,925 $ (242,671) ------------ ------------ ------------ ------------ Basic and diluted income (loss) per common share: Basic income (loss) per share $ 0.00 $ (0.03) $ 0.00 $ (0.01) Diluted income (loss) per share $ 0.00 $ (0.03) $ 0.00 $ (0.01) ------------ ------------ ------------ ------------ Weighted average shares outstanding Basic 53,003,273 19,260,453 87,031,218 19,411,556 Diluted 56,860,485 19,260,453 90,888,430 19,411,556 ------------ ------------ ------------ ------------ See accompanying notes to financial statements 6
PLANGRAPHICS, INC. Condensed and Consolidated Statements of Cash Flow (Unaudited) Six Months Ended March 31, 2002 2001 - -------------------------------------------------------------------------------- Operating Activities: Net income (loss) $ 47,859 $ (611,922) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 110,122 321,437 Amortization of debt discount 46,250 75,000 Provision for losses on accounts receivable -- (1,007) Stock options and warrants in exchange for services performed 71,027 124,500 Write off of acquisition costs -- 25,608 Changes in operating assets: Increase in accounts receivable (203,463) (455,339) Increase (decrease) in prepaid expenses (101,393) 47,065 Increase (decrease) in accounts payable (785,694) 310,529 Decrease in accrued expenses (479,420) (28,718) Increase in deferred revenue 135,872 51,191 Increase (decrease) in other assets (12,041) 62,832 ----------- ----------- Net cash used in operating activities (1,170,881) (78,824) ----------- ----------- Investing Activities: Purchase of equipment (62,218) (7,505) ----------- ----------- Net cash used in investing activities (62,218) (7,505) ----------- ----------- Financing Activities: Checks written against future deposits (24,100) 32,970 Proceeds from borrowing 621,299 75,000 Payments on debt (979,699) (172,649) Net proceeds from issuance of common stock 2,438,581 140,612 ----------- ----------- Net cash provided by financing activities 2,056,081 75,933 ----------- ----------- Net increase (decrease) in cash 822,982 (10,396) Cash and cash equivalents, beginning of period 18,799 20,306 ----------- ----------- Cash and cash equivalents, end of period $ 841,781 $ 9,910 ----------- ----------- See accompanying notes to financial statements 7 PLANGRAPHICS, INC. NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (1) Condensed and Consolidated Financial Statements We have prepared the condensed and consolidated financial statements included herein without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. We believe that the disclosures are adequate to make the information presented not misleading. In the opinion of management, the accompanying unaudited condensed and consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly our consolidated financial position as of March 31, 2002, and the consolidated results of our operations and statements of cash flows for the three- and six-month periods ended March 31, 2002 and 2001. The accounting policies we followed are set forth in the annual report of September 30, 2001, filed under our former name, Integrated Spatial Information Solutions, Inc., on Form 10-KSB and the audited consolidated financial statements in it with the accompanying notes. The consolidated results of operations for the period ended March 31, 2002, are not necessarily indicative of the results to be expected for the full year ending September 30, 2002. Certain prior year financial statements have been restated to conform to the current year presentation. (2) Accounts Receivable The components of accounts receivable are as follows: March 31 September 30 2002 2001 ---------- ---------- unaudited audited Contract Receivables: Billed $1,975,820 $1,609,294 Unbilled 375,137 538,199 ---------- ---------- 2,350,957 2,147,493 Less allowance for doubtful accounts 12,754 12,754 ---------- ---------- Accounts receivable, net $2,338,203 $2,134,739 Deferred revenue amounts were $317,448 and $181,575 at March 31, 2002 and September 30, 2001, respectively, and represents amounts billed in excess of amounts earned. We have historically received greater than 10% of annual revenues from one or more customers. The Rhode Island Department of Transportation ("RIDOT") represented 12% of revenue and the City of New York's Department of Information Technology and Telecommunications (NYDOITT) accounted for 39% of revenue for the six month period ended March 31, 2002, compared to NYDOITT and Providence Gas Company of Rhode Island who accounted for 29% and 12%, respectively, for the period ended March 31, 2001. In addition, at March 31, 2002 two customers, the NYDOITT and RIDOT accounted for 49% and 13% of accounts receivable, respectively, compared to NYDOITT and Providence Gas Company of Rhode Island who accounted for 40% and 15%, respectively, of accounts receivable at March 31, 2001. NYDOITT is the largest of our current customers and its revenues represent services both as a client and as a contract vehicle utilized by as many as 20 different departments within the New York City government through individual order assignments. The diversity of order assignments and variety of departments as clients diminishes the concentration of revenue and receivables in a manner not obvious from the financial reports. 8 (3) Provision for Income Taxes At the beginning of the fiscal year we had net operating loss carryforwards of $10.4 million with expirations through 2020. At March 31, 2002, the amount of the net operating loss carryforward balance is estimated at $10.4 million. We expect to incur a minimal amount of alternative minimum tax for the fiscal year. Since we are unable to determine that deferred tax assets exceeding tax liabilities are more likely than not to be realized, we have recorded a valuation allowance equal to the excess deferred tax assets for FY 2001 and at March 31, 2002. As a result, no provision or benefit for income tax has been recorded for the three and six months ended March 31, 2002 and 2001. (4) Litigation We were the respondent in an arbitration claim by our former Chief Financial Officer filed in August 1999 with the American Arbitration Association in Jacksonville, Florida. The case was arbitrated in February 2000. In a final decision on April 20, 2000 the arbitrator awarded him a total of $330,000 in separation payments, fees and expenses in the dispute stemming from his employment agreement with us. All costs associated with the arbitration award were expensed as of June 30, 2000. On July 18, 2000 we appealed the award in State Circuit Court for Duval County, Florida. The appeal was not sustained. We paid the award, attorney's fees and accrued interest in full during December 2001 and all claims were dismissed with prejudice. (5) Lease Obligations We lease various equipment as well as facilities under capital and operating leases that expire through the year 2006 as noted in Note 6 to the Consolidated Financial Statements in Form 10-KSB for the fiscal year ended September 30, 2001. (6) Recapitalization On February 9, 2001 the Board of Directors approved a recapitalization plan as a precedent to the further execution of our business plan. The Board of Directors authorized a rights offering to existing shareholders of our common stock and to certain other qualified parties. The offering, described in our prospectus of October 19, 2001, was successfully completed February 1, 2002 and resulted in total gross subscriptions of $2,686,500 and the issuance of 76,757,134 shares of free trading common stock. This dollar amount has been reduced for outstanding receivables from certain company officers (see Note 7, below) and for related capital raising costs . The Board of Directors authorized consulting agreements with Crossways Consulting Group, Inc. and Brean Murray & Co., Inc. for advice and assistance in the completion of our shareholder rights offering and other advisory services. The agreements provided that upon successful completion of the offering we issue warrants to each of the companies to acquire common stock in a quantity equal to two percent of the number of shares outstanding immediately after completing the offering. The warrant exercise fee is equal to 110% of the shareholder rights subscription fee, or $0.0385 per share. During the quarter ended March 31, 2002, we have issued each of the two entities above warrants to acquire 1,928,606 shares of our common stock for a total of 3,857,212 shares. (7) Related Party Transactions On February 9, 2001, the Board of Directors approved a loan of $75,000 and we entered into a convertible promissory note payable to Human Vision LLC, an entity controlled by a director. On May 15, 2001, we borrowed an additional $40,000 from Human Vision LLC pursuant to the same terms. See Note 7 to the Consolidated Financial Statements and Loan Transactions of Item 6 in our Form 10-KSB for the fiscal year ended September 30, 2001 for more information. Both of the notes were paid in full along with accrued interest on December 3, 2001. The Board concurrently approved a resolution authorizing us to provide to Human Vision LLC a security interest in the ownership of our subsidiary as collateral for providing a standby letter of credit to further collateralize an extension of our subsidiary's line of credit. See also the Loan Transaction discussion in Item 6, Management Discussion and Analysis in our Form 10-KSB for the fiscal year ended September 30, 2001. During May 2001 we obtained a line of credit from a Maryland based banking institution, Branch Banking & Trust ("BB&T"), comparable in terms with the previous line and for an initial amount of $500,000. The new line of credit 9 which matured on February 2, 2002 was also collateralized by the accounts receivable of PlanGraphics, a standby letter of credit provided by a related party, Human Vision L.L.C. and the personal guarantee of an officer and director. On January 31, 2002 the line of credit was extended 30 days in connection with a commitment letter for a replacement line of credit obtained by PlanGraphics with the same institution for $750,000 and similar terms except that the standby letter of credit will no longer be required and will be released. On February 15, 2002 we received a new line of credit for $750,000 from BB&T and BB&T subsequently released the standby letter of credit extended by Human Vision, L.L.C. and Human Vision has released and is returning the PlanGraphics collateral. On February 1, 2002, two officers, Frederick G. Beisser and John C. Antenucci, borrowed $8,750 and $175,000, respectively from the company. Repayment of the notes is due by February 1, 2004. The borrowed sums were used to exercise subscription rights to purchase 250,000 and 5,000,000 shares, respectively, under our Shareholder Rights Offering that expired on the same date. The notes receivable have been recorded as a reduction to common stock. The company's Board of Directors approved the loan of funds to each of its officers as being in the company's best interest because it will provide greater incentives to continue employment and motivation to strive for the success of the company so that the value of our common stock will increase. Mr. Beisser's note is collateralized by a lien in favor of the company on his residence. Mr. Antenucci's note is collateralized by his purchased shares and we may offset any compensation, including severance, toward payment of the note if his employment ends. Both notes bear interest at a rate equal to one fourth of one percent over the interest rate we receive on our money market accounts. Both officers have agreed not to sell the purchased shares of stock for six months after the date of purchase. (8) Net Income and Loss Per Common Share. Basic earnings per share includes no dilution and is computed by dividing loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity, when appropriate. The total of warrants and options outstanding and exercisable at March 31, 2002 and 2001 were 8,661,645 and 7,250,747, respectively. The computation of diluted shares outstanding at March 31, 2002 includes 3,857,212 of in-the-money warrants while the remaining balance of 4,804,433 of options and warrants issued and outstanding at that date are excluded because their exercise prices exceeded the closing price at that date and doing so would be anti-dilutive to earnings per share. Further, as we incurred a net loss in the periods ended March 31, 2001 none of our outstanding options or warrants were included in the computation of diluted earnings per share for that period as their effect would also be anti-dilutive. (9) Supplemental Cash Flow Information During the six months ended March 31, 2002 and 2001 we disbursed $176,574 and $135,618 for interest expense, respectively. (10) Recently Issued Accounting Pronouncements In June 2001 the Financial Accounting Standards Board finalized FASB Statements No. 141, Business Combinations (SFAS 141) and No. 142, Goodwill and Other Intangible Assets (SFAS 142). SFAS 141 requires the use of the purchase method of accounting and prohibits the use of the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001. SFAS 141 also requires that we recognize acquired intangible assets apart from goodwill if the acquired intangible assets meet certain criteria. SFAS 141 applies to all business combinations initiated after June 30, 2001 and for purchase business combinations completed on or after July 1, 2001. It also requires, upon adoption of SFAS 142, that we reclassify the carrying amounts of intangible assets and goodwill based on the criteria in SFAS 141. SFAS 142 requires, among other things, that companies no longer amortize goodwill, but instead test goodwill for impairment at least annually. In addition, SFAS 142 requires that we identify reporting units for the purposes of assessing potential future impairments of goodwill, reassess the useful lives of other existing recognized intangible assets, and cease amortization of intangible assets with an indefinite useful life. An intangible asset with an indefinite useful life should be tested for impairment in accordance with the guidance on SFAS 142. SFAS 142 is required to be applied in fiscal years beginning after December 15, 2001 to all goodwill and other intangible assets 10 recognized at that date, regardless of when those assets were initially recognized. SFAS 142 requires us to complete a transitional goodwill impairment test six months from the date of adoption. We are also required to reassess the useful lives of other intangible assets within the first interim quarter after adoption of SFAS 142. We accounted for our previous business combinations using the purchase method. As of March 31, 2002, the net carrying amount of goodwill is $3,948,343 (net of $1,403,136 in accumulated amortization) and other intangible assets nil. We have elected voluntary early implementation of SFAS 141 and 142 as of October 1, 2001. We recently retained an independent third party to assist with the transitional goodwill impairment test required within six months of adoption. Based upon the valuation report received from the third party dated October 1, 2001, we determined there was no impairment of goodwill. The following table reflects unaudited pro forma results of our operations, giving effect to SFAS 142 as if it were adopted on October 1, 2000:
Periods ended March 31, Three Months Six Months 2002 2001 2002 2001 - ----------------------------------------------------------------------------------------- Net income (loss), as reported $ 9,925 $(242,671) $47,859 $(611,922) Add back: amortization expense -- 90,981 -- 181,962 - ----------------------------------------------------------------------------------------- Pro forma net income $ 9,925 $(151,690) $47,859 $(429,960) Basic net income (loss) per share: As reported $ 0.00 $ (0.01) $ 0.00 $ (0.03) Pro forma $ 0.00 $ (0.01) $ 0.00 $ (0.01) Diluted net income (loss) per share: As reported $ 0.00 $ (0.01) $ 0.00 $ (0.03) Pro forma $ 0.00 $ (0.01) $ 0.00 $ (0.01) - -----------------------------------------------------------------------------------------
In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. SFAS No. 143 is effective June 30, 2003 for us. We believe the adoption of this statement will have no material impact on our consolidated financial statements. In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 requires that those long-lived assets be measured at the lower of carrying amount or fair value, less cost to sell, whether reported in continuing operations or in discontinued operations. Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred. SFAS 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, are to be applied prospectively. We believe the adoption of this statement will have no material impact on our consolidated financial statements. ITEM 2: MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Condition The following discussion of liquidity and capital resources addresses our requirements and sources as of March 31, 2002 and should be read in conjunction with our Consolidated Financial Statements and the accompanying notes. Recapitalizaton Our rights offering to existing stockholders and to certain other qualified parties commenced on October 19, 2001, as part of a recapitalization plan initiated in February 2001. The offering closed on February 1, 2002 resulting in 11 total gross subscriptions of $2,686,500. The funds received were used primarily to pay down certain notes payable, accrued expenses and accounts payable. We also utilized a portion of the proceeds from the rights offering to pay all outstanding notes and accounts payable beyond 30-day terms. The remaining funds will be used as working capital and for general operational purposes. Our management team believes that as a result of the successful rights offering and the anticipated cash flow from operations in FY 2002, we have the cash resources to meet our obligations for the current fiscal year. See also Notes 1 and 13 to the financial statements in our Form 10-KSB for September 30, 2001. We have categorized below the participation in the shareholder rights offering as to sources of funds: Directors and Officers $ 720,106 Other employees 67,157 Exercise of Shareholder Rights 548,599 Standby Investors 1,350,638 ---------- Total Subscriptions $2,686,500 ========== The shareholder rights offering has resulted in significant enhancement of our working capital position and significantly increased our working capital which now amounts to $1.1 million at March 31, 2002 as compared to a deficit of approximately $1.2 million a year ago. Cash Flow As of March 31, 2002 we had net working capital of $1,072,934 as compared to a net working capital deficit of $1,400,538 at September 30, 2001 and to a $1,232,092 deficit at March 31, 2001. This significant increase in working capital resulted from our successful shareholder rights offering. In the six months ended March 31, 2002, operations used net cash of $1,170,881, as compared to $78,824 used in operations in the period ended March 31, 2001. This increase in cash use was primarily related to the application of funds received from the shareholder rights offering to pay down liabilities, accrued expenses and accounts payable that were 30 days or more old as seen in the decreases to these accounts. Accounts receivable increased $203,463. In the period ended March 31, 2002, net cash used in investing activities was $62,218 as compared to $7,505 of net cash used in investing activities in the period ended March 31, 2001. Increased equipment purchases accounted for the change. Accounts receivable balances at March 31, 2002 and 2001, include both billed receivables and work-in-process. The payment terms on accounts receivable are generally net 30 days and collections generally average 45 to 60 days after invoicing. The actual collection period is consistent with industry experience with clients in the public sector. While this results in an elevation and aging of the billed accounts receivable balance, our history reflects consistent collectibility of the receivable balances. Work-in-process represents work that has been performed but has not yet been billed. This work will be billed in accordance with milestones and other contractual provisions. The amount of unbilled revenues will vary in any given period based upon contract activity. Financing activities in the period ended March 31, 2002 provided $2,056,081 as compared to net cash of $75,933 provided by financing activities in the period ended March 31, 2001. Cash provided by the issuance of common stock increased over the prior year by $2,481,719 accounting for most of the increase and the net use of funds from payments on and proceeds from debt transactions increased $214,501. Historically, our accounts receivable have been more than adequate to cover our line of credit and management believes that this will continue to be the case. Capital Resources On February 9, 2001, we borrowed $75,000 from an entity controlled by one of our directors and executed a convertible promissory note. On May 15, 2001 we borrowed an additional $40,000 from the same entity. The proceeds from these borrowings were used to meet certain working capital requirements. These notes were subsequently paid during December 2001 with proceeds from the shareholder rights offering. 12 On May 31, 2001, PlanGraphics obtained a $500,000 line of credit from Branch Banking and Trust Company ("BB&T") to replace the line of credit with National City Bank of Kentucky that expired on April 30, 2001. The BB&T line of credit matured on February 2, 2002 and was extended in connection with a January 31, 2002 commitment letter from BB&T to replace it with a new line of credit for $750,000 from the same institution with similar terms and removing the requirement for a standby letter of credit. We entered into the new line of credit on February 15, 2002 with BB&T for $750,000 that no longer requires the Human Vision Standby Letter of Credit. They released the standby letter of credit and, therefore, the pledge of the outstanding shares of PlanGraphics to Human Vision LLC is no longer required and is being returned to us. See the Loan Transaction discussion in Item 6, Management Discussion and Analysis in our form 10-KSB for the fiscal year ended September 30, 2001. As of March 31, 2002, our cash and cash equivalents had increased to $841,781 after paying down significant amounts of liabilities. Our management team believes that our current operating funds will be sufficient to fund our cash requirements through September 30, 2003. We also periodically consider the sale of our interest in Jobsview.com L.L.C. The 7.9% ownership interest in Jobsview.com is valued at the original investment cost of $56,400 in our books while the current market value is estimated at approximately $479,000 as noted in the recent third party valuation report. Efforts to conserve and to develop new sources of cash and equity are complimentary to the improved operating performance achieved during the past fiscal year. We anticipate the improvement to continue during the fiscal year ending September 30, 2002, and to be accompanied by positive cash flows. Operations Outlook We believe that information technology, which includes e-solutions, spatial data management and geographic information systems or "GIS," continues to be a global market that is rapidly evolving and becoming the basis for a myriad of new applications and services to solve customer problems and creating additional markets. We also believe the potential gross profit margins in information technology are much higher than we presently experience and we are working to grow the spatial data management and integration solutions of our GIS business base according to forward looking statements in our business plan, augmenting growth to be achieved through acquisitions. We had work backlog and assignments of approximately $11.2 million as of March 31, 2002, significantly increased from the $9.6 million at March 31, 2001 and an even larger increase from $9.1 million as of September 30, 2001. Of the $11.2 million, we expect to complete approximately $9.1 million within 12 months. Revenue from existing backlog and assignments will be recognized through the fiscal year ending September 30, 2003. We report backlog based on executed contracts. Assignments include contract awards where documentation is pending or task orders based on existing indefinite quantity contract vehicles. A typical contract, standard for the industry, includes terms that permit termination for convenience by either party with 30 days prior notice. Most of our orders are from existing or previous customers with whom we have a good relationship. Therefore, we do not anticipate cancellation of such contracts or order assignments. On January 7, 2002 we reached an agreement to license exclusive North American rights to intellectual property and spatial integration software components previously owned by Xmarc Ltd. and now held by the Swiss based investment company HPI LLC for use in the public sector and utility markets. The technology provides wireless and Internet-enabled software solutions that aid in the access of location-based information from data warehouses and repositories. We also agreed to support former Xmarc clients, work in progress and proposals in North America. This arrangement effectively gives us increased access to federal, state and local government clients in addition to commercial enterprises. We will pay HPI LLC a royalty stream for a period of 21 months ending Sept. 30, 2003, after which we will have the right to acquire in perpetuity the exclusive rights to Xmarc intellectual property and technology and all subsequent enhancements for the North American public sector and utility markets. Currently, we plan to grow internally, through strategic alliances and through acquisitions that enhance shareholder value. We have made substantial progress in positioning ourselves as a provider of Internet-accessible data repositories and warehouses that leverage spatial data. Several of our current assignments and a material portion of our contract backlog and assignments are associated with these initiatives. Further, our past marketing investments in China continue to yield results measured by increased sales from current and anticipated projects funded by the World Bank and a number of alliances and business partner arrangements that have been consummated. In addition, we have taken specific steps to position ourselves for strategic alliances, joint venture opportunities and additional acquisitions including reorganizing our corporate governance and management structure and the retention of third party advisors and investment bankers. 13 Results of Operations First Half of Fiscal Year 2002 Operating revenue for the first half of FY 2002 amounted to $4,280,855 a 25% increase from $3,438,028 in the prior year and resulted from increases in both our advisory and implementation services associated with geographic information systems. Revenues increased as a result of initiated on accumulated backlog and from priority requirements we received for clients responding to emergency management systems needing improvements and enhancements. Our total operating costs and expenses amounted to $4,074,504 or 95% of revenue, down from 112% of revenue a year ago. The costs reflect a small increase in operating costs from the prior year period of $218,913 or 6%. Comparing year to year the major variances were a $572,505, or 30%, increase in direct contract costs, as expected in light of the 25% increase in revenue; offsetting reductions appeared in salaries, employee benefits and overhead, in public and corporate affairs. These latter costs are associated with the costs of being public; costs principally associated with fees for audits, investment banking and shareholder communications. Reductions in costs were a result of spending constraints implemented to better align costs with revenues while accommodating a need for more aggressive business development and communications seen in the 9% increase in marketing costs. We achieved operating income of $206,351 as compared to last fiscal year's first half operating loss of $417,563, an improvement in excess of $620,000 or 15% measured against current year revenues. Interest expense decreased from that of the prior year by $65,051 as a result of a decrease in the average outstanding balance of our line of credit as compared to the prior year period and lower interest rates. Other income decreased to $15,220 from the prior year total of $44,404 principally as a result of reduced commissions received on company travel transactions reflecting industry wide reductions and elimination of commissions on airfares. We reported net income of $47,859 for the current period as compared to a net loss of $611,922 during the prior period, an improvement in excess of $660,000, or 15% measured against current year revenues. The marked improvement resulted principally from the increased revenue, concerted attention to controllable expenses and reduced interest expense. Result of Operations for the Quarter Ended March 31, 2002 Revenues Our revenues increased $371,633 or 21% from $1,789,006 for the quarter ended March 31, 2001 to $2,160,639 for the quarter ended March 31, 2002. This increase was related to new orders and work assignments received during the past 12 months. Deferred revenue increased by $135,873 from the beginning of fiscal year balance in response to new orders to proceed on work that were received during the quarter. Costs and Expenses The costs and expenses for the quarter ended March 31, 2002 amounted to $2,093,638, an increase of $189,149 compared to $1,904,489 for the quarter ended March 31, 2001. This 10% increase compares favorably to the 21% increase in revenue for the period. While direct contract costs increased 39% following the increase in revenue, salaries and benefits decreased by approximately 24% due entirely to a one-time reduction in the reserve for medical insurance costs caused by the change from a self-insured plan to an insured plan, general and administrative expenses decreased less than 1%, costs associated with being a public company increased by about 57% due to the shareholder meeting this year and not held in the prior year and, finally, other operating costs decreased by 64% due to reductions in acquisition and depreciation expense. 14 Net Income (Loss) Our operating income for the quarter ended March 31, 2002 was $67,001 compared to an operating loss of $115,483 for the prior year period. This positive change is a result of significantly increased revenues and closely controlled operating costs and expenses. Interest expense decreased to $59,872 in the current quarter as compared to $158,166 during the same period of the prior year, a decrease of 62%. The decrease is attributable to reduced use of interest bearing debt. Other income decreased from the prior year total by $28,182 as a result of reduced commissions from our in-house travel activities. We achieved net income of $9,925 for the quarter ended March 31, 2002 as compared to a net loss of $242,671 for the prior year period. The improvement was primarily from increased revenues coupled with closely controlled operating expenses. Other Matters Our appeal in State Circuit Court for Duval County, Florida of an arbitration award made to our former chief financial officer was unsuccessful. In a final decision on April 20, 2000, the arbitrator awarded a total of $330,000 plus expenses and interest for an overall total of approximately $362,000. All costs associated with the award were expensed as of June 30, 2000. We paid the entire amount including expenses in full during December 2001 and pending actions were dismissed with prejudice. Income Taxes and Deferred Tax Valuation Allowance -- FY 2002 and FY 2001 We have net operating loss carryforwards of approximately $10.4 million as of March 31, 2002 and September 30, 2001 (See Note 5 to the Condensed and Consolidated Financial Statements in our Form 10-KSB for September 30, 2001). We have established a 100 % valuation allowance on the net deferred tax asset arising from the loss carryforwards in excess of the deferred tax liability. The valuation allowance has been recorded, as our management has not been able to determine that it is more likely than not that the deferred tax assets will be realized. As a result, no provision or benefit for income taxes has been recorded for the three and six months ended March 31, 2002 and 2001. Retention of Certain Executives We recently executed employment agreements with three officers of the company. They are John C. Antenucci, President and CEO; J. Gary Reed, Chief Operating Officer of PlanGraphics, Inc.; and Frederick G. Beisser, Senior Vice President-Finance. The agreements replace previous employment agreements from 1997 in their entirety. The agreements establish the employment parameters determined by the compensation committee and provide for grants of immediately vested options to acquire common stock of the company; 880,000 shares for Beisser, 1,320,000 shares for Reed and 2% of outstanding shares on May 1, 2002 for Antenucci. In addition, the agreements provide for performance bonuses either in cash or additional stock options. The new agreements are made a part of this report as exhibits 10.1 through 10.3. PART II- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS See Note 4 to the Financial Statements. ITEM 2. CHANGES IN SECURITIES Not Applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable. 15 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the annual shareholders' meeting on April 30, 2002, at which 89,500,030 shares of the 96,633,942 shares of common stock were voted either in person or by Proxy. Shareholders voted their shares in approval as follows on the three items in our Proxy Statement: a. Nominees to the Board of Directors: 1. John C. Antenucci: 87,466,435 for and 2,033,595 withheld. 2. Gary S. Murray: 88,299,579 for and 1,200,451 withheld. 3. Raymund E. O'Mara 88,319,579 for and 1,180,451 withheld. 4. William S. Strang 88,319,579 for and 1,180,451 withheld. b. Amend the articles of incorporation to change the name to PlanGraphics, Inc.: 87,521,004 for, 1,433,970 against and 545,056 withheld. c. Amend the Equity Compensation Plan to increase the number of shares available in the plan by 7 million: 64,019,147 for, 2,476,415 against, 190,902 abstained, and 22,813,566 were not voted. d. Such other matters as may properly come before the meeting. There were no other matters addressed that required a vote of shareholders. ITEM 5. OTHER INFORMATION. Not Applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8K. (a) Exhibits: Exhibit 10.1 Employment Agreement with J. Gary Reed, executed on April 22, 2002. Exhibit 10.2 Employment Agreement with Frederick G. Beisser, executed on May 2, 2002. Exhibit 10.3 Employment Agreement with John C. Antenucci, executed on May 1, 2002. (b) Reports on Form 8-K filed since the beginning of the current quarter: Form 8-K, dated January 17, 2002 reporting the extension of the Shareholder Rights Offering closing date to February 1, 2002 and the scheduling of the Annual Shareholder's Meeting for April 30, 2002 for shareholders of record at close of business on March 28, 2002. Form 8-K, dated March 11, 2002 reporting the dismissal of certifying public accountants. Form 8-K, dated March 26, 2002 reporting the engagement of new certifying public accountants. Form 8-K, dated April 24, 2002 reporting the name change to PlanGraphics, Inc., the availability of the webcast on the internet for 60 days from April 30, 2002 of our post-shareholder meeting conference call with investors and shareholders and the information disclosed in that conference call, and the assignment of our new trading symbol, PGRA, effective May 6, 2002. 16 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PLANGRAPHICS, INC. Dated: May 14, 2002 /S/ Fred Beisser ---------------- Frederick G. Beisser Senior Vice President-Finance, Secretary & Treasurer and Principal Financial Accounting Officer 17 EX-10.1 3 planex10-1.txt EMPLOYMENT AGREEMENT EXHIBIT 10.1 EXECUTIVE EMPLOYMENT AGREEMENT This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is entered into as of this lst day of January, 2002, by and between PlanGraphics, Inc. ("Employer"), Integrated Spatial Information Solutions, Inc. ("ISIS") and J. Gary Reed ("Executive"). WHEREAS, Employer is a corporation organized under the laws of the state of Maryland and with its principal place of business in Frankfort, Kentucky; and WHEREAS, ISIS is a corporation organized under the laws of the state of Colorado and with its principal places of business in Frankfort, Kentucky; and WHEREAS, Employer is a wholly-owned subsidiary of ISIS; and WHEREAS, Executive is an individual with knowledge and experience that are valuable to Employer; and WHEREAS, Employer desires to employ Executive and Executive desires to accept such employment subject to the terms and conditions hereinafter set forth. NOW THEREFORE, and in consideration of the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows: 1. EMPLOYMENT Employer hereby employs Executive and Executive hereby accepts employment by Employer, upon all of the terms and conditions as hereinafter set forth. 