-----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, Mok/oiTkmIR0wwwh5iBwz2lbBUHrQgZFaGS4x4V20Wi/lC02TaxmIfKfDv/WGjpW Ho+PN8xlZJX6FXLeguw+4g== 0001038838-06-000288.txt : 20060420 0001038838-06-000288.hdr.sgml : 20060419 20060419113118 ACCESSION NUMBER: 0001038838-06-000288 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060417 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060419 DATE AS OF CHANGE: 20060419 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARADYME CORP CENTRAL INDEX KEY: 0001123580 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 330619254 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50038 FILM NUMBER: 06766353 BUSINESS ADDRESS: STREET 1: 1255 NORTH RESEARCH WAY STREET 2: SUITE Q 3500 CITY: OREM STATE: UT ZIP: 84097 BUSINESS PHONE: 801-705-5000 MAIL ADDRESS: STREET 1: 1255 NORTH RESEARCH WAY STREET 2: SUITE Q 3500 CITY: OREM STATE: UT ZIP: 84097 FORMER COMPANY: FORMER CONFORMED NAME: ALBION AVIATION INC DATE OF NAME CHANGE: 20000912 8-K 1 form8k041706.txt FORM 8-K DATED APRIL 17, 2006 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): April 17, 2006 ARADYME CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 000-50038 33-0619254 - ------------------------------- ------------------------ ------------------- (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation or organization) Identification No.) 1255 North Research Way, Building Q3500 Orem, Utah 84097 ---------------------------------------- ---------- (Address of principal executive offices) (Zip code) 801-705-5000 ---------------------------------------------------- (Registrant's telephone number, including area code) N/A ------------------------------------------------------------ (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 1.01--ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. On April 17, 2006, Aradyme Corporation revised and restated the terms of an investment agreement with Eagle Rock Capital, LLC, an affiliate of Merwin D. Rasmussen, a director and corporate secretary of Aradyme. On the date of the original agreement, December 12, 2005, the closing sales price of Aradyme's common stock was $0.37 per share. On April 17, 2006, the closing sales price of Aradyme's common stock was $0.28 per share. Under the revised and restated agreement, Aradyme has agreed to sell to Eagle Rock Capital, in a series of tranches, up to 15,000,000 shares of common stock at $0.20 per share and warrants to purchase up to an additional 18,750,000 shares of common stock with exercise prices of $0.40 per share. The warrant to purchase 5,000,000 shares issued December 12, 2005, has been canceled and replaced with a warrant to purchase 5,000,000 shares under the revised and restated agreement. All of the warrants are exercisable any time on or after December 12, 2006, and expire on December 12, 2011. If all of the tranches are fully funded, Aradyme will receive $3,000,000 without regard to any additional amounts that would be received if any of the warrants are exercised. The revised and restated agreements obligate Aradyme to file a registration statement with the Securities and Exchange Commission within 30 days after Aradyme's certificate of incorporation is amended to increase its capitalization from 50,000,000 shares of common stock to 100,000,000 shares of common stock. The registration statement will register the resale of both the shares of common stock and the shares of common stock issuable upon the exercise of the warrants acquired under the revised and restated agreement as well as certain other shares designated by Eagle Rock Capital. The revised and restated agreement also provides Eagle Rock Capital with a right of first refusal to provide additional equity financing for a period of 18 months after the closing date. ITEM 3.02--UNREGISTERED SALES OF EQUITY SECURITIES. The information provided in Item 1.01 above is incorporated herein by reference. On April 17, 2006, Aradyme revised and restated its agreement and agreed to issue up to 15,000,000 shares of common stock and warrants to purchase an additional 18,750,000 shares of common stock to one accredited investor. The purchaser was an affiliate of one of Aradyme's directors and negotiated the terms of the transaction directly with Aradyme's executive officers. No general solicitation was used, no commission or other remuneration was paid in connection with such transaction, and no underwriter participated. The purchaser acknowledged, in writing, the receipt of restricted securities and consented to a legend on the certificate issued and stop-transfer instructions with the transfer agent. This transaction was effected in reliance on the exemption from registration provided in Section 4(2) of the Securities Act of 1933, as amended, for transactions not involving any public offering. 2 ITEM 9.01--FINANCIAL STATEMENTS AND EXHIBITS The following are exhibits to this report: Exhibit Number Title of Document Location 10 Material Contracts - -------------- --------------------------------------------------- ----------- 10.29 Revised and Restated Stock Purchase Agreement This filing between Aradyme Corporation and Eagle Rock Capital, LLC, dated April 17, 2006 10.30 Revised and Restated Registration Rights Agreement This filing between Aradyme Corporation and Eagle Rock Capital, LLC, dated April 17, 2006 10.31 Form of Warrant To Purchase Shares of Common Stock This filing (to be issued pursuant to Revised and Restated Stock Purchase Agreement between Aradyme Corporation and Eagle Rock Capital, LLC, effective December 12, 2005) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ARADYME CORPORATION Registrant Dated: April 17, 2006 By: /s/ James R. Spencer ------------------------- James R. Spencer, Chief Executive Officer 3 EX-10.29 2 ex1029form8k041706.txt REVISED AND RESTATED STOCK PURCHASE AGREEMENT REVISED AND RESTATED STOCK PURCHASE AGREEMENT --------------------------- These securities have not been registered with the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Securities Act"), and are being offered in reliance on exemptions from registration provided in Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder and preemption from the registration or qualification requirements (other than notice filing and fee provisions) of applicable state laws under the National Securities Markets Improvement Act of 1996. ---------------------------- THIS REVISED AND RESTATED STOCK PURCHASE AGREEMENT (this "Agreement") is entered into this 17th day of April, 2006, effective as of December 12, 2005, by and between ARADYME CORPORATION, a Delaware corporation (the "Company"), and EAGLE ROCK CAPITAL, LLC, a Utah limited liability company (the "Purchaser"), on the following: PREMISES A. The Company and the Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the provisions of Regulation D, as promulgated by the SEC under the Securities Act. B. The Purchaser wishes to purchase from the Company, and the Company wishes to sell and issue to the Purchaser, upon the terms and conditions stated in this Agreement, (i) up to an aggregate of 15,000,000 shares of the Company's common stock, par value $0.001 per share (the "Common Stock"), and (ii) warrants to purchase an aggregate of up to 18,750,000 shares of the Company's common stock, par value $0.001 per share, the form of which is attached hereto as Exhibit A (the "Warrants"); and (iii) the shares of common stock issuable upon exercise of the warrants (the "Warrant Shares"). C. Contemporaneously with the sale of the Common Stock and Warrants, the parties hereto will execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit B (the "Registration Rights Agreement"), pursuant to which the Company will agree to provide certain registration rights under the Securities Act, the rules and regulations promulgated thereunder, and applicable state securities laws. AGREEMENT NOW, THEREFORE, upon the foregoing premises, which are incorporated herein by reference, and for and in consideration of the mutual promises and covenants contained in this Agreement, it is hereby agreed as follows. ARTICLE I DEFINITIONS "10-KSB" means the Company's Annual Report on Form 10-KSB for the fiscal year ended September 30, 2004, as filed with the SEC on January 13, 2005, and as subsequently amended February 14, 2005. Revised and Restated 4/18/2006 Effective as of 12/12/05 "Affiliate" means, respecting any Person: (a) a spouse or member of the immediate family of such Person; (b) any member, manager, director, officer, or partner of such Person; (c) any corporation, partnership, business, association, limited liability company, firm, or other entity of which such Person is a member, manager, director, officer, or partner or owns or controls, directly or indirectly, more than 50% of the voting stock or other equity interests; and (d) any other Person that directly or indirectly controls, is controlled by, or is under direct or indirect common control with such first Person. "Agreement" means this Stock Purchase Agreement. "Business Day" means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business. "Closing" has the meaning specified in Section 2.08. "Closing Date" has the meaning specified in Section 2.08. "Common Stock" has the meaning specified in the premises of this Agreement. "Company" means Aradyme Corporation, a Delaware corporation, its successors and assigns. "Company's Knowledge" means a fact, circumstance, or other matter of which the Company has actual knowledge or reasonably should have knowledge after due inquiry of its officers, directors, and key employees and reasonable review of its books and records. "Confidential Information" means proprietary information, trade secrets, confidential information, and know-how (including ideas, formulae, compositions, processes, procedures and techniques, research and development information, computer program code, performance specifications, support documentation, drawings, specifications, designs, business and marketing plans, and customer and supplier lists and related information). "Environmental Laws" has the meaning set forth in Section 3.17. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Funding Date(s)" means any one or more of the following: Tranche Two Funding Date, Tranche Three Funding Date, Tranche Four Funding Date, or Tranche Five Funding Date. "Generally accepted accounting principles" or "GAAP" means accounting principles that are (a) consistent with the principles promulgated or adopted by the United States Financial Accounting Standards Board and its predecessors and other recognized principle setting bodies, in effect from time to time; (b) applied on a basis consistent with prior periods; and (c) such that a certified public accountant would, insofar as the use of accounting principles is pertinent, be in a position to base an opinion as to financial statements in which such principles have been properly applied. "Indemnified Person" shall have the meaning set forth in Section 8.03. "Infringe" shall have the meaning set forth in Section 3.16(d). Revised and Restated 4/18/2006 2 Effective as of 12/12/05 "Intellectual Property" means all of the following: (a) patents, patent applications, patent disclosures, and inventions (whether or not patentable and whether or not reduced to practice); (b) trademarks, service marks, trade dress, trade names, corporate names, logos, slogans, and Internet domain names, together with all goodwill associated with each of the foregoing; (c) copyrights and copyrightable works; (d) registrations, applications, and renewals for any of the foregoing; and (e) proprietary computer software (including data, data bases, and documentation). "Investment Representations" has the meaning set forth in Section 5.02(a). "Material Adverse Effect" means a material adverse effect on (a) the assets, liabilities, results of operations, condition (financial or otherwise), business, or prospects of the Company and its Subsidiaries taken as a whole, or (b) the ability of the Company to perform its obligations under the Transaction Documents. "Person" means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority, or any other form of entity not specifically listed herein. "Purchaser" means Eagle Rock Capital, LLC, a Utah limited liability company, and its successors and assigns. "Registration Rights Agreement" means the Registration Rights Agreement attached as Exhibit B to this Agreement. "SEC" means the United States Securities and Exchange Commission. "SEC Filings" has the meaning set forth in Section 3.07. "Securities" means the Common Stock, the Warrants, and the Warrant Shares. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Subsidiary" has the meaning set forth in Section 3.01. "Tranche Two Funding Date" is the date on which the Common Stock and Warrants described in Section 2.02(b) are purchased by Purchaser. "Tranche Three Funding Date" the date on which the Common Stock and Warrants described in Section 2.02(c) are purchased by Purchaser. "Tranche Four Funding Date" the date on which the Common Stock and Warrants described in Section 2.02(d) are purchased by Purchaser. "Tranche Five Funding Date" the date on which the Common Stock and Warrants described in Section 2.02(e) are purchased by Purchaser. "Transaction Documents" means this Agreement, the Warrants, and the Registration Rights Agreement. "Warrants" has the meaning specified in the premises of this Agreement. Revised and Restated 4/18/2006 3 Effective as of 12/12/05 "Warrant Shares" has the meaning specified in the premises of this Agreement. ARTICLE II PURCHASE AND SALE 2.01 Authorization. The Company has duly authorized the sale and issuance, pursuant to the terms of this Agreement, of the Common Stock and Warrants at the times and prices and subject to the conditions set forth in this Agreement. 2.02 Sale and Purchase. Subject to the terms and conditions of this Agreement, the Company, upon execution and acceptance of this Agreement and payment of the amount due at Closing, hereby agrees to sell, grant, and issue to the Purchaser, the following: (a) Tranche One: (i) 5,000,000 shares of Common Stock for a purchase price of $0.20 per share, or a total of $1,000,000, payable at Closing; and (ii) 5,000,000 Warrants to purchase one share of common stock at $0.40 per share, or a total of $2,000,000 if all such Warrants are exercised, not exercisable until at least one year after the Closing Date, and thereafter exercisable at any time within six years after the Closing Date. (b) Tranche Two: (i) 2,500,000 shares of Common Stock for a purchase price of $0.20 per share, or a total of $500,000, payable on or before the date on which a registration statement must be filed under Section 2(a) of the Registration Rights Agreement (the "Tranche Two Funding Date"); and (ii) 3,125,000 Warrants to purchase one share of common stock at $0.40 per share, or a total of $1,250,000 if all such Warrants are exercised, not exercisable until at least one year after the Closing Date, and thereafter exercisable at any time within six years after the Closing Date. (c) Tranche Three: (i) 2,500,000 shares of Common Stock for a purchase price of $0.20 per share, or a total of $500,000, payable on or before the date on which a registration statement must be filed under Section 2(a) of the Registration Rights Agreement (the "Tranche Three Funding Date"); and (ii) 3,125,000 Warrants to purchase one share of common stock at $0.40 per share, or a total of $1,250,000 if all such Warrants are exercised, not exercisable until at least one year after the Closing Date, and thereafter exercisable at any time within six years after the Closing Date. Revised and Restated 4/18/2006 4 Effective as of 12/12/05 (d) Tranche Four: (i) 2,500,000 shares of Common Stock for a purchase price of $0.20 per share, or a total of $500,000, payable on or before the date on which a registration statement must be filed under Section 2(a) of the Registration Rights Agreement (the "Tranche Four Funding Date"); and (ii) 3,750,000 Warrants to purchase one share of common stock at $0.40 per share, or a total of $1,500,000 if all such Warrants are exercised, not exercisable until at least one year after the Closing Date, and thereafter exercisable at any time within six years after the Closing Date. (e) Tranche Five: (i) 2,500,000 shares of Common Stock for a purchase price of $0.20 per share, or a total of $500,000, payable on or before the date on which a registration statement must be filed under Section 2(a) of the Registration Rights Agreement (the "Tranche Five Funding Date"); and (ii) 3,750,000 Warrants to purchase one share of common stock at $0.40 per share, or a total of $1,500,000 if all such Warrants are exercised, not exercisable until at least one year after the Closing Date, and thereafter exercisable at any time within six years after the Closing Date. 2.03 Termination. Notwithstanding any other provision of this Agreement, Purchaser shall have no right to fund Tranches Two, Three, Four, or Five if such tranches are not funded as of the date the registration statement is filed pursuant to Section 2(a) of the Registration Rights Agreement. 