-----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, KkufdEAIJzR1KWxRG0XZPqfpvYMezeM+uVKK3tJ5MNs5mMdwIw3ti52Cgt9S6qXb PRsin59vImImpm2ejcB0Tw== 0000753048-95-000011.txt : 19951229 0000753048-95-000011.hdr.sgml : 19951229 ACCESSION NUMBER: 0000753048-95-000011 CONFORMED SUBMISSION TYPE: 10KSB40 PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951228 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANALYTICAL SURVEYS INC CENTRAL INDEX KEY: 0000753048 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 840846389 STATE OF INCORPORATION: CO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10KSB40 SEC ACT: 1934 Act SEC FILE NUMBER: 000-13111 FILM NUMBER: 95605081 BUSINESS ADDRESS: STREET 1: 1935 JAMBOREE DR STREET 2: SUITE 100 CITY: COLORADO SPRINGS STATE: CO ZIP: 80920 BUSINESS PHONE: 7195930093 MAIL ADDRESS: STREET 1: 1935 JAMBOREE DRIVE STREET 2: SUITE 100 CITY: COLORADO SPRINGS STATE: CO ZIP: 80920 10KSB40 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 1O-KSB Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended September 30, 1995 Commission File Number 0-13111 ANALYTICAL SURVEYS, INC. (Name of small business issuer as specified in its charter) Colorado (State of incorporation) 84-0846389 (IRS Employer Identification No.) 1935 Jamboree Drive Colorado Springs, Colorado 80920 (Address of principal executive offices) (719) 593-0093 (telephone number) Securities registered pursuant to Section 12(g) of the Act: No Par Value Common Stock Title of each class) 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 twelve months and (2) has been subject to such filing requirements for the past ninety (90) days: Yes __X__ No_____ Check if there is no disclosure of delinquent filers in response to Items 405 of Regulation S-B in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB: Yes __X__ No_____ Issuer's revenue for its most recent fiscal year was $13,538,507. The aggregate market value of the voting stock held by non- affiliates computed by reference to average bid and asked prices of such stock, as of November 27, 1995 was $16,121,841. The number of shares of common stock outstanding as of November 27, 1995 was 2,832,349. Item 13(a) on page 24 describes the exhibits filed with the Securities and Exchange Commission and those exhibits incorporated by reference to previously filed documents. Certain sections of the definitive Proxy Statement to be filed for the 1996 Annual Meeting of Shareholders are incorporated by reference into Part III. Transitional Small Business Disclosure Format: Yes ____ No___X__ Table of Contents PART I Item 1. Description of Business 2 Item 2. Description of Property 4 Item 3. Legal Proceedings 4 Item 4. Submission of Matters to a Vote of Security Holders 4 PART II Item 5. Market for Common Equity and Related Stockholder Matters 4 Item 6. Management's Discussion and Analysis or Plan of Operation 5 Item 7. Financial Statements 9 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 23 Part III Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 1G(a) of the Exchange Act 24 Item 10. Executive Compensation 24 Item 11. Security Ownership of Certain Beneficial Owners and Management 24 Item 12. Certain Relationships and Related Transactions 24 Item 13. Exhibits and Reports on Form 8-K 24 Signatures 27 PAGE 1 PART I Item 1. Description of Business General Analytical Surveys, Inc., ("ASI" or the "Company") is a Colorado corporation formed in 1981. ASI's primary business is the production of precision computerized maps and information files used in Geographic Information Systems (GIS). Federal, state and local government agencies and commercial companies use Geographic Information Systems to manage information about features such as utilities, natural resources, streets, land use and property taxation. A Geographic Information System consists of four components: computer hardware, applications software, computerized maps and computerized information (database) files. ASI produces the last two components of the GIS; ASI does not manufacture or sell the computer hardware or applications software required by GIS end users. ASI produces maps for use on GIS computers from aerial photography using analytical stereoplotters, computer equipment and internally developed proprietary software. The Company also converts existing printed maps and other information into computerized maps and computer information files. The Company's digital imaging department prepares digital orthophotographs by scanning aerial photographs into the computer using a high resolution scanner. The distortions inherent in all aerial photography are then removed using internally developed proprietary software and the resulting digital image is accurate to mapping standards. The final product can be delivered either as a computer data file or as a printed image. ASI employs subcontractors for tasks outside its expertise such as aerial photography and ground survey. The Company also may use subcontractors for work similar to that performed by ASI in order to expand capacity, meet deadlines, to manage work load and to encourage businesses owned by women and minorities. The Company engages in research and development activities to develop new production process software and to improve existing process software. Research and development expenditures were $347,321 in fiscal year 1995 and $225,894 in fiscal year 1994. The industry has grown over the last several years as technical and price improvements in GIS hardware and software have expanded the GIS market by making these systems more attractive to potential customers. Marketing and Sales Virtually all of ASI's revenues are earned under fixed price contracts which cover a specific scope of work and the Company is dependent upon its ability to secure new contracts from new as well as existing customers. From time to time, the revenues earned on specific contracts may exceed ten percent of total revenues earned in a year. Those contracts which contributed more than ten percent of revenue in 1995 and 1994 are summarized in the following table. Customer 1995 1994 Montgomery County, AL 12% * City of Omaha, NE * 14% Prince George's County, MD * 12% * Less than ten percent Based on the backlog remaining on these existing contracts at September 30, 1995, none of the existing projects for these PAGE 2 customers is expected to contribute more than ten percent of revenue in future years. Backlog represents the value of revenue not yet earned on contracts awarded to the Company; it increases when new contracts are awarded and decreases as revenue is earned. The Company's backlog was $12,620,000 at September 30, 1995 up from $10,533,000 at the end of 1994. The backlog includes several large projects which will extend over one to three years. These larger projects are usually fixed price agreements which increases the Company's risk due to inflation; however the Company receives the benefit of the improved availability of production work. The Company employs five sales representatives to market and sell its three primary products throughout the United States and Canada. The Company maintains memberships in professional and trade associations and participates in industry conferences by presenting exhibits and technical papers. Contracts are awarded by customers through direct negotiation, competitive technical evaluation, competitive bid or a combination thereof. ASI has directed its marketing efforts towards clientele who require high quality digital mapping. Historically, ASI's customers have included cities, counties, engineering companies, utility companies and federal government agencies. Well over half of revenues have been historically derived from state and local government contracts. These contracts may contain termination provisions for the convenience of the customer, lack of appropriated funds or default by the Company. Contracts with the United States Government, which represent less than 10% of ASI's revenues, also may be subject to renegotiation or termination. Advances in GIS technologies and the decline in the costs of computers have attracted more industrial and municipal customers into the GIS marketplace. In addition, a significant portion of ASI's revenues are generated from utility clients, both commercial and municipal. The Company expects that an increasing share of its new customers will be industrial and municipal GIS users. The Company is pursuing an expansion of its presence in the utility market. ASI has entered into negotiations for the acquisition of substantially all of the net assets of a company engaged in a similar business for a total consideration of approximately $4,500,000. ASI is required to furnish performance bonds to customers on some of its contracts. The percentage of the Company's work requiring bonds varies between 20% and 50% depending on the mix of work in progress. Performance bonds are issued by a limited number of insurance companies; the continued availability of bonds depends on the Company's ability to meet the underwriting standards of potential issuers and surety market conditions. Competition The Company's management believes approximately five to seven companies are of comparable or greater size and similar capabilities as ASI. ASI and its principal competitors specialize in large computerized mapping projects and they generally compete nationally rather than regionally. Certain large companies, such as SAIC, IBM and Intergraph Corporation and others who are systems integrators or hardware manufacturers with experience in large scale information systems have been or are becoming active in the GIS industry. Industry growth should help ASI by increasing the number of GIS projects, but also may lead to new competition in the areas of ASI's expertise. ASI seeks to compete on the basis of the quality of its products and the efficiency with which it can provide digital mapping services to customers. The Company uses its internally developed proprietary software as well as commercially available software to automate much of the production process. The Company believes its systematic approach enables it to achieve more consistent quality than it could using more manually intensive methods. In general, management believes this industry is competitive and certain competitors may have more capital availability than does ASI. PAGE 3 Employees At September 30, 1995 ASI had 119 full time employees; 98 work in production, 10 in administration and 11 in sales and marketing. Approximately two thirds of the employees hold college degrees, including several with masters degrees, primarily in the fields of photogrammetry, geography, engineering and computer science. ASI offers its employees a typical benefits package including health, life, disability, and dental insurance, a 401-K tax deferred retirement savings plan, vacations and holidays. The Company does not provide any other pension plan to its employees. ASI does not have a collective bargaining agreement with any of its employees and generally considers relations with its employees to be good. Item 2. Description of Property The Company leases office and production space (approximately 31,700 square feet) in Colorado Springs, Colorado under a ten- year lease which expires in 2004. The existing space (plus a right of first refusal on an additional 6,850 square feet) is adequate for the foreseeable needs of the Company. The Company does not require specialized facilities. ASI also operates sales offices in Sterling, Virginia (near Washington, D.C.), Chattanooga, Tennessee and Chicago, Illinois. Item 3. Legal Proceedings The Company is not the subject of any significant outstanding legal proceedings or known claims. Item 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of the shareholders during the fourth quarter of the year ended September 30, 1995. PART II Item 5.Market for Common Equity and Related Stockholder Matters The Company's Common Stock is traded in the NASDAQ National Market System over-the-counter market under the symbol ANLT. The trading volume in ASI's Common stock has ranged from 128,000 shares per month to 713,000 shares per month. This range of trading volume may contribute to stock price volatility and limited trading liquidity. The following table sets forth the range of high and low prices per share for each quarterly period for the fiscal years ended September 30, 1994 and 1995 as reported by the National Association of Securities Dealers Automated Quotations System (NASDAQ). On April 1, 1995 trading in the Company's Common Stock moved from NASDAQ's Small Cap Market to NASDAQ's National Market System. Price ranges reported in the following table represent the range of bid quotations prior to April 1, 1995 and the trading range after that date. These prices reflect inter-dealer quotations without adjustments for retail markup, markdown or commission and do not necessarily represent actual transactions. PAGE 4 Fiscal Year Ended September 30, 1994 High Low First Quarter $ 3.38 $ 2.50 Second Quarter 3.12 2.38 Third Quarter 3.00 2.25 Fourth Quarter 3.62 2.25 Fiscal Year Ended September 30, 1995 First Quarter $ 5.25 $ 3.38 Second Quarter 6.25 4.50 Third Quarter 7.38 4.88 Fourth Quarter 8.75 6.50 American Securities Transfer, Inc., the transfer agent for the shares of ASI's Common Stock, has reported that there were approximately 450 shareholders of record as of September 30, 1995. This does not include an estimated 1,600 investors holding stock in "street name." On November 27, 1995, the closing bid and asked prices of the Company's Common Stock as reported by NASDAQ were $7.50 and $7.875 respectively. Holders of the Company's Common Stock are entitled to receive dividends as and when they may be declared by its Board of Directors. No such dividends have ever been paid with respect to the Company's Common Stock and none is anticipated to be paid in the foreseeable future. Item 6.Management's Discussion and Analysis or Plan of Operation The following table sets forth selected financial data for the Company and should be read in conjunction with the financial statements and related notes included elsewhere in this document and with the balance of this Management's Discussion and Analysis:
Year ended September 1995 1994 Statement of Operations Data Sales $13,538,507 11,176,165 Costs and expenses 11,519,146 9,696,442 Other expenses, net 119,184 184,106 Income tax expense 716,000 492,000 ---------- ---------- Net earnings 1,184,177 803,617 ========== ========== Earnings per share $ .40 .30 === ===
PAGE 5
Balance Sheet Data September 30, 1995 1994 Current assets $ 8,554,444 6,442,567 Current liabilities 2,816,212 2,749,378 --------- --------- Working capital 5,738,232 3,693,189 ========= ========= Total assets $10,047,675 8,016,056 Long-term debt less current portion 408,078 391,032 Stockholders' equity 6,654,688 4,596,538
Results of Operations The following table summarizes the changes in selected operating indicators. The percentages on the left show the relationship of various income and expense items to net revenues. The percentages on the right measure year to year changes.
Percentage of Net Revenues* Percentage Change Year Ended September 30 from Prior Year 1995 1994 1995 1994 100 100 Sales 21 23 Costs and expenses: Salaries, wages and 39 40 related benefits 17 9 24 24 Subcontractor costs 23 94 16 16 General and administrative 22 (4) 6 7 Depreciation and amortization 3 1 -- -- 85 87 Total costs and expenses 19 19 -- -- 15 13 Earnings from operations 36 50 (1) (2) Other income (expense) (35) (8) -- -- 14 11 Earnings before income taxes 47 66 5 4 Income tax expense 46 65 -- -- 9 7 Net earnings 47 66 == == *Totals may not be exact due to rounding.