2. TERM The term of this Agreement shall be for one year commencing on January 1, 2002, and ending on December 31, 2002 ("the Expiration Date"), unless renewed or extended by written agreement executed on or before the Expiration Date by Executive and by Employer with the approval of Management. As a courtesy to Executive, Employer shall indicate in writing its intent to renew or extend this Agreement at least thirty (30) days prior to the Expiration Date. 3. TERMINATION OF AGREEMENT This Agreement shall terminate upon the occurrence of any of the following events: (a) Upon written notice of termination from either party to the other party, which notice may be given at any time, with or without cause, and shall be effective thirty (30) days thereafter unless a different effective date is agreed in writing by the parties; (b) Upon the expiration of this Agreement without renewal or extension as provided in paragraph 2 of this Agreement; or (c) Upon Executive's death. Upon the termination of this Agreement, Executive shall be entitled to payment of compensation that is earned but unpaid for services rendered by Executive as of the date of termination of this Agreement. In addition, Executive shall be entitled to Separation Pay to the extent expressly set forth in Exhibit A to this Agreement, which pay shall become due and owing according to the schedule set forth in Exhibit A. However, Executive shall not be entitled to any compensation for services not yet performed, including services which could have been performed but for the termination of this Agreement. At the discretion of Employer, Employer may (a) require that Executive continue to perform his duties during the period between notice pursuant to Section 3(a) of this Agreement and the resulting termination of this Agreement, or (b) relieve Executive of his duties during such period (while continuing to provide compensation and benefits in accordance with this Agreement). 4. DUTIES Executive is employed by Employer as its Senior Vice President / Chief Operating Officer. The precise nature of Executive's duties shall be as defined by the Board of Directors of Employer and may be broadened, curtailed or otherwise modified by the Board of Directors from time to time in its sole discretion. Executive agrees to devote his full working time, energy and professional talent to the performance of the duties of his position with Employer. Notwithstanding the foregoing, Executive may serve as a director or trustee of another organization upon the prior written consent of Management. Executive's primary place of employment shall be Frankfort, Kentucky. 5. COMPENSATION Executive's compensation under this Agreement shall be as set forth in Exhibit A, which is attached hereto and incorporated herein. Such compensation shall be paid in accordance with the payroll policies and procedures of Employer, as they may be modified from time to time at Employer's sole discretion. Upon the termination of this Agreement, Executive shall have no further rights to compensation under this Agreement except for Separation Pay as provided in Exhibit A. 6. TRADE SECRETS, INTELLECTUAL PROPERTY AND CONFIDENTIAL INFORMATION a. Definitions. For purposes of this Agreement, the following terms shall have the following definitions: (i) "The ISIS Companies" shall mean ISIS and all subsidiaries of ISIS, both individually and collectively, throughout their history. (For example, "employment with the ISIS Companies" shall include all employment with any of the ISIS Companies, both before and after they became ISIS Companies, and "property of the ISIS Companies" shall include all property of any of the ISIS Companies, both before and after they became ISIS Companies, etc.) (ii) "Trade Secrets" shall have the meaning ascribed to it in the Kentucky Uniform Trade Secrets Act, KRS ss.365.880, as such provision may be amended from time to time. The term "Trade Secrets" shall include all documents containing Trade Secrets. (iii) "Intellectual Property" shall mean all products of human intelligence which have been protected or could be protected from appropriation or use by others through application of laws governing patent, trademark, copyright, or other similar protections, including but not limited to ideas, processes, trademarks, service marks, inventions, discoveries, and improvements to any of the foregoing, provided that such material relates to the services, methodologies or technologies used by or developed for the ISIS Companies during the course of Executive's employment with the ISIS Companies. The term "Intellectual Property" shall include all documents containing Intellectual Property. (iv) "Confidential Information" shall mean all non-public information concerning the business or the operation of the business of the ISIS Companies, including but not limited to information concerning: operations, organization or management; finances; business plans and strategies; clients; relationships with contractors and vendors; proprietary or specialized computer software; employees; products and services; equipment and systems; and prospective and executed contracts and other business arrangements. Confidential Information does not include information in the public domain or information that is properly known to Executive through sources other than the ISIS Companies. The term "Confidential Information" shall include all documents containing Confidential Information. (v) "Protected Information" shall mean all Trade Secrets of the ISIS Companies, all Intellectual Property of the ISIS Companies, and all Confidential Information of the ISIS Companies. (vi) The term "documents" shall mean all recordations of information, in any form, whether printed or written, produced by hand or otherwise, and whether stored electronically, magnetically, or in tangible form, and shall include but not be limited to: agreements; audio tapes; brochures; charts; circulars; communications; compact disks; computer disks; computer printouts; correspondence; diaries; digital recordings; drafts; drawings; electronic mail or other electronic communications; graphs; journals; ledgers; letters; maps; memoranda; motion pictures; notes; notebooks; opinion statements; pamphlets; photographs; press releases; reports; sketches; telegrams; transcripts; videotapes; written statements; summaries or records of conferences, interviews, investigations, meetings, negotiations, and personal or telephonic conversations; any marginal comments appearing on any documents; and all other writings. b. Non-Disclosure of Protected Information. During the term of this Agreement, and for a period of ten (10) years following the termination of this Agreement, Executive shall not, without the prior written consent of Management, directly or indirectly, use, disclose, transfer or otherwise communicate any Protected Information to any person or entity except where such use, disclosure, transfer or communication is (a) in connection with and in furtherance of Executive's work on behalf of the ISIS Companies, and (b) not otherwise contrary to applicable laws regarding Trade Secrets, Confidential Information or Intellectual Property. c. Documents and Other Property of the ISIS Companies. All documents containing Protected Information which are prepared by Executive or otherwise come into Executive's possession are and shall remain the property of the ISIS Companies. Upon the termination of this Agreement, or upon the request of Employer, Executive shall immediately deliver to Employer all documents containing Protected Information and all other property belonging to the ISIS Companies. d. Response to Subpoena or Court Order. In response to any subpoena, court order or other legal process purporting to require disclosure of Protected Information, Executive shall: (a) immediately notify Management, and (b) take all lawful steps to resist the subpoena, court order or other process unless instructed to the contrary by Management. e. Confidential Information from Third Parties. Executive acknowledges that the ISIS Companies have received and will continue to receive confidential or proprietary information from third parties and that the ISIS Companies must maintain the confidentiality of such information and use such information only for proper purposes. Executive shall not, without the prior written consent of Management, directly or indirectly, use, disclose, transfer or otherwise communicate any such information to any person or entity except where such use, disclosure, transfer or communication is: (a) in connection with and in furtherance of Executive's work on behalf of the ISIS Companies, (b) not otherwise contrary to applicable laws regarding Trade Secrets, Confidential Information or Intellectual Property; and (c) not contrary to any agreement between the ISIS Companies and the third party. f. Disclosure and Assignment of Intellectual Property. Upon the request of Employer, Executive shall promptly disclose to Employer, in a manner specified by Management, all Intellectual Property that Executive learns of, conceives, develops or creates alone or with others during the term of this Agreement (whether or not learned of, conceived, developed or created during regular working hours). In consideration of the mutual covenants of this Agreement, Executive shall assign to Employer, without further consideration, Executive's entire right to all Intellectual Property, which shall be the sole and exclusive property of Employer whether or not subject to patent, copyright, trademark or trade secret protection under applicable law. Executive also acknowledges that all original works of authorship which are made by Executive (solely or jointly with others), within the scope of Executive's employment pursuant to this Agreement, and which are protectable by copyright, are "works made for hire," as that term is defined in the United States Copyright Act (17 U.S. C. ss. 101). To the extent that any such works, by operation of law, cannot be "works made for hire," Executive hereby assigns to Employer all right, title, and interest in and to such works and to any related copyrights. Executive shall promptly execute, acknowledge and deliver to Employer all additional instruments or documents deemed at any time by Employer in its sole discretion to be necessary to carry out the intentions of this Section 6. 7. DUTY OF LOYALTY, NO SOLICITATION, NO COMPETITION a. Duty of Loyalty During the term of this Agreement, Executive shall owe a duty of loyalty to Employer. As part of this duty, Executive shall not, without the prior written consent of Management, directly or indirectly: (i) pursue or accept any employment or business opportunity with any Client or Competitor; (ii) provide any aid or assistance to any Competitor; (iii) engage in any act or omission which is contrary to the interests of the ISIS Companies. b. No Solicitation. During the term of this Agreement, and for a period of one (1) year following the termination of this Agreement, Executive shall not, without the prior written consent of Management, directly or indirectly: (i) cause or attempt to cause any employee, agent or contractor of the ISIS Companies to terminate his or her employment, agency or contractor relationship with the ISIS Companies; or (ii) interfere or attempt to interfere with the relationship between the ISIS Companies and any employee, contractor or agent of the ISIS Companies. For a period of one (1) year following the termination of this Agreement, Executive shall not, without the prior written consent of Management, directly or indirectly, hire or attempt to hire any director, officer or employee of the ISIS Companies. c. No Competition For a period of one (1) year following the termination of this Agreement, Executive shall not, without the prior written consent of Management perform any services for any Client or for any Competitor. For purposes of this Section 7, "Client" shall mean any person or entity who is then a client of the ISIS Companies or who was a client of the ISIS Companies at any time during the last one (1) year of Executive's employment pursuant to this Agreement, unless during the last one (1) year of Executive's employment pursuant to this Agreement: (i) Executive had no contact, directly or indirectly, with that person or entity in Executive's capacity as an employee pursuant to this Agreement; and (ii) Executive had no role, directly or indirectly, in the provision of services by the ISIS Companies to that person or entity, including but not limited to any role in providing the services, supervising or managing those who provided the services, or determining pricing or staffing for the services provided For purposes of this Section 7, "Competitor" shall mean any person or entity who provides services of the same or substantially similar kind as the services provided by the ISIS Companies. For purposes of this Section 7, the phrase "perform any services" includes all services of any kind, whether provided as an owner, director, officer, employee, agent, contractor, consultant, joint venturer, partner, member or otherwise. 8. INJUNCTIVE RELIEF In the event of any violation of the provisions of Section 6 or Section 7 of this Agreement ("the Covenants"), Executive acknowledges and agrees and hereby stipulates: (a) that the Covenants are fully enforceable; (b) that any breach of any of the Covenants will result in real, immediate and irreparable harm to Employer which cannot be adequately remedied by monetary damages; (c) that Employer will be entitled to an injunction restraining Executive from violating the Covenants pending mediation of the dispute between the parties; and (d) that Executive waives any right that he or she might have to challenge the enforceability of the Covenants, to contend that monetary damages provide an adequate remedy for violation of the Covenants, or that injunctive relief is not proper to restrain violations of the Covenants pending mediation. 9. DEFINITION OF MANAGEMENT; CONSENT IS DISCRETIONARY For purposes of this Agreement, "Management" shall mean: (a) the President of Employer if Executive is employed in a position below that of President, (b) the Chairman of the Board of Directors of Employer if Executive is employed as President, and (c) a majority of the Board of Directors of Employer if Executive is employed in a position above that of President. In all cases in which Executive must obtain the consent of Employer or Management, such consent may be granted or withheld at the sole discretion of Employer or Management as the case may be. 10. INDEMNIFICATION To the extent permitted by law and by the Articles of Incorporation and the Bylaws of Employer, Employer agrees to indemnify and hold harmless Executive from and against any and all personal liability which Executive may incur as a result of his actions or inactions within the course and scope of his employment pursuant to this Agreement; provided, however, that this Section 10 shall not apply to liability arising out of Executive's intentional misconduct or gross misconduct. During the term of this Agreement and for a period of three (3) years thereafter, Employer shall maintain Directors & Officers insurance coverage for Executive, with respect to his service pursuant to this Agreement, in the amount of not less than Dollars ($ ------- ). 11. SEVERABILITY In the event that any provision of this Agreement is held to be invalid, void or unenforceable, the remainder of this Agreement shall not be affected thereby, and all other provisions of this Agreement shall be valid and enforceable to the fullest extent permitted by the law. 12. AGREEMENT NOT ASSIGNABLE This Agreement shall be binding upon Employer and its successors and upon the heirs, representatives, executors, and administrators of Executive. This Agreement is not assignable by either party, except that the rights and obligations of this Agreement shall be assumed by any successor of Employer. For purposes of this Section 12, the term "successor" shall include any individual or entity which acquires all or substantially all of the assets of Employer by merger, purchase or otherwise. 13. WAIVER OF BREACH The waiver by either party of a breach or violation of any provision of this Agreement shall not operate as or be construed to be a waiver of any subsequent breach hereof 14. NOTICES Any written notice to be given to Employer under the terms of this Agreement shall be addressed to Employer as follows, unless Executive is notified in writing of a change of address: PlanGraphics, Inc. 112 East Main Street Frankfurt, Kentucky 40601-2314 Any written notice to be given to Executive under the terms of this Agreement shall be addressed to Executive as follows, unless Management is notified in writing of a change of address: J. Gary Reed 3388 Lyon Drive Lexington, KY 40513 Such notice shall be deemed to have been duly given when enclosed and properly sealed in an addressed envelope registered or certified mail return receipt requested and deposited, postage and registered or certification fee prepaid, in a post office or branch post office regularly maintained by the United States Postal Service. 15. TITLE AND HEADINGS Titles and headings to paragraphs in this Agreement are for the purpose of reference only and in no way shall limit, define or otherwise affect the provisions of this Agreement. 16. GOVERNING LAW This Agreement, all interpretation and enforcement of this Agreement, and all disputes arising out of this Agreement shall be governed solely and exclusively by the laws of the State of Kentucky, regardless of the forum in which such interpretation or enforcement of this Agreement occurs or such disputes are resolved, and without regard to any principles of conflicts of laws. 17. MEDIATION; VENUE; COSTS AND FEES a. Mediation as a Prerequisite to Litigation. Unless otherwise agreed in writing by the parties, all disputes relating to this Agreement, the interpretation or application of this Agreement, or Executive's employment pursuant to this Agreement (hereinafter "Covered Disputes"), shall be submitted first to non-binding mediation before any proceeding may be filed in a court of law or equity. Participation in such mediation shall be an indispensable prerequisite to the filing of any proceeding in a court of law or equity relating to any Covered Dispute, except that no party shall be required to mediate a Covered Dispute if the other party has failed or refused to honor a written request to mediate such dispute in accordance with this Section 17; Unless otherwise agreed in writing by the parties: (i) the mediation will be conducted before a single mediator of the American Arbitration Association ("AAA"), in accordance with the rules of the AAA then in effect regarding mediation of employment disputes; and (ii) such mediation shall be conducted in Frankfort, Kentucky, and Kentucky law shall govern. b. Venue and Personal Jurisdiction in Frankfort, Kentucky. Any proceeding in a court of law or equity relating to a Covered Dispute shall be brought only in the Circuit Court of Franklin County, Kentucky, or the United States District Court for the Eastern District of Kentucky, and Executive and Employer hereby waive any right that they might have to challenge the selection of those forums, including but not limited to challenges to personal jurisdiction, venue, or the convenience of the forum. Specifically, by executing this Agreement, Executive and Employer agree, consent, and stipulate that, in any action relating to a Covered Dispute: (i) the aforesaid courts have personal jurisdiction over Executive and Employer, (ii) venue is proper in those courts, and (iii) those courts provide a convenient forum for that action. To the maximum extent permitted by the law, the parties stipulate and agree that this provision supercedes any analysis of choice of laws. To the extent that a choice-of-laws analysis is required, the parties stipulate and agree that Kentucky law shall govern such analysis. c. Costs and Fees In any mediation between the parties, the parties shall divide the costs and fees of the mediator evenly between them, and each party shall bear its own costs and fees, including attorney fees. 18. NO RULE OF CONSTRUCTION The parties acknowledge that each of them has had ample opportunity for their own counsel to participate in negotiating and drafting this Agreement. Therefore, no rule of construction shall apply to this Agreement which construes ambiguous or unclear language in favor of or against any party. 