Aradyme Corporation Convertible Promissory Note with Shan Lassig

Summary

Aradyme Corporation, a Delaware company, issues a convertible promissory note to Shan Lassig, an accredited investor. The note promises repayment of the principal plus 15% annual interest by November 15, 2005, unless converted to company common stock at $0.80 per share. The noteholder may convert the debt to stock under certain conditions, and the company may also convert if unable to pay. The agreement includes provisions for prepayment, adjustments for stock splits or dividends, and other standard terms.

EX-10.02 3 ex1002form8k010305.txt CONVERTIBLE PROMISSORY NOTE Exhibit 10.02 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. _________________________ CONVERTIBLE PROMISSORY NOTE OF ARADYME CORPORATION $[amount] [date] ARADYME CORPORATION, a Delaware corporation (the "Company"), for value received, hereby promises to pay to Shan Lassig, an accredited individual (the "Noteholder"), or his assigns, the sum of $[amount], or such or such lesser amount as has been advanced by Noteholder to the Company pursuant to the Agreement of even date herewith between Noteholder and the Company, plus interest accrued on unpaid principal at a rate of fifteen percent (15%) per annum from the date the funds are received, in accordance with this convertible promissory note (the "Note"), until the principal amount hereof and all interest accrued thereon is paid (or converted, as provided in section 2 hereof). The principal amount of this Note and the interest accrued thereon shall be payable at the principal offices of the Noteholder or by mail to the registered address of the Noteholder according to the following schedule: On or before November 15, 2005, the principal amount and accrued interest as of that date shall be due and payable, or on the earlier to occur of (i) a default under this Note in accordance with section 8 below, or (ii) the date five days after the date of any breach by the Company of any agreement with the Noteholder and/or any affiliate of the Noteholder, unless this Note shall have been previously converted pursuant to section 2 hereof or as provided otherwise in this Note. The following is a statement of the rights of the Noteholder and the conditions to which this Note is subject and to which the Noteholder hereof, by the acceptance of this Note, agrees: 1. Definitions. The following definitions shall apply for all purposes of this Note: 1.1 "Company" shall mean the Company as defined above and includes any corporation that shall succeed to or assume the obligations of the Company under this Note. 1.2 "Common Stock" shall mean shares of the common stock of the Company. 1.3 "Conversion Date" shall mean the date on which, pursuant to sections 2 and 3 hereof, the Noteholder exercises its right to convert this Note into the Common Stock at the Note Conversion Price. 1.4 "Note Conversion Price" shall be $0.80 per share. 1.5 "Noteholder" or similar term, when the context refers to a holder of this Note, shall mean any person who shall at the time be the registered holder of this Note. 2. Payment. The Company shall have the right at any time to prepay any or all of the principal amount or accrued interest on this Note prior to the maturity date of the Note. 3. Conversion. 3.1 Conversion of Note. Subject to acceptance by the Company, the Noteholder may convert the principal amount and accrued interest of this Note into Common Stock at the Note Conversion Price at any time prior to the Note being paid, provided, however, that this right to convert shall automatically expire if at any time the Noteholder fails or refuses to advance funds to the Company within two business days after due request from the Company as provided in the Securities Purchase Agreement between the Company and the Noteholder of even date. Conversion under this section 3 shall occur only upon surrender of this Note for conversion at the principal offices of the Company, accompanied by written notice of election to convert. 3.2 Conversion in the Event of Prepayment or Payment of Note. At such time that the Company has funds immediately available and elects to pay all or any portion of the principal amount or accrued interest on the Note (whether as a prepayment with the consent of Noteholder or payment at or after maturity of this Note), the Noteholder shall have the option to convert this Note into Common Stock at the Note Conversion Price on or before 15 days after the receipt of notice of the Company's election to pay off the Note. 3.3 Conversion in the Event of Company Nonpayment of Note. The Company shall, if it determines in good faith that it is unable to repay the obligations incurred pursuant to this Note, have the right to convert the principal amount and accrued interest on the Note into Company Common Stock as calculated on the average closing price for the Common Stock on the principal market on which it is traded for the 20 days preceding the due date of the Note. 4. Issuance of Common Stock. As soon as practicable after conversion of all or part of this Note, the Company, at its expense, will cause to be issued in the name of and delivered to the Noteholder, a certificate or certificates for the number of shares of Common Stock to which the Noteholder shall be entitled upon such conversion (bearing such legends as may be required by applicable state and federal securities laws in the opinion of legal counsel of the Company), together with any other securities and property to which the Noteholder is entitled upon such conversion under the terms of this Note. Such conversion shall be deemed to have been made under section 3 above and immediately prior to the close of business on the date that the Note shall have been surrendered for conversion, accompanied by written notice of election to convert, and received by the Company. No fractional shares will be issued upon conversion of this Note. If upon any conversion of this Note a fraction of a share would otherwise result, then, in lieu of such fractional share, the Company will pay the cash value of that fractional share, calculated on the basis of the applicable Note Conversion Price. 