2.04 Preexisting Rights. This Agreement and the parties' rights and obligations hereunder shall not abrogate the rights of Enviro Fresh, Inc. or Merwin D. Rasmussen, affiliates of Purchaser, under that Modification and Documentation of Obligation dated as of September 29, 2003. 2.05 Payment of Purchase Price. All amounts payable by Purchaser hereunder on any Funding Date or the exercise of Warrants shall be paid by certified or official bank check, wire transfer, or other means acceptable to the Company. Payment may be made, at Purchaser's sole discretion, by cancellation of up to $100,000 in principal, plus any unpaid interest accrued thereon, owed by the Company to Purchaser or to an affiliate of Purchaser, provided that such debt is assigned to Purchaser prior to such payment. Payment shall not be deemed to have been received unless and until the Purchaser's payment, in whatever form, is collected in immediately available funds for the account of the Company by the Company's bank. 2.06 Delivery of Certificates for Common Stock and Warrants. Within two Business Days after receipt of the purchase price by the Company, it shall transmit to the Purchaser such number of certificates as the Purchaser may reasonably request evidencing the Common Stock purchased and an original Warrant, signed by the appropriate officers of the Company, in the form of Exhibit A appropriately completed to reflect the terms of such Warrant pursuant to the provisions of this Agreement. Purchaser may request, by written instructions, such certificates shall be (a) issued in even denominations of 100,000 shares, except that in the event the number of shares purchased is not an even increment of 100,000, one certificate shall be issued for such remaining lesser number, and (b) registered in the name of the Purchaser provided on the signature page hereof. Revised and Restated 4/18/2006 5 Effective as of 12/12/05 2.07 Issuance Expenses. The Company shall pay all costs and expenses of issuing and delivering the certificates for the Common Stock and Warrants respecting the issuance and delivery of such securities to the Purchaser. 2.08 Closing; Closing Date. The payment of $1,000,000 for the purchase of 5,000,000 shares of Common Stock shall be delivered to the Company against delivery to the Purchaser of one or more certificates for the shares so paid for and purchased and original Warrants as provided above (the "Closing") at the offices of Kruse Landa Maycock & Ricks, LLC, 50 West Broadway, Eighth Floor, Salt Lake City, Utah, at 5:00 o'clock p.m., local time on December 12, 2005, or such date, time, and place as may be mutually acceptable to the parties hereto (the "Closing Date"). ARTICLE III REPRESENTATIONS OF THE COMPANY The Company hereby represents and warrants to the Purchaser, except as set forth in the schedules delivered herewith (collectively, the "Disclosure Schedules"), as follows. 3.01 Organization, Good Standing, and Qualification. Each of the Company and its Subsidiaries is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own its properties. Each of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not and could not reasonably be expected to have a Material Adverse Effect. The Company's Subsidiaries are reflected on Schedule 3.01 hereto (the "Subsidiaries"). 3.02 Authorization. The Company has full power and authority and has taken all requisite action on the part of the Company and its officers, directors, and stockholders necessary for (a) the authorization, execution, and delivery of the Transaction Documents; (b) authorization of the performance of all obligations of the Company hereunder or thereunder; and (c) except as described on Schedule 3.02 hereto, the authorization, issuance (or reservation for issuance), and delivery of the Securities. The Transaction Documents constitute the legal, valid, and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and similar laws of general applicability, relating to or affecting creditors' rights generally. 3.03 Capitalization. (a) The Company is authorized to issue (i) 50,000,000 shares of common stock, of which 25,229,546 shares are issued and outstanding as of the date of this Agreement and 8,325,500 shares are reserved for issuance on the exercise of outstanding options and warrants; and (ii) 1,000,000 shares of preferred stock, $0.001 par value per share, none of which is outstanding. The common stock has the voting powers, designations, preferences, rights, qualifications, limitations, or restrictions set forth in the certificate of incorporation and amendments thereto. The undesignated preferred stock may be issued in such series with the voting powers, designations, preferences, rights, qualifications, limitations, or restrictions as may be duly approved by the board of directors. All of the issued and outstanding shares of the Company's capital stock have been duly authorized and validly issued, are fully paid, nonassessable, and free of preemptive rights, and were issued in full compliance with applicable law and any rights of third parties. All of the issued and outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued, are fully Revised and Restated 4/18/2006 6 Effective as of 12/12/05 paid, nonassessable, and free of preemptive rights, were issued in full compliance with applicable law and any rights of third parties, and are owned by the Company, beneficially and of record, subject to no lien, encumbrance, or other adverse claim. No Person is entitled to preemptive or similar statutory or contractual rights with respect to any securities of the Company. Except as described above, there are no outstanding warrants, options, convertible securities, or other rights, agreements, or arrangements of any character under which the Company or any of its Subsidiaries is or may be obligated to issue any equity securities of any kind and except as contemplated by this Agreement, neither the Company nor any of its Subsidiaries is currently in negotiations for the issuance of any equity securities of any kind. Except as described on Schedule 3.03(a) and except for the Registration Rights Agreement, there are no voting agreements, buy-sell agreements, option or right of first purchase agreements, or other agreements of any kind among the Company and any of the security holders of the Company relating to the securities of the Company held by them. Prior to this Agreement, the Company has not granted any Person the right to require the Company to register any securities of the Company under the Securities Act, whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the account of any other Person. (b) Schedule 3.03(b) sets forth a true and complete table setting forth the pro forma capitalization of the Company on a fully-diluted basis giving effect to (i) the issuance of the Common Stock and the Warrants, (ii) any adjustments in other securities resulting from the issuance of the Common Stock or the Warrants, and (iii) the exercise or conversion of all outstanding securities. Except as described on Schedule 3.03(b), the issuance and sale of the Securities hereunder will not obligate the Company to issue shares of common stock or other securities to any other Person (other than the Purchaser) and will not result in the adjustment of the exercise, conversion, exchange, or reset price of any outstanding security. (c) The Company does not have outstanding stockholder purchase rights or any similar arrangement in effect giving any Person the right to purchase any equity interest in the Company upon the occurrence of certain events. 3.04 Valid Issuance. The Common Stock has been duly and validly authorized and, when issued and paid for pursuant to this Agreement, will be validly issued, fully paid, and nonassessable, and shall be free and clear of all encumbrances and restrictions, except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws. The Warrants have been duly and validly authorized. Upon the due exercise of the Warrants, the Warrant Shares will be validly issued, fully paid, nonassessable, and free and clear of all encumbrances and restrictions, except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws. Except as described on Schedule 3.04, the Company has reserved a sufficient number of shares of common stock for issuance upon the exercise of exercisable Warrants, free and clear of all encumbrances and restrictions, except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws. 3.05 Consents. The execution, delivery, and performance by the Company of the Transaction Documents and the offer, issuance, and sale of the Securities require no consent of, action by or in respect of, or filing with any Person, governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws that the Company undertakes to file within the applicable time periods. The Company has taken all action necessary to exempt (a) the issuance and sale of the Securities, (b) the issuance of the Warrant Shares upon due exercise of the Warrants, and (c) the other transactions Revised and Restated 4/18/2006 7 Effective as of 12/12/05 contemplated by the Transaction Documents from the provisions of any antitakeover, business combination, or control share law or statute binding on the Company or to which the Company or any of its assets and properties may be subject or any provision of the Company's certificate of incorporation, bylaws, or any stockholder rights agreement that is or could become applicable to the Purchaser as a result of the transactions contemplated hereby, including the issuance of the Securities and the ownership, disposition, or voting of the Securities by the Purchaser or the exercise of any right granted to the Purchaser pursuant to this Agreement or the other Transaction Documents. 3.06 Over-the-Counter Bulletin Board Compliance. The Company's common stock is registered pursuant to Section 12(g) of the Exchange Act and is quoted on the Over-the-Counter Bulletin Board (the "OTCBB"), and the Company has taken no action designed to terminate, or likely to have the effect of terminating, the registration of the common stock under the Exchange Act or the quotation of the common stock on the OTCBB, nor has the Company received any notification that the SEC or the NASD is contemplating terminating such registration or listing, nor is the Company aware of any facts or circumstances that might reasonably be expected to result in such a transaction. 3.07 Delivery of SEC Filings; Business. The Company has provided the Purchaser with copies of the Company's 10-KSB and all other reports filed by the Company pursuant to the Exchange Act since the filing of the 10-KSB and prior to the date hereof (collectively, the "SEC Filings"). The SEC Filings are the only filings required of the Company pursuant to the Exchange Act for such period. The Company and its Subsidiaries are engaged only in the business described in the SEC Filings and the SEC Filings contain a complete and accurate description in all material respects of the business of the Company and its Subsidiaries taken as a whole. 3.08 Use of Proceeds. The proceeds of the sale of the Common Stock and the Warrants hereunder shall be used by the Company as described in Schedule 3.08. 3.09 No Material Adverse Change. Since September 30, 2004, except as identified and described in the SEC Filings or as described on Schedule 3.09, there has not been: (a) any change in the consolidated assets, liabilities, financial condition, or operating results of the Company from that reflected in the financial statements included in the Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 2005, except for changes in the ordinary course of business that have not and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate; (b) any declaration or payment of any dividend, or any authorization or payment of any distribution, on any of the capital stock of the Company, or any redemption or repurchase of any securities of the Company; (c) any material damage, destruction, or loss, whether or not covered by insurance to any assets or properties of the Company or its Subsidiaries; (d) any waiver, not in the ordinary course of business, by the Company or any Subsidiary of a material right or of a material debt owed to it; (e) any satisfaction or discharge of any lien, claim, or encumbrance or payment of any obligation by the Company or a Subsidiary, except in the ordinary course of business and which is not material to the assets, properties, financial condition, operating results, or business of the Company and its Subsidiaries taken as a whole (as such business is presently conducted and as it is proposed to be conducted); Revised and Restated 4/18/2006 8 Effective as of 12/12/05 (f) any change or amendment to the Company's certificate of incorporation or bylaws, or material change to any material contract or arrangement by which the Company or any Subsidiary is bound or to which any of their respective assets or properties is subject; (g) any material labor difficulties or labor union organizing activities with respect to employees of the Company or any Subsidiary; (h) any transaction entered into by the Company or a Subsidiary other than in the ordinary course of business; (i) the loss of the services of any key employee or material change in the composition or duties of the senior management of the Company or any Subsidiary; (j) the loss or threatened loss of any customer that has had or could reasonably be expected to have a Material Adverse Effect; or (k) any other event or condition of any character that has had or could reasonably be expected to have a Material Adverse Effect. 3.10 SEC Filings. At the time of filing thereof, the SEC Filings complied as to form in all material respects with the requirements of the Exchange Act and did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. 3.11 No Conflict, Breach, Violation, or Default. To the Company's knowledge, the execution, delivery, and performance of the Transaction Documents by the Company and the issuance and sale of the Securities will not conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under (a) the Company's certificate of incorporation or bylaws, both as in effect on the date hereof (copies of which have been provided to the Purchaser before the date hereof); or (b)(i) any statute, rule, regulation, or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company, any Subsidiary, or any of their respective assets or properties, or (ii) any agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or a Subsidiary is bound or to which any of their respective assets or properties is subject. 