1995 Compared to 1994 Net income from continuing operations (Net earnings) increased 47 percent to 9 percent of sales because greater production increased sales 21 percent while costs and expenses were up by only 19 percent as discussed below. PAGE 6 Salaries, wages and related benefits increased 17% over the previous year. Approximately 65% of the increase was due to increased number of employees required by increased production. Salaries, wages and related benefits decreased from 40% to 39% of sales because sales increased at a greater rate than salaries, wages and related benefits. Subcontractor costs include aerial photography, land surveying as well as data conversion services, and are incurred as direct costs on specific contracts. Aggregate subcontractor costs may vary substantially from year to year depending on the mix of project type and stage of production of projects in process during the year. Subcontractor costs were up 23% over last year as the Company has maintained its use of subcontractors to expand production capacity and flexibility and to encourage businesses owned by minorities and women. General and Administration expenses increased 22% in absolute dollars but were level at 16% of sales. Approximately 42% of the increased expenses were non-salary marketing and selling expenses and 21% of the increased expenses were non-salary research and development expenses. Other income (expense) consists primarily of interest expense. Interest expense decreased 35% due to reduced term debt and a decrease in average borrowing on the bank line of credit. Net cash provided by operating activities was $593,956 in 1995, down 38% from 1994 due primarily to greater investment in accounts receivable and revenues in excess of billings. The Company's investment in projects (accounts receivable plus revenue in excess of billing less amounts billed in excess of costs) increased in 1995 at a rate greater than sales growth due to the specific progress and billing terms on the current projects. Cash flow from operations improved due to the tax benefit associated with the exercise of employee stock options. It is unlikely such benefits will recur at levels experienced in 1995. Cash flows used in investing activities represents the Company's acquisition of new and replacement equipment, furniture and leasehold improvements. Expenditures for equipment increased 271% in 1995 to meet current and expected production requirements. Cash flows from financing activities include proceeds from the financing of capital expenditures, scheduled principal payments of term debt and cash received from the exercise of stock options by employees. The Company made one purchase of Treasury Stock, however there are no plans to acquire additional Treasury Stock. The Company's backlog of signed contracts increased to $12,620,000 at September 30, 1995 and the Company continues to work with existing and potential customers to sign new contracts. The Company has been awarded large projects (over $1,000,000) in the past and is actively seeking other large projects which often have longer sales and contract negotiation schedules than smaller projects. The Company continues to seek and perform smaller projects as well. Liquidity and Capital Resources Short term liquidity requirements are met primarily through operating receipts supplemented by a bank line of credit with a $1,250,000 limit. At September 30, 1995, the Company's balance on the line of credit was nil. The cost of capital equipment is usually financed through term debt and/or capitalized leases with terms of from three to five years. The company has up to $294,000 available under its line of credit for equipment acquisitions through the end of February 1996. The Company has not committed to any material capital purchases. The Company has entered into negotiations for the acquisition of substantially all of the net assets of a company engaged in a similar business for a total consideration of approximately $4,500,000. The Company has secured a commitment from a bank to finance substantially all of the cash portion of this transaction if the related negotiations with the seller are successful. PAGE 7 Management expects to meet long-term liquidity requirements through cash flows generated by operations supplemented from time to time by short term borrowings on a bank line of credit. Routine capital expenditures will usually be financed with term debt and/or capital leases. Management believes the line of credit combined with cash flow from operations is adequate to finance ongoing operations. Management also believes the Company will be able to finance any required capital expenditures from a combination of operating cash flows and new term debt or lease arrangements. The Company is dependent however, upon its ability to successfully deliver acceptable products in order to maintain adequate operating cash flows. Other Risk Factors The Company faces, as do all businesses, a wide range of increasingly complex legal, regulatory and compliance requirements. The Company is not aware of any substantial risk of loss from product liability litigation nor from noncompliance with environmental, labor or other laws and regulations. The Company has been awarded several projects with contract values in excess of $1,000,000, usually on a fixed price basis. While these projects provide improved availability of work, the projects may extend over two or three years. The extended production period may increase the Company's exposure to the risk of inflation, changes in customer expectations and customer funding capabilities. The Company has not paid any dividends since its inception, and there is no intention to pay dividends in the foreseeable future. Under its present bank loan agreement, the Company must obtain the bank's prior written consent should the Company wish to pay a dividend. The bank has agreed to not unreasonably withhold such consent, however there is no assurance that the Company would receive the bank's consent to pay a dividend. Recent Accounting Pronouncements Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets to Be Disposed Of (SFAS 121) was issued in March, 1995 by the Financial Accounting Standards Board. It requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. SFAS 121 is required to be adopted for fiscal years beginning after December 15, 1995. Adopting this statement by the Company is not expected to have a significant effect on the financial statements. Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS 123), was issued by the Financial Accounting Standards Board in October, 1995. SFAS 123 establishes financial accounting and reporting standards for stock-based employee compensation plans as well as transactions in which an entity issues its equity instruments to acquire goods or services from non-employees. This statement defines a fair value based method of accounting for employee stock option or similar equity instruments, and encourages all entities to adopt that method of accounting for all of their employee stock compensation plans. However, it also allows an entity to continue to measure compensation cost for those plans using the intrinsic value based method of accounting prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees. Entities electing to remain with the accounting in Opinion 25 must make proforma disclosures of net income and, if presented, earnings per share, as if the fair value based method of accounting defined by SFAS 123 had been applied. SFAS 123 is applicable to fiscal years beginning after December 15, 1995. The Company currently accounts for its equity instruments using the accounting prescribed by Opinion 25. The Company does not currently expect to adopt the accounting prescribed by SFAS 123; however, the Company will include the disclosures required by SFAS 123 in future financial statements. PAGE 8 Item 7. Financial Statements Independent Auditors' Report 10 Balance Sheets 11 Statements of Operations 13 Statements of Stockholders' Equity 14 Statements of Cash Flows 15 Notes to Financial Statements 16 PAGE 9 Independent Auditors' Report The Board of Directors and Stockholders Analytical Surveys, Inc.: We have audited the accompanying balance sheets of Analytical Surveys, Inc. as of September 30, 1995 and 1994, and the related statements of operations, stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Analytical Surveys, Inc. as of September 30, 1995 and 1994, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Denver, Colorado November 3, 1995 PAGE 10
Analytical Surveys, Inc. Balance Sheets September 30, 1995 and 1994 Assets 1995 1994 Current assets: Cash $ 665,274 552,232 Accounts receivable, net of allowance for doubtful accounts of $20,000 in 1995 and 1994 (notes 2 and 9) 2,925,094 1,699,372 Revenue in excess of billings (note 2) 4,705,020 3,988,270 Deferred income taxes (note 5) 49,713 60,137 Prepaid expenses and other 209,343 142,556 ---------- --------- Total current assets 8,554,444 6,442,567 ---------- --------- Equipment and leasehold improvements, at cost (note 3): Equipment 5,656,521 5,766,095 Furniture and fixtures 735,313 637,155 Leasehold improvements 133,711 121,918 ---------- --------- 6,525,545 6,525,168 Less accumulated depreciation and amortization (5,046,065) (4,967,046) ---------- --------- 1,479,480 1,558,122 Goodwill, net of accumulated amortization net of $11,966 and $10,350 in 1995 and 1994, respectively 13,751 15,367 ---------- --------- $10,047,675 8,016,056 ========== ========= (Continued)
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Analytical Surveys, Inc. Balance Sheets, Continued Liabilities and Stockholders' Equity 1995 1994 Current liabilities: Current portion of long-term debt (note 3) $ 417,100 647,800 Billings in excess of costs and revenue (note 2) 176,934 420,139 Accounts payable and other accrued liabilities 1,560,227 760,686 Accrued payroll and benefits 661,951 578,929 Income taxes payable -- 341,824 ---------- --------- Total current liabilities 2,816,212 2,749,378 Deferred income taxes (note 5) 113,290 232,065 Deferred compensation 55,407 47,043 Long-term debt, less current portion (note 3) 408,078 391,032 ---------- --------- Total liabilities 3,392,987 3,419,518 ---------- --------- Stockholders' equity (note 6): Preferred stock - authorized 2,500,000 shares of no par value; none issued and outstanding -- -- Common stock - authorized 100,000,000 shares, no par value; issued 2,854,849 and 2,557,099 shares in 1995 and 1994, respectively 3,461,100 2,462,283 Treasury stock - 23,500 shares, at cost (124,844) -- Retained earnings 3,318,432 2,134,255 ---------- --------- 6,654,688 4,596,538 ---------- --------- Commitments and contingencies (notes 4, 6 and 10) $ 10,047,675 8,016,056 ========== ========= See accompanying notes to financial statements.
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Analytical Surveys, Inc. Statements of Operations Years Ended September 30, 1995 and 1994 1995 1994 Sales $13,538,507 11,176,165 ---------- ---------- Costs and expenses: Salaries, wages, and related benefits 5,246,616 4,475,067 Subcontractor costs 3,244,485 2,628,652 General and administrative 2,244,207 1,833,691 Depreciation and amortization 783,838 759,032 ---------- ---------- 11,519,146 9,696,442 ---------- ---------- Earnings from operations 2,019,361 1,479,723 ---------- ---------- Other income (expense): Interest income 1,689 1,651 Interest expense (120,462) (182,760) Loss on sale of assets (411) (2,997) ---------- ---------- (119,184) (184,106) ---------- ---------- Earnings before income taxes 1,900,177 1,295,617 Income tax expense (note 5) 716,000 492,000 ---------- ---------- Net earnings $ 1,184,177 803,617 ========== ========== Earnings per common and common equivalent share $ .40 .30 === === Weighted average outstanding common shares and common stock equivalents 2,938,945 2,673,273 ========== ========== See accompanying notes to financial statements.
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Analytical Surveys, Inc. Statements of Stockholders' Equity Years Ended September 30, 1995 and 1994 Common stock Treasury stock Retained Shares Amount Shares Amount earnings Total Balance at October 1, 1993 2,533,599 $2,407,333 -- $ -- 1,330,638 3,737,971 Exercise of stock options 23,500 45,271 -- -- -- 45,271 Tax effect relating to exercise of stock options -- 9,679 -- -- -- 9,679 Net earnings -- -- -- -- 803,617 803,617 --------- --------- ------ ------- ---------- --------- Balance at September 30, 1994 2,557,099 2,462,283 -- -- 2,134,255 4,596,538 Exercise of stock options 297,750 561,575 -- -- -- 561,575 Tax effect relating to exercise of stock options -- 437,242 -- -- -- 437,242 Acquisition of treasury stock -- -- (23,500) (124,844) -- (124,844) Net earnings -- -- -- -- 1,184,177 1,184,177 --------- --------- ------ ------- --------- --------- Balance at September 30, 1995 2,854,849 $3,461,100 (23,500) $(124,844) 3,318,432 6,654,688 ========= ========= ====== ======= ========= ========= See accompanying notes to financial statements.
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Analytical Surveys, Inc. Statements of Cash Flows Years Ended September 30, 1995 and 1994 1995 1994 Cash flows from operating activities: Net earnings $ 1,184,177 803,617 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 783,838 759,032 Bad debt expense -- 22,500 Loss on sale of assets 411 2,997 Deferred income tax benefit (108,351) (120,075) Tax effect relating to exercise of employee stock options 437,242 9,679 Changes in operating assets and liabilities: Accounts receivable (1,225,722) (495,612) Revenue in excess of billings (716,750) (663,142) Prepaid expenses and other (66,787) 30,060 Billings in excess of costs and revenue (243,205) 1,889 Accounts payable and accrued liabilities 799,541 209,875 Accrued payroll and benefits 83,022 189,852 Income taxes payable (341,824) 205,980 Deferred compensation 8,364 8,363 ---------- -------- Net cash provided by operating activities 593,956 965,015 ---------- -------- Cash flows used by investing activities: Purchase of equipment and leasehold improvements (704,287) (189,642) Proceeds from sale of equipment 296 -- ---------- -------- Net cash used by investing activities (703,991) (189,642) ---------- -------- Cash flows from financing activities: Net payments under note payable to bank -- (85,000) Proceeds from issuance of long-term debt 520,936 143,603 Principal payments on long-term debt (734,590) (565,625) Exercise of stock options 561,575 45,271 Purchase of treasury stock (124,844) -- ---------- -------- Net cash provided (used) by financing activities 223,077 (461,751) ---------- -------- Net increase in cash 113,042 313,622 Cash at beginning of year 552,232 238,610 ---------- -------- Cash at end of year $ 665,274 552,232 ========== ======== Supplemental disclosures of cash flow information: Cash paid for interest $ 112,394 172,652 ========== ======== Cash paid for income taxes $ 765,290 399,045 ========== ======== See accompanying notes to financial statements.