19. ENTIRE AGREEMENT (a) This Agreement, including Exhibit A, represents the entire employment agreement between Employer and Executive pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written. No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by Executive and by Employer with the approval of Management. (b) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 20. GUARANTEE OF PAYMENT OBLIGATIONS BY ISIS The payment obligations of Employer set forth in this Agreement, including those set forth in Exhibit A to this Agreement, shall be and are hereby guaranteed by ISIS in consideration for the indirect benefit that Executive's service to Employer will provide to ISIS. EXECUTED at Frankfort, Kentucky, on the date aforesaid. EXECUTIVE: PLANGRAPHICS, INC. /s/ J. Gary Reed By: /s/ John C. Antenucci - ------------------------------- -------------------------------- J. Gary Reed, Sr. VP I COO John C. Antenucci, President INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC. By: /s/ Gary Murray - ------------------------------- Gary Murray, Chairman EXHIBIT A to EXECUTIVE EMPLOYMENT AGREEMENT between PLANGRAPHICS, INC. ("Employer") and J. GARY REED ("Executive") dated January 1, 2002 During the term of the Agreement, Executive's compensation shall be as follows: A-1 SALARY Employer shall pay to Executive an annual salary of One Hundred Twenty-Five Thousand Dollars ($125,000.00) per year, subject to applicable withholdings for taxes, to be paid in the manner specified in paragraph 5 of the Agreement. However, Executive's salary may be increased or reduced from time to time at the sole discretion of the Board of Directors of Employer, provided that Executive's salary may not be reduced by more than ten percent (10%) below the figure stated above. A-2 INCENTIVE BONUS At the conclusion of each fiscal year ("Year") of Employer during the term of this Agreement, Executive shall be eligible for an incentive bonus which shall be earned as described herein and which shall not exceed eighty percent (80%) of the Salary paid to Executive during that Year ("Yearly Salary"). Executive's incentive bonus shall be comprised of three elements, as follows: (a) Sales Incentive (up to 25% of Salary): If each Work Group of Employer achieves at least 75% of its goals for the Year as established by Employer, and if Employer's actual sales for the Year ("Actual Sales") exceed by at least $1,000,000 the annual sales objective for the Year as defined in the Employer's business plan ("Sales Objective"), Executive shall be paid an amount equal to 2.5% of his Yearly Salary for each full increment of $1,000,000 by which Actual Sales exceed Sales Objective, provided that the total Sales Incentive bonus for a Year shall not exceed 25% of Executive's Yearly Salary. Stated as a formula, Executive's Sale Incentive Bonus shall be: A x B, where: A = .025 x Annual Salary; and B = ((Actual Sales - Sales Objective) / 1,000,000), with the result rounded down to the nearest whole number; and A x B does not exceed .25 x Annual Salary (b) EBITDA Incentive (up to 40% of Salary): If the actual consolidated earnings before interest, taxes, depreciation and amortization of Employer's consulting groups for the Year ("Actual EBITDA") exceed by at least $150,000 the EBITDA objective for Employer's consulting groups for the Year as defined in the Employer's business plan ("EBITDA Objective"), Executive shall be paid an amount equal to 5% of his Yearly Salary for each full increment of $150,000 by which Actual EBITDA exceeds EBITDA Objective, provided that the total EBITDA Incentive bonus for a Year shall not exceed 40% of Executive's Yearly Salary. Stated as a formula, Executive's EBITDA Incentive Bonus shall be: C x D, where: C = .05 x Annual Salary; and D = ((Actual EBITDA- EBITDA Objective) / 150,000), with the result rounded down to the nearest whole number; and C x D does not exceed .40 x Annual Salary (c) Other Incentive (up to 15% Of Salary): (i) Growth in head count. If the number of professional and billable employees of Employer who report to Frankfort (i.e. are assigned code 023) ("the Frankfort PBE Head Count") for Fiscal Year 2002 exceeds the Frankfort PBE Head Count for 2001 by least five (5), and if FFT consolidated consulting utilization remains at or above 62% for Fiscal Year 2002 (inclusive of executive consultants), then Executive shall be paid an amount equal to one percent (1%) of his Salary for each of the fifth, sixth and seventh persons by which the Frankfort PBE Head Count for 2002 exceeds the Frankfort PBE Head Count for 2001; plus one point five percent (1.5%) of his Salary for each of the eighth, ninth and tenth persons by which the Frankfort PBE Head Count for 2002 exceeds the Frankfort PBE Head Count for 2001; provided that the total incentive bonus for growth in head count shall not exceed 7.5% of Executive's Salary. (ii) Bifurcation of East Coast Practice. If Executive successfully as determined by Management in its discretion) bifurcates the East Coast practice of Employer into a Northeast Region and a Mid-Atlantic and Southeast Region, then Executive shall be paid an amount equal to four percent (4%) of his Salary or such lesser amount as Management may determine in its discretion. (iii) Overall Performance Assessment. Based upon an overall assessment of Executive's performance by Management, Executive may receive an additional bonus in an amount not to exceed three point five percent (3.5%) of Executive's Salary. A-3 COMMITMENT COMPENSATION As compensation for Executive's surrender of all anti-dilution rights, Executive shall receive a stock option grant of 1,320,000 shares of the common stock of ISIS fully vested and priced at the market price as of January 1, 2002. Under no circumstances shall Executive be granted any anti-dilution rights with respect to the stock of the ISIS Companies. A-4 VACATION Executive shall be eligible for Thirty-Three (33) days of personal time off per year, as provided by and governed by the Personal Time Off Plan ("PTOP"). Upon termination of this Agreement, Executive shall be paid for earned but unused PTOP days as provided in the PTOP plan, based upon the Salary in effect at the time of termination. A-5 GROUP HEALTH COVERAGE Executive shall be permitted to participate in such group health insurance plan as Employer may elect to provide for its other employees, subject to the eligibility and participation requirements of such plan, which plan may be altered or abolished from time to time at the sole discretion of Employer. A-6 PENSION/PROFIT-SHARING PARTICIPATION Executive shall be permitted to participate in such pension or profit-sharing plan as Employer may elect to provide for its other employees, subject to the eligibility and participation requirements of such plan, which plan may be altered or abolished from time to time at the sole discretion of Employer. A-7 LIFE INSURANCE Executive shall be provided with a life insurance policy in the amount of Two Hundred Fifty Thousand Dollars ($250,000.00), payable to such beneficiary as Executive may designate, with an additional One Hundred Thousand Dollars ($100,000.00) of coverage for accidental death, provided that Executive satisfies the medical requirements for these and keyman coverages. A-8 AUTOMOBILE ALLOWANCE Executive shall receive an automobile allowance of Two Hundred Fifty Dollars ($250.00) per month. However, Executive's automobile allowance may be increased or reduced from time to time at the sole discretion of the Board of Directors of Employer, provided that Executive's automobile allowance may not be reduced by more than ten percent (10%) below the figure stated above. A-9 OTHER EMPLOYMENT BENEFITS Executive shall be permitted to participate in such other benefits of employment as Employer may elect to provide for its other employees, subject to the terms and conditions established by Employer for those benefits, which benefits may be altered or abolished from time to time at the sole discretion of Employer. A-10 EXPENSE REIMBURSEMENT Executive shall receive reimbursement from Employer for all reasonable expenses incurred for the benefit of Employer by Executive in the performance of his duties under the Agreement. Such expenses may include but are not limited to reasonable out-of-pocket expenses for travel, lodging, meals, entertainment, and professional dues. Employer shall have the right to establish guidelines for reimbursement of expenses, including but not limited to guidelines regarding when prior approval for an expense is required and what documentation must be provided in order to obtain reimbursement. A-11 SEPARATION PAY Upon termination of this Agreement, Executive shall be entitled to Separation Pay in accordance with the following provisions: (a) Termination by Employer for Convenience: Executive shall receive twelve (12) months of Base Compensation. (b) Termination by Employer for Cause: Executive shall receive three (3) months of Base Compensation . (c) Termination by Employer due to disability of Executive: Executive shall receive three (3) months of Base Compensation. Should Executive satisfy the requirements for keyman disability insurance, Executive shall receive an additional three (3) months of Base Compensation. (d) Resignation of Executive: Executive shall receive six (6) months of Base Compensation. (e) Termination upon Expiration of Agreement Without Renewal or Extension: Executive shall receive six (6) months of Base Compensation (f) Death of Executive: Executive's estate shall receive three(3) months of Salary, and Executive's dependents who are covered by Group Health Coverage at the time of Executive's death shall receive continued Group Health Coverage for three (3) months following Executive's death. Should Executive satisfy the requirements for keyman insurance, Executive's estate shall receive an additional three (3) months of Salary, and Executive's dependents who are covered by Group Health Coverage at the time of Executive's death shall receive an additional three (3) months of continued Group Health Coverage. Except in the event of death of Executive, Separation Pay shall not be considered earned at the time of the termination, shall not be paid in a lump sum, and shall not be paid at the time of termination. Instead, Separation Pay shall be paid after termination, at Employer's regular pay intervals, as though Executive were still employed by Employer. For example, three (3) months of Base Compensation would be paid over a period of three (3) months following termination. If the Agreement is terminated by the death of Executive, the Separation Pay specified in subsection (f) above shall be paid in a lump sum to Executive's designated beneficiaries within 120 days after Executive's death. In the event of Executive's death during one of the periods of Separation Pay specified in subsections (a) through (e) above, any owed but unpaid balance of such Separation Pay shall be accelerated and shall be paid in a lump sum to Executive's designated beneficiaries within 120 days after Executive's death. "Base Compensation" shall consist of: (1) salary at the rate in effect at the time of termination; and (2) continued participation in Employer's group health insurance plan. EX-10.2 4 planex10-2.txt EMPLOYMENT AGREEMENT EXHIBIT 10.2 EXECUTIVE EMPLOYMENT AGREEMENT FREDERICK G. BEISSER This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is entered into as of this 1st day of January, 2002, by and between Integrated Spatial Information Solutions, Inc. ("Employer" or "ISIS") and Frederick G. Beisser ("Executive"). WHEREAS, Employer is a corporation organized under the laws of the State of Colorado and with its principal place of business in Frankfort, Kentucky; WHEREAS, Executive is an individual with knowledge and experience that are valuable to Employer; and WHEREAS, Employer desires to employ Executive and Executive desires to accept such employment subject to the terms and conditions hereinafter set forth. NOW THEREFORE, and in consideration of the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows: 1. EMPLOYMENT Employer hereby employs Executive and Executive hereby accepts employment by Employer, upon all of the terms and conditions as hereinafter set forth. 2. TERM The term of this Agreement shall be for one (1) year commencing on January 1, 2002, and ending on December 31, 2002 ("the Expiration Date"), unless renewed or extended by written agreement executed on or before the Expiration Date by Executive and by Employer with the approval of Management. As a courtesy to Executive, Employer shall indicate in writing its intent to renew or extend this Agreement at least thirty (30) days prior to the Expiration Date. 3. TERMINATION OF AGREEMENT This Agreement shall terminate upon the occurrence of any of the following events: (a) Upon written notice of termination from either party to the other party, which notice maybe given at any time, with or without cause, and shall be effective thirty (30) days thereafter unless a different effective date is agreed in writing by the parties; (b) Upon the expiration of this Agreement without renewal or extension as provided in paragraph 2 of this Agreement; or (c) Upon Executive's death. Upon the termination of this Agreement, Executive shall be entitled to payment of compensation that is earned but unpaid for services rendered by Executive as of the date of termination of this Agreement. In addition, Executive shall be entitled to Separation Pay to the extent expressly set forth in Exhibit A to this Agreement, which pay shall become due and owing according to the schedule set forth in Exhibit A. However, Executive shall not be entitled to any compensation for services not yet performed, including services which could have been performed but for the termination of this Agreement. At the discretion of Employer, Employer may (a) require that Executive continue to perform his duties during the period between notice pursuant to Section 3(a) of this Agreement and the resulting termination of this Agreement, or (b) relieve Executive of his duties during such period (while continuing to provide compensation and benefits in accordance with this Agreement). 4. DUTIES Executive is employed by Employer as its Senior Vice President of Finance. The precise nature of Executive's duties and responsibilities shall be as defined by Management and may be broadened, curtailed or otherwise modified by Management from time to time in its sole discretion. Executive shall be expected to work a normal workweek of a minimum of forty (40) hours on average through the course of each quarterunless otherwise agreed in writing by the parties, and Executive agrees to devote his time, energy and professional talent to the performance of the duties of his position with Employer during those hours. Notwithstanding the foregoing, Executive may serve as a director or trustee of another organization upon the prior written consent of Management or as was already disclosed to Employer in public filings prior to the date of this Agreement. Executive's primary place of employment shall be Parker, Colorado, or such other location within thirty (30) air miles of the Colorado State Capitol Building as may be selected by the Board of Directors of Employer in its sole discretion. Except where travel is required by Employer or otherwise necessary to the performance of the duties, Executive shall have the right to perform his duties out of any personal residence he may have, provided that the exercise of such right does not interfere with Executive's ability to perform his duties effectively or otherwise result in behavior or actions injurious to Employer. 5. COMPENSATION Executive's compensation under this Agreement shall be as set forth in Exhibit A, which is attached hereto and incorporated herein. Such compensation shall be paid in accordance with the payroll policies and procedures of Employer, as they may be modified from time to time at Employer's sole discretion. 2 Upon the termination of this Agreement, Executive shall have no further rights to compensation under this Agreement except for Separation Pay as provided in Exhibit A. 6. TRADE SECRETS, INTELLECTUAL PROPERTY AND CONFIDENTIAL INFORMATION a. Definitions. For purposes of this Agreement, the following terms shall have the following definitions: (i) "The ISIS Companies" shall mean ISIS and all subsidiaries of ISIS, both individually and collectively, throughout their histories. (For example, "employment with the ISIS Companies" shall include all employment with any of the ISIS Companies, both before and after they became ISIS Companies, and "property of the ISIS Companies" shall include all property of any of the ISIS Companies, both before and after they became ISIS Companies, etc.) (ii) "Trade Secrets" shall have the meaning ascribed to it in the Kentucky Uniform Trade Secrets Act, KRS ss.365.880, as such provision may be amended from time to time. The term "Trade Secrets" shall include all documents containing Trade Secrets. (iii) "Intellectual Property" shall mean all products of human intelligence which have been protected or could be protected from appropriation or use by others through application of laws governing patent, trademark, copyright, or other similar protections, including but not limited to ideas, processes, trademarks, service marks, inventions, discoveries, and improvements to any of the foregoing, provided that such material relates to the services, methodologies or technologies used by or developed for the ISIS Companies during the course of Executive's employment with the ISIS Companies or any predecessor of ISIS. The term "Intellectual Property" shall include all documents containing Intellectual Property. (iv) "Confidential Information" shall mean all non-public information concerning the business or the operation of the business of the ISIS Companies, including but not limited to information concerning: operations, organization or management; finances; business plans and strategies; clients; relationships with contractors and vendors; proprietary or specialized computer software; employees; products and services; equipment and systems; and prospective and executed contracts and other business arrangements. Confidential Information does not include information in the public domain or information that is properly known to Executive through sources other than the ISIS Companies. The term "Confidential Information" shall include all documents containing Confidential Information. 