3.12 Tax Matters. To the Company's knowledge, the Company and each Subsidiary has timely prepared and filed all tax returns required to have been filed by the Company or such Subsidiary with all appropriate governmental agencies and timely paid all taxes shown thereon or otherwise owed by it except those described on Schedule 3.12. The charges, accruals, and reserves on the books of the Company in respect of taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against the Company or any Subsidiary nor, to the Company's Knowledge, any basis for the assessment of any additional taxes, penalties, or interest for any fiscal period or audits by any federal, state, or local taxing authority, except for any assessment that is not material to the Company and its Subsidiaries taken as a whole. To the Company's knowledge and except as described on Schedule 3.12, all taxes and other assessments and levies that the Company or any Subsidiary is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental entity or third party when due. There are no tax liens or claims pending or, to the Company's Knowledge, threatened against the Company or any Subsidiary or any of their respective assets or property. Except as described on Schedule 3.12, there are no outstanding tax-sharing agreements or other such arrangements between the Company and any Subsidiary or other corporation or entity. Revised and Restated 4/18/2006 9 Effective as of 12/12/05 3.13 Title to Properties. To the Company's knowledge and except as disclosed in the SEC Filings, the Company and each Subsidiary has good and marketable title to all real properties and all other properties and assets owned by it, in each case free from liens, encumbrances, and defects that would materially affect the value thereof or materially interfere with the use made or currently planned to be made thereof by them; and except as disclosed in the SEC Filings, the Company and each Subsidiary holds any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or currently planned to be made thereof by them. 3.14 Certificates, Authorities, and Permits. To the Company's knowledge, the Company and each Subsidiary possess adequate certificates, authorities, or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by it, and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authority, or permit that, if determined adversely to the Company or such Subsidiary, could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate. 3.15 No Labor Disputes. No material labor dispute with the employees of the Company or any Subsidiary exists or, to the Company's Knowledge, is imminent. 3.16 Intellectual Property. (a) To the Company's knowledge, all Intellectual Property of the Company and its Subsidiaries is currently in compliance with all legal requirements (including timely filings, proofs, and payments of fees) and is valid and enforceable. No Intellectual Property of the Company or its Subsidiaries that is necessary for the conduct of Company's and each of its Subsidiaries' respective businesses as currently conducted or as currently proposed to be conducted has been or is now involved in any cancellation, dispute, or litigation and, to the Company's Knowledge, no such action is threatened. No patent of the Company or its Subsidiaries has been or is now involved in any interference, reissue, reexamination, or opposition proceeding. (b) All of the licenses and sublicenses and consent, royalty, or other agreements concerning Intellectual Property that are necessary for the conduct of the Company's and each of its Subsidiaries' respective businesses as currently conducted or as currently proposed to be conducted to which the Company or any Subsidiary is a party or by which any of their assets are bound (other than generally commercially available, non-custom, off-the-shelf software application programs having a retail acquisition price of less than $10,000 per license) are valid and binding obligations of the Company or its Subsidiaries that are parties thereto and, to the Company's Knowledge, the other parties thereto, enforceable in accordance with their terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other similar laws affecting the enforcement of creditors' rights generally, and there exists no event or condition that will result in a material violation or breach of or constitute (with or without due notice or lapse of time or both) a default by the Company or any of its Subsidiaries under any such license agreement. (c) To the Company's knowledge, the Company and its Subsidiaries own or have the valid right to use all of the Intellectual Property that is necessary for the conduct of the Company's and each of its Subsidiaries' respective businesses as currently conducted or as currently proposed to be conducted and for the ownership, maintenance, and operation of the Company's and its Subsidiaries' properties and assets, free and clear of all liens, encumbrances, adverse claims, or obligations to license all such owned Intellectual Property and Confidential Information, other than licenses entered into in the ordinary course of the Company's and its Subsidiaries' businesses. The Revised and Restated 4/18/2006 10 Effective as of 12/12/05 Company and its Subsidiaries have a valid and enforceable right to use all third-party Intellectual Property and Confidential Information used or held for use in the respective businesses of the Company and its Subsidiaries. (d) To the Company's knowledge, the conduct of the Company's and its Subsidiaries' businesses as currently conducted does not infringe or otherwise impair or conflict with (collectively, "Infringe") any Intellectual Property rights of any third party or any confidentiality obligation owed to a third party and the Intellectual Property and Confidential Information of the Company and its Subsidiaries that are necessary for the conduct of Company's and each of its Subsidiaries' respective businesses as currently conducted or as currently proposed to be conducted are not being Infringed by any third party. There is no litigation or order pending or outstanding or, to the Company's Knowledge, threatened or imminent that seeks to limit or challenge or that concerns the ownership, use, validity, or enforceability of any Intellectual Property or Confidential Information of the Company and its Subsidiaries and the Company's and its Subsidiaries' use of any Intellectual Property or Confidential Information owned by a third party and, to the Company's Knowledge, there is no valid basis for the same. (e) To the Company's knowledge, the consummation of the transactions contemplated hereby will not result in the alteration, loss, impairment of, or restriction on the Company's or any of its Subsidiaries' ownership or right to use any of the Intellectual Property or Confidential Information that is necessary for the conduct of Company's and each of its Subsidiaries' respective businesses as currently conducted or as currently proposed to be conducted. (f) All software owned by the Company or any of its Subsidiaries and, to the Company's Knowledge, all software licensed from third parties by the Company or any of its Subsidiaries: (i) is free from any material defect, bug, virus, or programming, design, or documentation error; (ii) operates and runs in a reasonable and efficient business manner; and (iii) conforms in all material respects to the specifications and purposes thereof. (g) The Company and its Subsidiaries have taken reasonable steps to protect the rights of the Company and its Subsidiaries in their Intellectual Property and Confidential Information. Each employee, consultant, and contractor that has had access to Confidential Information that is necessary for the conduct of Company's and each of its Subsidiaries' respective businesses as currently conducted or as currently proposed to be conducted has executed an agreement to maintain the confidentiality of such Confidential Information and has executed appropriate agreements that are substantially consistent with the Company's standard forms thereof. Except under confidentiality obligations, there has been no material disclosure of any of the Confidential Information of the Company or its Subsidiaries to any third party. 3.17 Environmental Matters. To the Company's knowledge, neither the Company nor any Subsidiary (a) is in violation of any statute, rule, regulation, decision, or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal, or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, "Environmental Laws"), (b) owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, (c) is liable for any off-site disposal or contamination pursuant to any Environmental Laws, and (d) is subject to any claim relating to any Environmental Laws, which violation, contamination, liability, or claim has had or could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate; and there is no pending or threatened investigation that might lead to such a claim. Revised and Restated 4/18/2006 11 Effective as of 12/12/05 3.18 Litigation. Except as described on Schedule 3.18, there are no pending actions, suits, or proceedings against or affecting the Company, its Subsidiaries, or any of its or their properties; and to the Company's Knowledge, no such actions, suits, or proceedings are threatened or contemplated. 3.19 Financial Statements. The financial statements included in each SEC Filing present fairly, in all material respects, the consolidated financial position of the Company as of the dates shown and its consolidated results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis (except as may be disclosed therein or in the notes thereto and, in the case of quarterly financial statements, as permitted by Form 10-QSB under the Exchange Act). Except as set forth in the financial statements of the Company included in the SEC Filings filed prior to the date hereof or as described on Schedule 3.19, neither the Company nor any of its Subsidiaries has incurred any liabilities, contingent or otherwise, except those incurred in the ordinary course of business and consistent (as to amount and nature) with past practices since the date of such financial statements, individually or in the aggregate, that have or could reasonably be expected to have a Material Adverse Effect. 3.20 Insurance Coverage. To the Company's knowledge, the Company and each Subsidiary maintains in full force and effect insurance coverage that is customary for comparably situated companies for the business being conducted and properties owned or leased by the Company and each Subsidiary, and the Company reasonably believes such insurance coverage to be adequate against all liabilities, claims, and risks against which it is customary for comparably situated companies to insure. 3.21 Brokers and Finders. No Person will have, as a result of the transactions contemplated by this Agreement, any valid right, interest, or claim against or upon the Company, any Subsidiary, or the Purchaser for any commission, fee, or other compensation pursuant to any agreement, arrangement, or understanding entered into by or on behalf of the Company, other than as described in Schedule 3.21. 3.22 No General Solicitation. Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D) in connection with the offer or sale of any of the Securities. 3.23 No Integrated Offering. Neither the Company nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any Company security or solicited any offers to buy any security, under circumstances that would adversely affect reliance by the Company on Section 4(2) for the exemption from registration for the transactions contemplated hereby or would require registration of the Securities under the Securities Act. 3.24 Private Placement. The offer and sale of the Securities to the Purchaser as contemplated hereby is exempt from the registration requirements of the Securities Act. 3.25 Questionable Payments. Neither the Company, its Subsidiaries nor, to the Company's Knowledge, any of their respective current or former stockholders, directors, officers, employees, agents, or other Persons acting on behalf of the Company or any Subsidiary, on behalf of the Company or any Subsidiary or in connection with their respective businesses, has: (a) used any corporate funds for unlawful contributions, gifts, entertainment, or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payments to any governmental officials or employees from corporate funds; (c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (d) made any false or fictitious entries on the books and records of the Company or any Subsidiary; or (e) made any unlawful bribe, rebate, payoff, influence payment, kickback, or other unlawful payment of any nature. Revised and Restated 4/18/2006 12 Effective as of 12/12/05 3.26 Transactions with Affiliates. Except as disclosed in SEC Filings made on or prior to the date hereof or as disclosed on Schedule 3.26, none of the officers or directors of the Company and, to the Company's Knowledge, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than as holders of stock options and/or warrants, and for services as employees, officers, and directors), including any contract, agreement, or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director, or such employee or, to the Company's Knowledge, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, or partner. 3.27 Internal Controls. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management's general or specific authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (c) access to assets is permitted only in accordance with management's general or specific authorization, and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 3.28 Disclosures. The Transaction Documents delivered to the Purchaser in connection with the transactions contemplated herein, including all exhibits and schedules thereto, do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. ARTICLE IV REPRESENTATIONS OF PURCHASER The Purchaser represents and warrants to the Company as follows as of the date of the Purchaser's execution of this Agreement and at and as of the Closing Date. 4.01 Investment. The Purchaser (a) is acquiring the Securities solely for its own account for investment purposes and not with a view to or for sale in connection with any distribution thereof, nor with any present intention of distributing the same, (b) has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness, or commitment providing for the disposition thereof, and (c) is fully aware that in agreeing to sell the Securities and entering into this Agreement, the Company is relying upon the truth and accuracy of the representations and warranties contained herein. 4.02 Authority for Agreement. The Purchaser has full power and authority to execute, deliver, and perform its obligations under this Agreement in accordance with its terms. The Purchaser has not been organized, reorganized, or recapitalized specifically for the purpose of investing in the Company, or, if it has, all equity owners of the Purchaser are "accredited investors" as that term is defined in Section 5.01(a) of Regulation D promulgated under the Securities Act. This Agreement has been duly executed and delivered by the Purchaser and constitutes a valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms. 4.03 Information. The Purchaser, or its purchaser representative or other duly constituted representative, (a) has reviewed the information and representations of the Company contained in, or incorporated by reference into, this Agreement and the Company Reports, and (b) has had the opportunity to make inquiry concerning the Company and its business and personnel. The officers of the Company have made available to each such Person any and all written information that it has requested and have answered to each such Person's Revised and Restated 4/18/2006 13 Effective as of 12/12/05 satisfaction all inquiries made. The Purchaser understands that an investment in the Company involves a degree of risk, as set forth in the information provided by the Company. 4.04 Accredited Investor. The Purchaser is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act. The Purchaser, either alone or with its purchaser representative or other duly constituted representative, has sufficient knowledge and experience in investing in companies similar to the Company so as to be able to evaluate the risks and merits of its investment in the Company and is able financially to bear the risks thereof, including a complete loss of its entire investment. 4.05 Restrictions on Transfer. The Purchaser understands that the Securities have not been registered, but are being acquired by reason of a specific exemption under the Securities Act as well as under certain state statutes for transactions by an issuer not involving any public offering and that any disposition of the Securities may, under certain circumstances, be inconsistent with this exemption and may make the Purchaser an "underwriter" within the meaning of the Securities Act. The Purchaser acknowledges that the Securities must be held and may not be sold, transferred, or otherwise disposed of for value unless subsequently registered under the Securities Act or an exemption from such registration is available. 