PAGE 15 Analytical Surveys, Inc. Notes to Financial Statements September 30, 1995 and 1994 (1) Summary of Significant Accounting Policies (a) Revenue Recognition The Company recognizes revenue on the percentage of completion method using the cost-to-cost method, whereby the percentage complete is based on costs incurred to date in relation to total estimated costs. Costs associated with sales of services are expensed when incurred. The Company does not combine contracts for purposes of recognizing revenue and, generally, does not segment contracts. Revenue in excess of billings represents work completed but not billed. The Company bills customers based upon the terms included in the contract, which is generally upon delivery. When billed, such amounts are recorded as accounts receivable. The Company recognizes losses on contracts in the period such loss is determined. The Company does not believe warranty obligations on completed contracts are material. (b) Equipment and Leasehold Improvements Equipment and leasehold improvements are stated at cost. Depreciation and amortization are provided using the straight-line method over the following estimated lives: Equipment 3 -- 10 years Furniture and fixtures 5 -- 10 years Leasehold improvements 5 years Maintenance, repairs, and renewals which neither add to the value of the asset or extend its useful life are charged to expense as incurred. (c) Earnings Per Share The computation of earnings per common share is based on the weighted average number of shares outstanding plus the effect of common stock equivalents. (d) Income Tax The Company accounts for income taxes under the provisions of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109). SFAS 109 requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. PAGE 16 Notes to Financial Statements, Continued (e) Research and Development Costs The Company expenses research and development costs as they are incurred. Research and development costs, which are included in general and administrative expenses in the statement of operations, totaled $347,321 and $225,894 in 1995 and 1994, respectively. (f) Reclassifications Certain prior year amounts have been reclassified to conform to the 1995 presentation. (2) Accounts Receivable, Revenue in Excess of Billings, and Billings in Excess of Costs and Revenue At September 30, 1995, the time to complete contracts in process ranges from one to thirty-six months, and the Company expects to collect substantially all related accounts receivable and revenue in excess of billings within one year. Claims by the Company reflected in accounts receivable and revenue in excess of billings at September 30, 1995 were not material. The following tables summarize contracts in process at September 30: 1995 1994 Costs incurred on uncompleted contracts $15,345,767 10,731,287 Estimated earnings 10,522,603 6,747,745 ---------- ---------- 25,868,370 17,479,032 Less billings to date (21,340,284) (13,910,901) ---------- ---------- $ 4,528,086 3,568,131 ========== ========== Included in the accompanying balance sheets as follows: Revenue in excess of billings $ 4,705,020 3,988,270 Billings in excess of costs and revenue (176,934) (420,139) --------- --------- $ 4,528,086 3,568,131 ========== ========= PAGE 17 Notes to Financial Statements, Continued (3) Long-Term Debt Long-term debt consists of the following at September 30: 1995 1994 Term notes payable in monthly installments of $8,215, including interest ranging from 7.95% to 9.40%, final maturity in November 1996, secured by certain equipment $ 82,209 169,680 Note payable to a bank under a $1,250,000 equipment draw-down term loan, bearing interest at effective rates ranging from 8.13% to 12% at September 30, 1995, monthly payments of $34,891, final maturity in November 1998, secured by certain equipment 742,969 488,069 Capitalized lease obligation, effective interest rate of 17.5%, monthly payments of $35,280, repaid in fiscal year 1995 -- 381,083 ------- --------- 825,178 1,038,832 Less current portion (417,100) (647,800) ------- --------- $ 408,078 391,032 ======= ========= Maturities of long-term debt, as of September 30, 1995, are as follows: Years ending September 30: 1996 $ 417,100 1997 268,646 1998 131,817 1999 7,615 ------- $ 825,178 ======= PAGE 18 Notes to Financial Statements, Continued The Company's note payable to a bank under a $1,250,000 equipment draw-down term loan contains restrictive covenants which require, among other things, the maintenance of certain financial ratios and includes certain limitations on capital expenditures and dividend payments. The Company has a $1,250,000 revolving line of credit bearing interest at .5% over the base rate (9.25% effective rate at September 30, 1995). The line of credit is collateralized by the assignment of accounts receivable and officers life insurance and expires February 28, 1996. No borrowings were outstanding as of September 30, 1995 and 1994. (4) Leases The Company leases its facilities under operating leases. Amounts due under noncancelable operating leases with terms of one year or more at September 30, 1995 are as follows: Operating leases Years ending September 30: 1996 $ 301,631 1997 301,011 1998 295,498 1999 313,610 2000 332,990 Thereafter 1,483,514 --------- Total minimum lease payments $3,028,254 ========= Rent expense for operating leases totaled $302,303 and $276,818 for the years ended September 30, 1995 and 1994, respectively. (5) Income Taxes Income tax expense (benefit) for the years ended September 30 is as follows: 1995 1994 Current: Federal $ 712,860 530,343 State and local 111,491 81,732 ------- ------- 824,351 612,075 ------- ------- Deferred: Federal (93,826) (103,980) State and local (14,525) (16,095) ------- ------- (108,351) (120,075) ------- ------- $ 716,000 492,000 ======= ======= PAGE 19 Notes to Financial Statements, Continued Expected income tax expense computed at the federal statutory rate of 34% differs from actual income tax expense for the years ended September 30 is as follows: 1995 1994 Computed "expected" income tax expense $ 646,000 $ 441,000 State income taxes, net of federal tax effect 63,000 43,000 Other 7,000 8,000 ------- ------- Income tax expense $ 716,000 492,000 ======= ======= The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at September 30, are presented below. 1995 1994 Current deferred tax assets and liabilities: Accounts receivable, principally due to allowance for doubtful accounts $ 7,460 7,460 Accrued liabilities, principally due to accrued compensated absences for financial statement purposes 62,162 68,529 Deferred compensation due to expense related to stock options issued under the 1988 ASI Stock Option Plan 7,539 11,048 Prepaid expenses, principally due to marketing commissions expensed for income tax purposes (27,448) (26,900) ------ ------ Total net current deferred tax asset $ 49,713 60,137 ====== ====== Non-current deferred tax assets and liabilities: Deferred compensation due to expense accrued for financial statement purposes $ 20,667 17,547 Equipment and leasehold improvements, principally due to differences in depreciation (133,957) (249,612) ------- ------- Total net non-current deferred tax liability $ (113,290) (232,065) ======= ======= PAGE 20 Notes to Financial Statements, Continued (6) Stockholders' Equity and Stock Options The Board of Directors may issue preferred stock with rates of dividends, voting rights, redemption prices, liquidation prices, liquidation premiums, conversion rights, and requirements as to any sinking or purchase fund without a vote of the shareholders. In 1989, the Company entered into a stock redemption agreement with its founder, who is also its chairman, chief technical officer, and a major shareholder of the Company (the Shareholder). Under the terms of the agreement, the Company may be required under certain events to purchase all or a portion of the common stock owned by the Shareholder. In these instances, the purchase price will be determined based upon the mean between the bid and asked price of the Company's stock on the over-the- counter market. The future events that may require purchase and the related terms are summarized as follows: Minimum shares required Payment Event (a) to be purchased terms Death The number of shares based upon Cash from proceeds from $1,000,000 life insuranc insurance policy policy maintained and owned by the Company (b) Disability The number of shares based upon Cash from proceeds from $1,000,000 insurance policy disability insurance policy maintained and owned by the Company (b) Involuntary Up to all shares owned by Cash termination, shareholder except for cause
(a) In the event of voluntary termination or involuntary termination for cause, the Company is not required to purchase shares. In the event of voluntary termination, the Company will have the option to purchase up to all shares owned by the Shareholder through the issuance of promissory notes. (b) The Company would be required to purchase the minimum shares based upon a request from the Shareholder or his estate. In addition, the Company may be offered the option to purchase all additional shares of the Shareholder, which may be purchased by issuing promissory notes with a three year term. At September 30, 1995, the Shareholder owned 530,949 shares of the Company's common stock, which represented approximately 19% of the outstanding common stock. The Company currently has five nonqualified stock option plans. The Board of Directors may grant options to purchase up to 1,177,000 shares of the Company's common stock to officers, directors, and key employees. The exercise price of the options is established by the Board of Directors on the date of grant. Employees may vest in their options either 100% on date of grant or 25% on date of grant and 25% each year thereafter as determined by the Board of Directors. The options are exercisable in whole or in part for a period of up to ten years from date of grant. PAGE 21 Notes to Financial Statements, Continued The following summarizes stock option transactions under the plans: Shares Option under price option per share Outstanding at October 1, 1993 622,000 Granted 173,000 2.39 Exercised (23,500) 1.69 to 3.13 Canceled (26,975) 2.78 ------- Outstanding at September 30, 1994 744,525 Granted 284,000 5.25 to 7.38 Exercised (297,750) 1.00 to 3.13 Canceled (19,500) 2.38 to 6.00 ------- Outstanding at September 30, 1995 711,275 ======= At September 30, 1995: Options exercisable 320,400 ======= Options available for grant 29,975 ======= The exercise of non-qualified stock options results in state and federal income tax deductions to the Company related to the difference between the market price at the date of exercise and the option price. Common stock was increased by $437,242 and $9,679 in 1995 and 1994, respectively, related to the tax effect of the exercise of stock options. (7) Employee Benefit Plan The Company sponsors a qualified tax deferred savings plan in accordance with the provisions of section 401(k) of the Internal Revenue Code. Employees may defer up to 15% of their compensation, subject to certain limitations. The Company matches 50% of the employee contributions up to 4% of their compensation. The Company contributed $60,494 and $52,414 to the Plan in 1995 and 1994, respectively. (8) Major Customers Sales to individual customers amounting to more than 10% of the total sales were as follows: Year ended September 30: 1995 Customer A 12% 1994 Customer B 14%, and Customer C 12% PAGE 22 Notes to Financial Statements, Continued (9) Concentrations of Credit Risk Financial instruments which potentially expose the Company to concentrations of credit risk, as defined by Financial Accounting Standards Board's Statement No. 105, Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentration of Credit Risk, consist primarily of accounts receivable with the Company's various customers. Historically, the Company's customers have included cities, counties, engineering companies, utility companies, and federal government agencies. Substantially more than 50% of revenues have historically been derived from state and local government contracts. In addition, a significant portion of the Company's revenues are generated from utility clients, both commercial and municipal. The Company's accounts receivable are due from a variety of organizations throughout the United States. The Company provides for uncollectible amounts upon recognition of revenue and when specific credit and collection issues arise. Management's estimates of uncollectible amounts have been adequate in prior years, and management believes that all significant credit and collection risks have been identified and adequately provided for at September 30, 1995. (10) Pending Transaction The Company has entered into negotiations for the acquisition of substantially all of the net assets of a company engaged in a similar business for a total consideration of approximately $4,500,000. PAGE 23 Item 8.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Part III Item 9.Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 16(a) of the Exchange Act Information required by this item is contained in the registrant's definitive proxy statement for its 1996 Annual Meeting of Shareholders to be filed on or before January 20, 1996 and such information is incorporated herein by reference. Item 10. Executive Compensation Information required by this item is contained in the registrant's definitive proxy statement for its 1996 Annual Meeting of Shareholders to be filed on or before January 20, 1996 and such information is incorporated herein by reference. Item 11.Security Ownership of Certain Beneficial Owners and Management Information required by this item is contained in the registrant's definitive proxy statement for its 1996 Annual Meeting of Shareholders to be filed on or before January 20, 1996 and such information is incorporated herein by reference. Item 12. Certain Relationships and Related Transactions Information required by this item is contained in the registrant's definitive proxy statement for its 1996 Annual Meeting of Shareholders to be filed on or before January 20, 1996 and such information is incorporated herein by reference. Item 13. Exhibits and Reports on Form 8-K (a) Index of Exhibits (3) The Exhibits set forth in the following Index of Exhibits are filed as part of this report. 3. Articles of Incorporation and By-Laws 3.1 Articles of incorporation (as amended) are incorporated by reference to the Exhibit to the Company's Registration Statement on Form S-18, Registration No. 2-93108-D 3.2 By-laws are incorporated by reference to the Exhibits to the Company's Registration Statement on Form S-18, Registration No. 2-93108-D. 4. Instruments defining the rights of Security Holders including Indentures Form of Stock Certificate (filed with Registration Statement No. 2-93108-D and hereby incorporated by reference) 10. Material Contracts 10.1 Stock Redemption and Repurchase Agreement dated February 14, 1989 between John A. Thorpe, Chairman and Chief Technical Officer, and the registrant, incorporated herein by reference to registrant's Annual Report on Form 10-K for Fiscal Year ended September 30, 1989. PAGE 24 10.2 Employment Agreement between John A. Thorpe, Chairman and Chief Technical Officer, and the registrant, dated June 27, 1994 incorporated herein by reference to registrant's Quarterly Report on Form 10- QSB for June 30, 1994. 10.3 Stock Option Agreement dated July 27, 1990 and amended November 19, 1990 between Sidney V. Corder, Chief Executive Officer and President. and the registrant, incorporated herein by reference to registrant's Annual Report on Form 10-K for Fiscal Year ended September 30, 1990. 10.4 Employment agreement dated June 27, 1994 between ASI and Sidney V. Corder, Chief Executive Officer and President, incorporated herein by reference to registrant's Quarterly Report on Form 10-QSB for June 30, 1994. 10.5 Stock Option Plan dated December 17, 1987, and amended on August 31, 1992 incorporated herein by reference to registrant's Annual Report on Form 10-K for Fiscal Year ended September 30, 1992. 