3 (v) "Protected Information" shall mean all Trade Secrets of the ISIS Companies, all Intellectual Property of the ISIS Companies, and all Confidential Information of the ISIS Companies. (vi) The term "documents" shall mean all recordations of information, in any form, whether printed or written, produced by hand or otherwise, and whether stored electronically, magnetically, or in tangible form, and shall include but not be limited to: agreements; audio tapes; brochures; charts; circulars; communications; compact disks; computer printouts; correspondence; diaries, digital recordings; drafts; drawings; electronic mail or other electronic communications; graphs; journals; ledgers; letters; maps; memoranda; motion pictures, notes, notebooks; opinion statements; pamphlets; photographs; press releases; reports; sketches; telegrams; transcripts; videotapes; written statements; summaries of records of conferences, interviews, investigations meetings, negotiations, and personal or telephonic conversations; any marginal comments appearing on any documents; and all other writings. b. Non-Disclosure of Protected Information. During the term of this Agreement, and for a period of two (2) years following termination of this Agreement, Executive shall not, without the prior written consent of Management, directly or indirectly, use, disclose, transfer or otherwise communicate any Protected Information to any person or entity except where such use, disclosure, transfer or communication is (a) in connection with and in furtherance of Executive's work on behalf of the ISIS Companies, and (b) not otherwise contrary to applicable law regarding Trade Secrets, Confidential Information or Intellectual Property. c. Documents and Other Property of the ISIS Companies. All documents containing Protected Information which are prepared by Executive or otherwise come into Executive's possession are and shall remain the property of the ISIS Companies. Upon the termination of this Agreement, or upon the request of Employer, Executive shall promptly deliver to Employer all documents containing Protected Information and all other property belonging to the ISIS Companies. d. Response to Subpoena or Court Order. In response to any subpoena, court order or other legal process purporting to require disclosure of Protected Information, Executive shall: (a) immediately notify Management, and (b) take all lawful steps to resist the subpoena, court order or other process unless instructed to the contrary by Management. 4 e. Confidential Information from Third Parties. Executive acknowledges that the ISIS Companies have received and will continue to receive confidential or proprietary information from third parties and that the ISIS Companies must maintain the confidentiality of such information and use such information only for proper purposes. Executive shall not without the prior written consent of Management, directly or indirectly use, disclose, transfer or otherwise communicate any such information to any person or entity except where such use, disclosure, transfer or communication is: (a) in connection with and in furtherance of Executive's work on behalf of the ISIS Companies, (b) not otherwise contrary to applicable laws regarding Trade Secrets, Confidential Information or Intellectual Property; and (c) not contrary to any agreement between the ISIS Companies and the third party of which Executive has knowledge. f. Disclosure and Assignment of Intellectual Property. Upon the request of Employer, Executive shall promptly disclose to Employer, in a manner specified by Management, all Intellectual Property that Executive learns of, conceives, develops or creates along or with others during the term of this Agreement (whether or not learned of, conceived, developed or created during regular working hours). In consideration of the mutual covenants of this Agreements, Executive shall assign to Employer, without further consideration, Executive's entire right to all Intellectual Property, which shall be the sole and exclusive property of Employer whether or not subject to patent, copyright, trademark or trade secret protection under applicable law. Executive also acknowledges that all original works of authorship which are made by Executive (solely or jointly with others), within the scope of Executive's employment pursuant to this Agreement, and which are protected by copyright, are "works made for hire," as that term is defined in the Untied States Copyright Act (17 U.S.C. ss. 101). To the extent that any such works, by operation of law, cannot be "works made for hire," Executive hereby assigns to Employer all right, title, and interest in and to such works and to any related copyrights. Executive shall promptly execute, acknowledge and deliver to Employer all additional instruments or documents deemed at any time by Employer in its sole discretion to be necessary to carry out the intentions of this Section 6. 7. DUTY OF LOYALTY, NO SOLICITATION, NO COMPETITION a. Duty of Loyalty. During the term of this Agreement, Executive shall owe a duty of loyalty to Employer. As part of this duty, Executive shall not knowingly, without the prior written consent of Management, directly or indirectly: (i) pursue or accept any employment or business opportunity with any Client or Competitor; 5 (ii) provide any aid or assistance to any Competitor; (iii) engage in any act or omission which is contrary to the interests of the ISIS Companies. b. No Solicitation. During the term of this Agreement, and for a period of one (1) year following the termination of this Agreement, Executive shall not, without the prior written consent of Management, directly or indirectly: (i) cause or attempt to cause any employee, agent or contractor of the ISIS Companies to terminate his or her employment, agency or contractor relationship with the ISIS Companies; or (ii) interfere or attempt to interfere with the relationship between the ISIS Companies and any employee, contractor or agent of the ISIS Companies. For a period of one (1) year following the termination of this Agreement, Executive shall not, without the prior written consent of Management, directly or indirectly hire or attempt to hire any director, officer or employee of the ISIS Companies. c. No Competition For a period of one (1) year following the termination of this Agreement, Executive shall not, without the prior written consent of Management, perform any services for any Client or any Competitor. For purposes of this Section 7, "Client" shall mean any person or entity who is then a client of the ISIS Companies or who was a client of the ISIS Companies at any time during the last one (1) year of Executive's employment pursuant to this Agreement, unless during the last one (1) year of Executive's employment pursuant to this Agreement: (i) Executive had no contact, directly or indirectly, with that person or entity in Executive's capacity as an employee pursuant to this Agreement; and (ii) Executive had no role, directly or indirectly, in the provision of services by the ISIS Companies to that person or entity, including but not limited to any role in providing the services, supervising or managing those who provided the services, or determining pricing or staffing for the services provided. For purposes of this Section 7, "Competitor" shall mean any person or entity who provides services of the same or substantially similar kind as the services provided by the ISIS Companies with respect to which the Executive possessed or had knowledge of Confidential Information at or prior to date of Termination. 6 For purposes of this Section 7, the phrase "perform any services" includes all services of any kind, whether provided as an owner, director, officer, employee, agent, contractor, consultant, joint venturer, partner, member or otherwise. d. Approved Outside Activities The parties agree that Executive's investment in the capital stock or other securities of a business dissimilar from that of the ISIS Companies, his investment solely as a passive or minority investor in any business, or his oversight of his own investment portfolio of securities, real estate and other assets, shall not constitute a violation of this Agreement provided that such activity does not violate Subsection 7(c) of this Agreement. 8. INJUNCTIVE RELIEF In the event of any violation of the provisions of Section 6 or Section 7 of this Agreement ("the Covenants"), Executive acknowledges and agrees and hereby stipulates: (i) that the Covenants are fully enforceable; (ii) that any breach of any of the Covenants will result in real, Immediate and irreparable harm to Employer which cannot be adequately remedied by monetary damages; (iii) that Employer will be entitled to an injunction restraining Executive from violating the Covenants pending arbitration of the merits of the dispute between the parties; (iv) that Executive waives any right that he or she might have to challenge challenge the enforceability of the Covenants, to contend that monetary damages provide an adequate remedy for violation of the Covenants, or that injunctive relief is not proper to restrain violations of the Covenants pending arbitration. 9. DEFINITION OF MANAGEMENT ; CONSENT IS DISCRETIONARY For purposes of this Agreement, the phrase "Management" shall mean: (a) the President of Employer if Executive is employed in a position below that of President, (b) the Chairman of the Board of Directors of Employer if Executive is employed as President, and (c) a majority of the Board of Directors of Employer if Executive is employed in a position above that of President. In all cases in which Executive must obtain the consent of Employer or Management, such consent may be granted or withheld at the sole discretion of Employer or Management as the case may be. 7 10. INDEMNIFICATION To the extent permitted by law and by the Articles of Incorporation and the Bylaws of Employer, Employer agrees to indemnify and hold harmless Executive from and against any and all personal liability which Executive may incur as a result of his actions or inactions within the course and scope of his employment pursuant to this Agreement; provided, however, that this Section 10 shall not apply to liability arising out of Executive's intentional misconduct or gross misconduct. During the term of this Agreement and for a period of three (3) years thereafter, Employer shall maintain Directors & Officers insurance coverage for Executive, with respect to his service pursuant to this Agreement, in an amount to be determined by Management. 11. SEVERABILITY In the event that any provision of this Agreement is held to be invalid, void or unenforceable, the remainder of this Agreement shall not be affected thereby and all other provisions of this Agreement shall be valid and enforceable to the fullest extent permitted by the law. 12. AGREEMENT NOT ASSIGNABLE This Agreement shall be binding upon Employer and its successors and upon the heirs, representatives, executors, and administrators of Executive. This Agreement is not assignable by either party, except that the rights and obligations of this Agreement shall be assumed by any successor of Employer. For purposes of this Section 12, the term "Successor" shall include any individual or entity which acquires all or substantially all of the assets of Employer by merger, purchase or otherwise. 13. WAIVER OF BREACH The waiver by either party of a breach or violation of any provision of this Agreement shall not operate as or be construed to be a waiver of any subsequent breach hereof. 14. NOTICES Any written notice to be given to Employer under the terms of this Agreement shall be addressed to Employer as follows, unless the Executive is notified in writing of a change of address: Integrated Spatial Information Solutions, Inc. 112 East Main Street P.O. Box 1503 Frankfort, Kentucky 40601 8 Any written notice to be given to Executive under the terms of this Agreement shall be addressed to Executive as follows, unless Management is notified in writing of a change of address: Frederick G. Beisser 796 Tioga Trail Parker, CO 80138 Such notice shall be deemed to have been duly given: (a) upon receipt, if sent by regular mail or by commercial delivery service such as Airborne Express, FedEx or UPS; or (b) upon the third calendar day following mailing, if sent by registered or certified mail with the United States Postal Service, return receipt requested, with postage and registration or certification fee prepaid. 15. TITLE AND HEADINGS Titles and headings to paragraphs in this Agreement are for the purpose of reference only and in no way shall limit, define or otherwise affect the provisions of this Agreement. 16. GOVERNING LAW This Agreement, all interpretations and enforcement of this Agreement, and all disputes arising out of this Agreement shall be governed solely and exclusively by the laws of the State of Colorado; regardless of the forum in which such interpretation or enforcement of this Agreement occurs or such disputes are resolved, and without regard to any principles of conflicts of laws. 17. ARBITRATION; VENUE; COSTS AND FEES a. Binding Arbitration of All Disputes. Except as set forth in subsection (b) below, all disputes relating to this Agreement, the interpretation or application of this Agreement, or Executive's employment pursuant to this Agreement (hereinafter "Covered Disputes"), shall be resolved solely and exclusively by binding arbitration, applying the law of Colorado. Unless otherwise agreed in writing by the parties: (i) the arbitration will be conducted before a single arbitrator of the American Arbitration Association ("AAA"), in accordance with the rules of the AAA then in effect regarding arbitration of employment disputes; and (ii) the arbitration will be conducted in Denver, Colorado. 9 The award rendered by the arbitrator shall be binding on the parties, and judgment on such award may be entered by any court of competent jurisdiction. b. Injunctions to Enforce Arbitration and to Restrain Violations Pending Arbitration. Notwithstanding the foregoing, either party may file a lawsuit to compel arbitration of disputes between the parties and to enjoin violations of this Agreement pending arbitration. Such lawsuit may be brought only in the District Court for Douglas County, Colorado, or the United States District Court for the District of Colorado, and Executive and Employer hereby waive any right that they might have to challenge the selection of those forums, including but not limited to challenges to personal jurisdiction, venue, or the convenience of the forum. Specifically, by executing this Agreement, Executive and Employer agree, consent, and stipulate that, in any action to compel arbitration of a Covered Dispute or to enjoin violations of this Agreement pending arbitration: (i) the aforesaid courts have personal jurisdiction over Executive and Employer, (ii) venue is proper in those courts, and (iii) those courts provide a convenient forum for that action. To the maximum extent permitted by the law, the parties stipulate and agree that this provision supercedes any analysis of choice of laws. To the extent that a choice-of-laws analysis is required, the parties stipulate and agree that Colorado law shall govern such analysis. c. Award of Cost and Fees. In any arbitration between the parties, the losing party shall pay for the arbitration, including all reasonable costs and attorney's fees incurred by the prevailing party in connection with such arbitration; provided, however, that no award of costs and fees to one party may exceed the cost and fees incurred by the other party. In the event that both parties prevail in part and lose in part, the arbitrator shall apportion the award of costs and attorney's fees based upon each party's degree of success; provided, however, that no award of costs and fees to one party may exceed the costs and fees incurred by the other party. 18. NO RULE OF CONSTRUCTION The parties acknowledge that each of them has had ample opportunity for their own counsel to participate in negotiating and drafting this Agreement. Therefore, no rule of construction shall apply to this Agreement which construes ambiguous or unclear language in favor of or against any party. 19. ENTIRE AGREEMENT (a) This Agreement, including Exhibit A, represents the entire employment agreement between Employer and Executive pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written. No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by Executive and by Employer with the approval of Management. 