4.06 Brokerage. Except as set forth on the signature page of this Agreement, no broker, finder, agent, or similar intermediary has acted on behalf of the Purchaser in connection with the Agreement or the transactions contemplated hereby, and there are no brokerage commissions, finder's fees, or similar fees or commissions payable in connection therewith based on any agreement, arrangement, or understanding with the Purchaser. 4.07 Legal Advice. The Purchaser has engaged its own legal advisors respecting its compliance with federal and state securities laws and federal, state, and local taxation laws respecting the transactions contemplated or permitted by this Agreement. The Purchaser has relied solely on its own such advisors and not on any statements or representations of the Company or its agents, attorneys, or accountants, written or oral. The Purchaser shall be solely responsible for its own compliance with applicable state and federal securities laws and applicable federal, state, and local tax laws related to this Agreement and the transactions contemplated hereby. ARTICLE V CONDITIONS TO CLOSING 5.01 Conditions to the Purchaser's Obligations. The obligation of the Purchaser to purchase the Securities at the Closing is subject to the fulfillment to the Purchaser's satisfaction, on or prior to the Closing Date, of the following conditions, any of which may be waived by the Purchaser. (a) The representations and warranties made by the Company in Section 3 hereof qualified as to materiality shall be true and correct at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date, and, the representations and warranties made by the Company in Section 3 hereof not qualified as to materiality shall be true and correct in all material respects at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date. The Company shall have Revised and Restated 4/18/2006 14 Effective as of 12/12/05 performed in all material respects all obligations and conditions herein required to be performed or observed by it on or prior to the Closing Date. (b) The Company shall have obtained in a timely fashion any and all consents, permits, approvals, registrations, and waivers necessary or appropriate for consummation of the purchase and sale of the Securities, all of which shall be in full force and effect. (c) The Company shall have executed and delivered the Registration Rights Agreement. (d) The Company shall have entered into the agreements superseding the Executive Employment Agreements of February 11, 2005, with James R. Spencer, Scott A. Mayfield, and Merwin D. Rasmussen attached hereto at Exhibit C. (e) The Company shall have entered into the agreements with certain Affiliates of Purchaser restructuring debt owed by the Company to those Affiliates attached hereto at Exhibit D. (f) The Company shall have entered into cost-containment measures reasonably satisfactory to Purchaser. (g) No judgment, writ, order, injunction, award, or decree of or by any court or judge, justice, or magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby or in the other Transaction Documents. (h) The Company shall have delivered a certificate, executed on behalf of the Company by its chief executive officer or its chief financial officer, dated as of the Closing Date, certifying the fulfillment of the conditions specified in subsections (a), (b), (d), (e), (f), (g), and (j) of this Section 5.01. (i) The Company shall have delivered a certificate, executed on behalf of the Company by its authorized officer, dated as of the Closing Date, certifying the resolutions adopted by the Company's board of directors approving the transactions contemplated by this Agreement and the other Transaction Documents and the issuance of the Securities, certifying the current versions of the Company's certificate of incorporation and bylaws and certifying as to the signatures and authority of Persons signing the Transaction Documents and related documents on behalf of the Company. (j) No stop order or suspension of trading shall have been imposed by the National Association of Securities Dealers, Inc., the SEC, or any other governmental regulatory body with respect to public trading in the common stock. (k) The Company shall have caused to be delivered to the Company irrevocable proxies from stockholders, that combined with stock owned by affiliates of the Purchaser, own of record not less than 50% of the issued and outstanding stock of the Company, appointing Purchaser as the proxy and attorney-in-fact of such stockholders to approve the proposed increase in the authorized capitalization of the Company in accordance with this Agreement. Revised and Restated 4/18/2006 15 Effective as of 12/12/05 5.02 Conditions to Obligations of the Company. The Company's obligation to sell and issue the Securities at the Closing is subject to the fulfillment to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may be waived by the Company. (a) The representations and warranties made by the Purchaser in Article IV hereof, other than the representations and warranties contained in Sections 4.01, 4.02, 4.03, 4.04, 4.05, and 4.06 (the "Investment Representations"), shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date with the same force and effect as if they had been made on and as of said date. The Investment Representations shall be true and correct in all respects when made, and shall be true and correct in all respects on the Closing Date with the same force and effect as if they had been made on and as of said date. The Purchaser shall have performed in all material respects all obligations and conditions herein required to be performed or observed by it on or prior to the Closing Date. (b) The Purchaser shall have executed and delivered the Registration Rights Agreement. (c) The Purchaser shall have delivered the purchase price to the Company. 5.03 Termination of Obligations to Effect Closing; Effects. (a) The obligations of the Company, on the one hand, and the Purchaser, on the other hand, to effect the Closing shall terminate as follows: (i) upon the mutual written consent of the Company and the Purchaser; (ii) by the Company if any of the conditions set forth in Section 5.02 shall have become incapable of fulfillment, and shall not have been waived by the Company; (iii) by the Purchaser if any of the conditions set forth in Section 5.01 shall have become incapable of fulfillment, and shall not have been waived by the Purchaser; or (iv) by either the Company or the Purchaser if the Closing has not occurred on or prior to December 31, 2005; provided, however, that, except in the case of clause (i) above, the party seeking to terminate its obligation to effect the Closing shall not then be in breach of any of its representations, warranties, covenants, or agreements contained in this Agreement or the other Transaction Documents if such breach has resulted in the circumstances giving rise to such party's seeking to terminate its obligation to effect the Closing. (b) In the event of termination by the Company or the Purchaser of their obligations to effect the Closing pursuant to this Section 5.03, written notice thereof shall forthwith be given to the other parties hereto and the obligation of all parties to effect the Closing shall be terminated, without further action by any party. Nothing in this Section 5.03 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents. Revised and Restated 4/18/2006 16 Effective as of 12/12/05 ARTICLE VI CONDITIONS TO CLOSING OF SUBSEQUENT FUNDING DATES The obligation of the Purchaser to purchase the Securities at the Closing of Funding Dates subsequent to the Closing Date shall be subject to the fulfillment to the Purchaser's satisfaction, on or prior to such Funding Date, of the following conditions, any of which may be waived by the Purchaser. (a) The Company shall have delivered a certificate, executed on behalf of the Company by its chief executive officer and chief financial officer, dated as of such Funding Date, certifying the continued fulfillment of the conditions specified in subsections (a), (b), (c), (d), (e), (f), (g), (h), and (k) of Section 5.01 of this Agreement and the Company's compliance with all covenants under Article VII of this Agreement required to have been performed, satisfied, or met on or before such Funding Date. (b) At each Funding Date, the Company shall have sufficient authorized but unissued shares to issue the shares of Common Stock and shall have reserved a sufficient number of authorized but unissued shares of common stock issuable upon the exercise of the exercisable Warrants associated with such Funding Date. (c) At each Funding Date, the Company shall have maintained the continued registration of the Company's common stock pursuant to Section 12(g) of the Exchange Act and the continued quotation of the Company's common stock on the OTCBB (or such other national exchange or listing reasonably acceptable to Purchaser), must not have received any notification that the SEC or the NASD is contemplating terminating such registration or listing, and must not be aware of any facts or circumstances that might reasonably be expected to result in such a termination. ARTICLE VII ADDITIONAL COVENANTS OF THE COMPANY 7.01 Reservation of Common Stock. The Company shall cause its authorized common stock to be increased to 100,000,000 shares and shall, at all times, reserve and keep available out of its authorized but unissued shares of common stock such number of shares of common stock as shall from time to time equal the number of shares sufficient to permit the shares of Common Stock to be issued in Tranches Two through Five and to permit the exercise of the Warrants issued pursuant to this Agreement in accordance with their respective terms. 7.02 Reports. The Company will furnish to Purchaser and/or its assignees such information relating to the Company and its Subsidiaries as from time to time may reasonably be requested by Purchaser and/or its assignees; provided, however, that the Company shall not disclose material, nonpublic information to the Purchaser, or to advisors to or representatives of the Purchaser, unless prior to disclosure of such information, the Company identifies such information as being material, nonpublic information and provides the Purchaser and such advisors and representatives with the opportunity to accept or refuse to accept such material, nonpublic information for review and Purchaser enters into an appropriate confidentiality agreement with the Company with respect thereto. 7.03 No Conflicting Agreements. The Company will not take any action, enter into any agreement, or make any commitment that would conflict or interfere in any material respect with the obligations to the Purchaser under the Transaction Documents. Revised and Restated 4/18/2006 17 Effective as of 12/12/05 7.04 Insurance. The Company shall not materially reduce the insurance coverages described in Section 3.20. 7.05 Compliance with Laws. The Company will comply in all material respects with all applicable laws, rules, regulations, orders, and decrees of all governmental authorities. 7.06 Quotation of Common Stock. The Company will use commercially reasonable efforts to continue the quotation and trading of its common stock on the OTCBB and, in accordance therewith, will use commercially reasonable efforts to comply in all respects with the Company's reporting, filing, and other obligations under the bylaws or rules of the OTCBB. 7.07 Board of Directors. The Company shall cause one independent member to be appointed to the Company's board of directors, subject to the approval of the Purchaser, within 45 days of the Closing Date, and a second independent member, subject to the approval of the Purchaser, within 30 days after the effectiveness of the registration statement pursuant to the Registration Rights Agreement. If the Company has not caused to be appointed either independent member to the board of directors by the required dates, the Company shall cause an independent member selected by the Purchaser to be appointed to the Company's board of directors. 7.08 Investor Relations. The Company shall obtain within 60 days of the Closing Date qualified internal or external investor relations capabilities, acceptable to Purchaser, and maintain such relationships to assure effective communications with the investment community in compliance with applicable laws. 7.09 Operating Plan. Within 60 days following the Closing Date, the Company shall provide Purchaser a detailed operating plan, approved by its board of directors, which shall include discussions of the Company's technology, product development, marketing strategies, competitive differentiation and competition, intellectual property, and financial strategy, as well as an executive summary. 7.10 Financial Projections and Operating Budgets. Within 30 days following the Closing Date, the Company shall provide Purchaser with financial projections for the following three years, which shall be detailed in monthly projections for the first 12 months and then in quarterly projections thereafter. These financial projections shall include: (a) revenue by product, service, vertical market, and customer; (b) cost and expense projections; (c) capital expenditures; (d) statement of operations; (e) balance sheet; and (f) cash flow statement. These financial projections shall be the basis for the Company's departmental and function-based operating budgets, which shall be updated and provided to the Purchaser on a quarterly basis. Revised and Restated 4/18/2006 18 Effective as of 12/12/05 7.11 Existing Loans. The Company shall pay all existing loans to Purchaser and its Affiliates when due, unless such payments are waived by Purchaser or its Affiliate, as applicable, in its sole discretion. 7.12 Right of First Refusal. For 18 months following the Closing Date, the Purchaser shall have a 30-day right of first refusal to provide any required equity financing. The Company shall provide the Purchaser with notice of its intent to seek additional equity financing setting forth the description of the Securities to be offered, the sales price, the terms of purchase, and other material business terms of the proposed financing, and the Purchaser shall have 30 days to provide some or all of the proposed financing on the terms proposed. Only after the expiration of the 30-day notice period (or receipt of the Purchaser's written notice that it will not provide some or all of the proposed equity financing) may the Company consummate any proposed equity financing with any investor other than the Purchaser during the succeeding 180 days at a price and on other terms no less favorable to the Company than as set forth in such notice. If the Company does not complete the foregoing financing within 180 days after the expiration of the 30-day notice period (or receipt of the Purchaser's written notice that it will not provide some or all of the proposed equity financing), the Company shall be required to provide a new notice of intent to seek equity financing as provided above before obtaining equity financing. This right of first refusal shall not apply to any equity issuances in connection with the Company's stock inventive plan, any options or warrants granted prior to the Closing Date, business acquisitions, joint ventures, strategic alliances, technology development agreements, or partnering or licensing agreements that are approved by the board of directors, or to a firm commitment underwritten offering of the Company's securities. 7.13 Termination of Covenants. The provisions of Sections 7.02 through 7.12 shall terminate and be of no further force and effect upon the earlier of (a) the mutual consent of the Company and the Purchaser or (b) the date on which the Company's obligations under the Registration Rights Agreement to register or maintain the effectiveness of any registration covering the Registrable Securities (as such term is defined in the Registration Rights Agreement) shall terminate. ARTICLE VIII SURVIVAL AND INDEMNIFICATION 8.01 Survival. All representations, warranties, covenants, and agreements contained in this Agreement shall be deemed to be representations, warranties, covenants, and agreements as of the date hereof and shall survive the execution and delivery of this Agreement for a period of three years from the date of this Agreement; provided, however, that the provisions contained in Article 7 hereof shall survive in accordance therewith. 