10.6 1990 Non-Qualified Stock Option Plan dated September 21, 1990 and amended and restated on December 17, 1990, and further amended on August 31, 1992 incorporated herein by reference to registrant's Annual Report on Form 10-K for Fiscal Year ended September 30, 1992. 10.7 1991 Non-Qualified Stock Option Plan dated December 17, 1990, and amended on August 31, 1992 incorporated herein by reference to registrant's Annual Report on Form 10-K for Fiscal Year ended September 30, 1992. 10.8 1993 Non-Qualified Stock Option Plan dated December 11, 1992 incorporated herein by reference to registrant's Proxy Statement dated January 11, 1993. 10.9 Analytical Surveys, Inc. 401-K Plan dated October 1, 1988, amended and restated May 22, 1992 incorporated herein by reference to registrant's Annual Report on Form lO-K for Fiscal Year ended September 30, 1992. 10.10 Analytical Surveys, Inc. Incentive Bonus Plan incorporated herein by reference to registrant's Annual Report on Form 10-K for Fiscal Year ended September 30, 1992. 10.11 Building lease dated August 1, 1994 incorporated herein by reference to registrant's Annual Report on Form 10-KSB for the Fiscal Year ended September 39, 1994. 10.12 Agreement to perform mapping services between ASI and Southern New England Telephone Company dated September 7, 1995 (included in Section 1 of the exhibits) 10.13 Employment agreement dated September 20, 1995 between ASI and Scott C. Benger, Senior Vice President, Finance and Secretary/Treasurer (included in Section 2 of the exhibits) 10.14 Employment agreement dated September 20, 1995 between ASI and Raymond R. Mann , Senior Vice President, Contracts and Business Development (included in Section 3 of the exhibits.) 10.15 1995 Non-Qualified Stock Option Plan dated August 22, 1995 (included in Section 4 of the exhibits.) 24. Consent of Experts Consent of KPMG Peat Marwick LLP (included in Section 5 of the Exhibits). Consent of Daniel P. Edwards, P.C. (included in Section 5 of the Exhibits). PAGE 25 (b) Reports on Form 8-K No reports on Form 8-K were filed during the fourth quarter of fiscal year 1995. PAGE 26 Signatures In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized as of the 19th day of December, 1995. Analytical Surveys, Inc. By /s/ John A. Thorpe John A. Thorpe, Chairman of the Board In accordance with the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrants and in the capacities indicated as of the 19th day of December, 1995. Signature Title /s/ John A. Thorpe John A. Thorpe Chairman and Chief Technical Officer /s/ Sidney V. Corder Director, President and Sidney V. Corder Chief Executive Officer /s/ Scott C. Benger Scott C. Benger Sr. Vice President Finance and Secretary/Treasurer (principal financial officer) (principal accounting officer) /s/ Brian J. Yates Brian J. Yates Controller /s/ William H. Hudson William H. Hudson Director Richard P. MacLeod Director /s/ James T. Rothe James T. Rothe Director /s/ Robert H. Keeley Robert H. Keeley Director /s/ Willem H. J. Andersen Willem H. J. Andersen Director EX-10 2 ENGINEERING SERVICES AGREEMENT This Agreement made this 23rd day of August 1995 is entered into by and between THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY, (hereinafter called "NET''), a corporation specially chartered by the General Assembly of the State of Connecticut with its principal place of business at 227 Church Street, New Haven, Connecticut 06510 and ANALYTICAL SURVEYS, INC., (hereinafter called "ASI"), with its principal place of business at 1935 Jamboree Drive, Suite 100, Colorado Springs, CO 80920, (collectively referred to herein as the "Parties"). THEREFORE, in consideration of the terms and conditions and mutual obligations herein, the Parties agree as follows: 1. SCOPE ASI shall provide to SNET photogrammetry services in order to create a Geographic Information System (hereinafter referred to as a "GIS") of SNET's Outside Plant in the state of Connecticut in accordance with Attachment A, SNET AM/FM GIS LANDBASE-LANDBASE COMPILATION FROM PHOTOGRAMMETRIC SOURCES, attached and incorporated by reference herein. 2. TERM The term of this Agreement shall commence on the above date and shall continue in effect unless otherwise termination as provided herein. 3. SERVICES TO BE PROVIDED ASI shall provide SNET with Outside Plant Photogrammetric Services ("Goods and Services") set forth in Attachment A. 4. FEES (A) The sole compensation to be paid to ASI by SNET under this Agreement shall be specified in Attachment B, FEES. (B) There shall be added charges in excess of the price above noted, an amount equal to any taxes, however designated, hereafter levied, imposed or based upon the sale covered by this Agreement including federal, state, local municipal or excise taxes which taxes or amounts in lieu thereof are charged to or payable by ASI in respect to the foregoing sale of services, if applicable; exclusive however, of taxes based upon the certificate of exemption or similar document or proceeding obtained in order to exempt the sale from a sales or use tax liability SNET has the option of obtaining such certificate, documents, or proceedings. 5. OWNERSHIP OF AERIAL PHOTOGRAPHY (A) ASI and SNET acknowledge that all aerial photography of the state of Connecticut taken by ASI under separate agreement with the state of Connecticut, Office of Policy and Management is open to the public as indicated by the attached letter from the state of Connecticut, attached and incorporated as Attachment C, herein. (B) ASI shall use such aerial photographs in accordance with all applicable rules, regulations imposed by the State of Connecticut or any other governmental authority. 6. BILLING AND PAYMENT (A) ASI shall submit a detailed invoice to SNET to Mr. David Dickman at 555 Long Wharf Drive, 3rd Floor, New Haven, Connecticut 06511. (B) 80% of invoice shall be due and payable forty-five (45) days after delivery of Goods and Services. The balance shall be due and payable forty-five (45) days after acceptance as defined in Attachment D, ACCEPTANCE CRITERIA, attached and incorporated by reference herein. 7. TRAVEL EXPENSES All travel, food, lodging, and other ASI employees' costs and charges for the services specified in Attachment B, FEES, are to be paid for by ASI, except for expenses specifically stated in Attachment B, FEES, as payable by SNET. 8. PROJECT MANAGEMENT ASI shall provide the services, deliver any deliverables, and complete this Agreement in the manner outlined herein. SNET shall have the right to monitor ASI's performance including but not limited to review of progress with ASI's project manager. 9. PERSONNEL (A) ASI and its personnel shall devote their best effort and skill to the services for SNET and the personnel shall serve subject to SNET approval. (B) The personnel provided by ASI shall be employees of ASI (including the Project Manager) for ninety (90) days prior to the date of ASI's bid or the commencement of services hereunder, and shall have a minimum of one (1) year experience in the Mapping field. (C) Nothing in this Agreement shall be construed to create an employment or agency relationship between SNET and ASI or its employees. ASI and ASI's employees shall not be entitled to any wages, salaries, employee benefits, or other remuneration from SNET. (D) ASI shall replace any personnel deemed unsatisfactory by SNET within one week after notification by SNET. ASI will absorb all training and project learning time for ASI's employees and replacements. 10. REQUIREMENTS OF LAW (A) ASI shall comply, at its own expense, with applicable provisions of all local, state, and federal laws, ordinances, statues, rules and regulation, applicable to the services performed or work furnished under this Agreement, including but not limited to provisions related to worker's compensation, equal employment opportunity, unemployment compensation, sickness and disability, social security occupational safety and health, wages and hours, taxation, environmental protection, the Fair Labor Standards Act, the Federal Occupational Safety Act, the Resource Conservation and Recovery Act of 1976, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and rule or regulations promulgated under these Acts or Statutes. Upon request from SNET, ASI shall submit evidence of compliance with or coverage or qualification under all applicable laws or regulations. (B) If, in the opinion of SNET's Project Manager any services being performed by ASI under this Agreement shall fail to comply with the provisions of any applicable law, ordinance, statute, rule or regulation, such failure will be deemed a failure to comply with the provisions of the Agreement and SNET specifications, for which SNET's Project Manager may order the work stopped and not resumed until, in his opinion, ASI has complied with such provisions. Failure of SNET's Project Manager to be present or to detect such non-compliance or to stop ASI form proceeding shall not constitute an endorsement or ratification of ASI's non- compliance by SNET. 11. SUBCONTRACTOR (A) ASI shall not subcontract any part of the work without the written consent of SNET's Project Manager as to both the subcontracting of the work and the identity of the subcontractor. All work performed by a subcontractor shall be deemed work performed by ASI. (B) All subcontracts shall provide that subcontractors shall be subject to all contract provisions set forth in the Agreement and documents insofar as they are applicable to the work to be done under such subcontracts. Any subcontract shall be immediately terminated by ASI whenever SNET's Project Manager's opinion the work of the subcontractor is unsatisfactory or unnecessarily delayed or that the subcontractor has violated any of the provisions of the Agreement or contract documents. (C) If ASI subcontracts in violation of this provision SNET may, at is option, and without waiving any other legal or equitable right, terminate this Agreement and shall thereupon be relieved from all liability hereunder to ASI of it purported subcontractor. (D) SNET hereby grants approval to ASI to subcontract the airborne GPS of this project to Measurement Science, Inc. 12. PROJECT MANAGERS (A) Both SNET and ASI shall designate a project manager on or before commencement of services to be performed under this Agreement. (B) ASI's project manager shall serve subject to SNET approval. (C) Said project managers shall meet as is mutually agreed to be necessary, to discuss accomplishments, plans for future work, new requirements (if any), milestones, problems and their resolutions. 13. WARRANTY BY ASI (A) ASI warrants that Goods and Services delivered to SNET under this Agreement will be at the time of delivery free and clear of any liens and encumbrances. ASI warrants that their services and any deliverable will conform to the Guidelines set forth in Attachment A. ASI further warrants the deliverables to be free from defect or deficiencies in workmanship. The Warranties expressed herein shall be in force for a period of one (1) year from the date of delivery. ASI shall pay all charges for labor necessary to diagnose, repair, and correct any error caused. (B) ASI warrants that the Goods and Services provided hereunder shall be performed in a professional, courteous and lawful manner to SNET's satisfaction and in accordance with the terms and conditions of this Agreement. 14. CONTRACTOR INTERFERENCE ASI shall perform all operations in a manner so as not to cause interference with other contractors or SNET employees. If it becomes necessary during ASI's course of operations to cause such interference, ASI shall immediately notify SNET's Project Manager of the anticipated interference and shall not proceed further with that phase of the work without the prior written approval of SNET's Project Manger. 15. PATENTS, TRADEMARKS AND COPYRIGHT ASI warrants that the sale and use of its services or deliverables hereunder shall not infringe any patent, trademark, or copyright issued by the United States or any foreign country. ASI agrees to defend SNET at ASI's own cost and expense and pay any judgment rendered in any suit or proceeding and indemnify and hold harmless SNET of any claim, cost, expenses, or Attorney's fees, in connection with any allegation that any services or deliverables set forth in Attachment A and acquired hereunder infringes a letter patent, trademark or copyright of the United States or any foreign country or any other rights to copyright or proprietary information, provided that ASI is reasonably notified in writing of any claim of infringement and furnished with any papers received in connection therewith and provided further that ASI shall have the sole direction and control of the negotiations or suit which is brought and that SNET shall assist ASI, at ASI's expense, in said litigation. 16. PROPRIETARY INFORMATION, NONDISCLOSURE (A) Each Party pledges that, its officers, employees and its agents, shall treat any and all information and data relating to or obtained through the performance of this Agreement, including but not limited to data relating to the other's operations, policies, procedures, source material, techniques, accounts and personnel, (the "Confidential Information") obtained by each Part, its officers, employees or agents, as confidential and will not disclose any such information or data to any employee or third Party not involved in, or responsible for, the negotiation of or with respect to this Agreement or effectuating the provisions thereof. Any oral discussions between SNET and ASI which relate to the confidential information shall be considered and treated as "Confidential Information". (B) Each Party shall protect the Confidential Information of the other with the same degree of care as it affords its own proprietary or confidential information, which shall in no event be less than that degree of care used by a reasonably prudent person in exercising ordinary care. (C) Neither Party, its agents, employees, representatives, subsidiaries, affiliates or parent companies shall, for themselves or for the benefit of any person or entity, use or disclose the Confidential Information of the other whether written or oral, for any purpose, at any time without the express prior written approval of the disclosing Party. (D) Notwithstanding anything to the contrary herein, the receiving Party shall have no obligation to preserve the confidentiality of any information which: (1) was previously known to the receiving Party free of any obligation to keep it confidential; or (2) is or become publicly available, by other than unauthorized disclosure; or (3) is independently developed by the receiving Party and said receiving Party can demonstrate that it has not used the confidential information; or (4) is disclosed to third Party by the disclosure Party without restriction; or (5) is lawfully received from a third Party whose disclosure would not violate any confidentiality or other legal obligation. (E) The obligations hereunder shall survive the cancellation, termination, or completion of this Agreement. (F) Upon termination of this Agreement each Party will immediately return all Confidential Information which may be demanded by the other as the other's property or certify to the other Party to the destruction of said Confidential Information. 