10 (b) This Agreement may be executed in one or more copies, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. EXECUTED at Frankfort, Kentucky, and Parker, Colorado, on the dates set forth below. EXECUTIVE: INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC. /s/ Frederick G. Beisser By: /s/ - ---------------------------------- -------------------------------- Frederick G. Beisser John C. Antenucci, Parker, Colorado President Frankfort, Kentucky DATE: May 2, 2002 DATE: May 2, 2002 ----------------------------- -------------------------------- 11 EXHIBIT A to EXECUTIVE EMPLOYMENT AGREEMENT between INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC. ("Employer") and FREDERICK G. BEISSER ("Executive") dated January 1, 2002 During the term of this Agreement, Executive's compensation shall be as follows: A-1 SALARY Employer shall pay to Executive an annual salary of Sixty-Six Thousand Dollars ($66,000.00) per year, subject to applicable withholdings for taxes, to be paid in the manner specified in paragraph 5 of the Agreement. However, Executive's salary may be increased or reduced from time to time at the sole discretion of the Board of Directors of Employer, provided that Executive's salary may not be reduced by more than ten percent (10%) below the figure stated above. A-2 INCENTIVE BONUS At the conclusion of each calendar year of Employer (or such other twelve-month period as may be agreed in writing by the parties) during the term of this Agreement (hereinafter "Year"), Executive shall be eligible for an incentive bonus which shall be described herein. The termination of Executive's employment after the conclusion of a Year shall not deprive Executive of any incentive bonus earned during that Year, even if the bonus has not yet been calculated or paid at the time of termination. Any incentive bonus earned by Executive prior to the termination of his employment shall be calculated and paid as though Executive were still employed. Executive's incentive bonus shall be comprised of two elements, as follows: (a) Stock Premium Incentive If the average bid and asking price of the common stock of ISIS for the last twenty (20) days of the Year ("ACSP") exceeds the Valuation Ratio by at least twenty percent (20%), then Executive shall receive a Stock Premium Incentive Bonus as follows: (i) If the ACSP is greater than or equal to one hundred twenty percent (120%) of the Valuation Ratio but less than one hundred thirty-five percent (135%) of the Valuation Ratio, then Executive shall be paid an amount equal to five percent (5%) of the Salary paid to Executive during that Year ("Yearly Salary") and shall receive a grant of stock options for shares of the common stock of ISIS equal to point one five percent (0.15%) of the outstanding shares of such stock as of the last day of the Year, fully vested and priced at the ASCP; (ii) If the ACSP is greater than or equal to one hundred thirty-five percent (135%) of the Valuation Ratio but less than one hundred fifty percent (150%) of the Valuation Ratio, then Executive shall be paid an amount equal to ten percent (10%) of his Yearly Salary and shall receive a grant of stock options for shares of the common stock of ISIS equal to point two five percent (0.25%) of the outstanding shares of such stock as of the last day of the Year, fully vested and priced at the ASCP; and (iii) If the ACSP is greater than or equal to one hundred fifty percent (150%) of the Valuation Ratio, then Executive shall be paid an amount equal to twenty percent (20%) of his Yearly Salary and shall receive a grant of stock options for shares of the common stock of ISIS equal to point five percent (0.50%) of the outstanding shares of such stock as of the last day of the Year, fully vested and priced at the ASCP. The "Valuation Ratio" shall be the gross revenue of ISIS for the Year divided by the number of shares of the common stock of ISIS outstanding during the Year. If the number of outstanding shares has varied during the Year, the Valuation Ratio shall be calculated using the weighted average of the number shares outstanding during the Year. Stated as a formula, Executive's Stock Premium Incentive Bonus shall be as follows: IF (ACSP >= 1.20 x Valuation Ratio) AND (ACSP < 1.35 x Valuation Ratio), THEN Bonus = ($ = 5% x Salary) + (options = 0.15% x Outstanding Shares) IF (ACSP >= 1.35 x Valuation Ratio) AND (ACSP < 1.50 x Valuation Ratio), THEN Bonus = ($ = 10% x Salary) + (options = 0.25% x Outstanding Shares) IF (ACSP >= 1.50 x Valuation Ratio), THEN Bonus = ($ = 20% x Salary) + (options = 0.50% x Outstanding Shares) (b) Stock Activity Incentive Executive shall receive a Stock Activity Incentive Bonus as set forth below if each of the following conditions is met: 2 (ii) The number of shares of the common stock of ISIS traded by the ISIS Traders during the last ninety (90) days of the Year ("Shares Traded") exceeds the Shares Target; (ii) The closing price of the common stock of ISIS on the last day of the Year is greater than the closing price of such stock on the last day of the preceding Year; and (iii) The net income of ISIS for the Year is greater than zero. If each of the conditions set forth above has been met, then Executive shall be paid an amount equal to one percent (1%) of his Yearly Salary for each increment of ten percent (10%) or fraction thereof by which the Shares Traded exceeds the Shares Target, provided that the total Stock Activity Incentive Bonus shall not exceed five percent (5%) of Executive's Yearly Salary. In the first Year during the term of this Agreement, the Shares Target shall be five percent (5%) of the number of shares of the common stock of ISIS outstanding during the last ninety (90) days of the Year. In any subsequent Year during the term of this Agreement, the Shares Target shall be seven point five percent (7.5%) of the number of shares of the common stock of ISIS outstanding during the last ninety (90) days of such Year. If the number of outstanding shares has varied during any such 90-day period, the Shares Target shall be calculated using the weighted average of the number of shares outstanding during that period. Stated as a formula, Executive's Stock Activity Incentive Bonus shall be as follows: IF (Shares Traded >= Shares Target) AND (Shares Traded < 1.1 x Shares Target), THEN Bonus = .01 x Salary IF (Shares Traded >= 1.1 x Shares Target) AND (Shares Traded < 1.2 x Shares Target), THEN Bonus = .02 x Salary IF (Shares Traded >= 1.2 x Shares Target) AND (Shares Traded < 1.3 x Shares Target), THEN Bonus = .03 x Salary IF (Shares Traded >= 1.3 x Shares Target) AND (Shares Traded < 1.4 x Shares Target), THEN Bonus = .04 x Salary IF (Shares Traded >= 1.4 x Shares Target), THEN Bonus = .05 x Salary 3 A-3 COMMITMENT COMPENSATION As compensation for Executive's surrender of all anti-dilution rights, Executive shall receive a stock option grant of 880,000 shares of the common stock of ISIS fully vested and priced at the market price as of January 1, 2002. The options will be convertible for a period of five (5) years from issuance. Under no circumstances shall Executive be granted any anti-dilution rights with respect to the stock of the ISIS Companies. All grants of stock options provided by this Agreement shall be made pursuant to Employer's Equity Compensation Plan (also sometimes referred to as the "Stock Option Incentive Plan"), as that plan may be amended from time to time in the discretion of Employer. A-4 VACATION Executive shall be eligible for Thirty-Six (36) days of personal time off per year, as provided by and governed by the Personal Time Off Plan ("PTOP"). Upon termination of this Agreement, Executive shall be paid for earned but unused PTOP days as provided in the PTOP plan, based upon the Salary in effect at the time of termination. A-5 GROUP HEALTH COVERAGE Executive shall be permitted to participate in such group health insurance plan as Employer may elect to provide for its other employees, subject to the eligibility and participation requirements of such plan, which plan may be altered or abolished from time to time at the sole discretion of Employer. A-6 PENSION/PROFIT-SHARING PARTICIPATION Executive shall be permitted to participate in such pension or profit sharing plan as Employer may elect to provide for its other employees, subject to the eligibility and participation requirements of such plan, which plan may be altered for abolished from time to time at the sole discretion of Employer. A-7 LIFE INSURANCE Executive shall be provided with a life insurance policy in the amount of One Hundred Fifty Thousand Dollars ($150,000.00) payable to such beneficiary as Executive may designate, with an additional One Hundred Thousand Dollars ($100,000.00) of coverage for accidental death, provided that Executive satisfies the medical requirements for these and keyman coverages. A-8 AUTOMOBILE ALLOWANCE Executive shall receive an automobile allowance of Two Hundred Twenty-Five Dollars ($225.00) per month. However, Executive's automobile allowance may be increased or reduced from time to time at the sole discretion of the Board of Directors of Employer, provided that Executive's automobile allowance may not be reduced by more than ten percent (10%) below the figure stated above. 4 A-9 OTHER EMPLOYMENT BENEFITS Executive shall be entitled to participate in such other benefits of employment as Employer may elect to provide for its other employees, subject to the terms and conditions established by Employer for those benefits, which benefits may be altered or abolished from time to time at the sole discretion of Employer. A-10 EXPENSE REIMBURSEMENT Executive shall receive reimbursement from Employer for all reasonable expenses incurred for the benefit of Employer by Executive in the performance of his duties under the Agreement. Such expenses may include but are not limited to reasonable out-of-pocket expenses for travel, lodging, meals, entertainment, office supplies and professional dues. Employer shall have the right to establish guidelines for reimbursement of expenses, including but not limited to guidelines regarding when prior approval is required and what documentation must be provided in order to obtain reimbursement. A-11 SEPARATION PAY Upon termination of this Agreement, Executive shall be entitled to Separation Pay in accordance with the following provisions: (a) Termination by Employer for Convenience: Executive shall receive one month of Base Compensation for each year of service as an employee or officer of Employer or the predecessor of Employer known as DCX, Inc ("DCX") (b) Termination by Employer for Cause: Executive shall receive three (3) months of Base Compensation. (c) Resignation Within Thirty (30) Days Following Change of Control: Executive shall receive one month of Base Compensation for each year of service as an employee or officer of Employer or the predecessor of Employer known as DCX, Inc. ("DCX"). (d) Other Resignation by Executive: Executive shall receive three (3) months of Base Compensation. (e) Termination upon Expiration of Agreement Without Renewal or Extension: Executive shall receive one month of Base Compensation for each year of service as an employee or officer of Employer or DCX. (f) Death of Executive: Executive's estate shall receive three (3) months of Salary, and Executive's dependents who are covered by Group Health Coverage at the time of Executive's death shall receive continued 5 Group Health Coverage for three (3) months following Executive's death. Should Executive satisfy the requirements for keyman insurance, Executive's estate shall receive an additional three (3) months of Salary, and Executive's dependents who are covered by Group Health Coverage at the time of Executive's death shall receive an additional three (3) months of continued Group Health Coverage. Except in the event of death of Executive, Separation Pay shall not be considered earned at the time of the termination, shall not be paid in a lump sum, and shall not be paid at the time of termination. Instead, Separation Pay shall be paid after termination, at Employer's regular pay intervals, as though Executive were still employed by Employer. For example, three (3) months of Base Compensation would be paid over a period of three (3) months following termination. If the Agreement is terminated by the death of Executive, the Separation Pay specified in subsection (f) above shall be paid in a lump sum to Executive's designated beneficiaries within 120 days after Executive's death. In the event of Executive's death during one of the periods of Separation Pay specified in subsections (a) through (e) above, any owed but unpaid balance of such Separation Pay shall be accelerated and shall be paid in a lump sum to Executive's designated beneficiaries within 120 days after Executive's death. "Base Compensation" shall consist of: (1) salary at the rate in effect at the time of termination; and (2) continued participation in Employer's group health insurance plan. "Change of Control" shall mean: (a) any change in the ownership or control of common stock of Employer which results in more than 50% of the issued and outstanding common stock of Employer being owned or controlled by a person or entity, or a group of persons or entities, who did not own or control more than 50% of the issued and outstanding common stock of Employer as of the date of this Agreement; or (b) the merger or consolidation of Employer with another entity such that more than 50% of the issued and outstanding voting stock of the surviving entity is owned or controlled by a person or entity, or a group of persons or entities, who did not own or control more than 50% of the issued and outstanding common stock of Employer as of the date of this Agreement. 6 EX-10.3 5 planex10-3.txt EMPLOYMENT AGREEMENT EXHIBIT 10.3 EXECUTIVE EMPLOYMENT AGREEMENT This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is entered into as of this 1st day of May, 2002, by and between Integrated Spatial Information Solutions, Inc. ("Employer" or "ISIS") and John C. Antenucci ("Executive"). WHEREAS, Employer is a corporation organized under the laws of the state of Colorado and with its principal places of business in Frankfort, Kentucky; and WHEREAS, Executive is an individual with knowledge and experience that are valuable to Employer; and WHEREAS, Employer desires to employ Executive and Executive desires to accept such employment subject to the terms and conditions hereinafter set forth. NOW THEREFORE, and in consideration of the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows: 1. EMPLOYMENT Employer hereby employs Executive and Executive hereby accepts employment by Employer, upon all of the terms and conditions as hereinafter set forth. 2. TERM The term of this Agreement shall be for three (3) years commencing on May 1, 2002, and ending on April 30, 2005 ("the Expiration Date"), unless renewed or extended by written agreement executed on or before the Expiration Date by Executive and by Employer with the approval of Management. As a courtesy to Executive, Employer shall indicate in writing its intent to renew or extend this Agreement at least thirty (30) days prior to the Expiration Date. 3. TERMINATION OF AGREEMENT This Agreement shall terminate upon the occurrence of any of the following events: (a) Upon written notice of termination from either party to the other party, which notice may be given at any time, with or without cause, and shall be effective ninety days (90) days thereafter unless a different effective date is agreed in writing by the parties; (b) Upon the expiration of this Agreement without renewal or extension as provided in paragraph 2 of this Agreement; or (c) Upon Executive's death. Upon the termination of this Agreement, Executive shall be entitled to payment of compensation that is earned but unpaid for services rendered by Executive as of the date of termination of this Agreement. In addition, Executive shall be entitled to Separation Pay to the extent expressly set forth in Exhibit A to this Agreement, which pay shall become due and owing according to the schedule set forth in Exhibit A. However, Executive shall not be entitled to any compensation for services not yet performed, including services which could have been performed but for the termination of this Agreement. At the discretion of Employer, Employer may (a) require that Executive continue to perform his duties during the period between notice pursuant to Section 3(a) of this Agreement and the resulting termination of this Agreement, or (b) relieve Executive of his duties during such period (while continuing to provide compensation and benefits in accordance with this Agreement). 4. DUTIES Executive is employed by Employer as its Chief Executive Officer and President and shall also serve as Chief Executive Officer and President of Employer's wholly-owned subsidiary, PlanGraphics, Inc. ("PlanGraphics"). The precise nature of Executive's duties shall be as defined by the Board of Directors of Employer and may be broadened, curtailed or otherwise modified by the Board of Directors of Employer from time to time in its sole discretion. Executive agrees to devote his full working time, energy and professional talent to the performance of the duties of his position with Employer. Notwithstanding the foregoing, Executive may serve as a director or trustee of another organization upon the prior written consent of Management. During the term of this Agreement, Employer shall nominate Executive for election to the Board of Directors of Employer and to the Board of Directors of PlanGraphics as a member of the management slate at each annual meeting of the stockholders of those companies, or at each meeting of the stockholders at which his class, if such class be designated, comes up for election. Executive's primary place of employment shall be Frankfort, Kentucky. 5. COMPENSATION Executive's compensation under this Agreement shall be as set forth in Exhibit A, which is attached hereto and incorporated herein. Such compensation shall be paid in accordance with the payroll policies and procedures of Employer, as they may be modified from time to time at Employer's sole discretion. Upon the termination of this Agreement, Executive shall have no further rights to compensation under this Agreement except for Separation Pay as provided in Exhibit A. 2 6. TRADE SECRETS, INTELLECTUAL PROPERTY AND CONFIDENTIAL INFORMATION a. Definitions. For purposes of this Agreement, the following terms shall have the following definitions: (i) "The ISIS Companies" shall mean ISIS and all subsidiaries of ISIS, both individually and collectively, throughout their history. (For example, "employment with the ISIS Companies" shall include all employment with any of the ISIS Companies, both before and after they became ISIS Companies, and "property of the ISIS Companies" shall include all property of any of the ISIS Companies, both before and after they became ISIS Companies, etc.) (ii) "Trade Secrets" shall have the meaning ascribed to it in the Kentucky Uniform Trade Secrets Act, KRS ss.365.880, as such provision may be amended from time to time. The term "Trade Secrets" shall include all documents containing Trade Secrets. (iii) "Intellectual Property" shall mean all products of human intelligence which have been protected or could be protected from appropriation or use by others through application of laws governing patent, trademark, copyright, or other similar protections, including but not limited to ideas, processes, trademarks, service marks, inventions, discoveries, and improvements to any of the foregoing, provided that such materials relates to the services, methodologies or technologies used by or developed for the ISIS Companies during the course of Executive's employment with the ISIS Companies. The term Intellectual Property" shall include all documents containing Intellectual Property. (iv) "Confidential Information" shall mean all non-public information concerning the business or the operation of the business of the ISIS Companies, including but not limited to information concerning: operations, organization or management; finances; business plans and strategies; clients; relationships with contractors and vendors; proprietary or specialized computer software; employees; products and services; equipment and systems; and prospective and executed contracts and other business arrangements. Confidential Information does not include information in the public domain or information that is properly known to Executive through sources other than the ISIS Companies. The term "Confidential Information" shall include all documents containing Confidential Information. 