8.02 Indemnification. The Company agrees to indemnify and hold harmless, on an after-insurance recovery basis, the Purchaser and its Affiliates and their respective directors, officers, employees, and agents from and against any and all losses, claims, damages, liabilities, and expenses (including reasonable attorney fees, disbursements, and other expenses incurred in connection with investigating, preparing, or defending any action, claim, or proceeding, pending or threatened, and the costs of enforcement hereof) to which such Person may become subject as a result of any breach of representation, warranty, covenant, or agreement made by or to be performed on the part of the Company under the Transaction Documents, and will reimburse any such Person for all such amounts as they are incurred by such Person. 8.03 Conduct of Indemnification Proceedings. Promptly after receipt by any Person (the "Indemnified Person") of notice of any demand, claim, or circumstances that would or might give rise to a claim or the commencement of any action, proceeding, or investigation in respect of which indemnity may be Revised and Restated 4/18/2006 19 Effective as of 12/12/05 sought pursuant to Section 8.02, such Indemnified Person shall promptly notify the Company in writing and the Company shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person, and shall assume the payment of all fees and expenses; provided, however, that the failure of any Indemnified Person so to notify the Company shall not relieve the Company of its obligations hereunder except to the extent that the Company is materially prejudiced by such failure to notify. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (a) the Company and the Indemnified Person shall have mutually agreed to the retention of such counsel; or (b) in the reasonable judgment of counsel to such Indemnified Person representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Company shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, but if settled with such consent, or if there be a final judgment for the plaintiff, the Company shall indemnify and hold harmless such Indemnified Person from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, the Company shall not effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such proceeding. ARTICLE IX MISCELLANEOUS 9.01 Opportunity to Review; Advisors; Investigation. Prior to the execution of this Agreement, each party has had the opportunity to review the schedules and exhibits to this Agreement, and has been afforded the opportunity to engage its own attorneys, accountants, and other advisors to assist in the review of such schedules and other information and has made its own decision respecting the extent to which it has engaged such attorneys, accountants, and other advisors. The representations, warranties, and agreements of each party hereto shall remain operative and in full force and effect regardless of any affiliation of the Purchaser with the Company or investigation made by or on behalf of either party, any person controlling either party, or any of their officers, directors, managers, partners, representatives, attorneys, accountants, or agents, whether prior to or after the execution of this Agreement. 9.02 No Assignment. This Agreement and the rights and obligations of the Purchaser may not be assigned in whole or in part by the Purchaser to any Person without the prior written consent of the Company, which such consent may be granted or withheld by the Company in its sole discretion. 9.03 Costs. The Company shall pay all of the costs and expenses incurred or to be incurred in negotiating and preparing this Agreement and in closing and carrying out the transactions contemplated by this Agreement, except as expressly otherwise provided herein, and shall reimburse the Purchaser up to $10,000 for costs and expenses incurred by Purchaser in connection with this Agreement. 9.04 Confidentiality. The Purchaser shall keep confidential and will not disclose or divulge any Confidential Information that Purchaser may obtain from the Company pursuant to financial statements, reports, and other materials submitted by the Company to Purchaser pursuant to this Agreement, or pursuant to visitation or inspection courtesies extended to Purchaser, unless such information is known, or until such information becomes known, to the public; provided, however, that the Purchaser may disclose such information (a) to its attorneys, accountants, consultants, and other professionals to the extent Revised and Restated 4/18/2006 20 Effective as of 12/12/05 necessary to obtain their services in connection with its investment in the Company, (b) to any permitted prospective purchaser of any of the Securities from Purchaser as long as such prospective purchaser agrees in writing to be bound by the provisions of this section, or (c) to any Affiliate of Purchaser; subject to the agreement of such party to keep such information confidential as set forth herein. 9.05 Notice. Any notice, demand, request or other communication permitted or required under this Agreement shall be in writing and shall be deemed to have been given as of the date so delivered, if personally served; as of the date so sent, if transmitted by facsimile and receipt is confirmed by the facsimile operator of the recipient; as of the date so sent, if sent by electronic mail and receipt is acknowledged by the recipient; one Business Day after the date so sent, if delivered by overnight courier service; or three Business Days after the date so mailed, if mailed by certified mail, return receipt requested, addressed as follows: if to the Company, to: Aradyme Corporation 1255 North Research Way, Bldg. Q3500 Orem, UT 84097 Telephone: (801) 705-5000 Facsimile: (801) 705-5001 if to Purchaser, to: Eagle Rock Capital, LLC 5722 S 1300 W Salt Lake City, UT 84123 Telephone: (801) 964-3456 Facsimile: (801) 964-3484 Each party, by notice duly given in accordance herewith, may specify a different address for the giving of any notice hereunder. 9.06 Attorneys' Fees. In the event that any party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the nonprevailing party shall reimburse the prevailing party for all costs, including reasonable attorneys' fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein, including such costs that are incurred in any bankruptcy or appellate proceeding. 9.07 Survival. The representations, warranties, and covenants of the respective parties shall survive the Closing. 9.08 Form of Execution; Counterparts. A valid and binding signature hereto or any notice or demand hereunder may be in the form of a manual execution or a true copy made by photographic, xerographic, or other electronic process that provides similar copy accuracy of a document that has been executed. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument. 9.09 Construction. This Agreement is the result of negotiation between the parties hereto, each of which has been, or has had the opportunity to be, represented by independent legal counsel of such party's own selection. Accordingly, no provision of this Agreement or any agreement, certificate, or other writing delivered in accordance with this Agreement shall be constructed against any party merely because of such party's involvement in its preparation. Revised and Restated 4/18/2006 21 Effective as of 12/12/05 9.10 Amendment or Waiver. Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein at law or in equity, and may be enforced concurrently herewith, and no waiver by any party of the performance of any obligation by the other shall be construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing. At any time prior to the Closing Date, this Agreement may be amended by a writing signed by all parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance thereof may be extended by a writing signed by the party or parties for whose benefit the provision is intended. 9.11 Validity of Provisions and Severability. If any provision of this Agreement is, becomes, or is deemed invalid, illegal, or unenforceable in any jurisdiction, such provision shall be deemed amended to conform to the applicable jurisdiction, or if it cannot be so amended without materially altering the intention of the parties, it will be stricken. However, the validity, legality, and enforceability of any such provisions shall not in any way be affected or impaired thereby in any other jurisdiction and the remainder of this Agreement shall remain in full force and effect. 9.12 Entire Agreement; Modification. This Agreement constitutes the entire agreement and understanding between the parties pertaining to the subject matter of this Agreement. This Agreement supersedes all prior agreements, if any, any understandings, negotiations, courses of dealing, and discussions, whether oral or written, between the parties hereto, including any subsidiary of the Company. No supplement, modification, waiver, or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby. 9.13 Governing Law. This Agreement shall be governed by, enforced, and construed under and in accordance with the laws of the United States of America and, with respect to matters of state law, with the laws of the state of Utah. IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written. ARADYME CORPORATION By: /s/ James R. Spencer ----------------------------------------- James R. Spencer, Chief Executive Officer Date: 04/17/06 -------------------------------------- EAGLE ROCK CAPITAL, LLC By: /s/ Merwin D. Rasmussen ----------------------------------------- Merwin D. Rasmussen, Manager Date: 04/17/06 -------------------------------------- Tax Identification Number: ----------------- Revised and Restated 4/18/2006 22 Effective as of 12/12/05 Exhibit A Form of Warrant Exhibit B Form of Registration Rights Agreement Exhibit C Employment Agreements Exhibit D Restructure of Debt with Affiliate of Purchaser Revised and Restated 4/18/2006 Effective as of 12/12/05 EX-10.30 3 ex1030form8k041706.txt REVISED & RESTATED REGISTRATION RIGHTS AGREEMENT REVISED AND RESTATED REGISTRATION RIGHTS AGREEMENT THIS REVISED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into this 17th day of April, 2006, effective as of December 12, 2005, by and between ARADYME CORPORATION, a Delaware corporation (the "Company"), and EAGLE ROCK CAPITAL, LLC, a Utah limited liability company (the "Investor"), who are the parties to the Stock Purchase Agreement by and between the Company and the Investor (the "Purchase Agreement"). The parties hereby agree as follows: 1. Certain Definitions. As used in this Agreement, the following terms shall have the following meanings: "Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. "Business Day" means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business. "Closing Date" is as defined in the Purchase Agreement. "Common Stock" shall mean the Company's common stock, par value $0.001 per share, and any securities into which such shares may hereinafter be reclassified. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Investor" shall mean the Investor identified in the Purchase Agreement and any Affiliate or permitted transferee of the Investor that is a subsequent holder of any Warrants or Registrable Securities acquired pursuant to the Purchase Agreement. "Person" means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority, or any other form of entity not specifically listed herein. "Prospectus" shall mean the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the Prospectus, including post-effective amendments and all material incorporated by reference in such Prospectus. "Register," "registered," and "registration" refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the Securities Act (as defined below), and the declaration or ordering of effectiveness of such Registration Statement or document. "Registrable Securities" shall mean the shares of Common Stock issued pursuant to the Purchase Agreement, and the shares of Common Stock issuable upon the exercise of the Warrants, if any, and any other securities issued or issuable with respect to or in exchange for Registrable Securities, and any other shares of the Company's Common Stock held by the Investor, its Affiliates, or other Persons identified by Investor within 10 days of the Closing Date, or issuable upon the exercise of options or warrants held by the Investor or its Affiliates, all as of the Closing Date; provided, that a security shall cease to Revised and Restated 4/18/2006 Effective as of 12/12/05 be a Registrable Security upon (a) sale pursuant to a Registration Statement or Rule 144 under the Securities Act, or (b) such security becoming eligible for sale by the Investor pursuant to Rule 144(k). "Registration Statement" shall mean any registration statement of the Company filed under the Securities Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, and all exhibits and all material incorporated by reference in such Registration Statement. "SEC" means the United States Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Warrants" means the warrants to purchase shares of Common Stock issued to the Investor pursuant to the Purchase Agreement, the form of which is attached to the Purchase Agreement as Exhibit A. "Warrant Shares" means the shares of Common Stock issuable upon the exercise of the Warrants. 2. Registration. (a) Registration Statements. On or before that date which is 30 days after the amendment to the Company's articles of incorporation increasing the Company's capitalization to 100,000,000 shares of common stock is effective, the Company shall prepare and file with the SEC one Registration Statement on Form S-3 (or, if Form S-3 is not then available to the Company, on such form of registration statement as is then available to effect a registration for resale of the Registrable Securities, subject to the Investor's consent), covering the resale of the Registrable Securities in an amount at least equal to the number of shares of Common Stock necessary to permit the exercise in full of the Warrants. Such Registration Statement also shall cover, to the extent allowable under the Securities Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends, or similar transactions with respect to the Registrable Securities. The Registration Statement (and each amendment or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided in accordance with Section 3(c) to the Investor and its counsel prior to its filing or other submission. The Registration Statement covering the Registrable Securities must be filed with the SEC on or prior to that date which is 30 days after the amendment to the Company's articles of incorporation increasing the Company's capitalization to 100,000,000 shares of common stock is effective. The Company will make pro rata payments to the Investor, as liquidated damages and not as a penalty, in an amount equal to 1.0% of the aggregate amount invested by the Investor under the Purchase Agreement prior to that date for each 30-day period or pro rata for any portion thereof following the date by which such Registration Statement should have been filed for which no Registration Statement is filed with respect to the Registrable Securities. Such payments shall be in partial compensation to the Investor and shall not constitute the Investor's exclusive remedy for such events. Such payments shall be made to the Investor in cash. (b) Expenses. The Company will pay all expenses associated with each registration, including filing and printing fees, counsel and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities laws, listing fees, fees and expenses of one counsel to the Investor and the Investor's reasonable expenses in connection with the registration, but Revised and Restated 4/18/2006 2 Effective as of 12/12/05 excluding discounts, commissions, fees of underwriters, selling brokers, dealer managers, or similar securities industry professionals with respect to the Registrable Securities being sold. (c) Effectiveness. (i) The Company shall use commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable. The Company shall notify the Investor by facsimile or e-mail as promptly as practicable, and in any event, within 24 hours, after any Registration Statement is declared effective and shall simultaneously provide the Investor with copies of any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby. If (1) a Registration Statement covering the Registrable Securities is not declared effective by the SEC within 90 days after the Registration Statement is filed with SEC, or (2) after a Registration Statement has been declared effective by the SEC, sales cannot be made pursuant to such Registration Statement for any reason (including by reason of a stop order or the Company's failure to update the Registration Statement), but excluding the inability of the Investor to sell the Registrable Securities covered thereby due to market conditions and except as excused pursuant to subsection (ii) below, then the Company shall be in default under this Agreement. (ii) For not more than 20 consecutive days or for a total of not more than 45 days in any 12-month period, the Company may delay the disclosure of material, nonpublic information concerning the Company by suspending the use of any Prospectus included in any registration contemplated by this section containing such information, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company (an "Allowed Delay"); provided, that the Company shall promptly (1) notify the Investor in writing of the existence of (but in no event, without the prior written consent of the Investor, shall the Company disclose to the Investor any of the facts or circumstances regarding) material, nonpublic information giving rise to an Allowed Delay, and (2) advise the Investor in writing to cease all sales under the Registration Statement until the end of the Allowed Delay. (d) Underwritten Offering. If any offering pursuant to a Registration Statement pursuant to Section 2(a) hereof involves an underwritten offering, the Company shall have the right to select an investment banker and manager to administer the offering, which investment banker or manager shall be reasonably satisfactory to the Investor. 