17. INSPECTION, AUDIT (A) SNET, or its representative, shall have the right to inspect all services hereunder and specifically reserves the right to conduct on-site visits and perform audits or operational reviews as SNET deems appropriate and necessary. Any inspection, audit, review or lack thereof shall not relieve ASI of responsibility for performance. ASI shall maintain a true and correct set of records to include, but not be limited to, referred accounts, invoices and internal records for all charges and sufficient other detail to permit reasonable verification or correction of charges and performance in accordance with this contract. (B) ASI shall maintain such records in accordance with generally accepted accounting principles, for the period of six (6) years. SNET or its representative may, from time to time, audit any and all such records and ASI agrees to permit SNET, or its representative, access to examine and audit these records at all reasonable times and without additional cost to SNET. ASI shall furnish SNET with service status and progress reports as SNET may request. The results of any SNET audit herein shall be determinative of any matter contested concerning billings by ASI to SNET. 18. INDEMNITY ASI agrees to indemnify, defend and hold SNET harmless from and against any claims, damages or expenses (including attorney's fees) resulting from or arising out of the acts, omissions, or services of ASI, its agents, servants, employees, representatives or attorneys, whether or not the same are made or brought against SNET individually, or jointly against both parties herein, in the performance of this Agreement. SNET shall notify ASI in writing of any such claims made against SNET. Notwithstanding its right to protection, defense, reimbursement and indemnification by ASI, and without limiting or restricting the other terms and provisions contained in this Paragraph, SNET reserves for itself, at its own option, the exclusive right to settle, compromise and pay any and all claims, demands, proceedings, suits, actions or causes of actions which are brought against either party herein under the terms and provisions of this Paragraph. 19. TERMINATION (A) In the event ASI fails t comply with any of the terms of this Agreement, SNET shall notify ASI in accordance with Section 26, NOTICES, of said noncompliance. ASI shall then have thirty (30) calendar days to cure said noncompliance. If ASI fails to cure said noncompliance, SNET may, without waiving any other rights it may have, terminate this Agreement upon written notice to ASI. (B) Either party may terminate this Agreement at any time, with or without justification or cause, by giving written notice to the other party not less than thirty (30) days prior to the effective date of such termination. No such termination shall affect or impair the obligation of SNET to pay ASI amounts on all services completed by ASI prior to the effective date of termination. 20. INSURANCE ASI shall carry such insurance covering all its employees as shall protect it from all claims under Worker's Compensation in the states where the work in this Agreement shall be performed and Unemployment Compensations Laws in effect that may be applicable to it. ASI shall also carry liability insurance consistent with its indemnification obligations under Section 18, INDEMNITY, (by name or as a member of an expressly named covered class) and SNET shall be names as an additional insured under the general liability insurance and comprehensive automobile insurance. Such insurance coverage shall have combined single limits of not less than one million dollars ($1,000,000.00) for general liability insurance, one million dollars ($1,000,000.00) for comprehensive automobile liability and one million dollars ($1,000,000.00) for professional liability insurance. ASI shall provide SNET proof of such insurance through certificates of insurance on an annual basis. 21. CONTINGENCY It is mutually agreed by the parties hereto that neither party shall be held responsible for any delay or failure in performance hereunder caused by revolution or other disorder, war embargoes, government requirements, civil or military authorities, strikes (even if a party could settle a labor dispute), floods, acts of nature, inability to secure material or transportation facilities because of aforementioned causes, or without limiting the foregoing, by any other cause not within the control of the party whose performance is interfered with, and which by the exercise of reasonable diligence, said party is unable to prevent whether of the class of causes hereinbefore enumerated or not. 22. BANKRUPTCY Either party may terminate this contract by notice in writing, in the event that the other makes an assignment for the benefit of creditors, or admits in writing inability to pay debts as they mature; or a trustee or receiver of the other, or of any substantial part of the other's assets, is appointed by any court; or a proceeding is instituted under any provision of the Federal Bankruptcy Act by the other, or against the other and is acquiesced in or is not dismissed within sixty (60) days or results in an adjudication in bankruptcy. 23. BREACH SNET may, on ASI's breach of or noncompliance with Paragraph 3 of Attachment D, ACCEPTANCE CRITERIA, where no other remedy exists herein, terminate this Agreement and at SNET's option because damages are difficult to ascertain recover liquidated damages and not as a penalty of one thousand dollars ($1,000.00) per day until the breach is cured or ASI is in compliance herewith. 24. NON-WAIVER OF BREACH Failure of SNET at any time or from time to time, to enforce or require the strict keeping and performance by ASI of any of the terms and provisions of this Agreement shall not constitute a waiver by SNET of a breach of any such terms or provisions and shall not affect or impair such terms or provisions in any way or the right of SNET at any time to avail itself of rights or remedies as it may have at any time. A waiver by SNET shall only be effective if such waiver is in writing and executed by SNET. 25. ASSIGNMENT (A) Any assignment of the service to be performed by ASI, in whole or in part, or of any other interest hereunder without written consent of SNET, except an assignment confined solely to monies due or to become due shall be void. It is expressly agreed that any such assignment of monies shall be void to the extent that it attempts to impose upon SNET obligations to the assignee additional to the payment of such monies or to preclude SNET from dealing solely and directly with ASI in all matters pertaining hereto, including the negotiation of amendments or settlements of amounts due. (B) The foregoing shall not limit SNET's right to assign this Agreement to any Company affiliated with SNET, which right is expressly affirmed. 26. NOTICES Any and all notices permitted or required to be given herein shall be deemed duly given (1) upon actual delivery, if delivery is by hand (2) upon receipt by the transmitting party of confirmation or answer back if delivery is by telex or telegram; or (3) upon delivery into the United States mail if delivery is by postage paid registered or certified return receipt requested mail. Each such notice shall be sent to the respective party at the address indicated below or to any other address as the respective party may designate in writing delivered pursuant to this paragraph. if to SNET, and of a legal nature, including price change: The Southern New England Telephone Company 48 Boston Post Road Orange, Connecticut 06477 ATTN: Manager-Technical Procurement if to SNET, and of an administrative nature: The Southern New England Telephone Company 555 Long Wharf Drive New Haven, Connecticut 06511 ATTN: Mr. David Dickman if to ASI: Analytical Surveys, Inc. 1935 Jamboree Drive, Suite 100 Colorado Springs, CO 80920 ATTN: Mr. Raymond R. Mann 27. PUBLICITY ASI shall not commercially use SNET's name without SNET's express written consent. The foregoing shall not apply to ASI's inclusion of SNET within a listing of ASI's clients. 28. SEVERABILITY In the event that any one or more of the provisions contained herein shall for any reason be held to be unenforceable in any respect under the law of Connecticut or the United States of America, such unenforceability shall not affect any other provision of this Agreement; but this Agreement shall then be construed as if such unenforceable provision or provisions had never been contained herein. 29. SURVIVAL The terms, provisions, representations, and warranties contained herein shall survive delivery, payment, and acceptance. This Agreement shall bind the parties hereto and their legal representatives, successors, assigns, and heirs (if ASI is a natural person). 30. MODIFICATION OF AGREEMENT The whole Agreement between the parties hereto is stated herein and may only be changed by amendment signed by both parties or their duly authorized agents. 31. AFFILIATED COMPANIES For the purpose of this Agreement, an Affiliate is (I) a company owning all outstanding voting shares of SNET (such company being hereinafter called the "Parent"): (ii) a company owned by or whose majority of voting stock is owned by the Parent; or (iii) a company owned by or whose majority of voting stock is owned by SNET. SNET may from time to time designate Affiliates to be eligible under this Agreement or may withdraw any of those presently designated, by a written notice to this effect, given to ASI thirty (30) days in advance. 32. WAIVER The waiver of strict compliance of any of the terms of this contract or of any breach thereof on the part of SNET shall not be held or deemed to be a waiver of any subsequent failure to comply with or perform the same or any other term or condition of this contract or of any breach thereof. 33. SNET STANDARDS OF CONDUCT (A) ASI agrees to comply with Attachment E, SNET SUPPLIER POLICY STATEMENT ON ETHICS, and SNET SUPPLIER STANDARDS OF CONDUCT, which are attached hereto and incorporated herein by reference. (B) ASI shall comply with all applicable Federal, State, County, and Local laws, regulations, and codes in the performance of this Agreement. 34. NO EXCLUSIVE RIGHT Nothing herein contained shall be construed as the grant of any exclusive right by SNET to ASI, and nothing herein contained shall be construed as a requirement that SNET refer any account or accounts to ASI, but any referred account shall be subject to all terms of this Agreement. 35. LAW GOVERNING This Agreement is made in and shall be governed by the laws of the State of Connecticut. 36. COMPLIANCE WITH LAWS ASI agrees to comply with all applicable federal, state and local laws and regulations in the performance of this Agreement. Without in any way limiting the foregoing, ASI agrees to comply with the Fair Labor Standards Act and Occupational Safety and Health Act as amended as wall as SNET's Equal Employment Opportunity Certificate which ASI shall recertify upon SNET's request. 37. ENTIRE AGREEMENT This contract including Attachments A through F, which are incorporated by reference herein, constitute the entire contract and Agreement between SNET and ASI. No conversations, understandings or agreements varying, extending or affecting in any way, the terms or provisions of this contract shall be binding on either party unless reduced to writing and duly executed by an authorized representative of each party. IN WITNESS WHEREOF, this contract is executed this 7th day of September, 1995. ANALYTICAL SURVEYS, INC. BY /s/ Raymond R. Mann ITS Senior Vice President DATE August 23, 1995 THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY BY /s/ Charlotte G. Denenberg ITS Vice President-Network Technology and CTO DATE September 7, 1995 EX-10 3 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made effective for all purposes and in all respects as of the 20th day of September, 1995, by and between ANALYTICAL SURVEYS, INC., a Colorado corporation (hereinafter referred to as the "employer" or the "Corporation"), and SCOTT C. BENGER (hereinafter referred to as the "employee"). WITNESSETH THAT: WHEREAS, Employee has been employed by Employer since September of 1990; and WHEREAS, Employer and Employee desire to state in writing the terms and conditions of their agreements and understandings, and to continue the term of Employee's employment hereunder; NOW, THEREFORE, in consideration of the foregoing of the mutual promises herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending legally to be bound, agree as follows: 1. Term of Employment. This Employment Agreement shall supersede and replace any prior understandings with respect to Employee's employment. The term shall commence on September 20, 1995, and shall continue until September 20, 1997, unless sooner terminated in accordance with the provisions of Paragraph 6, and shall be automatically renewed for additional, successive periods of two (2) years each thereafter. 2. Duties of Employee. 2.1 It is understood and agreed that Employee's principal duties on behalf of Employer at the date of execution hereof are and shall be as Sr. Vice President - Finance of the Corporation. In accepting employment by Employer, Employee shall undertake and assume the responsibility of performing for and on behalf of Employer whatever duties are necessary and required in his position as Secretary, Treasurer and Sr. Vice President - Finance of the Corporation. 2.2 Employee covenants and agrees that at all times during the term of this Agreement, Employee shall devote his full-time efforts to his duties as an employee of the Employer. Employee further covenants and agrees that he will not, directly or indirectly, engage or participate in any activities at any time during the term of this Agreement in conflict with the best interests of Employer. 3. Compensation. 3.1 Salary. As compensation for the services to be rendered by Employee for Employer under this Agreement, Employee shall be paid not less than the following base annual salary, on a monthly basis, during the term hereof: $84,000.00, plus annual increases and bonuses, if any, voted him by the Board of Directors of employer. 3.2 Bonus. Employee shall be a participant in the Analytical Surveys, Inc. Incentive Bonus Plan and Stock Option Plan as approved by the Board of Directors; provided, that a change in tax rules and regulations or required accounting principles shall not negatively impact the amount of Employee's bonus. 3.3 Salary Review. Employee's salary will be reviewed annually in November, commencing November, 1995. 4. Additional Benefits. In addition to, and not in limitation of, the compensation referred to in Paragraph 3, Employee shall be paid the following additional benefits during the term hereof: 4.1 Reimbursement. Reimbursement of all reasonable expenses incurred by him in connection with performance of his duties as Secretary, Treasurer and Sr. Vice President - Finance of the Corporation, upon submission of vouchers. Reasonable expenses shall include, but not be limited to all out-of-pocket expenses for entertainment, travel, meals, lodging, automobile expenses, professional fees, professional dues and the like incurred by him in the interest of the Employer. 4.2 Participation in Benefit Plans. Employee shall be a participant, to the extent he meets all eligibility requirements of general application to senior executives of the Corporation, in any and all plans maintained by the Corporation to provide benefits for its employees, as specified in the Corporation's Employee Handbook, revised January 2, 1990, a copy of which has been given to Employee, including, but not limited to, group term life insurance, hospitalization, medical, disability, profit sharing and retirement plans; provided however, that reasonable employee contributions may be required and reasonable increases my be made in deductible amounts, similar to those then in effect for all other officers of the Corporation. 4.3 Vacations. Employee shall be entitled to vacations of not less than four (4) weeks per year. Employee may accrue any unused vacation time from year to year, and upon termination of employment will be compensated for any unused vacation time. Any specific vacation of more than two (2) weeks' duration shall be approved in advance by the President. 4.4 Other Perquisites. Employee shall be entitled to such additional perquisites as may be customarily granted by the Corporation to senior executives, as determined by the President of the Corporation. 