5. Adjustment of Number of Shares. The number and character of shares of Common Stock issuable upon conversion of this Note (or any shares of stock or other securities or property at the time receivable or issuable upon conversion of this Note) are subject to adjustment upon the occurrence of any of the following events: 5.1 Adjustment for Stock Splits, Stock Dividends, Recapitalizations, etc. In the event that the Company shall fix a record date for the determination of holders of securities affected by any stock split, stock dividend, reclassification, recapitalization, or other similar event that 2 will, in the future, affect the number of outstanding shares of the Company's capital stock, then, and in each such case, the Noteholder, upon conversion of this Note at any time after the Company shall fix the record date for such event, shall receive, in addition to the shares of Common Stock issuable upon conversion on the Conversion Date, the right to receive the securities of the Company to which such Noteholder would have been entitled if such Noteholder had converted this Note immediately prior to such record date (all subject to further adjustment as provided in this Note). 5.2 Adjustment for Dividends and Distributions. In the event that the Company shall make or issue, or shall fix a record date for the determination of eligible holders of securities entitled to receive, a dividend or other distribution payable with respect to the Common Stock (or any shares of common stock or other securities at the time issuable upon conversion of this Note) in securities of the Company other than capital stock or any other assets, then, and in each such case, the Noteholder, upon conversion of this Note at any time after the consummation, effective date, or record date of such event, shall receive, in addition to the shares of the Company's Common Stock (or such other stock or securities) issuable upon such conversion prior to such date, the securities or such other assets of the Company to which Noteholder would have been entitled upon such date if Noteholder had converted this Note immediately prior thereto (all subject to further adjustment as provided in this Note). 5.3 Adjustment for Reorganization, Consolidation, Merger. In the event of any reorganization of the Company (or any other corporation the stock or other securities of which are at the time receivable upon the conversion of this Note) after the date of this Note, or in the event, after such date, the Company (or any such corporation) shall consolidate with or merge into another corporation or convey all or substantially all of its assets to another corporation, then, and in each such case, the Noteholder, upon the conversion of this Note (as provided in section 3) at any time after the consummation of such reorganization, consolidation, merger, or conveyance, shall be entitled to receive, in lieu of the stock or other securities and property receivable upon the conversion of this Note prior to such consummation, the stock or other securities or property to which such Noteholder would have been entitled upon the consummation of such reorganization, consolidation, merger, or conveyance if Noteholder had converted this Note immediately prior thereto, all subject to further adjustment as provided in this section 5, and the successor or purchasing corporation in such reorganization, consolidation, merger, or conveyance (if other than the Company) shall duly execute and deliver to the Noteholder a supplement hereto acknowledging such corporation's obligations under this Note. In each such case, the terms of the Note shall be applicable to the shares of stock or other securities or property receivable upon the conversion of this Note after the consummation of such reorganization, consolidation, merger, or conveyance. 5.4 Notice of Adjustments. The Company shall promptly give written notice of each adjustment or readjustment of the number of shares of Common Stock or other securities issuable upon conversion of this Note, by first class mail, postage prepaid, to the registered holder of this Note at the Noteholder's address as shown on the Company's books. The notice shall describe the adjustment or readjustment and show in reasonable detail the facts on which the adjustment or readjustment is based. 5.5 No Change Necessary. The form of this Note need not be changed because of any adjustment in the number of shares of Common Stock issuable upon its conversion. 5.6 Reservation of Stock. The Company has taken all necessary corporate action and obtained all necessary government consents and approvals to authorize the issuance of this Note and, prior to the conversion hereof, the shares of Common Stock issuable upon conversion of this Note. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of this Note, then the Company will take such corporate 3 action as may, in the opinion of its legal counsel, be necessary to increase its authorized but unissued shares of common stock as shall be sufficient for such purpose. 6. Fully-Paid Shares. All shares of Common Stock issued upon the conversion of this Note shall be validly issued, fully-paid and nonassessable. 7. No Rights or Liabilities as a Shareholder. This Note does not by itself entitle the Noteholder to any voting rights or other rights as a shareholder of the Company. In the absence of conversion of this Note, no provisions of this Note and no enumeration herein of the rights or privileges of the Noteholder shall cause Noteholder to be a shareholder of the Company for any purpose. 8. Corporate Action; No Impairment. The Company will not, by amendment of its articles of incorporation or bylaws, or through reorganization, consolidation, merger, dissolution, issue or sale of securities, repurchase of securities, sale of assets, or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Note, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate, or as reasonably requested by Noteholder, in order to protect the rights of the Noteholder under this Note against wrongful impairment. 9. Default. The Company will be in default if the Company fails to make any payment when due hereunder. The Company will also be in default if any of the following occurs and such default is not cured within a 10-day period after the Noteholder has given the Company written notice of such default: (a) the Company breaches any material obligation to the Noteholder hereunder; (b) a receiver is appointed for any part of the Company's property, the Company makes an assignment for the benefit of creditors, or any proceeding is commenced either by the Company or against the Company under any bankruptcy or insolvency laws; or (c) the Company suspends its normal business operations or otherwise fails to continue to operate its business in the ordinary course. In the event of a default under this section 9, the only remedy to which Noteholder shall be entitled shall be to convert the principal and all accrued interest into Common Stock of the Company at the Note Conversion Price. 10. Waiver and Amendment. Any provision of this Note may be amended, waived, modified, discharged, or terminated solely upon the written consent of both the Company and the Noteholder. 11. Assignment; Binding upon Successors and Assigns. The Company may not assign any of its obligations hereunder without the prior written consent of Noteholder. The terms and conditions of this Note shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties. 12. Waiver of Notice; Attorneys' Fees. The Company and all endorsers of this Note hereby waive notice, demand, notice of nonpayment, presentment, protest, and notice of dishonor. If any action at law or in equity is necessary to enforce this Note or to collect payment under this Note, the Noteholder shall be entitled to recover, as an element of the costs of suit and not as damages, reasonable attorney's fees, costs, and necessary disbursements in addition to any other relief to which it may be entitled. Noteholder will be entitled to recover its costs of suit, regardless of whether such suit proceeds to final judgment. 4 13. Construction of Note. The terms of this Note have been negotiated by the Company, the original Noteholder, and their respective attorneys, and the language hereof will not be construed for or against either the Company or the Noteholder. Unless otherwise explicitly set forth, a reference to a section will mean a section in this Note. The titles and headings herein are for reference purposes only and will not in any manner limit the construction of this Note, which will be considered as a whole. 14. Notices. Any notice, demand, request or other communication permitted or required under this Note shall be in writing and shall be deemed to have been given (a) as of the date so delivered if personally served; (b) as of the date so sent if transmitted by facsimile and receipt is confirmed by the facsimile operator of the recipient; (c) as of the date of sent if sent by electronic mail and receipt is acknowledged by the recipient; (d) one day after the date so sent if delivered by overnight courier service; or (e) three days after the date so mailed if mailed by certified mail, return receipt requested, addressed as follows: To the Company, as follows: Aradyme Corporation Attn. James R. Spencer 677 East 700 South, Suite 201 American Fork, Utah 84003 Telephone: (801) 756-9585 Facsimile: (801) 756-9518 E-mail: ***@*** To the Noteholder, as follows: Shan Lassig 6925 South Union Park Center, Suite 445 Midvale, Utah 84047 Telephone: (801) 233-1433 Facsimile: (801) 233-0627 E-mail: _______________ or such other addresses, facsimile numbers, or electronic mail address as shall be furnished in writing by any party in the manner for giving notices hereunder. 15. Governing Law. This Note shall be governed by and construed under the internal laws of the United States and the state of Utah as applied to agreements among Utah residents entered into and to be performed entirely within Utah, without reference to principles of conflict of laws or choice of laws. IN WITNESS WHEREOF, the Company has caused this Note to be signed in its name as of the date first above written. ARADYME CORPORATION By --------------------------------- Merwin Rasmussen, Vice Chairman & Corporate Secretary 5