3. Company Obligations. The Company will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the terms hereof, and pursuant thereto the Company will, as expeditiously as possible: (a) use commercially reasonable efforts to cause such Registration Statement to become effective and to remain continuously effective for a period that will terminate upon the earlier of (i) the date on which all Registrable Securities covered by such Registration Statement, as amended from time to time, have been sold, and (ii) the date on which all Registrable Securities covered by such Registration Statement may be sold pursuant to Rule 144(k); (b) prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement Revised and Restated 4/18/2006 3 Effective as of 12/12/05 effective for the period specified in Section 3(a) and to comply with the provisions of the Securities Act and the Exchange Act with respect to the distribution of all of the Registrable Securities covered thereby; (c) provide copies to and permit counsel designated by the Investor to review each Registration Statement and all amendments and supplements thereto no fewer than seven days prior to their filing with the SEC and not file any document to which such counsel reasonably objects; (d) furnish to the Investor and its legal counsel (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company (but not later than two Business Days after the filing date, receipt date, or sending date, as the case may be) one copy of any Registration Statement and any amendment thereto; each preliminary prospectus and Prospectus and each amendment or supplement thereto; each letter written by or on behalf of the Company to the SEC or the staff of the SEC; and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion of the above that contain information for which the Company has sought confidential treatment); and (ii) such number of copies of a Prospectus, including a preliminary prospectus and all amendments and supplements thereto, and such other documents as the Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by the Investor that are covered by the related Registration Statement; (e) in the event the Company selects an underwriter for the offering, the Company shall enter into and perform its reasonable obligations under an underwriting agreement in usual and customary form, including customary indemnification and contribution obligations, with the underwriter of such offering; (f) if required by the underwriter, or if the Investor is described in the Registration Statement as an underwriter, the Company shall furnish, on the effective date of the Registration Statement (except with respect to clause (i) below) and on the date that Registrable Securities are delivered to an underwriter, if any, for sale in connection with the Registration Statement (including the Investor if deemed to be an underwriter), (i) (1) in the case of an underwritten offering, an opinion, dated as of the Closing Date of the sale of Registrable Securities to the underwriters, from independent legal counsel representing the Company for purposes of such Registration Statement, in form, scope, and substance as is customarily given in an underwritten public offering, addressed to the Investor and the underwriters participating in such underwritten offering, or (2) in the case of an "at-the-market" offering, an opinion, dated as of or promptly after the effective date of the Registration Statement to the Investor, from independent legal counsel representing the Company for purposes of such Registration Statement, in form, scope, and substance as is customarily given in a public offering, addressed to the Investor; and (ii) a letter, dated as of the effective date of such Registration Statement and confirmed as of the applicable dates described above, from the Company's independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters (including the Investor if deemed to be an underwriter); (g) use commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness, and if such order is issued, obtain the withdrawal of any such order at the earliest possible moment; (h) prior to any public offering of Registrable Securities, use commercially reasonable efforts to register or qualify or cooperate with the Investor and its counsel in connection with the registration Revised and Restated 4/18/2006 4 Effective as of 12/12/05 or qualification of such Registrable Securities for offer and sale under the state securities laws of such jurisdictions requested by the Investor and do any and all other commercially reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(h); (ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject but for this Section 3(h); or (iii) file a general consent to service of process in any such jurisdiction; (i) use commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed or quoted on each securities exchange, interdealer quotation system, or other market on which similar securities issued by the Company are then listed; (j) immediately notify the Investor, at any time when a Prospectus relating to Registrable Securities is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the Prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and at the request of any such holder, promptly prepare and furnish to such holder a reasonable number of copies of a supplement to or an amendment of such Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (k) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the Securities Act and the Exchange Act and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and make available to its security holders, as soon as reasonably practicable, but not later than the Availability Date (as defined below), an earnings statement covering a period of at least 12 months, beginning after the effective date of each Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act, including Rule 158 promulgated thereunder (for the purpose of this subsection 3(k) ("Availability Date" means the 45th day following the end of the fourth fiscal quarter that includes the effective date of such Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the Company's fiscal year, Availability Date means the 90th day after the end of such fourth fiscal quarter); and (l) with a view to making available to the Investor the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the SEC that may at any time permit the Investor to sell shares of Common Stock to the public without registration, the Company covenants and agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earlier of six months after such date as all of the Registrable Securities may be resold pursuant to Rule 144(k) or any other rule of similar effect or such date as all of the Registrable Securities shall have been resold; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act; and (iii) furnish to the Investor upon request, as long as the Investor owns any Registrable Securities, (1) a written statement by the Company that it has complied with the reporting requirements of the Exchange Act, (2) a copy of the Company's most recent annual report on Form Revised and Restated 4/18/2006 5 Effective as of 12/12/05 10-KSB or quarterly report on Form 10-QSB, and (3) such other information as may be reasonably requested in order to avail the Investor of any rule or regulation of the SEC that permits the selling of any such Registrable Securities without registration. 4. Due Diligence Review; Information. The Company shall make available, during normal business hours, for inspection and review by the Investor, advisors to and representatives of the Investor (that may or may not be affiliated with the Investor and that are reasonably acceptable to the Company), any underwriter participating in any disposition of shares of Common Stock on behalf of the Investor pursuant to a Registration Statement or amendments or supplements thereto or any state securities, National Association of Securities Dealers, Inc., or other filing, all financial and other records, all SEC Filings (as defined in the Purchase Agreement) and other filings with the SEC, and all other corporate documents and properties of the Company as may be reasonably necessary for the purpose of such review, and cause the Company's officers, directors, and employees, within a reasonable time period, to supply all such information reasonably requested by the Investor or any such representative, advisor, or underwriter in connection with such Registration Statement (including in response to all questions and other inquiries reasonably made or submitted by any of them), prior to and from time to time after the filing and effectiveness of the Registration Statement for the sole purpose of enabling the Investor and such representatives, advisors, and underwriters and their respective accountants and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy of such Registration Statement. The Company shall not disclose material, nonpublic information to the Investor, or to advisors to or representatives of the Investor, unless prior to disclosure of such information the Company identifies such information as being material, nonpublic information and provides the Investor and such advisors and representatives with the opportunity to accept or refuse to accept such material, nonpublic information for review and the Investor enters into an appropriate confidentiality agreement with the Company with respect thereto. 5. Obligations of the Investor. (a) The Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. At least five Business Days prior to the first anticipated filing date of any Registration Statement, the Company shall notify the Investor of the information the Company requires from the Investor if the Investor elects to have any of the Registrable Securities included in the Registration Statement. The Investor shall provide such information to the Company at least two Business Days prior to the first anticipated filing date of such Registration Statement if the Investor elects to have any of the Registrable Securities included in the Registration Statement. (b) The Investor, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of a Registration Statement hereunder, unless the Investor has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement. (c) In the event the Company, at the request of the Investor, determines to engage the services of an underwriter, the Investor agrees to enter into and perform its obligations under an underwriting agreement in usual and customary form, including customary indemnification and contribution obligations, with the managing Revised and Restated 4/18/2006 6 Effective as of 12/12/05 underwriter of such offering and take such other actions as are reasonably required in order to expedite or facilitate the dispositions of the Registrable Securities. (d) The Investor agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to Subsection 2(c)(ii), or (ii) the happening of an event pursuant to Subsection 3(j) hereof, the Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the Investor's receipt of the copies of the supplemented or amended Prospectus filed with the SEC and declared effective and, if so directed by the Company, the Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in the Investor's possession of the Prospectus covering the Registrable Securities current at the time of receipt of such notice. (e) The Investor may not participate in any third-party underwritten registration hereunder unless it (i) agrees to sell the Registrable Securities on the basis provided in any underwriting arrangements in usual and customary form entered into by the Company; (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents reasonably required under the terms of such underwriting arrangements; and (iii) agrees to pay its pro rata share of all underwriting discounts and commissions. Notwithstanding the foregoing, Investor shall not be required to make any representations to such underwriter, other than those with respect to itself and the Registrable Securities owned by it, including its right to sell the Registrable Securities, and any indemnification in favor of the underwriter by the Investor shall be limited to the proceeds received by the Investor from the sale of its Registrable Securities. The scope of any such indemnification in favor of an underwriter shall be limited to the same extent as the indemnity provided in Subsection 6(b) hereof. 6. Indemnification. (a) Indemnification by the Company. The Company will indemnify and hold harmless the Investor and its officers, directors, members, employees, agents, successors, assigns, and each other Person, if any, that controls the Investor within the meaning of the Securities Act, against any losses, claims, damages, or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any preliminary or final Prospectus contained therein, or any amendment or supplement thereof; (ii) any state securities application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities laws thereof; (iii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated under the Securities Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration; or (v) any failure to register or qualify the Registrable Securities included in any such Registration in any state where the Company or its agents has affirmatively undertaken or agreed in writing that the Company will undertake such registration or qualification on an Investor's behalf (the undertaking of any underwriter chosen by the Company being attributed to the Company), and will reimburse the Investor, and each such officer, director, or member and controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the Revised and Restated 4/18/2006 7 Effective as of 12/12/05 Company will not be liable in any such case if and to the extent that any such loss, claim, damage, or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by the Investor or any such controlling Person in writing specifically for use in such Registration Statement or Prospectus. (b) Indemnification by the Investor. In connection with any registration pursuant to the terms of this Agreement, the Investor will furnish to the Company in writing such information as the Company reasonably requests concerning the holders of Registrable Securities or the proposed manner of distribution for use in connection with any Registration Statement or Prospectus and agrees to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, stockholders, and each Person that controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities, and expense (including reasonable attorney fees) resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement or Prospectus, or preliminary prospectus or amendment or supplement thereto, or necessary to make the statements therein not misleading, to the extent, but only to the extent that such untrue statement or omission is contained in any information furnished in writing by the Investor to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment or supplement thereto. In no event shall the liability of the Investor be greater in amount than the dollar amount of the proceeds (net of all expense paid by the Investor in connection with any claim relating to this Section 6 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue statement or omission) received by the Investor upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation. (c) Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder shall give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any Person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (i) the indemnifying party has agreed to pay such fees or expenses, or (ii) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such Person, or (iii) in the reasonable judgment of any such Person, based upon written advice of its counsel, a conflict of interest exists between such Person and the indemnifying party with respect to such claims (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person); and provided, further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. Revised and Restated 4/18/2006 8 Effective as of 12/12/05 (d) Contribution. If for any reason the indemnification provided for in the preceding subsections (a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage, or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. No Person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any Person not guilty of such fraudulent misrepresentation. In no event shall the contribution obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation. 