Exhibit 10.01
SECURITIES PURCHASE AGREEMENT
These Securities have not been registered with the United
States Securities and Exchange Commission 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 or exemption from such state
registration requirements.
These Securities involve a high degree of risk.
______________________________
This Securities Purchase Agreement ("Agreement") is entered into
effective the 15th day of November, 2004, by and between Aradyme Corporation, a
Utah corporation (the "Company"), and XXXX XXXXXX, a resident of the state of
Utah (the "Investor").
For and in consideration of the mutual promises and covenants set forth
herein, the receipt and adequacy of which are hereby acknowledged, it is hereby
agreed as follows:
1. Investment. Investor hereby agrees to purchase, and the Company
hereby agrees to issue and sell to Investor, the following (the "Securities"):
(a) a promissory note in the principal amount of $200,000 or
such lesser amount as has been advanced by Noteholder to the Company
pursuant to this Agreement, convertible in certain circumstances into
shares of common stock of the Company at a conversion price of $0.80
per share, all as more particularly set forth in the form of note
attached hereto as Exhibit A and incorporated herein by reference (the
"Note");
(b) a warrant to purchase at $0.80 per share, exercisable at
any time on or before November 14, 2006, up to 200,000 shares of common
stock of the Company, subject to adjustment in certain circumstances,
all as more particularly set forth in the form of warrant attached
hereto as Exhibit B and incorporated herein by reference (the
"Warrant"); and
(c) 25,000 shares of fully-paid and nonassessable common stock
of the Company, par value $0.001 per share.
2. Purchase Price; Line of Credit Advances. As payment in full for the
purchase and issuance of the Securities, Investor hereby agrees to advance to
the Company, in immediately available funds, up to Two Hundred Thousand Dollars
($200,000), payable at any time after the Execution of this Agreement and before
November 15, 2005, within two business days after the receipt of a written
request from the Company in the form of Exhibit C attached hereto and
incorporated herein by reference, for an advance of not less than $25,000 each.
If the Investor fails or refuses to advance funds to the Company within two
business days after due request from the Company as provided above, the Investor
shall have no further right to exercise the Warrant or to convert any
outstanding balance of principal or accrued but unpaid interest into common
stock.
3. Closing. The consummation of the purchase and sale of the Securities
in accordance with this Agreement (the "Closing") will take place
contemporaneously with the execution of this Agreement by both parties. At the
Closing:
(a) Investor will deliver to the Company the full purchase
price for the Securities as specified above; and
(b) the Company shall execute and deliver to Investor
manually-executed originals of the Note and the Warrant, together with
the original certificate evidencing the common stock to be purchased by
and issued to Investor, registered in the name of Investor.
4. General Representations of Investor. Investor hereby represents and
warrants as follows, and expressly agrees that he will be representing and
warranting each of the below statements anew upon each payment for the
investment in the Note, as of the date of such payment.
(a) Investor is over the age of 21 years.
(b) Investor confirms his status as an "accredited investor"
as defined under Rule 501 of Regulation D promulgated under the
Securities Act, inasmuch as Investor is a natural person whose
individual net worth, or joint net worth with his spouse, at the time
of executing this Agreement and the Closing, exceeds $1,000,000 and
Investor had an individual income in excess of $200,000 in each of the
two most recent years, or joint income with his spouse in excess of
$300,000 in each of those years, and has a reasonable expectation of
reaching the same income level in the current year.
(c) Investor acknowledges that neither the United States
Securities and Exchange Commission ("SEC") nor the securities
commission of any state or other federal agency has made any
determination as to the merits of purchasing the Securities.
(d) Investor acknowledges that an investment in the Company
involves a high degree of risk. Investor acknowledges that no
representations or warranties have been made to him or to his advisors
by the Company, or by any person acting on behalf of the Company, with
respect to the business of the Company or any other aspects or
consequences of the purchase of the Securities and/or an investment in
the Company, and that he has not relied upon any information concerning
the offering, written or oral, other than that contained in the
Company's SEC filings described in subsection 4(f) below. Investor
understands the risks associated with investing in a new business
enterprise with limited capitalization in a highly-competitive
business.