4.5 Death or Disability Payments. In the event of the Employee's disability or death, Employee's salary in effect at the time of his death or disability shall continue to be paid to Employee, or to his designee, for a period of twelve (12) calendar months from the date of death or from the date of Employee's termination by reason of disability. For the purposes of this Employment Agreement, the obligations of the Employer make the payments upon the disability of Employee shall not become effective unless and until all of the following conditions are met, as determined by an independent physician selected by the Board of Directors and agreed to by Employee: (1) Employee shall become physically or mentally incapable (excluding infrequent and temporary absences due to ordinary illnesses) of properly performing the services required of him in accordance with his obligations under Paragraph 2 hereof or similar provisions of any renewal agreement; (2) such incapacities shall exist or be reasonably expected to exist for more than ninety (90) days in the aggregate during the period of twelve (12) consecutive months; and (3) either Employee or Employer shall have given the other thirty (30) days' written notice of his or its intention to terminate the active employment of Employee because of such disability. The benefits payable hereunder shall be in addition to, and shall not be offset against, any amounts paid to Employee or his designee by reason of insurance benefits pursuant to Paragraph 4.2 above. 4.6 Life Insurance. Employee shall be provided with a life insurance policy in the amount of $100,000 (provided he can meet the medical conditions for such coverage), payable to such beneficiaries as he shall designate, with an additional $100,000 of accidental death coverage. 5. Disclosure of Information. Employee acknowledges that in and as a result of his employment hereunder, he will be making use of, acquiring, and/or adding to confidential information of a special and unique nature and value relating to such matters as Employer's trade secrets, systems, procedures, manuals, confidential reports, and lists of clients. As a material inducement to Employer to enter into this Agreement and to pay to Employee the compensation stated in Paragraph 3, as well as any additional benefits stated in Paragraph 4, Employee covenants and agrees that he shall not, other than in the ordinary course of business, at any time during or following the term of his employment, directly or indirectly divulge or disclose for any purpose whatsoever or appropriate to his own use or to the use of others any confidential information that has been obtained by, or disclosed to him, as a result of his employment by Employer. 6. Termination. 6.1 Termination By Either Party Without Cause. At any time during the term hereof, this Employment Agreement may be terminated "without cause" by either Employer or Employee upon written notice to the other party. (A) In the event of such termination "without cause" by Employee, Employer shall have the option either (a) to accept Employee's resignation, effective immediately on receipt of such notice; or (b) to require Employee to continue to perform his duties hereunder, for a period not to exceed six (6) months from the date of receipt of such written notice. In either event, the Employee's compensation and benefits hereunder shall continue only until the effective date of termination, as defined in Paragraph 6.4 below. (B) In the event of such termination "without cause" by Employer, Employee shall be continued on the payroll for twelve (12) months, and shall receive bonuses equal to those received by him during the twelve (12) months prior to termination. Such severance pay shall be paid in twelve (12) equal, successive monthly payments, beginning on the 1st day of the month immediately following the effective date of termination. Employee shall also be continued under all group benefit plans for a period of twelve (12) months from the effective date of termination, as defined in Paragraph 6.4(A) below. In addition, Employee's stock options shall continue to vest, and he shall have the continuing right to exercise such options during the period of twelve (12) months from the effective date of termination. 6.2 Termination by Employer For Cause. Notwithstanding any other provision hereof, Employer may terminate Employee's employment under this Agreement at any time for cause. The termination shall be effective by written notice thereof to the Employee, which shall specify the cause for termination. For purposes hereof, the term "cause" shall mean the failure of Employee for any reason, within thirty (30) days after receipt by Employer of written notice from Employee, to correct, cease, or otherwise alter any action or omission to act that constitutes a material and willful breach of Agreement likely to result in material damage to the Corporation. Upon such termination for cause by Employer, Employee shall not receive termination pay or benefits beyond the effective date of termination, as defined in Paragraph 6.4(B) below. 6.3 Termination by Employee for Cause. Notwithstanding any other provision hereof, Employee may resign his employment under this Agreement at any time for cause. The termination may be by written notice thereof to Employer, which shall mean the failure of Employer for any reason, within thirty (30) days after receipt by Employer of written notice from Employee, to correct, cease or otherwise alter any material adverse change in the conditions of Employee's employment caused by (a) a change in ownership of Corporation; or (b) any change in Employee's position as Sr. Vice President - Finance, or the duties assigned to him by the President of the Company, unless Employee consents to such change, on terms as mutually agreed. Upon such termination for cause by Employee, Employee shall be continued on the payroll for eighteen (18) months from the effective date of termination (as defined in Paragraph 6.4(B) below) at his then current salary without further responsibilities to the Corporation. Employee shall also be continued under all group benefits plans for a period of eighteen (18) months from the effective date of termination. Employee's stock options shall continue to vest, and he shall have the continuing right to exercise such options during the period of eighteen (18) months from the effective date of termination. 6.4 Effective date of Termination. (A) The effective date of termination, as used in Paragraph 6.1 with respect to termination "without cause", shall be the date on which Employee actually ceases to perform his duties hereunder. (B) The effective date of termination, as used in Paragraph 6.2 and 6.3 with respect to termination "for cause", shall be thirty (30) calendar days after the date on which Employee receives or gives written notice of termination. 6.5 Limitation on Severance Compensation. Notwithstanding any other provision of the Agreement, solely in the event of a Termination Upon a Change In Control, the aggregate of the amount of severance compensation paid to the Employee under the Agreement or otherwise, but exclusive of any payments to the Employee by virtue of the Employee's exercise of any right or payment of any kind under any incentive or benefit plan upon a change in control, shall not include any amount that the Employer is prohibited from deducting for federal income tax purposes by virtue of Section 280G of the Internal Revenue Code or any successor provision. 7. Covenant Not to Compete. The parties hereto agree that the Employee shall not directly or indirectly own, control, operate, manage, consult, own shares in, be employed by, or otherwise participate in any sole proprietorship, corporation, partnership or entity whose primary business is the same or similar to the business of the Corporation during the term of his employment hereunder, nor for a period of one (1) years after his termination of employment, within the territory (North America) in which the Corporation does business. The parties hereto recognize that Employee has been retained in the position of Secretary, Treasurer and Sr. Vice President - Finance for the Corporation, and that in said position he is considered to be part of the professional, management and executive staff of the Corporation. In the event Employee violates this covenant of non- competition, both parties acknowledge and agree that the Corporation shall have the right to bring a lawsuit to enforce this covenant against Employee, and to obtain equitable relief in the form of an injunction and, where applicable, damages at law; that the District Court for El Paso County, Colorado shall have venue, and exclusive jurisdiction in such lawsuit; and that Colorado law shall apply. In the event the Corporation must bring such a lawsuit by reason of Employee's breach of this covenant of non- competition, the Corporation shall be entitled to recover its reasonable attorneys fees, costs, and expenses of litigation, in the event it prevails in such lawsuit. This covenant of non-competition has been negotiated and agreed to by and between the Corporation and Employee with full knowledge of, and pursuant to the requirements of Section 8-2-113 (2) of Colorado Revised Statutes, as amended from time to time, and is deemed by both parties to be fair and reasonable under the terms of that statute. 8. Other Business Activities. During the period of his employment under this Agreement, the Employee shall not be employed by or otherwise engage or be interested in any business whether or not in competition with the Corporation, or with any of its subsidiaries or affiliates, with the following exceptions: (A) Employee's investment in any business shall not be considered a violation of this paragraph, provided that such business is not in competition with the Corporation and so long as any services rendered to such business by Employee do not in any way interfere with Employee's duties under this Agreement. (B) Employee may consult with other businesses not in competition with the Corporation, provided that each such consulting job shall be expressly considered and approved or disapproved in advance by the audit committee of the Board of Directors. 9. Indemnification. So long as Employee is not found by a court of law to be guilty of willful and material breach of this Agreement, or to be guilty of willful gross misconduct, he shall be indemnified from and against any and all losses, liability, claims and expenses, damages, or causes of action, proceedings or investigations, or threats thereof (including reasonable attorney fees and expenses of counsel satisfactory to and approved by Employee) incurred by Employee, arising out of, in connection with, or based upon Employee's services and the performance of his duties pursuant to this Employment Agreement, or any other matter contemplated by this Employment Agreement, whether or not resulting in any such liability; and Employee shall be reimbursed by Employer as and when incurred for any reasonable legal or other expenses incurred by Employee in connection with investigating or defending against any such loss, claim, damage, liability, action, proceeding, investigation or threat thereof, or producing evidence, producing documents or taking any other action in respect thereto (whether or not Employee is a defendant in or target of such action, proceeding or investigation). 10. Burden and Benefit. This Agreement shall be binding upon, and shall inure to the benefit of, Employer and Employee, and their respective heirs, personal and legal representatives, successors, and assigns and shall be expressly binding upon and inure to the benefit of any person or entity assuring the Corporation, by merger, consolidation, purchase of assets or stock, or otherwise; provided, however, that the interests of the Employee hereunder are not subject to the claims of his creditors, and may not be voluntarily or involuntarily assigned, alienated or encumbered. 11. Governing Law. It is understood and agreed that the construction and interpretation of this Agreement shall at all times and in all respects be governed by the laws of the State of Colorado. 12. Severability. The provisions of this Agreement, including particularly but not solely, the provisions of Paragraphs 5 and 6, shall be deemed severable, and the invalidity or unenforceability of any one or more of the provisions of this Agreement shall not affect the validity and enforceability of the other provisions. 13. Notice. Any notice required to be given shall be sufficient if it is in writing and sent by certified or registered mail, return receipt requested, first-class postage prepaid, to this residence in the case of Employee, and to its principal office in the case of Employer. 14. Entire Agreement. This Agreement contains the entire agreement and understanding by and between Employer and Employee with respect to the employment of Employee, and no representations, promises, agreements, or understandings, written or oral, not contained herein shall be of any force or effect. No change or modification of this Agreement shall be valid or binding unless it is in writing and signed by the party against whom the waiver is sought to be enforced. No valid waiver of any provision of this Agreement at any time shall be deemed a waiver of any other provision of this Agreement at such time or at any other time. 15. Counterparts. The Agreement may be executed in two or more counterparts, any one of which shall be deemed the original without reference to the others. IN WITNESS WHEREOF, Employer and Employee have duly executed this Agreement as of the day and year first above written. EMPLOYER: ATTEST: ANALYTICAL SURVEYS, INC. a Colorado corporation /s/Brian J. Yates by: /s/ Sidney V. Corder Notary President EMPLOYEE: /s/ Scott C. Benger SCOTT C. BENGER EX-10 4 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made effective for all purposes and in all respects as of the 20th day of September, 1995, by and between ANALYTICAL SURVEYS, INC., a Colorado corporation (hereinafter referred to as the "employer" or the "Corporation"), and RAYMOND R. MANN (hereinafter referred to as the "employee". WITNESSETH THAT: WHEREAS, Employee has been employed by Employer since March of 1992; and WHEREAS, Employer and Employee desire to state in writing the terms and conditions of their agreements and understandings, and to continue the term of Employee's employment hereunder; NOW, THEREFORE, in consideration of the foregoing of the mutual promises herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending legally to be bound, agree as follows: 1. Term of Employment. This Employment Agreement shall supersede and replace any prior understandings with respect to Employee's employment. The term shall commence on September 20, 1995, and shall continue until September 20, 1997, unless sooner terminated in accordance with the provisions of Paragraph 6, and shall be automatically renewed for additional, successive periods of two (2) years each thereafter. 2. Duties of Employee. 2.1 It is understood and agreed that Employee's principal duties on behalf of Employer at the date of execution hereof are and shall be as Sr. Vice President - Business Development and Contracts of the Corporation. In accepting employment by Employer, Employee shall undertake and assume the responsibility of performing for and on behalf of Employer whatever duties are necessary and required in his position as Sr. Vice President - Business Development and Contracts of the Corporation. 2.2 Employee covenants and agrees that at all times during the term of this Agreement, Employee shall devote his full-time efforts to his duties as an employee of the Employer. Employee further covenants and agrees that he will not, directly or indirectly, engage or participate in any activities at any time during the term of this Agreement in conflict with the best interests of Employer. 3. Compensation. 1 3.1 Salary. As compensation for the services to be rendered by Employee for Employer under this Agreement, Employee shall be paid not less than the following base annual salary, on a monthly basis, during the term hereof: $84,000.00, plus annual increases and commissions, if any, voted him by the Board of Directors of employer. 3.2 Stock Options. Employee shall be a participant in the Analytical Surveys, Inc. Stock Option Plan as approved by the Board of Directors. 3.3 Commissions. Employee shall, on an annual basis, receive commissions based on a percentage of the Corporation's annual sales, and based upon a predetermined annual sales goal, to be set forth in a separate memorandum as determined by the President of the Corporation after consultation with Employee; provided that the amount of such commissions shall be determined by and at the sole discretion of the President of the Corporation. 