7. Miscellaneous. (a) Amendments and Waivers. This Agreement may be amended only by a writing signed by the Company and the Investor. The Company may take any action herein prohibited or omit to perform any act herein required to be performed by it only if the Company shall have obtained the written consent to such amendment, action, or omission to act of the Investor. (b) Notices. All notices and other communications provided for or permitted hereunder shall be made as set forth in Section 9.04 of the Purchase Agreement. (c) Assignments and Transfers by the Investor. The provisions of this Agreement shall be binding upon and inure to the benefit of the Investor and its respective successors and assigns. The Investor may transfer or assign, in whole or from time to time in part, to one or more Persons its rights hereunder in connection with the transfer of the Common Stock issued pursuant to the Purchase Agreement or upon the exercise of Warrants by the Investor to such Person, provided that the Investor complies with all laws applicable thereto and provides written notice of assignment to the Company promptly after such assignment is effected. (d) Assignments and Transfers by the Company. This Agreement may not be assigned by the Company (whether by operation of law or otherwise) without the prior written consent of the Investor, provided, however, that the Company may assign its rights and delegate its duties hereunder to any surviving or successor corporation in connection with a merger or consolidation of the Company with another corporation or a sale, transfer, or other disposition of all or substantially all of the Company's assets to another corporation, without the prior written consent of the Investor, after notice duly given by the Company to the Investor. (e) Benefits of the Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. (f) Counterparts; Faxes. This Agreement may be executed in two counterparts, each of which shall be deemed an original, but all of Revised and Restated 4/18/2006 9 Effective as of 12/12/05 which together shall constitute one and the same instrument. This Agreement may also be executed via facsimile, which shall be deemed an original. (g) Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. (h) Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law that renders any provisions hereof prohibited or unenforceable in any respect. (i) Further Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained. (j) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. (k) Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and construed under and in accordance with the laws of the state of Utah without giving effect to any choice or conflict of law provision or rule (whether the state of Utah or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the state of Utah. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action, or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action, or proceeding brought in such courts and irrevocably waives any claim that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum. IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written. ARADYME CORPORATION By: /s/ James R. Spencer ------------------------------------------ James R. Spencer, Chief Executive Officer EAGLE ROCK CAPITAL, LLC By: /s/ Merwin D. Rasmussen ------------------------------------------ Merwin D. Rasmussen, Manager Revised and Restated 4/18/2006 10 Effective as of 12/12/05 EX-10.31 4 ex1031form8k041706.txt FORM OF WARRANT: PURCHASE SHARES OF COMMON STOCK This Warrant has not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any state and may not be sold, transferred, or otherwise disposed of except pursuant to an effective registration statement or exemption from registration under the foregoing laws. ARADYME CORPORATION WARRANT TO PURCHASE [___________] SHARES OF COMMON STOCK, PAR VALUE $0.001 PER SHARE FOR VALUE RECEIVED, EAGLE ROCK CAPITAL, LLC ("Warrantholder") is entitled to purchase, subject to the provisions of this Warrant, from ARADYME CORPORATION, a Delaware corporation ("Company"), at any time on or after December 12, 2006, and not later than 5:00 p.m. Mountain time, on December 11, 2011, (the "Expiration Date"), at an exercise price per share equal to $[_____] (the exercise price in effect being herein called the "Warrant Price"), [__________] shares ("Warrant Shares") of the Company's Common Stock, par value $0.001 per share ("Common Stock"). The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as described herein. Section 1. Registration. The Company shall maintain books for the transfer and registration of the Warrant. Upon the initial issuance of this Warrant, the Company shall issue and register the Warrant in the name of the Warrantholder. Section 2. Transfers. As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under the Securities Act or an exemption from such registration. Subject to such restrictions, the Company shall transfer this Warrant from time to time upon the books to be maintained by the Company for that purpose, upon surrender thereof for transfer properly endorsed or accompanied by appropriate instructions for transfer and such other documents as may be reasonably required by the Company, including, if required by the Company, an opinion of its counsel to the effect that such transfer is exempt from the registration requirements of the Securities Act, to establish that such transfer is being made in accordance with the terms hereof, and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company. Section 3. Exercise of Warrant. Subject to the provisions hereof, the Warrantholder may exercise this Warrant in whole or in part at any time prior to its expiration upon surrender of the Warrant, together with delivery of the duly-executed Warrant Exercise Form attached hereto as Appendix A (the "Exercise Agreement") and payment by cash, certified check, or wire transfer of funds for the aggregate Warrant Price for that number of Warrant Shares then being purchased, to the Company during normal business hours on any business day at the Company's principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof). In order to facilitate the foregoing, the Company shall cooperate with licensed securities broker-dealers to or through which Warrant Shares may be sold to deposit certificates evidencing the Warrant Shares to be sold with such broker-dealer for delivery upon settlement of the sale of such Warrant Shares against transmittal to the Company of immediately available funds for the full purchase price of the Warrant Shares so sold and delivered. The Warrant Shares so purchased shall be deemed to be issued to the holder hereof or such holder's designee, as the record owner of such shares, as of the close of business on the date on which this Warrant shall have been surrendered (or evidence of loss, theft, or destruction thereof and security or indemnity satisfactory to the Company), the Warrant Price shall have been paid, and the completed Exercise Agreement shall have been delivered. Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in the Exercise Agreement, shall be delivered to the holder hereof within a reasonable time, not exceeding three business days, after this Warrant shall have been so exercised. The certificates so delivered shall be in such denominations as may be requested by the holder hereof and shall be registered in the name of such holder or such other name as shall be designated by such holder. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the holder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised. As used herein, "business day" means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business. Each exercise hereof shall constitute the reaffirmation by the Warrantholder that the representations and warranties contained in Article 4 of the Stock Purchase Agreement by and between the Company and the Warrantholder of even date herewith (the "Purchase Agreement") are true and correct in all material respects with respect to the Warrantholder as of the time of such exercise. Section 4. Compliance with the Securities Act. The Company may cause the legend set forth on the first page of this Warrant to be set forth on each Warrant or similar legend on any security issued or issuable upon exercise of this Warrant, unless counsel for the Company is of the opinion as to any such security that such legend is unnecessary. Section 5. Payment of Taxes. The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes that may be payable in respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a name other than that of the registered holder of this Warrant in respect of which such shares are issued, and in such case, the Company shall not be required to issue or deliver any certificate for Warrant Shares or any Warrant until the person requesting the same has paid to the Company the amount of such tax or has established to the Company's reasonable satisfaction that such tax has been paid. The holder shall be responsible for income taxes due under federal, state, or other law, if any such tax is due. Section 6. Mutilated or Missing Warrants. In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen, or destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft, or destruction of the Warrant, and with respect to a lost, stolen, or destroyed Warrant, reasonable indemnity or bond with respect thereto, if requested by the Company. Section 7. Reservation of Common Stock. The Company hereby represents and warrants that there have been reserved, and the Company shall at all applicable times keep reserved until issued (if necessary) as contemplated by this Section 7, out of the authorized and unissued shares of Common Stock, sufficient shares to provide for the exercise of the rights of purchase represented by this Warrant. The Company agrees that all Warrant Shares issued upon due exercise of the Warrant shall be, at the time of delivery of the certificates for such Warrant Shares, duly authorized, validly issued, fully paid, and nonassessable shares of Common Stock of the Company. Section 8. Adjustments. In order to prevent dilution of the rights granted hereunder, the Warrant Price shall be subject to adjustment from time to time in accordance with this section. 2 (a) In the event the Company shall declare a stock dividend or make any other distribution on any capital stock of the Company payable in common stock, options to purchase common stock, or securities convertible into common stock, or the Company shall at any time subdivide (other than by means of a dividend payable in common stock) its outstanding shares of common stock into a greater number of shares or combine such outstanding stock into a smaller number of shares, then in each such event, the Warrant Price in effect immediately prior to such dividend, distribution, or effective date of such combination shall be adjusted so that the holders of the Warrants shall be entitled to receive the kind and number of shares of common stock or other securities of the Company that they would have owned or have been entitled to receive, after the happening of any of the events described above, had such Warrants been exercised immediately prior to the happening of such event or any record date with respect thereto; an adjustment made pursuant to this subsection (a) shall become effective immediately after the effective date of such event retroactive to the record date for such event. (b) If any capital reorganization or reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation, or the sale of all or substantially all of the Company's assets to another corporation shall be effected in such a way that holders of common stock shall be entitled to receive stock, securities, or assets with respect to or in exchange for common stock, then, as a condition of such reorganization, reclassification, consolidation, merger, or sale, lawful adequate provisions shall be made whereby the holders of the Warrants shall thereafter have the right to acquire and receive on exercise of the Warrants such shares of stock, securities, or assets as would have been issuable or payable (as part of the reorganization, reclassification, consolidation, merger, or sale) with respect to or in exchange for such number of outstanding shares of common stock as would have been received on exercise of the Warrants immediately before such reorganization, reclassification, consolidation, merger, or sale. In any such case, appropriate provision shall be made with respect to the rights and interests of the holders of the Warrants to the end that the provisions hereof (including provisions for adjustments of the Warrant Price and for the number of shares issuable on exercise of the Warrants) shall thereafter be applicable in relation to any shares of stock, securities, or assets thereafter deliverable on the exercise of the Warrants. In the event of a merger or consolidation of the Company with or into another corporation, or the sale of all or substantially all of the Company's assets, as a result of which a number of shares of common stock of the surviving or purchasing corporation greater or lesser than the number of shares of common stock outstanding immediately prior to such merger, consolidation, or purchase are issuable to holders of Warrants, then the Warrant Price in effect immediately prior to such merger, consolidation, or purchase shall be adjusted in the same manner as though there was a subdivision or combination of the outstanding shares of common stock. The Company will not effect any such consolidation, merger, or sale unless, prior to the consummation thereof, the successor corporation resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument mailed or delivered to the holders of the Warrants, at the last address of each such holder appearing on the Company's books, the obligation to deliver to each such holder such shares of stock, securities, or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire on exercise of the Warrants. (c) If the Company shall issue any common stock other than Excluded Stock (as hereinafter defined) without consideration or for a consideration per share less than the Warrant Price in effect immediately prior to such issuance, the Warrant Price in effect immediately prior to each such issuance shall