3 (v) "Protected Information" shall mean all Trade Secrets of the ISIS Companies, all Intellectual Property of the ISIS Companies, and all Confidential Information of the ISIS Companies. (vi) The term "documents" shall mean all recordations of information, in any form, whether printed or written, produced by hand or otherwise, and whether stored electronically, magnetically, or in tangible form, and shall include but not be limited to: agreements; audio tapes; brochures; charts; circulars; communications; compact disks; computer disks; computer printouts; correspondence; diaries; digital recordings; drafts; drawings; electronic mail or other electronic communications; graphs; journals; ledgers; letters; maps; memoranda; motion pictures; notes; notebooks; opinion statements; pamphlets; photographs; press releases; reports; sketches; telegrams; transcripts; videotapes; written statements; summaries or records of conferences, interviews, investigations, meetings, negotiations, and personal or telephonic conversations; any marginal comments appearing on any documents; and all other writings. b. Non-Disclosure of Protected Information. During the term of this Agreement, and for a period of five (5) years following the termination of this Agreement, Executive shall not, without the prior written consent of Management, directly or indirectly, use, disclose, transfer or otherwise communicate any Trade Secrets or Confidential Information of the ISIS Companies to any person or entity except where such use, disclosure, transfer or communication is (a) in connection with and in furtherance of Executive's work on behalf of the ISIS Companies, and (b) not otherwise contrary to applicable laws regarding Trade Secrets or Confidential Information. During the term of this Agreement, and for a period of five (5) years following the termination of this Agreement, Executive shall not, without the prior written consent of Management, directly or indirectly, use, disclose, transfer or otherwise communicate any Intellectual Property of the ISIS Companies to any person or entity where such use, disclosure, transfer or communication is made in connection with any activity that is in competition with activities of the ISIS Companies or is otherwise contrary to applicable laws regarding Intellectual Property. c. Documents and Other Property of the ISIS Companies. All documents containing Protected Information which are prepared by Executive or otherwise come into Executive's possession are and shall remain the property of the ISIS Companies. Upon the termination of this Agreement, or upon the request of Employer, Executive shall immediately deliver to Employer all documents containing Protected Information and all other property belonging to the ISIS Companies. 4 d. Response to Subpoena or Court Order. In response to any subpoena, court order or other legal process purporting to require disclosure of Protected Information, Executive shall: (a) immediately notify Management, and (b) take all lawful steps to resist the subpoena, court order or other process unless instructed to the contrary by Management. e. Confidential Information from Third Parties. Executive acknowledges that the ISIS Companies have received and will continue to receive confidential or proprietary information from third parties and that the ISIS Companies must maintain the confidentiality of such information and use such information only for proper purposes. Executive shall not, without the prior written consent of Management, directly or indirectly, use, disclose, transfer or otherwise communicate any such information to any person or entity except where such use, disclosure, transfer or communication is: (a) in connection with and in furtherance of Executive's work on behalf of the ISIS Companies, (b) not otherwise contrary to applicable laws regarding Trade Secrets, Confidential Information or Intellectual Property; and (c) not contrary to any agreement between the ISIS Companies and the third party. f. Disclosure and Assignment of Intellectual Property. Upon the request of Employer, Executive shall promptly disclose to Employer, in a manner specified by Management, all Intellectual Property that Executive learns of, conceives, develops or creates alone or with others during the term of this Agreement (whether or not learned of, conceived, developed or created during regular working hours). In consideration of the mutual covenants of this Agreement, Executive shall assign to Employer, without further consideration, Executive's entire right to all Intellectual Property, which shall be the sole and exclusive property of Employer whether or not subject to patent, copyright, trademark or trade secret protection under applicable law. Executive also acknowledges that all original works of authorship which are made by Executive (solely or jointly with others), within the scope of Executive's employment pursuant to this Agreement, and which are protectable by copyright, are "works made for hire," as that term is defined in the United States Copyright Act (17 U.S. C. ss. 101). To the extent that any such works, by operation of law, cannot be "works made for hire," Executive hereby assigns to Employer all right, title, and interest in and to such works and to any related copyrights. Executive shall promptly execute, acknowledge and deliver to Employer all additional instruments or documents deemed at any time by Employer in its sole discretion to be necessary to carry out the intentions of this Section 6. 7. DUTY OF LOYALTY, NO SOLICITATION, NO COMPETITION a. Duty of Loyalty. 5 During the term of this Agreement, Executive shall owe a duty of loyalty to Employer. As part of this duty, Executive shall not, without the prior written consent of Management, directly or indirectly: (i) pursue or accept any employment or business opportunity with any Client or Competitor; (ii) provide any aid or assistance to any Competitor; (iii) engage in any act or omission which is contrary to the interests of the ISIS Companies. b. No Solicitation. During the term of this Agreement, and for a period of three (3) years following the termination of this Agreement, Executive shall not, without the prior written consent of Management, directly or indirectly: (i) cause or attempt to cause any employee, agent or contractor of the ISIS Companies to terminate his or her employment, agency or contractor relationship with the ISIS Companies; or (ii) interfere or attempt to interfere with the relationship between the ISIS Companies and any employee, contractor or agent of the ISIS Companies. For a period of three (3) years following the termination of this Agreement, Executive shall not, without the prior written consent of Management, directly or indirectly, hire or attempt to hire any director, officer or employee of the ISIS Companies. c. No Competition. For a period of three (3) years following the termination of this Agreement, Executive shall not, without the prior written consent of Management perform any services for any Client or for any Competitor. For purposes of this Section 7, "Client" shall mean any person or entity who is then a client of the ISIS Companies or who was a client of the ISIS Companies at any time during the last three (3) years of Executive's employment pursuant to this Agreement, unless during the last three (3) years of Executive's employment pursuant to this Agreement: (i) Executive had no contact, directly or indirectly, with that person or entity in Executive's capacity as an employee pursuant to this Agreement; and (ii) Executive had no role, directly or indirectly, in the provision of services by the ISIS Companies to that person or entity, including but not limited to any role in providing the services, supervising or managing those who provided the services, or determining pricing or staffing for the services provided. 6 For purposes of this Section 7, "Competitor" shall mean any person or entity who provides services of the same or substantially similar kind as the services provided by the ISIS Companies. For purposes of this Section 7, the phrase "perform any services" includes all services of any kind, whether provided as an owner, director, officer, employee, agent, contractor, consultant, joint venturer, partner, member or otherwise. d. Approved Outside Activities. The parties agree that Executive's performance of services for his own account, including but not limited to writing, teaching, consulting, employment by a government agency, or employment by another business venture, shall not constitute a violation of this Agreement provided that such activity does not violate Subsection 7(c) of this Agreement. 8. INJUNCTIVE RELIEF In the event of any violation of the provisions of Section 6 or Section 7 of this Agreement ("the Covenants"), Executive acknowledges and agrees and hereby stipulates: (a) that the Covenants are fully enforceable; (b) that any breach of any of the Covenants will result in real, immediate and irreparable harm to Employer which cannot be adequately remedied by monetary damages; (c) that Employer will be entitled to an injunction restraining Executive from violating the Covenants pending mediation of the dispute between the parties; (d) that Executive waives any right that he or she might have to challenge the enforceability of the Covenants, to contend that monetary damages provide an adequate remedy for violation of the Covenants, or that injunctive relief is not proper to restrain violations of the Covenants pending mediation. 9. DEFINITION OF MANAGEMENT; CONSENT IS DISCRETIONARY For purposes of this Agreement, "Management" shall mean: (a) the President of Employer if Executive is employed in a position below that of President, (b) the Chairman of the Board of Directors of Employer if Executive is employed as President, and (c) a majority of the Board of Directors of Employer if Executive is employed in a position above that of President. 7 In all cases in which Executive must obtain the consent of Employer or Management, such consent may be granted or withheld at the sole discretion of Employer or Management as the case may be. 10. INDEMNIFICATION To the extent permitted by law and by the Articles of Incorporation and the Bylaws of Employer, Employer agrees to indemnify and hold harmless Executive from and against any and all personal liability which Executive may incur as a result of his actions or inactions within the course and scope of his employment pursuant to this Agreement; provided, however, that this Section 10 shall not apply to liability arising out of Executive's intentional misconduct or gross misconduct. During the term of this Agreement and for a period of three (3) years thereafter, Employer shall maintain Directors & Officers insurance coverage for Executive, with respect to his service pursuant to this Agreement. 11. SEVERABILITY In the event that any provision of this Agreement is held to be invalid, void or unenforceable, the remainder of this Agreement shall not be affected thereby, and all other provisions of this Agreement shall be valid and enforceable to the fullest extent permitted by the law. 12. AGREEMENT NOT ASSIGNABLE This Agreement shall be binding upon Employer and its successors and upon the heirs, representatives, executors, and administrators of Executive. This Agreement is not assignable by either party, except that the rights and obligations of this Agreement shall be assumed by any successor of Employer. For purposes of this Section 12, the term "successor" shall include any individual or entity which acquires all or substantially all of the assets of Employer by merger, purchase or otherwise. 13. WAIVER OF BREACH The waiver by either party of a breach or violation of any provision of this Agreement shall not operate as or be construed to be a waiver of any subsequent breach hereof. 14. NOTICES Any written notice to be given to Employer under the terms of this Agreement shall be addressed to Employer as follows, unless Executive is notified in writing of a change of address: Integrated Spatial Information Solutions, Inc. 112 East Main Street Frankfort, Kentucky 40601 8 Any written notice to be given to Executive under the terms of this Agreement shall be addressed to Executive as follows, unless Management is notified in writing of a change of address: John C. Antenucci P.O. Box 1503 Frankfort, Kentucky 40602 Such notice shall be deemed to have been duly given when enclosed and properly sealed in an addressed envelope registered or certified mail return receipt requested and deposited, postage and registered or certification fee prepaid, in a post office or branch post office regularly maintained by the United States Postal Service. 15. TITLE AND HEADINGS Titles and headings to paragraphs in this Agreement are for the purpose of reference only and in no way shall limit, define or otherwise affect the provisions of this Agreement. 16. GOVERNING LAW This Agreement, all interpretation and enforcement of this Agreement, and all disputes arising out of this Agreement shall be governed solely and exclusively by the laws of the State of Kentucky, regardless of the forum in which such interpretation or enforcement of this Agreement occurs or such disputes are resolved, and without regard to any principles of conflicts of laws. 17. MEDIATION; VENUE; COSTS AND FEES a. Mediation as a Prerequisite to Litigation. Unless otherwise agreed in writing by the parties, all disputes relating to this Agreement, the interpretation or application of this Agreement, or Executive's employment pursuant to this Agreement (hereinafter "Covered Disputes"), shall be submitted first to non-binding mediation before any proceeding may be filed in a court of law or equity. Participation in such mediation shall be an indispensable prerequisite to the filing of any proceeding in a court of law or equity relating to any Covered Dispute, except that no party shall be required to mediate a Covered Dispute if the other party has failed or refused to honor a written request to mediate such dispute in accordance with this Section 17; Unless otherwise agreed in writing by the parties: (i) the mediation will be conducted before a single mediator of the American Arbitration Association ("AAA"), in accordance with the rules of the AAA then in effect regarding mediation of employment disputes; and (ii) such mediation shall be conducted in Frankfort, Kentucky, and Kentucky law shall govern. 9 b. Venue and Personal Jurisdiction is Frankfort, Kentucky. Any proceeding in a court of law or equity relating to a Covered Dispute shall be brought only in the Circuit Court of Franklin County, Kentucky, or the United States District Court for the Eastern District of Kentucky, and Executive and Employer hereby waive any right that they might have to challenge the selection of those forums, including but not limited to challenges to personal jurisdiction, venue, or the convenience of the forum. Specifically, by executing this Agreement, Executive and Employer agree, consent, and stipulate that, in any action relating to a Covered Dispute: (i) the aforesaid courts have personal jurisdiction over Executive and Employer, (ii) venue is proper in those courts, and (iii) those courts provide a convenient forum for that action. To the maximum extent permitted by the law, the parties stipulate and agree that this provision supercedes any analysis of choice of laws. To the extent that a choice-of-laws analysis is required, the parties stipulate and agree that Kentucky law shall govern such analysis. c. Costs and Fees In any mediation between the parties, the parties shall divide the costs and fees of the mediator evenly between them, and each party shall bear its own costs and fees, including attorney fees. 18. NO RULE OF CONSTRUCTION The parties acknowledge that each of them has had ample opportunity for their own counsel to participate in negotiating and drafting this Agreement. Therefore, no rule of construction shall apply to this Agreement which construes ambiguous or unclear language in favor of or against any party 19. ENTIRE AGREEMENT (a) This Agreement, including Exhibit A, represents the entire employment agreement between Employer and Executive pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written. No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by Executive and by Employer with the approval of Management. (b) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 10 20. POST-RESIGNATION CONSULTING EMPLOYMENT a. Consulting Employment. If Executive terminates the Agreement upon written notice in accordance with the provisions of Section 3(a) of this Agreement, Employer shall continue to employ Executive as an advisor and consultant ("Consulting Employment") for a period of five (5) years, unless Executive waives his right to Consulting Employment. During this period of Consulting Employment, Executive shall at all reasonable times, to the extent his health and mental condition permit, be available to consult and advise the officers, directors, representatives and clients of the ISIS Companies at the direction of Board and the Management for a minimum of one thousand (1000) hours per year. During this period of Consulting Employment, Employer shall pay to Executive a minimum annual compensation equal to one-half of the average annual salary paid to him during the last 36-month period of his Executive Employment with Employer ("the Minimum Consulting Compensation"). Executive's compensation for his Consulting Employment ("Consulting Compensation") may be increased or decreased from time to time at the discretion of Employer provided that such compensation may not be decreased below the Minimum Consulting Compensation. b. Availability of Consulting Employment in Event of Mutual Termination. If both Executive and Employer terminate the Agreement upon written notice in accordance with the provisions of subsection 3(a) of this Agreement, Employer shall be obligated to provide Consulting Employment only if Executive's notice of termination preceded the notice of termination from Employer. c. Renewal or Extension of Consulting Employment. Executive's Consulting Employment with Employer may be renewed or extended by written agreement executed prior to the expiration of the five-year period specified in subsection 10(a) of this Agreement. d. Termination of Consulting Employment. The Consulting Employment shall terminate upon the occurrence of any of the following events: (i) Upon written notice of termination from Executive to Employer, which notice may be given at any time, with or without cause; (ii) Upon written notice of termination from Employer to Executive, which notice may be given at any time for cause; 11 (iii) Upon the expiration of the five-year period of Consulting Employment without renewal or extension as provided in subsection 10(c) of this Agreement. (iv) Upon the inability of Executive to perform the duties of his Consulting Employment as a result of his health or mental condition; or (iv) Upon Executive's death. e. Compensation Upon Termination of Consulting Employment. Upon termination of Executive's Consulting Employment, Executive shall be entitled to Consulting Termination Pay in accordance with the following provisions: (i) Termination upon Written Notice from Executive: Executive shall continue to receive his Consulting Compensation through the end of the Consulting Employment period if he terminates his Consulting Employment with cause. Executive shall receive no Consulting Termination Pay if he terminates his Consulting Employment without cause. (ii) Termination upon Written Notice from Employer: After two years of Consulting Employment, the Employer may choose to terminate the Consulting Employment with thirty days written notice by releasing the Executive from all obligations and compensating the Executive at a rate no less than 50% of the outstanding Consulting Compensation over the remaining period of the Consulting Employment at Employer's regular pay intervals, as though Executive were still in Consulting Employment with Employer or, by mutual agreement, the Company may otherwise accelerate payments to the Executive. (iii) Termination upon Expiration of Agreement Without Renewal or Extension: Executive shall receive no Consulting Termination Pay. (iv) Termination upon Executive's Inability to Perform Duties Due to Health or Mental Condition. If Executive's inability to perform his duties is the result of a "disability" as defined by the Americans With Disabilities Act, Executive shall continue to receive his Consulting Compensation through the end of the Consulting Employment period or until the disability no longer prevents Executive from performing his duties, whichever first occurs. If Executive's inability to perform his duties is not the result of a "disability" as defined by the Americans With Disabilities Act, Executive shall receive no Consulting Termination Pay. (v) Termination upon Death of Executive: Executive's estate shall receive a lump sum payment of $200,000 within 120 days of the Executive's death. 