3.4 Salary Review. Employee's salary will be reviewed annually in November, commencing November, 1995. 4. Additional Benefits In addition to, and not in limitation of, the compensation referred to in Paragraph 3, Employee shall be paid the following additional benefits during the term hereof: 4.1 Reimbursement. Reimbursement of all reasonable expenses incurred by him in connection with performance of his duties as Sr. Vice President - Business Development and Contracts of the Corporation, upon submission of vouchers. Reasonable expenses shall include, but not be limited to all out-of-pocket expenses for entertainment, travel, meals, lodging, automobile expenses, professional fees, professional dues and the like incurred by him in the interest of the Employer. 4.2 Participation in Benefit Plans. Employee shall be a participant, to the extent he meets all eligibility requirements of general application to senior executives of the Corporation, in any and all plans maintained by the Corporation to provide benefits for its employees, as specified in the Corporation's Employee Handbook, revised January 2, 1990, a copy of which has been given to Employee, including, but not limited to, group term life insurance, hospitalization, medical, disability, profit sharing and retirement plans; provided however, that reasonable employee contributions may be required and reasonable increases may be made in deductible amounts, similar to those then in effect for all other officers of the Corporation. 4.3 Vacations. Employee shall be entitled to vacations of not less than four (4) weeks per year. Employee may accrue any unused vacation time from year to year, and upon termination of employment will be compensated for any unused vacation time. Any 2 specific vacation of more than two (2) weeks' duration shall be approved in advance by the President. 4.4 Other Perquisites. Employee shall be entitled to such additional perquisites as may be customarily granted by the Corporation to senior executives, as determined by the President of the Corporation. 4.5 Death or Disability Payments. In the event of the Employee's disability or death, Employee's salary in effect at the time of his death or disability shall continue to be paid to Employee, or to his designee, for a period of twelve (12) calendar months from the date of death or from the date of Employee's termination by reason of disability. For the purposes of this Employment Agreement, the obligations of the Employer to make the payments upon the disability of Employee shall not become effective unless and until all of the following conditions are met, as determined by an independent physician selected by the Board of Directors and agreed to by Employee: (1) Employee shall become physically or mentally incapable (excluding infrequent and temporary absences due to ordinary illnesses) of properly performing the services required of him in accordance with his obligations under Paragraph 2 hereof or similar provisions of any renewal agreement; (2) such incapacities shall exist or be reasonably expected to exist for more than ninety (90) days in the aggregate during the period of twelve (12) consecutive months; and (3) either Employee or Employer shall have given the other thirty (30) days' written notice of his or its intention to terminate the active employment of Employee because of such disability. The benefits payable hereunder shall be in addition to, and shall not be offset against, any amounts paid to Employee or his designee by reason of insurance benefits pursuant to Paragraph 4.2 above. 4.6 Life Insurance. Employee shall be provided with a life insurance policy in the amount of $100,000 (provided he can meet the medical conditions for such coverage), payable to such beneficiaries as he shall designate, with an additional $100,000 of accidental death coverage. 5. Disclosure of Information. Employee acknowledges that in and as a result of his employment hereunder, he will be making use of, acquiring, and/or adding to confidential information of a special and unique nature and value relating to such matters as Employer's trade secrets, systems, procedures, manuals, confidential reports, and lists of clients. As a material inducement to Employer to enter into this Agreement and to pay to Employee the compensation stated in Paragraph 3, as well as any additional benefits stated in Paragraph 4, Employee covenants and agrees that he shall not, other than in the ordinary course of business, at any time during or following the term of his employment, directly or indirectly divulge or disclose for any purpose whatsoever or appropriate to his own use or to the use of others any confidential information 3 that has been obtained by, or disclosed to him, as a result of his employment by Employer. 6. Termination. 6.1 Termination By Either Party Without Cause. At any time during the term hereof, this Employment Agreement may be terminated "without cause" by either Employer or Employee upon written notice to the other party. (A) In the event of such termination "without cause" by Employee, Employer shall have the option either (a) to accept Employee's resignation, effective immediately on receipt of such notice; or (b) to require Employee to continue to perform his duties hereunder, for a period not to exceed six (6) months from the date of receipt of such written notice. In either event, the Employee's compensation and benefits hereunder shall continue only until the effective date of termination, as defined in Paragraph 6.4 below. (B) In the event of such termination "without cause" by Employer, Employee shall be continued on the payroll for twelve (12) months, and shall receive bonuses equal to those received by him during the twelve (12) months prior to termination. Such severance pay shall be paid in twelve (12) equal, successive monthly payments, beginning on the 1st day of the month immediately following the effective date of termination. Employee shall also be continued under all group benefit plans for a period of twelve (12) months from the effective date of termination, as defined in Paragraph 6.4(A) below. In addition, Employee's stock options shall continue to vest, and he shall have the continuing right to exercise such options during the period of twelve (12) months from the effective date of termination. 6.2 Termination by Employer For Cause. Notwithstanding any other provision hereof, Employer may terminate Employee's employment under this Agreement at any time for cause. The termination shall be effective by written notice thereof to the Employee, which shall specify the cause for termination. For purposes hereof, the term "cause" shall mean the failure of Employee for any reason, within thirty (30) days after receipt by Employee of written notice thereof from Employer, to correct, cease, or otherwise alter any action or omission to act that constitutes a material and willful breach of this Agreement likely to result in material damage to the Corporation, or willful gross misconduct likely to result in material damage to the Corporation. Upon such termination for cause by Employer, Employee shall not receive any termination pay or benefits beyond the effective date of termination, as defined in Paragraph 6.4(B) below. 6.3 Termination by Employee For Cause. Notwithstanding any other provision hereof, Employee may resign his employment under this Agreement at any time for cause. The termination may be by 4 written notice thereof to Employer, which shall specify the cause for Employee's resignation. For purposes hereof, the term "cause" shall mean the failure of Employer for any reason, within thirty (30) days after receipt by Employer of written notice from Employee, to correct, cease or otherwise alter any material adverse change in the conditions of Employee's employment caused by (a) a change in ownership of Corporation; or (b) any change in Employee's position from Sr. Vice President - Business Development and Contracts, or the duties assigned to him by the President of the Company, or any change in Employee's right to hire and fire the sales staff for the Company within the predetermined budget and with the knowledge and consent of the President of the Corporation, unless Employee consents to such change, on terms as mutually agreed. Upon such termination for cause by Employee, Employee shall be continued on the payroll for eighteen (18) months from the effective date of termination (as defined in Paragraph 6.4(B) below) at his then current salary without further responsibilities to the Corporation. Employee shall also be continued under all group benefits plans for a period of eighteen (18) months from the effective date of termination. Employee's stock options shall continue to vest, and he shall have the continuing right to exercise such options during the period of eighteen (18) months from the effective date of termination. 6.4 Effective date of Termination. (A) The effective date of termination, as used in Paragraph 6.1 with respect to termination "without cause", shall be the date on which Employee actually ceases to perform his duties hereunder. (B) The effective date of termination, as used in Paragraph 6.2 and 6.3 with respect to termination "for cause", shall be thirty (30) calendar days after the date on which Employee receives or gives written notice of termination. 6.5 Limitation on Severance Compensation. Notwithstanding any other provision of the Agreement, solely in the event of a Termination Upon a Change In Control, the aggregate of the amount of severance compensation paid to the Employee under the Agreement or otherwise, but exclusive of any payments to the Employee by virtue of the Employee's exercise of any right or payment of any kind under any incentive or benefit plan upon a change in control, shall not include any amount that the Employer is prohibited from deducting for federal income tax purposes by virtue of Section 280G of the Internal Revenue Code or any successor provision. 7. Covenant Not to Comptete. The parties hereto agree that the Employee shall not directly or indirectly own, control, operate, manage, consult, own shares in, be employed by, or otherwise participate in any sole proprietorship, corporation, partnership or entity whose primary business is the same or similar to the business of the Corporation during the term of his employment 5 hereunder, nor for a period of two (2) years after his termination of employment, within the territory (North America) in which the Corporation does business. The parties hereto recognize that Employee has been retained in the position of Sr. Vice President - Business Development and Contracts for the Corporation, and that in said position he is considered to be part of the professional, management and executive staff of the Corporation. In the event Employee violates this covenant of non- competition, both parties acknowledge and agree that the Corporation shall have the right to bring a lawsuit to enforce this covenant against Employee, and to obtain equitable relief in the form of an injunction and, where applicable, damages at law; that the District Court for El Paso County, Colorado shall have venue, and exclusive jurisdiction in such lawsuit; and that Colorado law shall apply. In the event the Corporation must bring such a lawsuit by reason of Employee's breach of this covenant of non-competition, the Corporation shall be entitled to recover its reasonable attorneys fees, costs, and expenses of litigation, in the event it prevails in such lawsuit. This covenant of non-competition has been negotiated and agreed to by and between the Corporation and Employee with full knowledge of, and pursuant to the requirements of Section 8-2-113 (2) of Colorado Revised Statutes, as amended from time to time, and is deemed by both parties to be fair and reasonable under the terms of that statute. 8. Other Business Activities. During the period of his employment under this Agreement, the Employee shall not be employed by or otherwise engage or be interested in any business whether or not in competition with the Corporation, or with any of its subsidiaries or affiliates, with the following exceptions: (A) Employee's investment in any business shall not be considered a violation of this paragraph, provided that such business is not in competition with the Corporation and the Employee does not render management or other personal services to such business; (B) Employee may consult with other businesses not in competition with the Corporation, provided that each such consulting job shall be expressly considered and approved or disapproved in advance by the audit committee of the Board of Directors. 9. Indemnification. So long as Employee is not found by a court of law to be guilty of willful and material breach of this Agreement, or to be 6 guilty of willful gross misconduct, he shall be indemnified from and against any and all losses, liability, claims and expenses, damages, or causes of action, proceedings or investigations, or threats thereof (including reasonable attorney fees and expenses of counsel satisfactory to and approved by Employee) incurred by Employee, arising out of, in connection with, or based upon Employee's services and the performance of his duties pursuant to this Employment Agreement, or any other matter contemplated by this Employment Agreement, whether or not resulting in any such liability; and Employee shall be reimbursed by Employer as and when incurred for any reasonable legal or other expenses incurred by Employee in connection with investigating or defending against any such loss, claim, damage, liability, action, proceeding, investigation or threat thereof, or producing evidence, producing documents or taking any other action in respect thereto (whether or not Employee is a defendant in or target of such action, proceeding or investigation). 10. Burden and Benefit. This Agreement shall be binding upon, and shall inure to the benefit of, Employer and Employee, and their respective heirs, personal and legal representatives, successors, and assigns and shall be expressly binding upon and inure to the benefit of any person or entity assuring the Corporation, by merger, consolidation, purchase of assets or stock, or otherwise; provided, however, that the interests of the Employee hereunder are not subject to the claims of his creditors, and may not be voluntarily or involuntarily assigned, alienated or encumbered. 11. Governing Law. It is understood and agreed that the construction and interpretation of this Agreement shall at all times and in all respects be governed by the laws of the State of Colorado. 12. Severability The provisions of this Agreement, including particularly but not solely, the provisions of Paragraphs 5 and 6, shall be deemed severable, and the invalidity or unenforceability of any one or more of the provisions of this Agreement shall not affect the validity and enforceability of the other provisions. 13. Notice. Any notice required to be given shall be sufficient if it is in writing and sent by certified or registered mail, return receipt requested, first-class postage prepaid, to this residence in the case of Employee, and to its principal office in the case of Employer. 14. Entire Agreement. 7 This Agreement contains the entire agreement and understanding by and between Employer and Employee with respect to the employment of Employee, and no representations, promises, agreements, or understandings, written or oral, not contained herein shall be of any force or effect. No change or modification of this Agreement shall be valid or binding unless it is in writing and signed by the party against whom the waiver is sought to be enforced. No valid waiver of any provision of this Agreement at any time shall be deemed a waiver of any other provision of this Agreement at such time or at any other time. 15. Counterparts. The Agreement may be executed in two or more counterparts, any one of which shall be deemed the original without reference to the others. IN WITNESS WHEREOF, Employer and Employee have duly executed this Agreement as of the day and year first above written. EMPLOYER: ATTEST: ANALYTICAL SURVEYS, INC. a Colorado corporation by: /s/ Sidney V. Corder /s/Scott C. Benger Secretary EMPLOYEE: /s/ Raymond R. Mann RAYMOND R. MANN 8 EX-10 5 Analytical Surveys, Inc. 1995 Stock Option Plan 1. Purpose. The 1995 Analytical Surveys, Inc. Stock Option Plan (the "Plan" or the "1995 Plan") is intended to advance the interests of Analytical Surveys, Inc. (the "Company") and its shareholders by encouraging and enabling selected officers, directors and other key employees upon whose judgment, initiative and effort the Company is largely dependent for the successful conduct of its business, to acquire and retain a proprietary interest in the Company by ownership of its stock. Options granted under the Plan are intended to be Options which do not meet the requirements of Section 422A of the Internal Revenue Code of 1986 (the "Code"). 