immediately (except as provided below) be reduced to the price determined by dividing (i) an amount equal to the sum of (1) the number of shares of common stock outstanding immediately prior to such issuance multiplied by the 3 Warrant Price in effect immediately prior to such issuance and (2) the consideration, if any, received by the Company upon such issuance, by (ii) the total number of shares of common stock outstanding immediately after such issuance. For this purpose the number of shares of common stock outstanding shall be determined on a fully-diluted basis including Excluded Stock that the Company has reserved for issuance and assuming the full exercise or conversion of all outstanding options, warrants, convertible securities, and other rights to acquire common stock. (d) For the purposes of any adjustment of the Warrant Price pursuant to Subsection 8(c), the following provisions shall be applicable: (i) In the case of the issuance of common stock for cash, the amount of the consideration received by the Company shall be deemed to be the amount of the cash proceeds received by the Company for such common stock before deducting therefrom any discounts, commissions, taxes, or other expenses allowed, paid, or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof. (ii) In the case of the issuance of common stock (otherwise than upon the conversion of shares of capital stock or other securities of the Company) for a consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so exchangeable), the consideration other than cash shall be deemed to be the fair value thereof as determined in good faith by the board of directors, irrespective of any accounting treatment. (iii) (1) In the case of the issuance of options, warrants, or other rights to purchase or acquire common stock (whether or not at the time exercisable), securities by their terms convertible into or exchangeable for common stock (whether or not at the time so convertible or exchangeable) or options, warrants, or rights to purchase such convertible or exchangeable securities (whether or not at the time exercisable): (A) the aggregate maximum number of shares of common stock deliverable upon exercise of such options, warrants, or other rights to purchase or acquire common stock shall be deemed to have been issued at the time such options, warrants, or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subclauses (i) and (ii) above), if any, received by the Company upon the issuance of such options, warrants, or rights plus the minimum purchase price provided in such options, warrants, or rights for the common stock covered thereby; (B) the aggregate maximum number of shares of common stock deliverable upon conversion of or in exchange for any such convertible or exchangeable securities, or upon the exercise of options, warrants, or other rights to purchase or acquire such convertible or exchangeable securities and the subsequent conversion or exchange thereof, shall be deemed to have been issued at the time such securities were issued or such options, warrants, or rights were issued and for a consideration equal to the 4 consideration, if any, received by the Company for any such securities and related options, warrants, or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration (determined in the manner provided in subclauses (i) and (ii) above), if any, to be received by the Company upon the conversion or exchange of such securities, or upon the exercise of any related options, warrants, or rights to purchase or acquire such convertible or exchangeable securities and the subsequent conversion or exchange thereof; (C) on any change in the number of shares of common stock deliverable upon exercise of any such options, warrants, or rights or conversion or exchange of such convertible or exchangeable securities or any change in the consideration to be received by the Company upon such exercise, conversion, or exchange, including a change resulting from the antidilution provisions thereof, the Warrant Price as then in effect shall forthwith be readjusted to such Warrant Price as would have been obtained had an adjustment been made upon the issuance of such options, warrants, or rights not exercised prior to such change, or of such convertible or exchangeable securities not converted or exchanged prior to such change, upon the basis of such change; (D) on the expiration or cancellation of any such options, warrants, or rights, or the termination of the right to convert or exchange such convertible or exchangeable securities, if the Warrant Price shall have been adjusted upon the issuance thereof, the Warrant Price shall forthwith be readjusted to such Warrant Price as would have been obtained had an adjustment been made upon the issuance of such options, warrants, rights, or such convertible or exchangeable securities on the basis of the issuance of only the number of shares of common stock actually issued upon the exercise of such options, warrants, or rights, or upon the conversion or exchange of such convertible or exchangeable securities; and (E) if the Warrant Price shall have been adjusted upon the issuance of any such options, warrants, rights, or convertible or exchangeable securities, no further adjustment of the Warrant Price shall be made for the actual issuance of common stock upon the exercise, conversion, or exchange thereof. (2) "Excluded Stock" shall mean (A) shares of common stock issued or reserved for issuance by the Company as a stock dividend payable in shares of common stock, or upon any subdivision or split-up of the outstanding shares of common stock or preferred stock, or upon conversion of shares of preferred stock, (B) shares of common stock issued or reserved for issuance by the Company pursuant to stock plans adopted by the Company's board of directors for employees, directors, and advisors of the Company together with any such shares that are repurchased by the Company and reissued to any such employee, director, or advisor, (C) shares of common stock issued or reserved for issuance by the Company 5 pursuant to any acquisition by the Company of another entity or business, and (D) shares of common stock issued or reserved for issuance pursuant to transactions with strategic partners or other joint venture arrangements. (e) No adjustment shall be made in the Warrant Price or the number of shares of common stock issuable on exercise of the Warrants solely as a result of: (i) the offer and sale of any shares of preferred stock, common stock, or other securities convertible or exercisable into shares of common stock on a per share basis greater than the Warrant Price for the common stock; (ii) the issuance of any common stock, securities, or assets on conversion or redemption of shares of preferred stock; (iii) the issuance of any shares of common stock, securities, or assets on account of the antidilution provisions set forth in this Section 8, other than as heretofore provided in this section; (iv) the purchase or other acquisition by the Company of any capital stock, evidence of its indebtedness, or other securities of the Company; or (v) the sale of shares of common stock at a price of less than $0.50 per share at any time on or before June 30, 2006. (f) Notwithstanding anything to the contrary set forth elsewhere in this Section 8, no adjustment in the Warrant Price or number of shares purchasable hereunder shall be required unless such adjustment would require an increase or decrease of at least 5% in the Warrant Price; provided, however, that any adjustments that by reason of this subsection (f) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. Section 9. Fractional Interest. The Company shall not be required to issue fractions of Warrant Shares upon the exercise of this Warrant. If any fractional share of Common Stock would, except for the provisions of the first sentence of this Section 9, be deliverable upon such exercise, the Company, in lieu of delivering such fractional share, shall pay to the exercising holder of this Warrant an amount in cash equal to the Market Price of such fractional share of Common Stock on the date of exercise. "Market Price" as of a particular date (the "Valuation Date") shall mean the following: (a) if the common stock is then listed on a national stock exchange, the closing sale price of one share of common stock on such exchange on the last trading day prior to the Valuation Date; (ii) if the common stock is then quoted on The Nasdaq Stock Market, Inc. ("Nasdaq"), the closing sale price of one share of common stock on Nasdaq on the last trading day prior to the Valuation Date or, if no such closing sale price is available, the average of the high bid and the low asked price quoted on Nasdaq on the last trading day prior to the Valuation Date; (iii) if the common stock is then quoted on The OTC Bulletin Board ("OTCBB"), the closing sale price of one share of common stock on OTCBB on the last trading day prior to the Valuation Date or, if no such closing sale price is available, the average of the high bid and the low asked price quoted on OTCBB on the last trading day prior to the Valuation Date; or (iv) if the common stock is not then listed on a national stock exchange or quoted on Nasdaq or OTCBB, the fair market value of one share of common stock as of the Valuation Date, shall be determined in good faith by the Company's board of directors and the Warrantholder. 6 Section 10. Extension of Expiration Date. If the Company fails to cause any Registration Statement covering Registrable Securities (as defined in the Registration Rights Agreement) to be declared effective prior to the applicable dates set forth therein, or if any of the events specified in Section 2(c)(ii) of the Registration Rights Agreement occurs, and the Blackout Period (whether alone or in combination with any other Blackout Period) continues for more than 60 days in any 12-month period, or for more than a total of 90 days, then the Expiration Date of this Warrant shall be extended one day for each day beyond the 60-day or 90-day limits, as the case may be, that the Blackout Period continues. Section 11. Benefits. Nothing in this Warrant shall be construed to give any person, firm, or corporation (other than the Company and the Warrantholder) any legal or equitable right, remedy, or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company and the Warrantholder. Section 12. Notices to Warrantholder. Upon the happening of any event requiring an adjustment of the Warrant Price, the Company shall promptly give written notice thereof to the Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant Price and the adjusted number of Warrant Shares resulting from such event and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Failure to give such notice to the Warrantholder or any defect therein shall not affect the legality or validity of the subject adjustment. Section 13. Identity of Transfer Agent. The transfer agent for the Common Stock is Colonial Stock Transfer Company, 66 East Exchange Place, Salt Lake City, Utah 84111. Upon the appointment of any subsequent transfer agent for the Common Stock or other shares of the Company's capital stock issuable upon the exercise of the rights of purchase represented by the Warrant, the Company will mail to the Warrantholder a statement setting forth the name and address of such transfer agent. Section 14. Notices. Unless otherwise provided, any notice required or permitted under this Warrant shall be given in writing and shall be deemed effectively given as hereinafter described (a) if given by personal delivery, then such notice shall be deemed given upon such delivery, (b) if given by telex or facsimile, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (c) if given by mail, then such notice shall be deemed given upon the earlier of receipt of such notice by the recipient or three days after such notice is deposited in first class mail, postage prepaid, and (d) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one day after delivery to such carrier. All notices shall be addressed as follows: if to the Warrantholder, at its address as set forth in the Company's books and records and, if to the Company, at 1255 North Research Way, Bldg. Q3500, Orem, Utah 84097, or at such other address as the Warrantholder or the Company may designate by 10 days' advance written notice to the other. Section 15. Registration Rights. The initial holder of this Warrant is entitled to the benefit of certain registration rights with respect to the shares of Common Stock issuable upon the exercise of this Warrant as provided in the Registration Rights Agreement, and any subsequent holder hereof may be entitled to such rights. Section 16. Successors. All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns hereunder. Section 17. Governing Law. This Warrant shall be governed by, and construed in accordance with, the internal laws of the state of Utah, without reference to the choice of law provisions thereof. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably submits to the exclusive jurisdiction of the courts of the state of Utah located in Utah County and the 7 United States District Court for the Central District of Utah for the purpose of any suit, action, proceeding, or judgment relating to or arising out of this Warrant and the transactions contemplated hereby. Service of process in connection with any such suit, action, or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably consents to the jurisdiction of any such court in any such suit, action, or proceeding and to the laying of venue in such court. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably waives any objection to the laying of venue of any such suit, action, or proceeding brought in such courts and irrevocably waives any claim that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum. Section 18. No Rights as Stockholder. Prior to the exercise of this Warrant, the Warrantholder shall not have or exercise any rights as a stockholder of the Company by virtue of its ownership of this Warrant. Section 19. Amendment; Waiver. Any term of this Warrant may be amended or waived (including the adjustment provisions included in Section 8 of this Warrant) only upon the written consent of the Company and the Warrantholder. Section 20. Section Headings. The section headings in this Warrant are for the convenience of the Company and the Warrantholder and in no way alter, modify, amend, limit, or restrict the provisions hereof. IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the 12th day of December, 2005. ARADYME CORPORATION By: /s/ James R. Spencer ------------------------- James R. Spencer, Chief Executive Officer 8 Appendix A ARADYME CORPORATION WARRANT EXERCISE FORM To: Aradyme Corporation The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant ("Warrant") for, and to purchase thereunder by the payment of the Warrant Price and surrender of the Warrant, _______________ shares of Common Stock ("Warrant Shares") provided for therein, and requests that certificates for the Warrant Shares be issued as follows: ______________________________________________________________________________ Name ______________________________________________________________________________ Address ______________________________________________________________________________ Federal Tax ID or Social Security No. and delivered by (certified mail to the above address, or (electronically (provide DWAC Instructions: __________), or (other (specify): _______________________________________). and, if the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned's assignee as below indicated and delivered to the address stated below. Dated: ___________________, ____ Signature:____________________________ Note: The signature must correspond ______________________________________ with the name of the Name (please print) registered holder as written on the first page of the ______________________________________ Warrant in every particular, Address without alteration or enlargement or any change ______________________________________ whatever, unless the Warrant Federal Identification or has been assigned. Social Security No. Assignee: ______________________________________ ______________________________________ ______________________________________ -----END PRIVACY-ENHANCED MESSAGE-----