(e) Investor, either alone or with the assistance of one or
more advisers selected and engaged by him, has such knowledge and
experience in business and financial matters that he is capable of
evaluating the Company, its business operations, and the risks and
merits of an investment in the Company.
(f) Investor has been provided with access to all reports,
schedules, forms, statements, and other documents filed by the Company
with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934 since September 30, 2003, and all exhibits
included therein, financial statements and schedules thereto, and
documents incorporated by reference therein. The Company has made
available to Investor all materials and information requested by him or
his representatives, including any information requested to verify any
information furnished, and Investor has been provided the opportunity
for direct communication with the Company and its representatives
regarding the purchase made hereby, including the opportunity to ask
questions of and receive answers from executive officers and directors
of the Company.
(g) Investor has met personally with management of the Company
to discuss all facets of its activities, risks, industry, and financial
outlook, including principal assumptions on which all of the foregoing
are based.
(h) All information Investor has provided to the Company or
its agents or representatives concerning his suitability to invest in
the Company is complete, accurate, and correct as of the date of the
signature on the last page of this Agreement. Such information includes
information concerning Investor's personal financial affairs, business
position, and the knowledge and experience of Investor and his
advisers.
(i) Investor has no present intention of selling any of the
Securities or the rights under this Agreement with others, or of
reselling or otherwise disposing of all or any portion of the
Securities, currently or after the passage of a fixed or determinable
period of time or on the occurrence or nonoccurrence of any
predetermined event or circumstance.
(j) Investor was at no time solicited by any leaflet, public
promotional meeting, circular, newspaper or magazine article, radio or
television advertisement, or any other form of general advertising or
solicitation in connection with the offer, sale, or purchase of the
Securities through this Agreement.
(k) Investor has adequate means of providing for his current
needs and possible personal contingencies and has no need now, and
anticipates no need in the foreseeable future, to sell any of the
Securities for which he hereby subscribes. Investor is able to bear the
economic risks of this investment, and consequently, without limiting
the generality of the foregoing, is able to hold the Securities for an
indefinite period of time, and has a sufficient net worth to sustain a
loss of the entire investment, in the event such loss should occur.
(l) Investor is a resident of the state set forth above.
5. Representations Regarding Exemptions and Restrictions on Transfer.
(a) In connection with the acquisition by Investor of the
Securities, Investor represents that the Securities are being acquired
without a view to, or for, resale in connection with any distribution
of such Securities or any interest therein without registration or
other compliance under the Securities Act and that Investor has no
direct or indirect participation in any such undertaking or in the
underwriting of such an undertaking.
(b) Investor 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; the Company is under no obligation to
register the Securities under the Securities Act or under Section 12 of
the Securities Exchange Act of 1934, as amended, except as expressly
agreed to in writing by the Company; if Rule 144 is available, and no
assurance is given that it will be, initially only routine sales of
such Securities in limited amounts can be made in reliance on Rule 144
in accordance with the terms and conditions of that rule; the Company
is under no obligation to the Investor to make Rule 144 available,
except as may be expressly agreed to by it in writing; in the event
Rule 144 is not available, compliance with Regulation A or some other
exemption may be required before Investor can sell, transfer, or
otherwise dispose of such Securities without registration under the
Securities Act; the Company's registrar and transfer agent will
maintain a stop-transfer order against the registration of transfer of
the Securities; and the certificates representing such Securities will
bear a legend in substantially the following form so restricting the
sale of such securities:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or under the securities laws of any state.
These securities have been acquired for investment and may not
be sold or transferred in the absence of an effective
registration or an available exemption from registration under
the Securities Act or the laws of the applicable state.
(c) Investor 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 Investor an "underwriter"
within the meaning of the Securities Act.