2. Definitions. (a) "Board" means the Board of Directors of the Company. (b) "Committee" means the body administering the Plan. (c) "Common Stock" means the Company's Common Stock. (d) "Date of Grant" means the date on which an option is granted under the plan. (e) "Disinterested Person" means a director, officer or other person who has not been granted equity securities pursuant to the Plan during the year prior to their service as a plan administrator, unless (i) the plan under which they were awarded securities was a formula plan or a broad-based participant - directed plan or (ii) the plan they are administering does not permit participation by directors. (f) "Option" means an option granted under the Plan. (g) "Optionee" means a person to whom an option, which has not expired, has been granted under the Plan. (h) "Successor" means the legal representative of the estate of a deceased optionee or the person or persons who acquire the right to exercise an option by bequest or inheritance or by reason of the death of any optionee. 3. Administration of the Plan; Disinterested Administrators. (a) The Plan shall be administered by a Committee of three or more outside directors appointed from time to time by the Board; provided, however, that all Committee members administering the Plan must be "disinterested persons" as that term is herein defined. (b) Subject to the provisions of subparagraph (c) below, the Committee shall have full and final authority in its discretion to determine the individuals to whom and the time or times at which options shall be granted and the number of shares and purchase price of Common Stock covered by each option; to construe and interpret the Plan; to determine the terms and provisions of the respective option agreements, which need not be identical, including, but without limitation, terms covering the payment of the option price; and to make all other determinations and take all other actions deemed necessary or advisable for the proper administration of the Plan. All such actions and determinations shall be conclusively binding for all purposes and upon all persons. (c) If the selection of any director or officer of the Company to whom stock options may be granted pursuant to the Plan, or the determination of the maximum number of shares of stock which may be allocated to any such director or officer or which may be covered by stock options granted to any such director or officer pursuant to the Plan is subject to the discretion of any person, then such discretion shall be exercised only as follows: (1) With respect to the participation of directors: (i) By the board of directors, a majority of which board and a majority of the directors acting in the matter are disinterested persons; (ii) By, or only in accordance with the recommendation of, the Committee; or (iii) Otherwise in accordance with the Plan, if the Plan (A) specifies the number or maximum number of shares of stock which directors may acquire or which may be subject to stock options granted to directors pursuant to the Plan and the terms upon which, and the times at which, or the periods within which, such stock may be acquired or such options may be acquired and exercised; or (B) sets forth, by formula or otherwise, effective and determinable limitations with respect to the foregoing based upon earnings of the Company, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares or percentages thereof outstanding from time-to-time or similar factors. (2) With respect to the participation of officers who are not directors: (i) By the board of directors or a committee of three or more directors; (ii) By, or only in accordance with the recommendations of the Committee; or (iii) Otherwise in accordance with the Plan, if the Plan (A) Specifies the number or maximum number of shares of stock which directors may acquire or which may be subject to stock options granted to directors pursuant to the plan and the terms upon which, and the times at which, or the periods within which, such stock may be acquired or such options may be acquired and exercised; or (B) sets forth, by formula or otherwise, effective and determinable limitations with respect to the foregoing based upon earnings of the Company, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares or percentages thereof outstanding from time-to-time or similar factors. 4. Common Stock Subject to Options. The aggregate number of shares of the Company's Common Stock which may be issued upon the exercise of options granted under the Plan shall not exceed 120,000.00, subject to adjustment under the provisions of Paragraph 8. The shares of Common stock to be issued upon the exercise of options may be authorized but unissued shares, shares issued and reacquired by the company or shares bought on the market for the purposes of the Plan. In the event any option shall, for any reason, terminate or expire or be surrendered without having been exercised in full, the shares subject to such option but not purchased thereunder shall again be available for options to be granted under the Plan. 5. Participants. Options may be granted under the Plan to any person who is or who agrees to become a director, officer, or employee (including officers and employees who are also directors) of the Company. 6. Terms and Conditions of Options. Any option granted under the Plan shall be evidenced by an agreement executed by the Company and the applicable officer or employee and shall contain such terms and be in such form as the Board may from time to time approve, subject to the following limitations and conditions. 7. Option Price. (a) The option price per share with respect to each option shall be determined by the Board but shall in no instance be less than one-hundred percent (100%) of the fair market value to a share of the Common Stock on August 22, 1995. For the purposes hereof, fair market value shall be the bid price of the Common Stock on the OTC market as reported by NASDAQ. The bid price of the Common Stock, as reported by NASDAQ, on August 22, 1995 was $ 7.375. (b) Period of Option. The expiration date of each option shall be fixed by the Board, but, notwithstanding any provision of the Plan to the contrary, such expiration date shall not be more than ten (10) years from the Date of Grant. (c) Vesting of Shareholder Rights. Neither an optionee nor his successor shall have the rights of a shareholder of the company until the certificate evidencing the shares purchased are properly delivered to such optionee or his successor. (d) Exercise of Option; Sale of Underlying Security. Each option shall be exercisable from time to time over a period commencing the date of Grant and ending upon the expiration or termination of the option. An option shall not be exercisable in whole or in part prior to the date of Board approval of the Plan. Any underlying security issued pursuant to the exercise of an option under the Plan must be held for at least six months from the date of grant of the exercise of the option, before such security can be sold. (e) Nontransferability of Option. No option shall be transferable or assignable by an optionee, otherwise than by will or the laws of descent and distribution and each option shall be exercisable, during the optionee's lifetime, only by him. No option shall be pledged or hypothecated in any way and no option shall be subject to execution, attachment, or similar process except with the expressed consent of the Board. (f) Termination of Employment. Upon termination of an optionee's employment with the Company, his option privileges shall be terminated in accordance with the terms of the option agreement between the Company and the Optionee. The granting of an option to an eligible person does not alter, in any way, the Company's existing rights to terminate such person's employment at any time for any reason, nor does it confer upon such person any rights or privileges except as specifically provided for in the Plan. (g) Death of Optionee. If an optionee dies while in the employ of the company or any subsidiary, his option privileges shall be limited to the shares which were immediately purchasable by him at the date of death and such option privileges shall expire unless exercised by his successor within one hundred-eighty (180) days after the date of death. 8. Adjustments. (a) In the event that the outstanding shares of Common Stock of the Company are hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation, by reason of a recapitalization, reclassification, stock split-up, combination of shares, or dividend or other distribution payable in capital stock, appropriate adjustment shall be made by the Board in the number and kind of shares for the purchase of which options may be granted under the Plan. In addition, the Board shall make appropriate adjustment in the number and kind of shares as to which outstanding options, or portions thereof then unexercised, shall be exercisable, to the end that the proportionate interest of the holder of the option shall, to the extent practicable, be maintained as before the occurrence of such event. Such adjustment in outstanding options shall be made without change in the total price applicable to the unexercised portion of the option but with a corresponding adjustment in the option price per share. (b) In the event of the dissolution or liquidation of the Company, any option granted under the Plan shall terminate as of a date to be fixed by the Board, provided that no less than thirty (30) days' written notice of the date so fixed shall be given to each optionee and each such optionee shall have the right during such period to exercise his option as to all or any part of the shares covered thereby including shares as to which such option would not otherwise be exercisable by reason of an insufficient lapse of time. (c) In the event of a Reorganization (as hereinafter defined) in which the Company is not he surviving or acquiring company, or in which the Company is or becomes a wholly owned subsidiary of another company after the effective date of the Reorganization, then: (1) If there is no plan or agreement respecting the Reorganization ("Reorganization Agreement") or if the Reorganization Agreement does not specifically provide for the change, conversion, or exchange of the shares under outstanding and unexercised stock options for securities of another corporation, then the Board shall take such action, and the options shall terminate, as provided in subparagraph (b) of the Paragraph 7; or (2) If there is a Reorganization Agreement and if the Reorganization Agreement specifically provides for the change, conversion, or exchange of the shares under outstanding and unexercised stock options for securities of another corporation, then the Board shall adjust the shares under such outstanding and unexercised stock options (and shall adjust the shares remaining under the Plan which are then available to be optioned under the plan if the Reorganization Agreement makes specific provision (therefore) and in a manner consistent with the provisions of the Reorganization Agreement for the adjustment, change, conversion, or exchange of such stock and such options. The term "Reorganization as used in this subparagraph (c) of the Paragraph 8 shall mean any statutory merger, statutory consolidation, sale of all or substantially all of the assets of the Company, or sale, pursuant to an agreement with the Company of securities of the Company pursuant to which the Company is or become s a wholly owned subsidiary of another company after the effective date of the Reorganization. (d) Adjustments and determination under this Paragraph 8 shall be made by the Board, whose decisions as to what adjustments or determinations shall be made, and the extent thereof, shall be final, binding, and conclusive. 9. Restriction of Issuing Shares. The exercise of each option shall be subject to the condition that if at any time the Company shall determine in its discretion that the satisfaction of withholding tax or other withholding liabilities, or that the listing, registration, or qualification of any shares otherwise deliverable upon such exercise upon any securities exchange or under any state or federal law, or that the consent or approval of any shall have been effected or obtained free of any condition not acceptable to the Company. 10. Use of Proceeds. The proceeds received by the Company from the sale of Common Stock pursuant to the exercise of options granted under the Plan shall be added to the Company's general funds and used for general corporate purposes. 11. Terms of the Plan. Unless the Plan shall theretofore have been terminated by the Board or as provided in Paragraph 12, the Plan shall terminate ten (10) years after the effective date of the Plan. 12. Amendment, Suspension, and Termination of the Plan. The Board may at any time suspend or terminate the plan or may amend it from time to time in such respects as the Board may deem advisable in order that the options granted thereunder may conform to any changes in the law or in any other respect which the Board may deem to be in the best interest of the Company. No option may be granted during any suspension or after the termination of the Plan. No amendment, suspension, or termination of the Plan shall, without an optionee's consent, alter or impair any of the rights or obligations under the option theretofore granted to such optionee under the Plan. 13. Effective Date of Plan; Shareholder Approval. The effective date of the Plan is August 22, 1995, the date of this approval by the Board. It shall be subject to approval and ratification by the Shareholders of the Company at its next regularly scheduled meeting in February, 1996; provided, that grants of stock options may be made by the Committee prior to such Shareholder approval, but that no exercise of the options will be allowed prior to such Shareholder approval. EX-23 6 Consent of Independent Auditors The Board of Directors Analytical Surveys, Inc.: We consent to incorporation by reference in the registration statements (No. 33-24142, No. 33-33948, No. 33-53950, and No. 33-59940) on Form S-8 of Analytical Surveys, Inc. of our report dated November 3, 1995, relating to the balance sheets of Analytical Surveys, Inc. as of September 30, 1995 and 1994, and the related statements of operations, stockholders' equity, and cash flows for the years then ended which report appears in the September 30, 1995 Annual Report on Form 10-KSB of Analytical Surveys, Inc. KPMG Peat Marwick LLP Denver, Colorado November 3, 1995 EX-23 7 CONSENT OF COUNSEL I hereby consent to the use of my name as legal counsel in the Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended September 30, 1995 filed by Analytical Surveys, Inc. on Form 10-KSB. DANIEL P. EDWARDS, P.C. BY: /s/ Daniel P. Edwards President Colorado Springs, CO December 27, 1995 EX-27 8
5 This schedule contains summary financial information extracted from SEC Form 10-QSB and is qualified in its entirety by reference to such financial statements. 0000753048 ANALYTICAL SURVEYS INC 12-MOS SEP-30-1995 SEP-30-1995 665274 0 7650114 20000 0 8554444 6525545 5046065 10047675 2816212 0 3336256 0 0 3318432 10047675 0 13538507 0 11519146 (1278) 0 120462 1900177 716000 1184177 0 0 0 1184177 .40 .40
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