12 Consulting Termination Pay shall not be considered earned at the time of termination of the Consulting Employment, shall not be paid in a lump sum, and shall not be paid at the time of termination. Instead, Consulting Termination Pay shall be paid after termination, at Employer's regular pay intervals, as though Executive were still in Consulting Employment with Employer excepting in the case of payments associated with ss.20 (e)(v) or where the Employer chooses to accelerate the Consulting Termination Pay. f. Application of Agreement to Consulting Employment. The provisions of Sections 1, 2, 3, 4, 5 and Exhibit A shall not apply during any period of Consulting Employment. Termination of Consulting Employment shall not entitle Executive to a new period of Consulting Employment. In all other respects, this Agreement shall apply with full force and effect to Executive's Consulting Employment with Employer just as if it were continued employment pursuant to this Agreement. EXECUTED at Frankfort, Kentucky, on the date aforesaid. EXECUTIVE: INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC. /s/ John C. Antenucci By: /s/ Gary S. Murray - ----------------------------- ------------------------------- John C. Antenucci Gary S. Murray, Chairman 13 EXHIBIT A to EXECUTIVE EMPLOYMENT AGREEMENT between INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC. ("Employer") and JOHN C. ANTENUCCI ("Executive") dated May 1, 2002 During the term of the Agreement, Executive's compensation shall be as follows: A-1 SALARY Employer shall pay to Executive an annual salary of One Hundred Fifty-Seven Thousand ($157,000) per year, subject to applicable withholdings for taxes, to be paid in the manner specified in paragraph 5 of the Agreement. However, Executive's salary may be increased or reduced from time to time at the sole discretion of the Board of Directors, of Employer provided that Executive's salary may not be reduced by more than ten percent (10%) below the figure stated above. A-2 INCENTIVE BONUS At the conclusion of each fiscal year ("Year") of Employer during the term of this Agreement, Executive shall be eligible for an incentive bonus which shall be described herein. Executive's incentive bonus shall be comprised of three elements, as follows: (a) Profitable Revenue Growth. If the consolidated revenues of the ISIS Companies ("Actual Revenues") for the Year exceed the Target Revenues for the Year, and if the net income ("NI") of the ISIS Companies for the Year are greater than zero, Executive shall be paid an amount equal to 1.5% of the amount by which Actual Revenues for the Year exceed Target Revenues for the Year. The Target Revenues for 2002 shall be $9.1 Million; thereafter, Target Revenues for a Year shall be 118% of the Target Revenues for the preceding Year. (b) Positive Net Income. If the Net Income of the ISIS Companies for the Year is greater than zero, Executive shall be paid an amount equal to 10% of the amount by which Net Income exceeds zero. (c) General Performance Bonus. At the end of each Year, Executive shall be eligible for an additional bonus, in cash and/or stock options for shares of the common stock of ISIS, for general performance as determined by the Board of Directors of Employer ("Board"), taking into account such qualitative and/or quantitative factors as the Board may consider in its sole discretion. Any cash payment to Executive for a General Performance Bonus shall not exceed 15% of his Salary for the Year. Any award of stock options to Executive for a General Performance Bonus shall not exceed 0.5% of the outstanding shares of the common stock of ISIS as of the time of the award. (d) Stock Appreciation. Executive shall be awarded stock options for shares of the common stock of ISIS on the first occasion during the term of this Agreement when the closing price of such stock remains at or above a specified target level for a specified number of consecutive days, as follows: (i) 0.5% of outstanding shares on the first occasion when the closing price of ISIS common stock remains at or above 25 cents ($0.25) for thirty (30) consecutive days; the options being priced at 25 cents ($0.25) and exerciseable for five years. (ii) 1.0% of outstanding shares on the first occasion when the closing price of ISIS common stock remains at or above 50 cents ($0.50) for thirty (30) consecutive days, the options being priced at 50 cents ($0.50) and exerciseable for five years; and (iii) 2.0% of the outstanding shares on the occasion of ISIS' re-listing with one of the major stock exchanges (i.e. NASDAQ, NYSE, American SE), the options being priced at 85% of the closing market price on the date of re-listing and exerciseable for five years. (e) Stock price targets in (d)i and (d)ii shall automatically adjust proportionately to reflect stock splits and reverse splits. 2 (f) The cash incentive compensation shall not exceed 25% of the Net Income in any fiscal year. (g) Look Back Provision. The Executive may, prior to the close of any fiscal year, present a memo to Management outlining a business decision which may jeopardize short term earnings affecting incentive compensation defined in (a), (b) or (d) above, and request that the Board review at the end of the subsequent fiscal year a restatement of the forgone incentive compensation if the Company's performance has demonstrated a positive and longer term benefit from that decision. Nothing in this section obligates the Management to provide additional incentive compensation over that paid in prior years. A-3 COMMITMENT COMPENSATION As compensation for Executive's surrender of all anti-dilution rights, Executive shall receive: (a) Promptly upon execution of this Agreement, a grant of stock options for shares of the common stock of ISIS equal to two percent (2%) of the outstanding shares of such stock as of the date of this Agreement, fully vested and priced at seven cents ($0.07) per share; (b) On each anniversary of the date of this Agreement, during the term of this Agreement, a grant of stock options for shares of the common stock of ISIS equal to one percent (1%) of the outstanding shares of such stock as of such anniversary date, fully vested and priced at the closing price as of such anniversary date; and (c) Two computers and related peripheral and communication devices of Executive's choice, the total cost of which to Employer shall not exceed Ten Thousand Dollars ($10,000.00), with Executive retaining the option to purchase said computers and devices for their residual value upon termination of this Agreement. Under no circumstances shall Executive be granted any anti-dilution rights with respect to the stock of the ISIS Companies. A-4 COMPENSATION FOR GUARANTEE OF PLANGRAPHICS DEBT As compensation for Executive's guarantee of the debt of PlanGraphics, Executive shall receive, at the end of each fiscal year of Employer during the term of this Agreement, compensation equal to 5% of the amount of debt of PlanGraphics that was personally guaranteed by Executive during that fiscal year. Such compensation may be in the form of cash or in the form of stock options for the stock of ISIS, as the Board of Directors of Employer may elect in its sole discretion. Stock options shall be valued at the closing price on the day preceding the award of the options. If the amount of debt guaranteed by Executive varies during the year, Executive's compensation for guaranteeing that debt shall be based upon the weighted average of the amount of such debt during the year. 3 A-5 VACATION Executive shall be eligible for Thirty-Six (36) days of personal time off per year, as provided by and governed by the Personal Time Off Plan ("PTOP"). Upon termination of this Agreement, Executive shall be paid for earned but unused PTOP days as provided in the PTOP plan, based upon the Salary in effect at the time of termination. Executive will also retain his Catastrophic Illness Reserve. The reserve shall be credited on a quarterly basis for PTOP days which, pursuant to the PTOP plan, were not granted because the aggregate threshold of PTOP days would have exceeded the accumulation limits in the PTOP plan. A-6 GROUP HEALTH COVERAGE Executive shall be permitted to participate in such group health insurance plan as Employer may elect to provide for its other employees, subject to the eligibility and participation requirements of such plan, which plan may be altered or abolished from time to time at the sole discretion of Employer. However, the level of health insurance coverage for Executive shall not be reduced below the level in effect upon Executive's execution of this Agreement, and the cost to Executive for health insurance coverage shall not be increased above the cost in effect upon Executive's execution of this Agreement. Subsequent to the termination or the expiration of the Agreement or Consulting Employment and at the Executive's election and cost, the Company will provide (subject to the eligibility and participation requirements), continued group health insurance coverage through insurance plans as the Employer may make available for its other employees. A-7 PENSION/PROFIT-SHARING PARTICIPATION Executive shall be permitted to participate in such pension or profit-sharing plan as Employer may elect to provide for its other employees, subject to the eligibility and participation requirements of such plan, which plan may be altered or abolished from time to time at the sole discretion of Employer. A-8 LIFE INSURANCE Executive shall be provided with a life insurance policy in the amount of One Million Dollars ($1,000,000.00), payable to such beneficiary as Executive may designate, with an additional Two Hundred Fifty Thousand Dollars ($250,000.00) of coverage for accidental death, provided that Executive satisfies the medical requirements for these and keyman coverages. 4 A-9 AUTOMOBILE ALLOWANCE Executive shall receive an automobile allowance of Four Hundred Fifty Dollars ($450.00) per month. However, Executive's automobile allowance may be increased or reduced from time to time at the sole discretion of the Board of Directors of Employer, provided that Executive's automobile allowance may not be reduced by more than ten percent (10%) below the figure stated above. A-10 RELOCATION ALLOWANCE In the event that Executive's primary place of business is relocated more than fifty (50) miles from the location specified in Section 4 of this Agreement, Employer and Executive shall negotiate a relocation allowance. A-11 REGISTRATION OF SHARES AND OPTIONS Employer agrees to register with the Securities and Exchange Commission, within 125 days following the execution of this Agreement, all stock options granted to Executive pursuant to this Agreement. A-12 OTHER EMPLOYMENT BENEFITS Executive shall be permitted to participate in such other benefits of employment as Employer may elect to provide for its other employees, subject to the terms and conditions established by Employer for those benefits, which benefits may be altered or abolished from time to time at the sole discretion of Employer. Subsequent to the Executives termination or the expiration of the Agreement or Consulting Employment and at the Executive's election and cost the Company will provide (subject to the eligibility and participation requirements), continued insurance coverage for life, disability, accidental death, and other specialty coverages through insurance plans as the Employer may make available for its other employees. A-13 EXPENSE REIMBURSEMENT Executive shall receive reimbursement from Employer for all reasonable expenses incurred for the benefit of Employer by Executive in the performance of his duties under the Agreement. Such expenses may include but are not limited to reasonable out-of-pocket expenses for travel, lodging, meals, entertainment, and professional dues. Employer shall have the right to establish guidelines for reimbursement of expenses, including but not limited to guidelines regarding when prior approval for an expense is required and what documentation must be provided in order to obtain reimbursement. 5 A-14 SEPARATION PAY Upon termination of this Agreement, Executive shall be entitled to Separation Pay in accordance with the following provisions: (a) Termination by Employer for Convenience: Executive shall receive one month of Base Compensation for each year of service as an employee or officer of the ISIS Companies. (b) Termination by Employer for Cause: Executive shall receive six (6) months of Base Compensation. (c) Resignation Within Ninety (90) Days Following Change of Control: Executive shall receive one month of Base Compensation for each year of service as an employee or officer of the ISIS Companies. In addition: (i) all of Executive's options shall vest immediately; (ii) all of Executive's shares of stock of the ISIS Companies shall be promptly registered; and (iii) any Incentive Bonus remaining unpaid (or unvested) for the period in which the resignation occurs shall be paid (or vested) immediately, regardless of Executive's performance status. (d) Constructive Termination: If he waives his right to Consulting Employment pursuant to Section 20 of this Agreement, Executive shall receive one month of Base Compensation for each year of service as an employee or officer of the ISIS Companies. (e) Other Resignation by Executive: If he waives his right to Consulting Employment pursuant to Section 20 of this Agreement, Executive shall receive two weeks of Base Compensation for each year of service as an employee or officer of the ISIS Companies. (f) Termination upon Expiration of Agreement Without Renewal or Extension: Executive shall receive one month of Base Compensation for each year of service as an employee or officer of the ISIS Companies. (g) Death of Executive: Executive's estate shall receive one month of salary for each year of service by Executive as an employee or officer of the ISIS Companies. Except in the event of death of Executive, Separation Pay shall not be considered earned at the time of the termination, shall not be paid in a lump sum, and shall not be paid at the time of termination. Instead, Separation Pay 6 shall be paid after termination, at Employer's regular pay intervals, as though Executive were still employed by Employer. For example, three (3) months of Base Compensation would be paid over a period of three (3) months following termination. If the Agreement is terminated by the death of Executive, the Separation Pay specified in subsection (g) above shall be paid in a lump sum to Executive's designated beneficiaries within 120 days after Executive's death. In the event of Executive's death during one of the periods of Separation Pay specified in subsections (a) through (f) above, any owed but unpaid balance of such Separation Pay shall be accelerated and shall be paid in a lump sum to Executive's designated beneficiaries within 120 days after Executive's death. "Base Compensation" shall consist of: (1) salary at the rate in effect at the time of termination; (2) continued participation in Employer's group health insurance plan; (3) continued life insurance coverage; (4) access at the Executive's expense (subject to the eligibility and participation requirements) continued insurance coverage for disability, accidental death, and other specialty coverages through insurance plans as the Employer may make available for its other employees. "Constructive Termination" shall mean Executive's resignation within thirty (30) days after the occurrence of an Unremedied Breach by Employer, unless such Unremedied Breach by Employer has been approved or ratified by Executive. "Unremedied Breach by Employer" shall mean a material breach by Employer of this Agreement which is not remedied within thirty (30) days after Executive has provided written notice of the breach and a written demand for remedy to the Board of Directors of Employer. "Change of Control" shall mean: (a) any change in the ownership or control of common stock of Employer which results in more than 50% of the issued and outstanding common stock of Employer being owned or controlled by a person or entity, or a group of persons or entities, who did not own or control more than 50% of the issued and outstanding common stock of Employer as of the date of this Agreement; or (b) the merger or consolidation of Employer with another entity such that more than 50% of the issued and outstanding voting stock of the surviving entity is owned or controlled by a person or entity, or a group of persons or entities, who did not own or control more than 50% of the issued and outstanding common stock of Employer as of the date of this Agreement. 7 -----END PRIVACY-ENHANCED MESSAGE-----