(d) Investor understands that (i) after one year from the
later of the date the Securities are acquired from the Company or an
affiliate of the Company and the full purchase price or other
consideration is paid, all as calculated in accordance with Rule
144(d), sales of the Securities in reliance on Rule 144 can only be
made in limited amounts in accordance with the terms and conditions of
that rule; (ii) after two years from the date the Securities are fully
paid for, as calculated in accordance with Rule 144(d), Securities can
generally be sold without meeting these conditions provided the holder
is not (and has not been for the preceding three months) an affiliate
of the Company; (iii) the Company may refuse to register transfer of
the Securities in the absence of compliance with Rule 144 unless
Investor furnishes the Company with an opinion of counsel reasonably
acceptable to the Company stating that the transfer is proper; further,
unless such letter or opinion states that the Securities are free of
any restrictions under the Securities Act, the Company may refuse to
transfer the Securities to any transferee that does not furnish in
writing to the Company the same representations and agree to the same
conditions with respect to such Securities as are set forth herein; and
(iv) the Company may also refuse to transfer the Securities if any
circumstances are present reasonably indicating that the transferee's
representations are not accurate.
(e) Investor understands that the resale of the Securities
must be effected in reliance on exemptions from registration under the
Securities Act 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 or exemption from such state registration requirements.
Investor understands that such exemptions and preemption may not be
available and, in such case, he would not be able to resell the
Securities held.
6. Indemnity. Investor hereby agrees to indemnify and hold harmless the
Company, its controlling persons, persons that participated in the preparation
of the offering information, and any person participating in the offering, from
and against any and all liability, damage, cost, or expense (including
reasonable attorneys' fees) incurred on account of or arising out of:
(a) any inaccuracy in his declarations, representations, and
warranties set forth herein or made by Investor to the Company in
connection with his investment;
(b) the disposition of any of the Securities that he will
receive, contrary to his declarations, representations, and warranties
set forth herein; and
(c) any action, suit, or proceeding based on (i) the claim
that said declarations, representations, or warranties made by Investor
were inaccurate or misleading or otherwise cause for obtaining damages
or redress from the Company, (ii) the disposition of any of the
Securities or any part thereof contrary to the terms hereof, or (iii)
the breach by Investor of any part of this Agreement.
7. Setoff. Notwithstanding the provisions of the last preceding section
or the enforceability thereof, Investor hereby grants to the Company the right
to setoff against any amounts payable by the Company to Investor, for whatever
reason, of any and all damages, costs, or expenses (including reasonable
attorneys' fees) that are incurred on account of or arising out of any of the
items referred to in clauses (a) through (c) of the last preceding section.
8. Miscellaneous. Investor further understands, acknowledges, and
agrees that:
(a) This Agreement is registered in the name of Investor on
the books of the Company at its principal offices, and no transfer
hereof shall be valid and binding on the Company unless made at such
offices by Investor or his attorney-in-fact duly authorized in writing.
The Company may deem and treat the person in whose name this Agreement
is registered as the absolute owner hereof for the purpose of receiving
any Securities issuable pursuant hereto and for all other purposes.
(b) This Agreement shall be construed in accordance with and
governed by 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.
(c) This Agreement constitutes the entire agreement between
the parties respecting the subject matter hereof.
(d) Notwithstanding any of the representations, warranties,
acknowledgments, or agreements made herein by Investor, Investor does
not waive any rights granted to him under federal or state securities
laws.
(e) This Agreement does not entitle Investor to any rights as
a holder of the Company's Common Stock with respect to any Securities
purchasable hereunder that have not been fully paid for.
(f) All investment payments should be made payable to "Aradyme
Corporation." Contemporaneously with acceptance of this Agreement to
purchase Securities, the Company will deposit the accompanying payment
directly into its operating account and deliver the Convertible
Promissory Note to Investor.
Executed this 29th day of December, effective as of November 15, 2004.
/s/ Xxxx Xxxxxx
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XXXX XXXXXX
ARADYME CORPORATION
By /s/ Xxxxxx Xxxxxxxxx
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Xxxxxx Xxxxxxxxx, Vice Chairman
& Corporate Secretary
