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, 00 Xxxx Xxxxxxxx Xxxxx, Xxxx
Xxxx Xxxx, Xxxx 00000. 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 0000 Xxxxx Xxxxxxxx Xxx, Xxxx. X0000, Xxxx, Xxxx 00000, 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
0
Xxxxxx Xxxxxx Xxxxxxxx Xxxxx 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/ Xxxxx X. Xxxxxxx
-------------------------
Xxxxx X. Xxxxxxx,
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:
______________________________________
______________________________________
______________________________________
